During His Ongoing India Visit, Khosrowshahi Touched Upon Uber’s Future Investments, Regulatory Roadblocks And War With Waymo
Uber CEO Dara Khosrowshahi is currently on his maiden visit to India, since joining the ride-hailing company in August last year. As part of the two-day visit on February 22-23, Khosrowshahi will be meeting government officials, regulators, business leaders as well as company employees to discuss the cab aggregator’s current offerings and future plans.
Currently present in 29 cities across India, as opposed to Ola’s 110 city coverage, Uber’s focus at the moment is to perfect its products and services for the Indian market, said Khosrowshahi during a media interaction at the country’s capital earlier today.
He stated, “As we think about our city coverage in India and scaling the product, one real mistake some companies make early on is that they try to expand before perfecting their product. At the moment, we are focussed on quality, which means there are zero defects in terms of driver-partner experience, ride experience, the match rate that we have achieved on our UberPOOL product, etc.”
According to him, while the cab aggregator’s India coverage might be somewhat limited, it is not too broad that Uber would lose focus of its immediate goals.
Speaking on the rivalry with Ola, Khosrowshahi added, “I am not expecting anything to change as far as the competitor dynamic with ola is concerned. I respect them – they are a very strong competitor. Competition makes us better and makes all better as it results in better partners, better products for consumers. And it has played a part in how our service has developed here. We are confident about our position here and we intend to keep it that way in terms of investing in people and building our services.”
To bolster its operations in its second largest market after the US, Uber has adopted a partnership-based strategy. In the coming month, Khosrowshahi added, the company will be announcing partnerships with a number of auto players.
He went on to say, “Currently we are in a partnership with Toyota, with the aim of developing their autonomous car concept along with our software. We will be announcing a number of new partnerships in the coming months.”
Talking about how integral the Indian market is to Uber’s global expansion plans, the CEO said, “I have been in the job five months. When I was thinking about what I want to accomplish in the first six months, I wanted to make sure I came to India. Because when I think about Uber and the breadth and depth of our products, one of our core differentiator is how global our product is. In India, our greatest value here will be to continue and grow and invest in our product and business.”
“We operate in countries that represent over 80% of the world’s population, and when we look at the Indian market we consider it a core market for us. Not only in the context of where we want to be in 10 years but also if you can succeed in India, given how demanding the Indian consumer is, it can be a model for us for the next 6 Bn consumers who are going to have exposure to our product,” he averred.
As stated by Dara, one of Uber’s core focusses when it comes to the Indian market is UberEats. He said, “UberEats is one of the fastest growing services in the world. UberEats in India especially is very fast growing and we are already present in nine cities. And we are expanding very quickly and so we continue to invest in the Indian market.”
Uber To Invest Aggressively In Southeast Asia
Making his first Asia trip as the CEO of Uber, the former Expedia Chief Executive Officer also visited Japan earlier this week, where he met Japan Prime Minister Shinzo Abe. During a media interaction in Tokyo, Khosrowshahi reiterated the company’s commitment to emerging markets across the globe.
Adding that Uber would be willing to forge alliances with local taxi companies to strengthen its presence in countries where it has less than 1% market share, he said, “I saw Japan as an incredible opportunity, and when I asked the team why wasn’t our Japan business larger, I started learning the history of our approach to Japan, and it was an approach that frankly didn’t work. It’s clear to me that we need to come in with partnership in mind, and in particular a partnership with the taxi industry here.”
During today’s event in Delhi/NCR, Khosrowshahi highlighted Uber’s plans to invest aggressively in Southeast Asia, in terms of marketing, subsidies, etc.
He explained, “We are cautiously optimistic. Part of my history of the CEO of Expedia was driving growth organically and transactionally. When I look at Uber 10 years from now, I am hoping that we will have 80% of our growth through organic means and some growth in transactions as well.”
This, interestingly, is in sharp contrast to SoftBank Vision Fund CEO Rajeev Misra’s earlier statement that Uber’s current focus is on its key markets including, the US, Europe, Latin America and Australia.
Misra has been nominated to join the Uber’s board, as part of the massive $9.3 Bn investment the Japanese conglomerate made in the cab aggregator recently. The deal has, in turn, made SoftBank the largest shareholder in US-headquartered Uber.
Inside Dara Khosrowshahi’s Maiden India Visit
As part of his first visit to India, Dara Khosrowshahi will also participate in a session with the students at IIT Delhi.
Commenting on the matter, Uber India and South Asia President Amit Jain said, “We are really excited to welcome Dara in India. This is a key market for Uber globally, and Dara’s visit is another testament to our commitment to serving riders and driver partners in the country.”
The company’s CEO is keen on discussing the ways Uber can serve riders, drivers, and cities in the Asian landscape, Uber spokesperson Chris Brummitt had stated earlier.
Dara Khosrowshahi took over the CEO position in August 2017, after the company’s founder Travis Kalanick stepped down from the CEO job under investor pressure in June.
Kalanick’s resignation came after a year of scandals and currently he is also being sued by early investor Benchmark Capital accusing him of fraud, breach of contract and breach of fiduciary duty.
At the time, the company was fighting the battle on both internal and external fronts. Particularly, in India, various state governments have long been pushing in for imposing new rules on cab aggregators to make a level playing field for the other cab aggregators and Kaali-Peeli taxis.
Not only this, rival Ola also joined hands with Flipkart to establish a lobby group called Indiatech, thereby pulling in the government to frame laws favourable to the local companies.
Since then, Dara Khosrowshahi has been on the offensive to improve Uber’s image. In fact, within days of joining as the new CEO, he made his clear that his intentions were to bring a cultural shift in Uber.
Uber And Its India Bet
Founded in August 2008 by Travis Kalanick and Garrett Camp, San Francisco-headquartered Uber was last valued at $48 Bn, post its fundraise from SoftBank. Globally, it is present in over 600 cities across 80+ countries.
Globally, Uber claims to have 300K driver partners in its ecosystem at the moment. According to the current CEO, the number could increase by 5x to 10x over the next 10 yrs.
India currently plays a pivotal role in the cab aggregator’s global expansion plans and is Uber’s largest market outside of the US, despite intense competition from homegrown rival Ola. In terms of revenues, the Indian market accounts for around 10% of the company’s global revenues at present, said Khosrowshahi earlier today.
As part of their continued focus on India, the cab aggregator promised to infuse a substantial portion of the $3.5 Bn it raised from the Public Investment Fund of Saudi Arabia into Uber India in 2016.
Later in July last year, the company poured $7.99 Mn (INR 51.64 Cr) into Uber India as per filings with the Registrar of Companies. This infusion occurred in May 2017 as per company filings with the MCA.
Speaking on future investments in the Indian market, Dara Khosrowshahi told the media today, “The investment is going to continue. If you look at our company, we are an alternative to taxis. But we want to become an alternative to car ownership. Car ownership turns into car sharing and that can solve all kinds of problems-traffic, pollution-which are real issues in India with the population urbanising more and more. And that’s worth a long term investment for us.”
Since June 2016, the company’s presence in India has grown 2.5x in terms of the number of trips as well as total merchandise volume, as claimed by Uber India head Amit Jain in an interview last year.
The cab aggregator has launched a number of value-added services, including UberPOOL, UberPASS, which enabled cab riders to avail discounted fares and a variety of exclusive benefits in selected metro cities.
Uber has also forayed into digital payments and announced the integration of Unified Payment Interface (UPI) in July 2017. Another segment that the cab aggregator is aggressively trying to gain a foothold in is online restaurant search and food delivery. To that end, it launched UberEATS back in June 2017.
Later in November, it announced a partnership with Mahindra, with the aim of deploying hundreds of electric hatchback e2oPlus and electric sedan eVerito on Uber’s platform in New Delhi and Hyderabad.
Around the same time, Uber also rolled out features like ‘request for a guest’, ‘call to ride’ and AI-enabled offline search facility for its Indian users. To challenge Ola in the Indian market, Uber is also in talks to relaunch its auto services in Bengaluru and Pune. Last month, reports surfaced that the company was set to launch its UberMoto services in Amritsar and Kanpur.
Still Too Many Skeletons In Uber’s Closet
Despite its efforts to gain a stronghold in the Indian cab aggregator market, Uber’s journey has been fraught with challenges.
Regarding the recent $245 Mn settlement with Alphabet-owned Waymo, Dara said today, “I look at the Waymo settlement, not necessarily as a break from the past. But as a removal from distraction. I want my team to focus on business and commercialising the technology. The Waymo case was a very significant distraction for us. The settlement has actually opened doors for an constructive relationship with Alphabet (Google).”
Adding to its woes, Uber lost more than $1 Bn two quarters in a row last year. The ride-hail company widened its net losses to $1.46 Bn in Q3 of 2017, up from $1.06 Bn in the second quarter.
As per its latest financial results, the cab aggregator reported losses of around $1.1 Bn in the fourth quarter last year. In the case of India, total revenue reported in FY15 was only $3 Mn (INR 18.7 Cr) higher than losses incurred.
On the regulatory roadblocks that the company has had to grapple with in India, the UK, Italy and other markets, Dara stated, “We are a global business. We have responsibility to local governments and to create a dialogue. One of my responsibilities is to increase the dialogue. It encompasses a back and forth and compromises as well. we are having a good conversation with UK authorities and with governments all over the world.”
“What is working for us is that every country, every city wants transportation as a service. They want to make transportation available to more and more citizens at a good price and also opportunity for work,” he further stated.
In the last two years, it has also left some of its biggest emerging markets. In August 2016, it sold its China business to rival Didi Chuxing. Similarly in July last year, it called it quits in the Russian market, as well.
The cab aggregator announced a $3.7 Bn merger deal with Russian rival Yandex.Taxi, which is owned and operated by Baltic search engine giant Yandex. Meanwhile it is also locked in battle in Southeast Asia with Grab and lost market share in the US to rival Lyft last year post a scandalous 2017.
With Indian rival Ola gearing up to set up operations outside India, having already launched in Sri Lanka and Bangladesh, Uber will likely face tough competition even in established markets like Australia.
Bogged down by burgeoning losses and a tarnished past that refuses to vanish, how successful Uber is in its ambitious expansion plans, under the leadership of Dara Khosrowshahi, remains to be seen.
The article was written with help from Shweta Modgil and Diana Chingakham.
