Is the sky falling in on tech darling Uber?
5 min read
23 March 2015
News that Uber’s CFO has thrown the towel in, the company’s Paris offices have been raided and CEO Travis Kalanick is the subject of a criminal indictment in South Korea begs the question: can Uber, even with all of its financial firepower, weather the storm it is currently embroiled in.
It’s one of the fastest-growing technology companies in the world, fuelled by the popular sharing economy and surging proliferation of smartphones. Super-charging this expansion is the $5.8bn worth of equity and debt funding Uber has raised, from the likes of Goldman Sachs, Google Ventures, Kleiner Perkins Caulfield & Byers, Jeff Bezos and the Qatar Investment Authority.
It’s aggressive business strategy has ruffled a great deal of feathers and knocked a few noses out of line, but for a long time this did not seem to be causing much of a problem.
Now, the mounting criminal investigations and hard to bury PR nightmares might just be proving much for a business last valued at $40bn at the end of 2014.
One of Uber’s biggest problems throughout its history has been its service complying with local regulation. Many countries and cities have pushed back against Uber, accusing it of operating an illegal taxi firm.
Uber’s service is divided in to a number of categories, with its recent UberPop addition meaning that drivers do not have to have professional licenses to become an Uber operator. This low-cost service was recently banned in Germany after a the Frankfurt District Court decided that it violated transport laws. A similar investigation saw Parisian police conduct a raid on Uber’s offices there – described by Kalanick as “intimidation” due to the amount of officers sent.
Its strife in South Korea stems from authorities there also believing Uber operates as an illegal taxi operation. Kalanick has refused to enter the Asian country to stand trial, a set of affairs which could lead to an arrest warrant being served.
Read more about Uber:
- Taxi app Uber declares it can create 50,000 jobs across Europe
- Google’s rival Uber service a legal row looking to erupt
- 5 things Uber can teach UK businesses about digital customer service
However, perhaps its most worrying recent development came when CFO Brent Callinicos decided he’d had enough of the Uber roller-coaster and was quitting to spend more time with his family.
As the man who had helped Uber raise over $5bn after joining the the company in 2013, it was a surprise that Kalanick had not managed to retain his services ahead of a lucrative IPO (initial public offering).
Whether you like Uber or not, use its services or avoid them like the plague, its growth strategies are hard to call anything else than aggressive. Stories have ranged from booking and then cancelling rides on competitor platforms (likened to attempting to crash a server) to firing a driver who dared to re-tweet a negative article about the firm.
Bloggers and tweeters the world over have also never been afraid to vent their fury against the business.
— Simon Chiu (@geetfun) August 26, 2014
There was also the time the company executive Emil Michael suggested it might be wise to hire investigators to dig up dirt on journalists being critical about Uber.
In an era of growing convenience and lack of brand loyalty, Uber has to be careful that, regardless of its affordability, customers could begin to desert its service very quickly. It operates in a heavily congested market, populated by the likes of Hailo, GetTaxi and Kabbee – to name but a few.
News that Indian investor Times Internet has just ploughed yet more capital into the business in the form of a “strategic investment” shows that institutions still place value on its underlying technology, but it will be useless if no consumers remain.
The next year will serve as an interesting period for Uber, when its planned growth in both existing and new regions continues and rumours of an IPO continue to intensify. The business will need to tread carefully when it comes to marketing, driver recruitment and local regulations or all that hard work by Kalanick could be for nothing. Reputation means a great deal in today’s world, just ask Wonga.
Let us know what you think about Uber’s future in the comment box below.