Uber posted a loss of $ 5.9 billion in the first quarter of 2022.
Philippe Pacheco | AFP via Getty Images
In this weekly series, CNBC will cover the companies that created the first Disruptor 50 list 10 years later.
Creation Uber It can be compared to the previous disruptive innovation of supermarkets in the wake of the 2008 financial crisis.
In 1930, in the early days of the Great Depression, Michael J. Karen leased a vacant garage to Queens, New York, and built King Kullen. This is the first supermarket in history, “Resource integration” model That created the Uber ecosystem.
Like King Kullen, Uber is the result of the “smart resource integration” of its founders, serial entrepreneur Travis Kalanick and Garrett Camp.
At the time of Karen’s innovation, none of the existing large dry grocery chains, including two former Karen employers, Kroger and A & P, were thinking of doing what he did. But the benefits were clear and the idea was quickly understood — the definition of a disruptive innovation textbook.
Unfortunately for Uber, that’s not the only comparison.
King Kullen’s business model proved to be easy to duplicate, and in the end the big chains did just that. Today, Kroger is America’s largest supermarket chain with a domestic market share of 16.1%. King Kullen remains a local chain.
Since the founding of Uber, many competitors known today as the gig economy have emerged, including Lyft for ride hailing, DoorDash for food delivery, and convoys for freight and trucks.
For the past 10 years Uber faces many obstacles, Both internal and external. These include allegations of sexual harassment, numerous firings related to work culture investigations, and allegations of distribution of medical records of rape victims. There are also compelling videos and emails from former CEO and co-founder Karanick. In addition, there was political pressure and conflict with regulatory agencies.Union tensions, court struggles alphabetRapid losses and conflicts among investors.
And in 2017, the company Expedia Since 2005, it has been recognized for expanding its global presence through several online travel booking brands such as Expedia.com, Hotels.com and Hotwire.That decision ended a long quest for Uber to replace it. Travis KalanickWho resigned Following the shareholder rebellion He made a name for himself as one of the most prominent and infamous founders of Silicon Valley startups. Like Elizabeth Holmes of Theranos and Adam Neumann of WeWork, his rise and fall at Uber has become the subject of television dramas.
For most accounts, Karanic Dedicated to maniac about Uber.. However, when he resigned from the board of directors in 2019 and sold all shares of the ride-hailing company, Karanick broke his last relationship with the co-founded company. Two years later he was on the New York Stock Exchange Company IPOAlthough he wasn’t working with company executives.
The company quickly gained over $ 80 billion in valuations, and then it fell like a stone. This experiment exposes companies with a large assessment stating that S-1 filing may not be profitable, and similarly large emotional changes between knowledgeable investors and retail buyers. Brought about. At the time, Josh Brown of Ritholtz Wealth Management described it as a “moment of time up.”
Of course, even Brown couldn’t have predicted that the moment could actually come a year later, in the form of a pandemic that puts almost every business in survival mode.
Ridehaling companies have struggled with supply and demand as the Covid-19 kicked the driver off the road. Uber had to rely on incentives to get the driver back. It seems to be stable for the last few months, War in Ukraine Caused a significant rise in fuel prices. Analysts were afraid that companies would have to spend millions of dollars to keep their drivers.
“The need to increase the number of drivers on the platform is neither new nor surprising … we have a lot of work in front of us, but this is a rolling machine,” Khosrowshahi recently called. The investor who spoke at the conference. The company expects to continue without “significant incremental incentive investments.”
Company Recorded quarterly profit for the first time in history Late 2021, but then Posted a large loss This is due to the investment in the first quarter of this year.
During his tenure at Khosrowshahi, the company has made significant investments in the grocery, beverage and convenient delivery segments through acquisitions such as alcohol delivery services. Drizly Same as last February PostmateAfter failing to negotiate to acquire food delivery service Grubhub.Uber shares fell 4.3% in the news yesterday Amazon To prime subscribers One year membership of food delivery service.
By concentrating acquisition efforts on the Eats segment during the pandemic, the company was able to retain part of its business despite a decline in travel. Investors believe it will also continue to move stocks forward.
Another important factor in the future is the regulatory environment of the company.
Parliamentarians are promoting the reclassification of gig workers as full-time employees to ensure minimum wages, benefits and more. However, by classifying drivers as contractors, companies can avoid the costly benefits associated with full-time employment, such as unemployment insurance.
Gig economy companies, including Uber, temporarily won in California in 2020, with voters approving Proposal 22 by majority vote. The voting bill effectively exempted some gig economy companies from the state’s recently enacted legislative bill 5, which aims to classify their workers as full-time employees.
But as far as the market is concerned, Uber really has one top-priority goal, which has become an immediate goal. It is to generate “meaningful positive cash flow” for the full year 2022.
Khosrowshahi says Uber is on track to do just that.
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