I think Uber board picked an amazing leader as the new CEO , despite all the leaks and drama and all around it . With adult supervision from the new boss and hiring experienced leaders to work for him in various functions , I think a lot of their current problems with culture , litigation , board politics, driver retention etc will get resolved .
Solving the current problems is unfortunately just table stakes really . The fundamental question in my mind is whether Uber has a sustainable business model . How long can they capture growth by subsidizing costs when we are talking in multiple billions ?
Clearly, they have made some mis-steps by trying to optimize for market share at all costs . So getting out of some international markets was a necessary step , and I expect more of the same for near future . Getting out of leasing also seems like a smart thing to do .
I am a firm believer that driverless cars will become a mainstream reality soon – between google , Tesla , uber and many others putting their might behind it – it’s only a matter of time . But that time is not in next couple of years . So for foreseeable future , they have to subsidize human drivers and figure out better ways to retain drivers . And then there will be a period where self driving cars and human driven cars will do-exist . And some time in far future – perhaps they can switch to mostly driverless cars ( assuming they have the legal and political backing to do so in the major markets ). Will investors agree to bleeding money for that long ?
Also – when they do mostly driverless cars, wouldn’t they just incur even more costs for owning ( or leasing ) and maintaining a big fleet ? And my guess is that insurance cost will be quite high for the in-between period where they need both human driven and self driving cars .
Not sure how to correctly extrapolate here – but my best guess is that for next decade it is not going to make profitable revenue with the “cheap taxi” business alone , while also capturing significant chunks of the global market.
While uber is getting out of some geographic markets, it’s definitely entering some adjacencies – like trucks and boats. But the business model is still the same – so all the problems with the economic model of taxis should apply to boats and trucks too .
First mover advantage is with uber – but there is always the significant risk of fast followers who can learn from Uber’s mistakes and avoid the heavy initial capital investments and expenses .
If private markets are fine with all this and Uber just chooses to remain privately held for a very long time – none of this might be an issue . But going to public markets without proving out their business model seems like mission impossible . Even in private market, my suspicion is that they cannot sustain the $69B valuation given all the economic issues . And a loss in valuation might start a round of talent attrition which might make it really hard to execute on whatever roadmap the new CEO puts in place .
So all things considered – I think the main challenge for the new Uber CEO might not be the things in the news now . They are all no doubt important problems to solve , and unless he solves them first – there might not even be a chance to change the business model . But the true fight in my mind is to figure out how to run this business as a sustainable enterprise , while preserving as much of the valuation as possible .
Given the size of the short term and long term challenges for uber – I hope the CEO, the board and the staff of Uber have the stamina to do a few marathons back to back !
3 thoughts on “The new Uber CEO’s primary challenge”
Hi tthanks for posting this
the CEO’s challenge is to make money for himself and uber investors and while paying very little to drivers