One Big Thing
Grab and Uber, two of the world’s biggest car-booking apps, are close to signing a deal that would result in the US company pulling back in south-east Asia in return for a more than 20 per cent stake in its Asian rival, said two people familiar with the matter.
I’ve been critical of Uber’s culture and leadership.
But under new leadership, Uber deserves credit: it is getting stronger by doing less.
With billions of investor dollars, Uber spent years fighting a global ridesharing war. To capture market share, they would dispatch operations teams, subsidize fares, and compete like hell.
The problem with this approach, though, is that each new international market was essentially a new business. It turns out that, in ridesharing and other businesses, local customs, culture, and experience matter. Uber could not easily port its SF model to, say, Singapore.
Rather than continuing its slow bleed, Uber has made a series of critical decisions to consolidate its operations. In exchange for substantial ownership positions in its competition, Uber has exited contested, expensive markets in China, Russia, and now SE Asia.
Although it is hardly the chest-beating “take on the world” approach, Uber’s consolidation does two important things: 1) improves financials and 2) improves product focus.
As Bloomberg notes, Uber has spent nearly $11 billion in ten years. They have also generated an enormous amount of revenue (bookings were ~$37 billion last year). As Uber approaches an IPO, it needs to stop the slow financial bleed. Consolidation helps its financial statements.
Because each new market requires unique work — operations, design, technology, outreach, promotion, branding — Uber could not have a great product everywhere. Since it built its core product for American cities — or, more generally, cities that have roughly similar characteristics — Uber can now redouble efforts on its primary, substantial value: technology, financials, user experience, and adjacent verticals (like Uber Eats, a fast-growing operation).
Every day, the best businesses think about improving their financials and improving their product. These issues do not make flashy headlines, but they are foundational for success.
After many years, good on Uber for making more by doing less.