The establishment of Uber Technologies Inc (NYSE:UBER) in the wake of the 2008 economic crisis can be likened to the establishment of King Kullen, a supermarket chain established in the 1930s during the onset of the great depression. Similar to King Kullen, the Uber ecosystem is a result of resource integration from founders Garret Camp and Travis Kalanick.
Uber’s resource integration model easy to replicate
Cullen’s innovation was easier to replicate for a big chain such as Kroger copying the model as King Kullen remained local. Uber faces the same fate with rising competition in the gig economy with the emergence of companies like Lyft in ride-sharing, DoorDash in food delivery, and Convoy in trucking and freight.
Uber has encountered a plethora of challenges during the last ten years, both internally and externally. Aside from unflattering clips and emails from the co-founder and former CEO Kalanick, the setbacks include sexual harassment claims, a wave of firings connected to an inquiry into workplace culture, and the purported dissemination of a rape victim’s health records.
Subsequently, in 2017, the business hired CEO Dara Khosrowshahi, who had been running Expedia since 2005 and was credited with growing its international footprint through a variety of online reservation brands, including Expedia.com, Hotels.com, and Hotwire.
Kalanick stepped down in 2019 and sold all his stake in the ride-sharing company, and severed ties with the firm. He was present during the company’s IPO at the New York Stock Exchange, where the company garnered a valuation of $80 billion before dropping massively.
Uber had to incentivize drivers to return to the platform
The COVID-19 pandemic has left businesses struggling with demand and supply as drivers took off the road. The company had to rely on incentives to attract drivers, which affected its financials. This seemed to be stabilizing, but the geopolitical situation in Ukraine resulted in fuel prices hike, and according to analysts, firms will have to use millions to maintain drivers.
Recently Khosrowshahi stated that they need to grow the number of drivers on the platform, which isn’t something new.