The Uber success

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Ever heard of Travis Kalanick? Travis Kalanick loves, adores and worships his own company Uber, which was founded in 2009. Being founder and current CEO of Uber, Mr. Kalanick excels at escaping sticky situations. In 1998, his first company Scour – a peer-to-peer file exchange platform - was sued for $250 billion (!) because of copyright infringement. Mr. Kalanick settled and moved on to start Uber – a service that allows people to order a car with chauffeur via smartphone app. In December 2013, Uber raised $1, 2 billion and is currently valued at $17 billion[1]. Not bad for a start-up…

Headstrong

So what is Uber? It’s not a taxi service – or is it? Well, Uber first and foremost is an “app that connects you with a driver at the push of a button”.[2] Uber is one of the fastest growing digital tech companies in the world and is currently available in 39 countries. It cleverly benefits from an established social media technology and a current trend to digitalize something that has been physical so far. Thereby, it follows the highly successful Airbnb business model of sharing goods. Uber simply brings people together. The driver receives eighty per cent of the fare while Uber takes the remaining 20%. Anyone with a suitable car may participate. You can make money on the side without requiring a taxi license or any other qualifications – apart from being able to drive. The results are staggering: an Uber trip is much cheaper (around 25%) than a conventional taxi ride. The problem: taxi cartels are not happy.

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The company has been dealing with accusations in several countries worldwide of illegal taxi operations. Uber received “cease and desist” letters in its hometown San Francisco from San Francisco Municipal Transportation Agency demanding it halt operations. But Uber is clever, or rather, Mr. Kalanick is. In the U.S capital, Washington D.C., Uber applied a particularly sneaky measure to free itself from legal restrictions. When council woman Mary Cheh proposed a transportation bill that would make Uber five times more expensive than a normal taxi ride, Uber turned to the internet community asking for support. And users delivered: 50,000 emails and 37,000 tweets later, Mrs. Cheh “forgot” about the bill and instead formed a new one that favoured Uber’s service. In Chicago, Uber faced similar pressures on its business model and threats of extra charges, but pulled the same trick – with success. “When we get to a critical mass, it becomes impossible to shut us down,” says Mr. Kalanick.

Changing personal mobility?

It seems courts are determined to shut down the service in order to protect taxi business regulation. In January this year, a court in Brussels banned Uber from all streets.[3] All drivers found carrying private passengers are fined €10,000. It will be interesting to see how politicians, taxi cartels and citizens find a way that’s satisfying to everyone. Uber neither owns vehicles nor employs drivers – it simply provides the technology to connect the two. Could this app change personal mobility for ever or does Uber’s success exemplify the internet as a fantasy market with utopian capital evaluations?

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