Hype over venture-funded start-up Uber has revved up in recent
weeks. The luxury-car-on-demand app could be valued as high as $3.5
billion in a fresh round of funding led by TPG Capital,
) venture-capital arm Google Ventures is believed to be
participating, too, following in the footsteps of past investors
like Jeff Bezos, Menlo Ventures, and
There's undoubtedly a lot of weight being thrown behind the tech
sector's latest rising star. Uber's third round of venture funding
to raise $100 million, certainly enough to further the San
Francisco-based company's meteoric rise. Since 2009, Uber has gone
from solely servicing the City by the Bay to operating in 38 cities
across 10 different countries (according to Uber's
), with little loss of momentum. Recent job openings at the company
Uber is now planning to expand into Africa, the Middle East, and
Latin America. Founder and CEO Travis Kalanick has publicly
that Uber's revenue is currently growing 18% month-over-month, and
that the company has become profitable in its earliest locations,
including San Francisco and New York. Uber's
total revenue this year is $125 million.
That's serious growth for a company that started as a way for its
founders to find available rides for themselves and their friends.
Now, Uber's GPS-enabled app -- available on
) iOS, Google Android,
) Windows Mobile -- is pairing passengers with luxury limousines
worldwide, and through its competitively-priced UberX service, with
cheaper non-luxury town cars, too. In addition, Uber has also begun
connecting users with local taxi services in New York, Boston,
Sydney, and five others cities via UberTaxi.
A screen shot of the Uber app taken at Minyanville's offices
But as Uber continues its expansion, with an expected tank full of
venture money, will it remain parked solely within the taxi and
limousine space? Many signs point to
Before understanding what Uber could be, it's important to
understand what Uber is not. Uber is not a taxi and limousine
company. Instead, Uber is a logistics company, one which has become
very good at quickly moving into new markets, converting local
transportation providers, and coercing -- and sometimes even
circumventing -- local governments. It's earned a reputation for
meeting opposition head-on, and ceaselessly working to get its way.
Writing in this month's
, Christine Lagorio calls Uber's "ability to present itself as a
force of modernization and freedom and against bureaucrats and
politically connected interests" its most "potent weapon."
Take California for example, Uber's home state. Last October, Uber
cease-and-desist letters from both the San Francisco Municipal
Transportation Agency and the California Public Utilities
Commission (CPUC), claiming Uber was operating without the
appropriate licenses and permits. This June, the Los Angeles
Department of Transportation delivered its own cease-and-desist
letter on the same day local yellow-taxi drivers gathered outside
City Hall to protest Uber unfairly encroaching on their businesses.
However, Uber never stopped operating in the state. Instead, it won
the favor of local politicians like LA Mayor Eric Garcetti, and
very closely with CPUC to ensure it was operating within the limits
of the law. CPUC suspended its cease-and-desist in January, and is
set to vote on legalizing services like Uber's throughout the state
on September 5.
(In addition to troubles in LA, Uber has recently faced hurdles
including but not limited to: Colorado regulators trying to make it
illegal for Uber taxis to come within 200 feet of bars, hotels and
restaurants; the French Prime minister considering a new rule that
would require Uber-booked cars to wait 15 minutes before picking up
a passenger; local taxi drivers in Milan storming Wired's Next
Conference -- causing it to temporarily shut down -- in protest of
Uber's encroachment on the Milanese taxicab marketplace. One can
only imagine the maneuvering currently underway by Uber to stay in
business in these cities.)
When contacted to speak about what other areas Uber is seriously
considering expanding into, a representative from the company
avoided a direct answer. Instead, he offered a recent
with Kalanick, conducted at the Fortune BrainstormTech conference
in Aspen, Colorado, last week. It took some prodding from
's Jessi Hempel, but Kalanick finally delivered a straight answer
on whether or not Uber is seeking to enter other product markets.
"So the answer is, yes, we're thinking about it," said Kalanick.
"What we're doing right now is we're in the experimentation phase
where you sort of find some interesting ways to do promotions like
Uber Ice Cream."
One the company's latest in a long list of promotional offerings,
Uber Ice Cream, was a one-day event on July 19 that saw on-demand
ice cream trucks roll out in 33 global cities including Atlanta,
Phoenix, Munich, London, Singapore, and more. Uber enlisted local
ice cream trucks in each partner city to pull off the stunt,
charging groups of five to six customers anywhere from $30 to $40.
Other promotions include UberCHOPPER -- running throughout the
summer -- which provides a $3,000 helicopter ride between NYC and
East Hampton, with Uber car service on both ends. Often, these
exploratory services are location-specific, like recently-announced
on-demand canal boats in Amsterdam, via Uber Sloep, or motorcycle
pickups in Paris. Other single-day offerings, like barbeque
delivery in Austin, Texas, or rose delivery on Valentine's Day,
demonstrate further non-transit applications.
Additionally, Kalanick has
to "informal" talks with a big e-commerce company about optimizing
drivers' time in between rides to deliver products to consumers.
Which of these might signal a viable future for Uber is left up for
debate. Fudgesicles are delicious, but are they worth $100 million
in venture fund pocket change?
Babak Hafezi, founder and CEO of HafeziCapital International
Consulting & Investing, believes Uber's future viably lies in
two markets. One of them doesn't come as much of a surprise. The
other's a bit of a curve ball.
"Uber makes its money on volume," Hafezi tells Minyanville. "Yes,
they are now in the helicopter business, but those [stunts] are
more to get publicity. The real growth market is providing taxi
services in smaller suburban areas rather than in large cities."
Hafezi's Washington, DC-based business management consultancy firm
has advised numerous small, medium and Fortune Global 500 companies
and CEOs, as well as angel investors, private equity, and venture
capital firms. In the tech space, Hafezi notably advised
(MS) Private Wealth Management on the
(GRPN) IPO. Eighteen months ago, Hafezi was contracted by a large
taxi fleet management company to conduct an entire firm analysis
and provide concrete data on the taxi industry in the United
States. (An NDA restricts Hafezi from sharing the company's name.)
The company had developed a fleet-management software now being
sold within the industry, making it an indirect competitor with
The information provided by this research, Hafezi says, is
pertinent to the entire fleet-management industry, and could
indicate Uber's future direction.
Of the 2,942 taxi cab companies in the United States registered
with the Census Bureau, 66% have fleets of less than five cabs,
Hafezi's research shows. Twenty-two percent have fleets of less
than 20 cabs. While there are exceptions like Washington, DC (where
most cab companies are owned by smaller players), in cities like
Boston, New York, San Francisco, Chicago, and Las Vegas, taxi
medallions are all owned by large corporations. Smaller players
can't compete in these markets, Hafezi says. So, they tend to
operate in the suburbs where there are no conglomerates to push
them out of the marketplace. This makes non-metropolitan areas
ideal for Uber's lower cost services like UberX and UberTaxi as
Uber can provide computer infrastructure to a class of drivers who
previously could never afford it.
"It's a very, very open market of individuals who don't have the
capability to invest $100,000 in backend support," Hafezi says.
"Uber can play a very big part in that marketplace."
In metropolitan areas where UberTaxi is available, local cab
drivers have been
saying they are happier with Uber because they can make more money
and are safer. That could potentially translate to suburban areas,
where, as Hafezi points out, taxi driver often struggle to get by.
"There are cabbies driving cars from the early '90s with 500,000
miles on them, just waiting for them to break down."
A backend network to support small cab companies and individuals
who couldn't otherwise afford mobile infrastructure feels like it
could fit within Uber's line of offerings. That is, if Uber intends
on moving away from its "luxury brand" image. However, Hafezi's
second suggestion seems completely uncharacteristic of the brand
Uber has put forth thus far -- at least at first blush.
Based on his research, Hafezi says telemedicine -- the use of
information technology to deliver health-care services at a
distance from hospitals, doctors offices, and other medical care
centers -- would be a lucrative marketplace for Uber to extend
into. He believes the capabilities of Uber's software make it ideal
for an industry slow to adapt to technological innovation.
"Anything that requires a nurse to come to your home or location,
including hospice care, applies," Hafezi says. "Organizations
providing those services are still using old-fashioned paper
models, with a centralized computer system and a calling system.
Systems like Uber have the ability to take the nurses and patients
and bring them much closer together."
It's no secret that the health-care industry is playing catch-up in
the area of IT -- a
estimated US hospitals lose $8.3 billion annually because they are
using outdated infrastructure technology. But spending is ramping
up, with a $100 billion expected to be doled out on health-care IT
in the US between now and 2017,
to Insight Research. The telemedicine industry is expected to grow
55% in 2013, and it will grow sixfold by 2013, reaching 1.8 million
Hafezi imagines a scenario where patients can use their phones to
pull up the closest available hospice nurses and call them to their
location. Once there, nurses will be able to use the same back-end
infrastructure to access patients' secure records, and perform
services like placing orders for medication and assistive devices.
Sure, it might seem like a far-fetched idea. But, when you look at
the marketplace, it really isn't.
(CSCO) all offer their own eHealth cloud platforms, which allow
health-care professionals to share patient records and information
and collaborate in real time.
Then, there are slew of companies that are beginning to define
what's being called the mobile health-care space.
Atlanta-based start-up Medicast, which has
itself as the "Uber for health care," connects patients with
close-by on-call doctors who go to a patient's home, workplace, or
hotel room to deliver emergency or routine care, all within two
hours; it currently only services Southern Florida. ZocDoc allows
users to find doctors and make appointments online, and, if using
the mobile phone app, utilizes GPS to find doctors close by.
Teledoc goes a step further, allowing users to talk with a
physician at any time via a Skype-like video-conferencing service.
"If Uber can define the market and be able to create a niche, it
can get major traction into this industry," Hafezi says.
"Furthermore, it can also go into the paratransit industry, which
is government-regulated, and can create major efficiencies for
small providers of paratransit services."
But does an 'UberHospice' service really fit a company that's made
its name selling a luxury transportation service?
Here's Kalanick one more time at the BrainstormTech conference:
"If somebody goes, Travis, you've got this great lifestyle
brand. Uber is, you know, so awesome and high-end and all this.
When are you going to do concierge services? Or when are you going
to do hotels? And I'm like, we're not going to do hotels because
we're not delivering a hotel building to you, right? So we know
what we are."
"I think we're the Uber of stuff. But I think those in the
investment community...see a lot of 'Uber of blanks.' If it's in
our wheelhouse, right, we'll ultimately do it...But there are a lot
of things that don't work for it."
With that muddled message from Kalanick, it seems only time will
tell where Uber is headed next .
Disclosure: Minyanville Studios, a division of Minyanville
Media, has a business relationship with BlackBerry.
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