An Uber driver holding a smartphone in a Volkswagen car, 2019.
Lutsenko_Oleksandr/Shutterstock.com
Uber, American company that provides services related to mobility. The business’s signature product is an application for smartphones that allows users to request transportation from drivers of privately owned vehicles. In addition to connecting passengers with drivers, Uber’s computer algorithm sets the fares for their trips based on distance and supply and demand. In return, Uber receives a commission from each booking.
Early history
Since its founding in 2009, Uber has grown from a start-up that operated exclusively in San Francisco into a global company. It has expanded its services to include food delivery, package delivery, freight transportation, and more. However, Uber is banned in several countries because the effects of the company on its markets have been controversial; critics charge that its disruption of the taxicab business has resulted in the impoverishment of that trade’s drivers and that working for Uber instead is financially untenable.
The company, originally named UberCab, was the product of a brainstorming session between entrepreneurs Garrett Camp and Travis Kalanick in 2008. Camp first conceived of the business as a full black-car service company for professionals that could be engaged through a smartphone application, but Kalanick was reluctant about the idea of owning cars and garages; he agreed to partner with Camp only once the ride-hailing app became the sole focus of the new venture. Uber would obtain its cars and drivers instead by offering free iPhones with the Uber application preinstalled to professional drivers for black-car and limousine services, which found the idea of filling their drivers’ downtime with UberCab fares appealing.
Camp and Kalanick found Uber’s first full-time CEO, Ryan Graves, via a post on Twitter. Kalanick consequently took over the post in December 2010, moving Graves to the role of general manager and senior vice president of global operations.
Rapid growth
After demonstrating its service at an app showcase in San Francisco known as the SF AppShow, Uber began offering rides in that city in 2010. Though the rides were approximately one and a half times more expensive than a cab at the time, Uber quickly gained popularity for its convenience of hailing a ride through a smartphone. Uber then rapidly expanded into other major U.S. markets, and, by the end of 2012, the company had started offering services in international hubs such as Paris, London, and Amsterdam.
In 2012 Uber faced significant competition from Lyft, Inc., a transportation technology company with a similar application that offered a low-cost alternative to Uber’s black cars and limousines; with Lyft, users could obtain rides from anyone willing to offer the use of their personal vehicles. In July 2012 in order to expand the company’s customer base, Uber introduced UberX, which allowed owners of hybrid cars, such as the Toyota Prius, to offer rides at a reduced fare and owners of SUVs, such as the Cadillac Escalade, to offer rides to larger groups; eventually anyone with a personal vehicle would be allowed to become a driver for the company. UberX soon became the company’s most popular service.
Additional investment from venture capital firms allowed Uber to continue pursuing rapid growth. Uber added more employees who oversaw the introduction of new services from 2014 to 2015, such as a carpooling option, UberPOOL, and a food-delivery service, Uber Eats. The company also expanded to additional markets, most notably China, after it raised a $1.2 billion investment. In July 2015 Uber became the most valuable start-up backed by venture capitalists, valued at $51 billion.
Challenges
In 2016 Uber accepted a rare defeat at the time, selling off its unsuccessful Chinese branch to its main competitor, Didi Chuxing, a Chinese mobile transportation company. Some investors still believed the company’s best days remained ahead of it, as Uber received an additional $3.5 billion in investment funds that year, but 2017 proved disastrous for the company. The trouble began in December 2016 when Kalanick accepted a seat on president-elect Donald Trump’s economic advisory council; a backlash ensued against Uber among customers angered by Trump’s recent win. Then in January 2017 Uber’s announcement of its temporary suspension of surge pricing during nationwide protests that included a strike by taxi drivers in New York City against Trump’s new immigration policy was interpreted by many as an opportunistic attempt to profit off the taxi drivers’ strike. The hashtag #DeleteUber swiftly began trending on social media. Though Uber put out a statement that the suspension of surge pricing was an attempt to keep down the price of a ride during times of high demand, it ultimately led to more than 500,000 deletions of the application from customers’ phones. Following this boycott, Kalanick announced his resignation from the economic advisory council on February 2, 2017.
On February 19 former employee Susan Fowler published a blog post alleging that Uber had a dysfunctional and sexist workplace culture. Fowler’s blog post became highly publicized, which prompted Kalanick to hire former U.S. attorney general Eric Holder to conduct an internal investigation into the company’s culture. The investigation resulted in the firing of 20 staff members, and 47 recommendations were made to improve the workplace culture. On March 3, 2017, The New York Times added to the company’s public relations problems by revealing the existence of Greyball, a program Uber had been using to track code-enforcement officials so that its drivers could avoid them. And, later that month, one of Uber’s self-driving-car tests resulted in an accident with another car, which led to a temporary suspension of the company’s autonomous-car testing.
All of these controversies and others contributed to the already negative public image of Kalanick. Following criticism from Uber’s shareholders, he stepped down as CEO on June 20, 2017, and was replaced in August by Dara Khosrowshahi, the former CEO of Expedia, Inc. Khosrowshahi began working to improve the company’s image and finances, including taking Uber public with an initial public offering (IPO) in May 2019. Despite high expectations, Uber’s stock price opened three dollars beneath its initial pricing target—the worst opening for an American company since 1975. In part to address shareholders’ concern about the company’s financial loss stemming from the disappointing IPO, Khosrowshahi laid off more than 1,000 staff members.
Despite the company’s controversies and turbulent IPO, Uber remained one of the largest transportation technology companies and a fixture of the transportation sector. Uber took initiatives to expand its services by completing several high-profile acquisitions of companies, including food-delivery service Postmates and alcohol-delivery service Drizly in 2020 and 2021, respectively. It also continued to make bold decisions: in September 2022 Uber announced that all of its vehicles and drivers’ vehicles would be electrically charged by 2030 and that it would be 100 percent carbon neutral by 2040.