From success to scandal, Uber are never far from the headlines. Having announced today the latest $1.2 billion dollar cash injection they have received, you can’t help but ask…How have they created a $40 billion company in 5 years?
From stereotypical Silicon Valley beginnings, Uber sprung onto the scene in 2010, when it was started by now CEO Travis Kalanick, with backing from super angel investors including Chris Sacca. An incredibly simple, yet clever business plan allows Uber to offer its taxi service to any driver with a ‘suitable’ car, which are then ordered and controlled from a mobile app, meaning that ‘Uber can offer lower fees, making it enormously competitive with traditional taxi services, expanding its appeal to a broader cross-section of the market’ (tech crunch).
In 2014, Uber saw another massive surge in external investment, raising $1.2 billion funding from Fidelity Investments, Wellington Management, and BlackRock Inc. to add to the long list of investors including Menlo Ventures, Google Ventures, Kleiner Perkins Caufield & Byers, Summit Partners, Benchmark, TPG Growth, Troy Carter, Jeff Bezos, CrunchFund, Goldman Sachs and a load more.
In the last year, Uber has grown from being in 60 cities in 21 countries to 250 cities in 50 countries. The company has grown 6 times in the last year, but perhaps even more remarkably is the sheer amount of penetration that Uber brings to the cities it moves into. They do not go unnoticed and very quickly make an impact on the community and cause mass disruption to the competition.
However, success comes at a price.
At the same rate that they have grown, Uber have been collecting scandals. The list of people queuing up to take a pop at the latest kid on the block is the length of Santa’s naughty list. In 2013, a driver using the Uber application ran over and killed a 6-year-old girl, in 2014 protestors in Paris attacked an Uber taxi as cab drivers worldwide rose up against Uber’s ‘sketchy’ legal requirements for drivers. And this year even the National Federation of the Blind filed a lawsuit against Uber for denying disabled passengers rides.
However, more famously, Uber have seen negative press over their policies on user privacy, which saw undesirable coverage from journalists, most notably Sarah Lacy, who then became the subject of direct threats from Uber Senior Vice President Emil Michael – bringing Uber, yet again, into the limelight, now for threatening the press.
But there’s no such thing as bad publicity, right?
Despite a rocky road, Uber’s $40 billion valuation shows that it has not stifled them, which is what brings me to the most interesting and, in my opinion, most valuable reason for Uber’s success. Marketing.
Yes, it’s true that heavy investment and a well-connected Silicon Valley have given this startup a boost. However, their dynamic thinking, publicity stunts and forward thinking corporate partnerships have really separated them from the competition. You really have to take your hat off to the vast number of marketing ploys that these guys come up with.
Their promotions range from hiring ice cream trucks to deliver ice creams to people in summer; offering DeLorean rides to Back to the Future fans; running helicopter rides from NY to the Hamptons during 4th July weekend; Xmas tree delivery services; and a kitten delivery promo. However, beyond the gimmicky, there are a number of more solid ideas which drive both innovation and profitability. Uber’s partnership with Spotify allows users to connect Spotify to their Uber app and then continue listening to their own music when they get in the cab – this will build consumer retention and positive sentiment, as well as the acquisition of a new, younger market. Additionally, a number of more serious corporate partnerships – including a deal with Citibank which offers rides to 250,000 employees as part of the companies travel policy – ensures a regular and dependable revenue stream.
Despite the haters, Uber seem to have proved their point and have grown at a rate pretty much unparalleled – clocking up the combined value of Airbnb, Dropbox, Square and Pinterest! Love them or hate them, you have to admit they are incredibly good at smothering the negative stories with an almost overwhelming amount of positive, cool and unusual success stories. But with competition on the rise, let’s see what 2015 has in store for Silicon Valley’s latest hot property.