Uber Business Model

10/9/2020 Uber Business Model - 1 Platform Attacking New Markets
Home » Business Models » Uber Business Model: How Uber Makes Money
Uber Business Model: How Uber Makes Money

Business Models / By Gary Fox
In this post, you will learn about the Uber business model. I’ll cover how Uber works,
how Uber makes money, Uber’s strategy and how they harness their platform
technology to expand into new markets.
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https://www.garyfox.co/uber-business-model/ 1/19
What Is Uber?
Uber is an on-demand ride service that connects passengers with drivers of cars
through an app. The Uber platform connects drivers with people that are looking
for a ride.
Anyone with a driver’s license, a new car and that has no traffic tickets can become
an Uber driver. People simply hail an ‘Uber’ via an app on their phone. Uber finds a
driver, ‘hails them’ and takes care of the whole process including payment.
The whole system works on simplicity, convenience and ease of use for both parties
– driver and passenger. However, underlying this simplicity is a sophisticated set of
technologies. I’ll take you through the technologies, the Uber business model and
their strategy.
SECTIONS
Uber Business Model

Uber Business Model Analysis
Uber Business Strategy
First, let’s take a look at how what made Uber successful, its ride-hailing service.
How Does Uber Work?
Uber works as a car-for-hire service, in other words, people use their personal
vehicles to offer rides through the Uber service to people who are looking for
transport.
First of all, Uber is not a taxi service. Uber drivers cannot simply pick up riders off
the street. Uber works as a car-for-hire service, in other words, people use their
personal vehicles to offer rides through the Uber service.
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Uber benefits from smartphone technology. Both the person who wants and Uber
and the driver use the app. Both use the smartphones technologies and this is
critical to their business model.
The app (the Uber platform), takes care of everything, from the initial ride-hailing
through to the payment process. When a person needs a ride, they use the app to
tell Uber their pickup location.
The Uber app hooks into smartphone technologies such as geo-location and
integrations with payment gateways to process payments (in other words it’s
cashless). The system, called “RideCheck,” also uses the GPS, accelerometer,
gyroscope, and other sensors on the driver’s smartphone to check for irregular
activity, like an unexpected long stop, or a car crash.
The Uber business model relies on ease of use for the value proposition. But, there
is much more under the hood of their platform that makes Uber so much more
interesting.
Before moving onto the business model let’s take a look at some of the big
numbers and key facts about Uber.
Quick Facts On Uber
Headquarters: San Francisco, US
Founded: 2009
Funding rounds: 23
Funding: $24.7B
Ride-hailing market: US$216,810m in 2020
Ride-hailing user penetration: 15.4% in 2020 
Uber’s share of ride-hailing: 69.2% Get Notifications ×

Average driver income per month: $374
No of Uber drivers: 3.9M
Annual number of rides: 5.22Bn
Monthly Active Users: 103M
Avg monthly trips per active Uber user: 5.5
No of Uber Eat users: 15M
Uber Eats share of global meal delivery service: 29%
Since Uber’s conception, it has grown to be a major force in the transportation

industry and has now started to harness the power of its platform to disrupt other
markets. Let’s examine Uber’s core business model to understand how it’s able to
move easily into other markets.
What Is Uber’s Business Model?
The Uber Business Model is a two-sided platform that

connects drivers with customers looking for a ride using their
mobile app. The app makes it easy for drivers to find the
person who wants the ride.
The Uber Business Model
Uber Business Model Canvas
The Uber Business Model is built upon its digital platform. Like other platform
business models e.g. Airbnb, Apple App Store or Amazon they rely on creating
demand on both sides of the platform – the supply-side and the buy-side.
There are four main types of platform models:
Collaboration
Orchestration
Creation
Matching
The Uber platform provides a matching service. As an example, it helps complete

match driver with someone wanting a ride. Or in the case of Uber eats, a three-
sided market, it matches someone who wants to order food with a restaurant and a
delivery method.
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What underpins the Uber business model is the technology they employ to identify
where people are using Google maps API (on the app) and match this to a driver
who is nearby. Additionally, they have a dynamic pricing system that adjusts pricing
according to demand in an area.
What Is Uber’s Value Proposition

Uber’s value proposition is based on convenience for the rider, and for the drivers
and easy way to make money at times that are convenient to them.
One of the most important outcomes of developing a business model is the value
proposition. In other words, how you create, deliver and capture value.
The Uber business model for Uber rides offers the following value propositions:
On-demand cab bookings (Convenient)

Real-time tracking
Accurate ETAs
Cashless rides
Low wait time for a ride
Upfront pricing
Multiple ride options
The Uber Business Model Map
Uber BusinessModel Anlaysis
Uber Business Model Ecosystem
Although most people associate Uber with rides, they have since expanded into
other transportation and are expected to enter into the driverless vehicle market.
The core of their capabilities is the ability to match and track objects – a vehicle for
most cases. But more recently shipments.
Uber Business Model Analysis
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How Uber has different sided platform models
The Uber Business Model is shifting as they harness the power of the platform, AI
and new driverless technologies towards a future where hailing a ride might not
involve a driver (a human) at all. Uber business model and the platform:
Single-sided market – Uber is the supplier to the market.

Two-sided market – matching suppliers to buyers.
Three-sided market – matching suppliers, buyers and deliverers.
Uber Technologies
Uber mentions the term artificial intelligence six times in its IPO filing, highlights
machine learning 11 times and the word algorithm 16 times. Those mentions aren’t
by accident. Uber makes it clear that its data science and algorithms are critical to
its marketplace technologies.
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Uber has built its own proprietary marketing, routing and payment technologies.
The bridge between Uber’s various ventures is its marketplace technologies.
Uber’s technologies comprise the real-time algorithmic decision engine that

matches supply and demand for our Personal Mobility, Uber Eats, and Uber Freight
offerings.
A demand prediction engine to predict volume, supply and demand and

location dynamics with current and historical trends. Data visualizations are
available for zones with unique pricing characteristics.
Matching and dispatching algorithms that review and consider variables such
as distance, time, traffic, weather and even meal preparation times for Uber
Eats.
Pricing tools that set real-time prices at the local level based on demand.
The Uber business model relies on Uber continually investing in their new
technologies and harnessing new AI to reshape the future of transportation.
Ubers Key Metrics
The Uber business model is based on some core metrics which guide how well it is
performing. First of all, per customer averaged over a month indicates loyalty plus
the number of services a customer uses.
Driver incentives. Driver incentives refer to payments made to Drivers e.g. a

consecutive number of trips or a cumulative number of trips over a defined period
of time.
Driver referrals. Driver referrals refer to payments that we make to existing Drivers

to refer new Drivers.
Excess Driver incentives. Excess Driver incentives refer to cumulative payments, 
including incentives. Get Notifications ×

Gross Bookings. Gross Bookings are the total dollar value, including any applicable
taxes, tolls, and fees, of Ridesharing and New Mobility rides.
Monthly Active Platform Consumers (“MAPCs”). MAPCs are the number of

unique consumers who completed a Rides or New Mobility ride or received an Eats
meal on their platform at least once in a given month.
Uber Acquisitions
The Uber business model has transformed Uber’s capabilities and presented further
opportunities for expansion. Moreover, with the focus on AI it points to smarter
segmentation of customers based on use and other data.
Company Description Purchase Date

Value
Cornershop Online grocery delivery in Chile and Mexico, Undisclosed 2020

and more recently in Peru and Toronto
Careem Careem is the internet platform for the greater $3.1Bn 2019
Middle East region. A pioneer of the region’s
ride-hailing economy, Careem is expanding
services across its platform to include mass
transportation, delivery and payments to
become the region’s everyday super app.
Swipe Labs Swipe Labs built a social app that was a Undisclosed 2017
competitor to Snapchat. They have been
doubts about the benefits of this acquisition.
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Company Description Purchase Date

Value
Geometric Geometric Intelligence, a startup co-founded Undisclosed 2016

Intelligence by academic researchers with AI experience,
and its team provide the core for Uber’s
central AI lab at Uber’s SF HQ.
Otto The company focused on retrofitting semi- $680M 2016

trucks with radars, cameras and laser sensors
to make them capable of driving
themselves. However, since the acquisition
Uber has focused on autonomous cars.
deCarta DeCarta was a company that provided a range Undisclosed 2015

of location and map services, including in-
map search, location APIs, turn-by-turn
navigation and more.
The Uber business model is changing and adapting and these acquisitions point the
direction for how Uber will expand and address problems that its technology can
solve in different markets.
Uber Business Strategy
What’s Uber Business Strategy
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Uber’s Strategy
The ride-hailing market has become more competitive as others have entered the
market, received funding and taken on Uber head to head. The largest of these is
Lyft.
Any company that has invested heavily in its resources and built unique capabilities
needs to exploit them whilst maintaining a focus on its core market. The long-term
play is in autonomous vehicles but it is many years before they will be a day to day
reality.
The core focus is to use an existing core base of users who want convenience and a
variety of ride experiences and scaling the network effect which results in more
liquidity. As I have mentioned before in my talks, it is the customer experience that
will underpin how they achieve this.
In many developing countries that do not have a strong logistics infrastructure,

there is a need to connect suppliers with customers. As an example, most retailers
are still supplied from a host of different suppliers rather than a wholesaler. The
Uber business model provides new opportunities for trade and efficiencies.
We can see from Uber’s acquisitions that they have identified opportunities to
improve the transparency and access between supplier and buyers.
The Uber business model is rapidly evolving as they expand into new geographies
and new markets.
How Does Uber Make Money
Uber business model – how Uber makes money
Uber History
Uber’s story began in Paris in 2008. Two friends, Travis Kalanick and Garrett Camp,
were attending the LeWeb, an annual tech conference the Economist describes as
“where revolutionaries gather to plot the future”.
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In 2007, both men had sold startups they co-founded for large sums. Kalanick sold
Red Swoosh to Akamai Technologies for $19 million while Camp sold StumbleUpon
to eBay (EBAY) for $75 million.
Rumor has it that the concept for Uber was born one winter night during the
conference when the pair was unable to get a cab. Initially, the idea was for a
timeshare limo service that could be ordered via an app. After the conference, the
entrepreneurs went their separate ways, but when Camp returned to San Francisco,
he continued to be fixated on the idea and bought the domain name
UberCab.com.
Ryan Graves, who was Uber’s General Manager and an important figure in the early
stages of the company, became CEO of Uber in August 2010. In December 2010,
Kalanick took over again as CEO, while Graves assumed the role of COO and board
member.
The Cease-And-Desist Order
In October 2010, the company received a cease-and-desist order from the San
Francisco Municipal Transportation Agency. One of the main issues cited was the
use of the word “cab” in UberCab’s name. The startup promptly responded by
changing the name UberCab to Uber and bought the Uber.com domain name from
Universal Music Group.
Uber Timeline
Uber has taken an interesting path in its 10 years in business. Here’s a brief timeline
underscoring its biggest and most noteworthy moments.
March, 2009. Kalanick and Camp, along with college buddies Oscar Salazar and
Conrad Whelan, create the “black car” ride service model that would ultimately
become UberCab. 
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June, 2010. UberCab is launched in San Francisco, and the ride service immediately
connects with the city’s tech-heavy, and car-ownership averse, urban professionals.
October, 2010. UberCab is renamed Uber, and the company snares $1.25 million in
capital funding to expand. Former Napster co-founder Shawn Fanning is an early
investor. Two months later, CEO Graves steps down and is replaced by Kalanick.
May, 2011. Uber rolls out in New York City, and is met with heavy resistance from
the city’s massive taxicab industry. Six months later, Uber launches in Paris.
December, 2013. Uber drivers join up to file a lawsuit against Uber, looking to be
designated as employees, and not contract workers. It’s the first of multiple
showdowns between drivers and Uber.
August, 2014. Uber introduces UberPool, a ride-sharing model that enables riders
to “pool” their rides and split the fare between multiple parties.
April, 2015. UberEats is launched in Los Angeles, Chicago and New York, giving
consumers the Uber experience with food delivery. The service immediately catches
on with young millennials too busy on the job to cook dinners – giving Uber
another profit line in the process.
February, 2017. Uber is hit with its first of several charges of sexual harassment in
the workplace. A blog post from a former company engineer lights the fuse with
charges of a sexist workplace culture at Uber. Management responds to the
resulting outcry by hiring former U.S. Attorney General Eric Holder to investigate the
matter, and to look into the company’s workplace culture. Five months later,
Kalanick resigns as CEO after strong pressure from the company’s board of
directors. He is replaced by Dara Khosrowshahi, the former CEO at Expedia.
May, 2019. Uber goes public on the New York Stock Exchange, with an initial share
price of $45, and a market capitalization of $75.5 billion. 
Who Has Funded Uber
In the 10 years since its inception, Uber has found support among some of the
world’s biggest backers, with outsized pockets to match. Its largest shareholder is
SoftBank (SB Cayman 2), which invested $9.3 billion of its Vision Fund in the
company last year.
Stockholders Shares (in thousands)
SB Cayman 2 Ltd. 222,228
Entities affiliated with Benchmark Capital Partners 150,079
Entities affiliated with Expa-1, LLC 81,575
The Public Investment Fund 72,841
Entities affiliated with Alphabet Inc. 71,097
Other shareholders include Google’s Alphabet and Garrett Camp’s startup studio

Expa-1. Saudi Arabia’s Public Investment Fund, the country’s sovereign wealth fund,
has also invested in Uber, sending $3.5 billion by wire transfer—then the largest
payment ever sent in one lump sum—in June 2016. It remains the largest
investment made by a foreign government in a venture-backed startup.
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10/9/2020 Uber Business Model - 1 Platform Attacking New Markets

Uber Business Model: How Uber Makes Money

How Does Uber Work?

Quick Facts On Uber

Headquarters: San Francisco, US

Ride-hailing market: US$216,810m in 2020

Ride-hailing user penetration: 15.4% in 2020 

Uber’s share of ride-hailing: 69.2% Get Notifications ×

Average driver income per month: $374

No of Uber drivers: 3.9M

Annual number of rides: 5.22Bn

Monthly Active Users: 103M

Avg monthly trips per active Uber user: 5.5

No of Uber Eat users: 15M

Uber Eats share of global meal delivery service: 29%

Since Uber’s conception, it has grown to be a major force in the transportation

What Is Uber’s Business Model?

The Uber Business Model is a two-sided platform that

The Uber Business Model

Uber Business Model Canvas

There are four main types of platform models:

The Uber platform provides a matching service. As an example, it helps complete

What Is Uber’s Value Proposition

On-demand cab bookings (Convenient)

The Uber Business Model Map

Uber BusinessModel Anlaysis

Uber Business Model Ecosystem

Uber Business Model Analysis

How Uber has different sided platform models

Single-sided market – Uber is the supplier to the market.

Uber’s technologies comprise the real-time algorithmic decision engine that

A demand prediction engine to predict volume, supply and demand and

Ubers Key Metrics

Driver incentives. Driver incentives refer to payments made to Drivers e.g. a

Driver referrals. Driver referrals refer to payments that we make to existing Drivers

Excess Driver incentives. Excess Driver incentives refer to cumulative payments, 

including incentives. Get Notifications ×

Monthly Active Platform Consumers (“MAPCs”). MAPCs are the number of

Company Description Purchase Date

Cornershop Online grocery delivery in Chile and Mexico, Undisclosed 2020

Company Description Purchase Date

Geometric Geometric Intelligence, a startup co-founded Undisclosed 2016

Otto The company focused on retrofitting semi- $680M 2016

deCarta DeCarta was a company that provided a range Undisclosed 2015

Uber Business Strategy

What’s Uber Business Strategy

In many developing countries that do not have a strong logistics infrastructure,

How Does Uber Make Money

Uber business model – how Uber makes money

The Cease-And-Desist Order

Who Has Funded Uber

Stockholders Shares (in thousands)

SB Cayman 2 Ltd. 222,228

Entities affiliated with Benchmark Capital Partners 150,079

Entities affiliated with Expa-1, LLC 81,575

The Public Investment Fund 72,841

Entities affiliated with Alphabet Inc. 71,097

Other shareholders include Google’s Alphabet and Garrett Camp’s startup studio

What Is A Business Model?

Business Model Patterns

Spotify Business Model 

How To Use The Business Model Canvas

Uber Business Model