Uber’s strategy teardown: The giant looks to an autonomous future, food delivery, and tighter financial discipline
A must-read: CB Insights put together a brilliant overview of Uber as it operates today and its (possible) plans for tomorrow.
The $68B gorilla continues to expand globally in places like India and Brazil and is still chasing autonomous driving. However, it will have to stem its losses ahead of an eventual IPO, which may lead to rollbacks in contested regions like Southeast Asia.
Uber is known for many things, but one thing that has remained constant is its ability to steal the spotlight. Once the darling of tech media, one of Silicon Valley’s most lauded growth stories, and the progenitor of an entire category of on-demand startups, Uber’s tumultuous 2017 has seen the company’s fortunes shift almost overnight.
Scandal after scandal brought accusations of everything from misogyny to intellectual property theft. This has turned the executive ranks of the world’s most valuable private startup into a revolving door. An exodus of senior leadership was capped by an investor revolt against co-founder and CEO Travis Kalanick, who had been virtually synonymous with the company and its famously aggressive culture.
New chief executive and former Expedia CEO Dara Khosrowshahi is just weeks into his new role, but faces pivotal decisions on how best to repair the company’s battered image and right the ship strategically. With a stated target of taking Uber public within the next 18-36 months, Khosrowshahi must strike a balance between financial discipline while also maintaining the growth and opportunity narrative that seduced investors and helped give Uber its lofty valuation.
Under new management, Uber’s strategies in both international markets and key fields of research like autonomous vehicles are open to revision. Key takeaways from our analysis focus on the company’s major initiatives:
* Balancing “paying the bills” and “big shots”: Uber’s new CEO committed to both instilling financial discipline ahead of a potential IPO and remaining invested in major forward-looking initiatives (such as autonomous vehicles). Aside from the considerable task of repairing the company’s damaged image and culture, finding a balance between these goals will be his major challenge going forward.
* Uber rethinks global strategy: Uber’s growth ambitions have begun shifting away from the pugnacious, attack-on-all-fronts strategy and indiscriminate spending of its earlier years, although the company’s latest financials continue to show a growing top-line as well as considerable cash burn. Our jobs listing analysis reveals that the company is still actively hiring in India, Brazil and Mexico. However, with a stated vision of taking Uber public within the next 18-36 months, Khosrowshahi may look to further narrow the focus on Uber’s efforts abroad to rein in money-losing efforts. Southeast Asia is one hotly-contested region where the company is spending heavily against the well-financed Grab and Go-Jek.
* Recent dealmaking focuses on divesting costly regional operations: Uber has withdrawn from its China and now Eastern European operations, retaining a significant stake in both while ceasing involvement in day-to-day operations. The company has now established a template that it can return to should it decide to draw down losses in other geographies.
* M&A to date has emphasized mapping and AI/AVs (autonomous vehicles): A late entrant into the now-fierce race to develop AVs, Uber has turned to M&A to bridge the gap in related competencies such as mapping and artificial intelligence. Its highest-profile deal to date was its acquisition of self-driving truck startup Otto, headed by Google Self-Driving Car (now Waymo) veteran Anthony Levandowski. That acquisition has led the company into a potentially devastating lawsuit with Waymo.
* AI, AVs remain a priority: Despite the upheaval in the wake of Waymo’s lawsuit, Uber is still hiring actively for its autonomous vehicle development group (Advanced Technologies Group or ATG). The unit comprises 6% of Uber’s total job listings, with the company seeking talent in the white-hot field of autonomous vehicle engineering. Uber also added a prominent AI researcher to lead a new ATG self-driving team. However, the unit’s long-term future is in doubt, with the Waymo lawsuit a looming threat and ATG requiring a sizable and sustained financial investment.
* Uber scales back other side ventures, focusing on food delivery: Outside of its core ride-hailing business, the company has retrenched in its once-hyped UberRUSH courier service effort, focusing on meal delivery platform UberEATS instead. The company continues to push UberEATS into new markets. Uber is also pursuing significant talent to support its food delivery service; 14% of the company’s open job listings mention UberEATS in the title. Uber has also recently launched its Freight service targeting the trucking brokerage market, but the new initiative has yet to gain meaningful traction.
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- Uber looks to the autonomous future.