How Uber Became The World’s Most Valuable Startup

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Growth Story is a weekly podcast that breaks down the strategy and tactics utilized by high growth companies, in a short case study format hosted by Scott D. Clary (@scottdclary)

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Welcome to success story, the mostuseful podcast in the world, I'm your host Scott de Clary. The success Torypodcast is part of the hub spot podcast network. That's bout, podcast networkis the audio destination for business professionals, who seek the besteducation and inspiration on how to start and grow a business hub spotpodcast new work coasts act as on demand mentors to entrepreneursstartups and scale ups through practical tips and inspirationalstories, listen, learn and grow with a Hoppo podcast network at hob spot apodcast network. Today, I'm going to walk you through the story of Uberwe're going to go through their origin story where the idea came from how theygrew, how they became the largest evaluation highest valued start up inhistory at roughly seventy billion dollars, and also how they fell fromthat seventy billion dollar valuation. What happened, but also some of thestrategies that they've used to grow over the year, some of the growthstrategies, marketing strategies,...

...product strategies. This is a businesscase study. This is Uber's growth story, so this took place over a ten year span.As of two thousand and twenty Uber became the world's most valuable startup with a seventy eight billion dollar valuation, but what Made Uber sosuccessful? Is it just because they offer an APP that connects writers anddrivers? Is it novel or is there more to it than meets the eye? So I'm goingto walk you through what Made Uber such a successful company, I'm going to lookat three key factors: innovated solutions, their marketing strategy andthen their profitability, and why that was so important for them achieving theseventy eight billion dollar valuation. The Uber Business Model is verystraightforward. I'm sure most of us have taken a never at some point. Itmatches people who need rights with drivers who are willing to provide them.If you think that sounds pretty much like a traditional c cab or taxicompany you're right, there is a...

...hundred percent direct competitionbetween Uber and traditional taxi services. We have seen this in the newsagain and again and again taxis lobbying to stop uber from growing as acompany to stop lower from stealing their customers. We've seen it at theairports when the Uber stand is you know a hundred feet away and cabs areright outside the front door of the airport. It's a non stop battle, butUber is very. Very popular. Taxis are unfortunately, a little bit of a dyingbreed in most parts of the world, except where taxi organizations unionshave really strong footholds, and perhaps they swayed the government, butfor most parts of the world, Uber is very strong and they have huge hugemarket share, but let's bring it back to two thousand and eight when it allstarted. So the idea of hooper was born in Paris in two thousand and ant onTravis, Kalani and Garret camp were both at an annual tech conference lowweb. After the event, they were left with their transportation when theywere standing outside in the cold waiting for a cab. So an idea came what,if you could request a ride from your...

...phone and the answer to that would bethe service that we know is Uber. That was the big idea. Kalani and camporiginally wanted their idea to be a time shared limbo service than onecould access with an APP, but obviously that's not how it eventually manifestedafter waiting in the cold to went their separate ways. But camp was sofascinated with this idea. He went ahead and purchased the domain UberCapcom, so on. Two Thousand and nine camp started working on a prototype forUber Cab, while being the CEO of stumble upon in the same year's summer,clannach was finally persuaded to join as the quote. Unquote. Chief incubatorof Uber Cab by Camp Uber Cab was tested with only three cars in New York andthe following year. They officially launched in May so they went throughtheir ups and downs grew as a company, nothing too incredible to reallydiscuss between then and two thousand and fifteen two thousand and fifteen.Obviously, at this point they have a significant, significant brandrecognition. They have significant market share in July of two thousandand fifteen over became the most valued...

...start up when it was valued at fiftyone billion dollars after a funding round in two thousand and sixteen UBAraise another three point: five billion dollars from Saudi Arabia's wealth fun.However thousand and seventeen was the year when shit hit the proverbial fanfor Uber, and it was a difficult year. So controversies for Uber up until twothousand and seventeen, it was a pretty smooth ride. It was a great start upidea. They were growing significantly. Of course, their competition was legacy,cabs and taxis, which really were not priced to compete at all, because untilnow in history there was no competition for taxes or caps. So Uber had a prettyeasy run to start, of course, traditional start of growing pains.There was some, but still till seven, two thousand and seventeen they weredoing pretty good. Two thousand and seventeen is when controversies started.So in two thousand and seventeen, a female engineer called out the sexistculture in Uber and a blog post. Reportedly Uber's corporate culture washostile and sexist to people. The Post went viral. It caused many people to belaid off. As a result, Uber then held...

...an internal investigation, known as theholder investigation. Meanwhile, calenick resigned as CEO. He was CEO atthe time, do to shareholder revolt, shareholder push back. This directlyimpacted the valuation of Uber. In January, two thousand and eighteenUber's value was reduced from seventy billion dollars to forty eight billiondollars. Almost thirty billion dollars wiped off the face of theirorganization because of stuff that has happened in the organization thatwasn't good, that was sexist. That was not conducive to a positive cultureexcept in culture. This lost them a thirty billion dollar valuation, but itwas after Colani resigned that things started to turn around again and ofcourse I want to point this out. Colani was not directly at fault for thethings that were discussed in this block post, but it was generally feltamongst the shareholders that there was not enough done to get rid of thissexist culture at Ober, so insteps Dera...

Cosrou. He was announced a CEO in Mayof two thousand and eighteen, a D, Two thousand and eighteen. That was alsothe year that soft bank invested in Uber Soft Bank, investing it Uber Uber,gaining a powerful ally in a pack Anesia, as well as the fact that theold CEO Colani resigned, Dera new CEO stepped in this bump obers valuationback up to sixty two billion dollars in two thousand and eighteen, not securingthe previous run that they had had before all of this thousand andseventeen turmoil occurred. But it still is one of the most valuablecompanies in the world and to this day still holds that title. So now, let'sbreak down the secret to Uber's growth and why they were able to even hit thatseventy billion dollar evaluation so quickly. So how did Uber do it all well?Uber began as an idea and from that...

...idea grew into a billion dollar companythat has survived adversity and scandal, and that's not easy, because somescandal can kill and destroy a company and thirty billion dollars was wipedout, but they're still doing okay. So what actually led to Uber being able toweather the storm to grow to that billion dollar valuation, MultibillionDollar Valuation and also spawn a whole slew of Gig economy services based onthat same concept? Well, the main differentiator was an innovativesolution, so the design of the APP and service is the most important reasonwhy customers, Love Uber Product, lead, growth, product, lead, marketing, focuson building a great product and your customers will come and they willevangelize you. You can order a ride by simply pulling out your phone andtapping a button. The GPS on your phone shows you exactly where you are. Thedriver knows where you're headed since you're entering the address into theAPP ahead of time, so the driver can...

...calculate their trip their route. Inaddition, it already has your credit card information, so there's no needfor financial exchange between you and the driver compared to the traditionaltaxi industry. Just think about all the steps that have been removed. All thefriction so, for example, having to find the phone number for a taxicompany was already an obstacle. Afterwards, you had to speak to anoperator and provide your address and tax. You would pick you up, but theywouldn't know exactly where you're standing you wouldn't know where in thetaxi had arrived, you had to be waiting outside, because if you weren't waitingoutside is a good chance, you can miss the taxi. Additionally, you had to usea payment method that you had on you at the end of your ride, so that meant youhad to have cast on you or you had to have a credit card on you, which arenot huge issues, but it's an extra step to provide the best possible service.Every company should minimize the amount of steps their customers have totake with its technology. Uber offers basic services of connecting people andpayment on demand to many. The...

...technology represents the GIG economyand technology mediated by on demand services. This is what Uber innovatedthey weren't just a ride. Sharing Company. They were innovating the waythat consumers and service providers can connect by eliminating friction,and that was really what the Uber Difference was. How did Uber actuallygrow as a company, because it's great, if you have a good product, but ofcourse it's important to actually grow and market yourself, Uber didn't focuson traditional marketing because their product was so good and so innovative.They focused on word of mouth and there is no better advertising than word ofmouth. It is one of the main reasons why you don't see ads for starbuckseverywhere. Word of mouth is more than enough to work for them to grow theirbrand. Of course, there's some advertising, but realistically, if youdo have an incredible product or service or brand people talk about youwith over being a new start up, it didn't have any awareness, any brandawareness. It encouraged its intial...

...customers to spread the word by givingthem a referral bonus. So their friends got their first ride free while theyget credit for the referral, as well, so by creating a great product andaligning that with a referral system or an affiliate system. If you want tocall it that, that's how Uber really spread word about their service andlastly, they had an incredible model set up so that they partnered withdrivers. Now this is a point of contention, because a lot of peoplethink that drivers on Uber should be considered employees, but it would besilly to think that this wasn't part of their success, so their strategy waslabeling themselves as a technology company, not a transportation servicebecause of this, their drivers are treated as independent contractors.Accordingly, Uber Drivers are not considered key resources in Uber'sinternal processes like employees rather key partners. OOver driverswould need to pay more taxes if they were over employees. Uber would have topay more attacks on the fact that they had hired all these people and it wouldbe less profitable for over, since...

...their clients would also have to pay ahigher price to cover all of these taxes and all of the things that comewhen you hire an employee. So they thought if they can have independentcontractors, not pay as many costs in actually hiring these employees. Theycould pass those savings on to the customer that could give them acompetitive advantage, which it did, and one more point that I wanted tobring up. Uber did include some quote: Unquote stunt marketing as they grew,so it wasn't like they didn't do any marketing at all. Uber Introduces NewService, for example, they want to introduce Uber eats, or they want tointroduce a new level of luxury car to their fleet. They often include somegimmicks when they launch a new product or a new service on their APP. Theyconstantly pull off herky stunts viral stunts. For example, they've donekitten delivery via Uber they've raffled off chances for passengers toget a ride with celebrity drivers.

These are all viral stunts that Uberdoes whenever they revamp some part of their platform, and these tactics workespecially well in the age of social media, where these types of thingscreate Buz, there's a viral factor, and these things are shared internationally,and this is also given uber massive exposure for new launches within theexisting product. So those are some of the ways that Uber has achieved thismultibillion dollar valuation. Of course they were innovative. They hadan innovated solution, they reduced friction, they made it easier for thecustomer. They focused on having a great product that led to word of mouthevangelism and then, of course, they pulled a few stunts and tapped intoviral marketing tactics that allowed people to share fun things that theywere doing to reinforce the cool new product launches that they wereimplementing and just a few final words on Uber Uber has grown much morequickly than the traditional taxi service, due to mainly it's use oftechnology, but the company's rapid...

...success is rooted in the fact that itwas the first to develop a quote: Unquote, destructive business modelthat took advantage of emerging technologies and completelyrestructured how we approached an entire industry like the taxi and CabIndustry.

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