Summary List Placement
Since he took over as CEO of Uber in 2017, Dara Khosrowshahi has made it a priority to get the ride-hailing giant to turn a profit. The company has yet to do so in even a single quarter, leading some to question whether Uber is destined to lose money forever.
Uber says that’s not the case. Despite the challenges presented by the coronavirus, the company expects to hit a measure of adjusted profitability (earnings before interest payments, taxes, depreciation, and amortization) by the end of this year.
To move Uber closer to that goal, Khosrowshahi has been slimming the company down and narrowing its focus on the services and markets he believes have the most potential.
These are the pillars of Khosrowshahi’s cost-cutting strategy.
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Reducing discounts and incentives
In its early years, Uber focused on growth above all else. To attract as many riders and drivers as possible and fend off competitors, Uber offered low prices, discounts, and bonuses.
But as Uber and Lyft have solidified their positions as the US’ ride-hailing leaders and attracted more financial scrutiny following their 2019 IPOs, both companies have raised prices, lowered driver pay, and cut back on discounts and incentives.
“The era of growth at all costs is over,” Khosrowshahi said last year.
Exiting markets where it can’t win
To limit the number of price wars Uber has to fight, Khosrowshahi has pulled the company out of countries or regions, including Egypt and Southeast Asia, where he doesn’t see a path to becoming one of the leaders in ride-hailing or food delivery, while investing in competitors that are in a better position to succeed.
That gives Uber the potential to benefit from the growing popularity of on-demand rides and deliveries across the globe, while limiting costly battles with well-funded rivals.
Read more: Read the pitch deck that Uber founder Garrett Camp created for the ride-hailing giant back in 2008 – before the company became the $120 billion giant it is today
Selling off or shutting down secondary businesses
In 2019, Khosrowshahi laid out a vision to turn Uber into the “Amazon of transportation” — the go-to option for people who want to travel nearby or order food, groceries, or other items from a local business. At times, the company has also expanded beyond transportation into areas like credit cards and short-term staffing.
But of late, Uber has scaled back its ambitions. In 2020, the company sold its bike and scooter business to Lime, its autonomous-vehicle unit to Aurora Innovation, and its flying-taxi project to Joby Aviation.
Bringing in outside investors to fund long-term projects
While the vast majority of Uber’s revenue comes from ride-hailing and food deliveries, the company also has a logistics app that allows shippers to find truck drivers who can haul their goods from their warehouses to stores. Last year, Uber sold part of its logistics business, Uber Freight, to Greenbriar Equity to help fund …read more
Source:: Business Insider