In the years since its founding in 2009, Uber instigated a revolution in transport, spread its disruptive business model into a range of sectors and became one of the world’s most valuable private tech companies. But the one thing it could not do was turn a consistent profit.
Then, seven months ago, the company — now listed — reported $1.1bn in annual operating profits, its first ever. This was something investors had long been clamouring for. Chief executive Dara Khosrowshahi called it an “inflection point” in Uber’s history: a company once beset by disputes with regulators and allegations of a toxic culture, even theft of trade secrets, had turned a corner. It was proof, Khosrowshahi announced, that Uber could “generate strong profitable growth at scale”.
The big question for Uber, 15 years on, is how to keep it up. Khosrowshahi, who took over in 2017, brought the company to operating profitability by homing in on its core business, cutting costs and offloading experiments including its driverless vehicles unit. But for Uber to keep growing, it will need to keep adding customers for its expanding roster of services.
Flights, trains, scooters, three-wheelers, even yachts are among the modes of transport users can book. Via its second customer app, Uber Eats, launched in 2015, shoppers can order everything from meals to groceries and late-night booze. And Uber’s business-focused arm, Uber Direct, is small but growing. Its couriers now transport goods on behalf of major brands including Sephora, Walmart, Apple and McDonald’s in the US, and supermarkets including Tesco in the UK.
Some backers hope that this growing roster of services might produce something akin to an “everything app” like China’s WeChat, which enables users to do everything from payments to messaging and gaming and more. Investors “have been searching for that type of super app in the west for a long time, which has mostly been portrayed as a Chinese accomplishment”, says early Uber investor Bill Gurley.
Khosrowshahi, who in 2019 proclaimed that he wanted Uber to be the “operating system for your everyday life”, tells the FT that is still very much the company’s goal. Uber, he says, should be the “default choice for the movement of people and things”. Yet rather than one “super app”, the company is “building three”, he says — Uber, Uber Eats and its Uber Driver platform for couriers and drivers.
But competition remains extremely fierce. Rivals including Lyft, Bolt and DoorDash are all pushing membership schemes in the battle for customers. And the emphasis on delivery also puts Uber in ever more direct competition with the ecommerce giant Amazon, which dominates retail and logistics.
The companies are “clearly all on a collision course”, says Youssef Squali, lead internet analyst at Truist Securities.
Khosrowshahi is bullish about the comparison. “Uber’s technology can allow retailers of all sizes to compete with Amazon,” he says. “While they are the global leader in ecommerce, we believe Uber can be the global leader in local commerce.” Amazon declined to comment.