SAN FRANCISCO—What’s next for Uber, the popular ride-sharing service that’s disrupting the taxi industry in countries around the world? CEO and cofounder Travis Kalanick told attendees at Salesforce.com’s Dreamforce conference that he’s looking forward to “the ride ahead” even if the visibility as to what’s next is a bit “foggy”.
That’s because new technology always brings change and no one can predict how society will react to those changes. Kalanick told the story of how when the first cars appeared on streets alongside horses there was a rule that someone had to walk in front of the car waving two flags to warn people a car was coming. “Eventually technology finds a way” and the good in the technology is why it succeeds, he said.
Now there’s a lot of buzz about driverless cars, an area that Uber is making deep investments in, but how that plays out remains to be seen. Driverless cars could be seen as a threat to companies like Uber since they eliminate the need for human drivers, but Kalanick said it made sense for Uber to start researching the technology.
“It’s a little bit disruptive to our model, but as a technology company I have two choices, be part of the future or resist it,” said Kalanick. “[Driverless cars] aren’t going to happen all at once or at scale. But ten, or fifteen years out, whatever the number is, there is going to be a need for leaders to help with the transition and there will be lots of opportunities.”
Earlier Kalanick said Uber’s goal is to offer the most reliable rides at the lowest price and quickest service and, as a spinoff effect, get more cars off the road to reduce traffic and pollution.
Driverless cars will help that. “There’s a lot of promise in it. Thirty thousand people in the U.S. alone die in car accidents every year,” he said. “What if that number was zero? Part two, what if there was no traffic? What if algorithms drove cars? There would be no traffic and the price would go down. Think of all the underserved areas and rural areas that would have access to transportation.”
Tech Drives Uber
It’s a particularly busy time for Uber in its home town of San Francisco with the giant Dreamforce conference this week expected to attract upwards of 150,000 attendees.
When demand outstrips the supply of Uber drivers, that’s when the technology behind the ride-sharing service clicks into high gear. “We do what we can to get as many cars as possible to riders,” said Kalanick.
Where there’s higher demand the Uber app automatically also raises prices, but that’s not an ideal outcome. “We don’t want higher prices, we prefer them to be low,” he said. “We will do whatever on the technology side with algorithms and operations side to make sure our customers have a quick pick up and the lowest price as possible to get from point A to point B.”
Uber recognizes, for example, that to compete with taxis a driver often can’t be more than 15 minutes away from a potential fare. Real-time demand prediction is a key aspect of Uber’s technology.
Dreamforce: Uber CEO Tells How the Cloud Made Ride-Sharing Possible
Kalanick explained that Uber drivers can see a heat map showing where demand is going to be to help them get closer to their next fare.
He also took a shot at the taxi industry, though he said taxi drivers are “good people just treated badly.”
Kalanick estimates Uber rides are about 40 percent cheaper than taxis and give drivers a better, more flexible income opportunity. “Taxi drivers pay $140 a day to rent a car, that’s $40,000 a year,” said Kalanick. “For that much they should be driving a Bentley.”
While there’s great technology behind Uber, Kalanick said the company got its start five years ago the old-fashioned way by reaching out to potential customers over the phone.
“We didn’t know if it was going to work,” he recalled. “I was typing in limousine services in Google and cold-calling those companies.” A third of them hung up right away, a third hung up after a few minutes of hearing the core pitch and a third responded with “This is interesting,” Kalanick said.
“We didn’t have the app yet, it was just an idea, but I knew from past experience that if 30 percent of the people you cold call express interest you’re doing good,” he said.
Salesforce CEO Takes an Uber Pool Ride
Since then, Uber has started offering new services like Uber Pool where you can share a ride by sharing the car with another passenger. Marc Benioff, the billionaire CEO of Kalanick’s host Salesforce.com, said he recently tried it out.
“A Prius picked me up and a few blocks later a Goldman Sachs guy joined me and we had a good conversation. He was a young guy trying to save money. It was a great experience,” said Benioff.
Kalanick said Uber Pool is less profitable for Uber in most cities, but he’s excited about the service. “Uber Pool gets over 100,000 passengers in each city it’s in every week,” he said. “That’s exciting for us, two cars becoming one and making Uber cheaper than owning a car.”
Consultant Jeff Kaplan, Managing Director of IT market research firm THINKstrategies, said companies like Uber and AirBnB are poster children for the so-called sharing economy that wouldn’t be possible without the advances in connectivity and software as a service of recent years.
“The rise of cloud computing created the economics that made all this possible. Ten years ago, the parts weren’t in place. You didn’t have GPS and the central coordination, the payment systems and analytics,” Kaplan told eWEEK.
He also said companies like Airbnb and Uber are creating and benefitting from an attitude shift, particularly from a younger generation raised on digital devices and always on connectivity who are more receptive to sharing services and less concerned with ownership.
Kalanick mentioned Uber is still challenged by customers who want to schedule pickups. He said at some point most everyone will get over the need to schedule. “When you took a shower did you schedule it?”
As to the future, Kalnick says he’s “super optimistic” about what’s ahead. “We’re creating a company and culture of people who want to invent and create new things.”
