Topic: Ride sharing
Uber Files Appeal in London Hours Before Deadline (Oct 13, 2017)
Uber has formally lodged an appeal against its ban in London, on the day the deadline to do so would have passed, allowing its service and drivers to continue operating until the matter is resolved. As I suspected, though this kicks off a formal legal process, it seems the situation is most likely to reach a resolution through negotiation between Uber and Transport for London, the body that regulates cabs and ride sharing services in the city. My guess is that Dara Khosrowshahi’s recent visit will have shed light on specific changes Uber needs to make to pass regulatory muster going forward, and that it’s actively working on a plan to ensure it can continue to operate there.
Lyft Announces 500m Total Rides, 100m in Past Three Months (Oct 11, 2017)
Lyft has announced that its service has provided 500 million cumulative rides since its inception, 100 million of which were in the last three months alone. It also says it’s providing over 1 million rides every day at this point, which gels with that 100m number. The chart in Lyft’s blog post looks like an exponential growth rate, and is a testament to the fact that the ride sharing category overall is still growing very rapidly even in a relatively mature market like the US, with Lyft’s share growing a little over the past year. As I’ve said before, while it’s tempting to ascribe that to Uber’s troubles, it’s actually mostly about Lyft’s rapid expansion into new markets during the course of this year in particular. But it’s good to see another competitor offering a serious alternative to Uber in its home market and keeping up the pressure, which should ensure that both companies continue to innovate and improve experiences for drivers and riders.
Indian ride sharing service Ola, which is the main rival to Uber in that market, is in the process of a large fundraising round, with backing from Tencent, SoftBank, and a variety of others. Ola arguably needed additional funding to be able to compete on more level terms with Uber, while Tencent and SoftBank have invested previously in India and the international ride sharing space respectively, their interests merging in Ola. The biggest risk for Uber in India is another failure and ultimate concession of the market to a stronger local competitor along the lines of what’s happened in China and Russia over the past eighteen months, so it’s clearly not about to give up there. But the two have been battling for supremacy for some time now without an obvious winner, in what’s one of the fastest-growing and potentially one of the largest ride sharing markets in the world.
Snapchat has added one of its biggest new features in recent memory with the addition of Context Cards, which will be reached through a swipe up on a Snap tied to a specific location. The Context Cards will offer various additional details about the place, and also provide links to ride sharing and restaurant booking services as well as information like address, reviews, and so on. This is yet another move by Snapchat beyond its original limitations, along with the addition a while back of outbound linking from Snaps. What both of those features offer is a way to add additional detail and context to a Snap beyond the limited photo/video formats Snapchat has supported natively. It’s also an interesting alternative to voice assistants, bots, and other ways to add context to what’s currently happening on screen without the user having to type text into a search box. The feature certainly lends itself well to monetization opportunities in future too, whether advertising or revenue sharing with the initial or additional partners. However, as with other Snapchat features, it doesn’t feel particularly tough for others to emulate if successful.
Also worth noting, briefly, is the fact that Evan Spiegel, who has rarely done press interviews, did not one but two as part of the launch of this feature, as a sort of follow-on to his recent comments that he realizes he needs to do more public communication now that Snap is a public company.
Bloomberg has dug out official financial statements for Uber’s London and European operations for last year, and found that the London operation recorded revenue of around $50 million, while the broader European operation had $1.6 billion in revenues. That London figure is a little funny because it appears to be a sort of net revenue after commissions paid to drivers – something made clear in a fuller version of the financials I saw posted to Twitter, which showed gross profits as identical to revenues. That revenue figure, though, would be a tiny fraction of Uber’s global revenue, but the strategic value of a presence in a major city like London goes well beyond the direct financial benefits. Interestingly, the London revenue figure was up just 59% year on year, while the European figure more than tripled, reflecting the relative maturity of the London operation relative to operations in much of the rest of the continent.
The Uber board met yesterday and approved proposed changes to the company’s governance, which limit Travis Kalanick’s power, commit the company to an IPO by 2019, open the door to an investment by SoftBank, and resolve some simmering issues among the board members. That’s a great step forward, and was followed by a somewhat bizarre statement from Kalanick welcoming the changes, which was rather odd given that his two appointments to the board late last week were widely seen as a petulant response to the proposed changes. Still, the changes should allow Uber to move forward on a more solid footing, with Benchmark apparently backing down from its lawsuit, Kalanick apparently on board, and therefore much of the recent drama starting to cool off. It would be great if the board could now focus on implementing all the other changes recommended in the Holder report and get on with transforming the company into one with a healthy culture.
The Information reports that Waymo is gearing up to offer the autonomous ride sharing service it previously announced sometime this fall (i.e. in the next month or two) but that its technology still has real problems dealing with some basic situations like left turns without human assistance. That’s a pretty fundamental problem and indicative of the state of autonomous driving even at companies as far along as Waymo is (generally further than others), and even in locales where it’s been testing for quite some time and therefore should have really good data. It’s not clear quite how Waymo is going to resolve that issue (neither making three right turns nor remote human control seem like workable long-term solutions). But bear this in mind next time you hear a car or tech company talk about imminent autonomous driving.
via The Information
This is a second piece today which serves as official confirmation of something previously reported, this time the news that Uber is shutting down its US car leasing business, which the Wall Street Journal was also the first to report early last month. Many of the details were in the Journal’s original report, but there are some new ones, including the fact that Uber will lay off 500 employees, or around 3% of its workforce, as a result. Uber also confirmed that the motivation is primarily financial, though it didn’t confirm the massive losses the Journal had originally reported and refers to again in today’s article. These changes pre-dated the arrival of new CEO Dara Khosrowshahi at Uber and are part of a broader pattern of re-evaluating loss-making enterprises at the company, something he is likely to embrace as he moves towards an accelerated IPO schedule.
★ Uber Loses License to Operate in London Over Bad Behavior (Sep 22, 2017)
Transport for London, the entity that oversees public transportation and taxi services in the UK capital, has refused to renew Uber’s license to operate a private ride for hire service in the city, citing several examples of bad behavior. It’s perhaps the most tangible sign yet that Uber’s toxic culture, disregard for regulation, and general willingness to do what it takes to win in the market have come home to roost. The timing is unfortunate given the ouster of Travis Kalanick and the recent appointment of Dara Khosrowshahi as CEO, but clearly stems from behavior that took place long before those recent changes. Uber has said it plans to appeal and Khosrowshahi has said both in communications to employees and in public on Twitter that the decision is in part Uber’s own fault, which is heartening. It’s important to note that this decision isn’t about ride sharing services in general but specifically about Uber’s bad acts, so Uber needs to address those specific concerns even as it makes its usual arguments about the benefits to society a service like Uber provides. This is an unusual situation for Uber to be in – being banned in a city where it’s well established and generally well regarded, without a broader ban on ride sharing services. If I were Dara Khosrowshahi, I’d be on the next plane to London to talk to TfL, understand exactly what the issues are, fix what still needs fixing, and promise to do much better in future. Losing its presence in a city like London could be enormously damaging to its business in the UK and Europe more broadly because so many people travel through London.
This isn’t huge news, and I think people who follow the transportation industry and autonomous driving technology closely would probably know this already, but it’s worth noting these comments from Alphabet subsidiary Waymo’s CEO on the timing of various applications of self-driving technology. He said at an event today that he sees trucking and ride sharing being the first applications for autonomy, and that either one might be the first to be commercialized at this point. That’s very much in keeping with the conclusions I’ve reached and what I’ve heard from various other industry players – the fact that trucking largely involves long distances and highways dramatically simplifies the driving task there and enables platooning of vehicles, all of which means it has a much clearer near-term return on the investment in autonomous technology than most other applications. Ride sharing, meanwhile, typically involves cars which have very high utilization rates versus private vehicles, and is often limited to a well defined geographic area, making the training and gathering of mapping data a more manageable task too. Of course, we still don’t know quite what the business model for either of these applications will be – whether a licensing of the technology, a direct participation or revenue sharing agreement for the ride sharing market, or something else.
The Wall Street Journal reports that Uber is planning to shut down its US car leasing business, which was apparently losing $9,000 per car instead of the $500 Uber projected it would lose when creating the program. It sounds like Uber might have around $800 million in cars leased through the program, which Uber apparently holds titles to in trust rather than on its books, and it may have to sell many of them and the associated leases to get out of the business. The program and this outcome are indicative of Uber’s enormously aggressive expansion strategy and the huge sums it’s sometimes incurred in poorly thought out initiatives which have ended up significantly worsening its losses. Though it’s most common to see Uber’s losses attributed to its subsidies in ride sharing itself, a good chunk of its losses are made in these other aspects of its business and could be cut back significantly as it focuses on more rapid progress towards profitability. I suspect cutting the leasing program in particular wouldn’t dent growth much but would certainly go a long way towards improving margins. It’s also likely another example of an area where Uber might well do better to partner with a small number of large, reputable firms rather than taking such a direct role in the operation – in general, Uber seems far less willing to partner than Lyft, which is arguably holding it back in some areas.