What's Next for Uber
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Transcript of What's Next for Uber
Team C3 talks about what’s next for Uber
Adnan WaheedAnchal RaghuwanshiErik GalasYash Sinha
Agenda
• Uber: An Overview• What’s next for Uber• How did we come to this conclusion• How are we implementing this• What’s in it for the customers• The financial outlook• Wrap up
The World’s Fastest Growing Company
• Global Presence – 339 Cities | 61 countries
• Target customer - anyone with a mobile phone and credit card
• Transportation + Logistics – Experimenting with food delivery and bicycle courier services
Provides What Customer Wants
Reliable
Customers get a cab within minutes
Ease of use
Easy to operate
application
Affordable
uberX at least 10% cheaper than a Taxi
Opportunity to Expand the Businesses
Large User Base
Platform
How do you decide what’s next?
Luxury Transportation
Mass Transportation
Delivery Logistics
Home Services
How do you decide what’s next?
Number of Customers (Demand)
The Stability of Demand
Organized Competition
Luxury Transportation
Mass Transportation
Delivery Logistics
Home Services
How do you decide what’s next?
Number of Customers (Demand)
The Stability of Demand
Organized Competition
Luxury Transportation Low (-) Stable (+) Low (+)
Mass Transportation Medium (+) Unstable (-) High (-)
Delivery Logistics High (++) Stable (+) High (-)
Home Services High (++) Stable (+) Low (+)
How do you decide what’s next?
Number of Customers (Demand)
The Stability of Demand
Organized Competition
Luxury Transportation Low (-) Stable (+) Low (+)
Mass Transportation Medium (+) Unstable (-) High (-)
Delivery Logistics High (++) Stable (+) High (-)
Home Services High (++) Stable (+) Low (+)
Introducing…
uberHome
Handyman
ChefCleaning
uberHome
Offers home care services at your doorstep across multiple categories, including• Cleaning
• Laundry and dry cleaning• Dusting, sweeping, tidying and floor washing
• Chef• Professional chef catering to your home or a small event• Cooking lessons
• Handyman • Repair services such as plumbing, electrical, furniture and
fixtures
Today’s focus
Addressing gaps in the market
• No major players – highly fragmented industry with large number of individual contractors and small companies
• Lack of well-defined service standards for the industry
• General experiences have been underwhelming and leave much to be desired
• Conflict between times people are at home and the times at which these services are available
How does it work?
Select a category
Select a service
Schedule the job
Check out responses
Finalize the appointment
Confirmation
Meanwhile, at the service end
What’s in it for customers?
• Convenience• The service providers come to you at a time of your convenience• No hassle of going through directories and contacting hundreds of
providers• Reliable service quality
• Uber’s trustworthy crowdsourced star-ratings• Initial vetting by Uber
• Services available immediately* in case of emergencies• Transparent pricing and charges• Available across multiple locations through a single app
What’s in it for service providers?
• Steady demand of customers• Removes dependency on sourcing agencies or advertising• Clear communication of work requirements• Competitive earnings potential• Flexible working hours• Earn extra after work hours (or use as primary source of work)• Bonuses and access to lines of credit• No more nightmarish customer experiences as customers are
reviewed by other service providers on the platform
What is the user’s cost?
• Handyman divides into 3 skill sub-sets with different fee structures• General Contractor (Repairs, Painting & Fixtures) = Range
$35-100 per hour• Electrician (Certification Required) = Range $50-100 per hour• Plumbing (Certification Required) = Range $50-100 per hour
• Fees are conveyed to the user before confirming the appointment
Market Opportunity
• According to US Census between 2009-11; population spent US$360 billion on home improvements
• 63% of this work was done by professionals
• We estimate that uberHome has the potential to capitalize on this market by targeting 2-5% of the Home Improvement spending.
• Hence there exists a potential Handyman market of US$ 5-11 billion per year.
The financial outlook
• Uber takes 10% of each uberHome transaction with potential to increase to 20% as with the uberX model
• Thus Uber can earn between $500 million and $1 billion per year by capturing just 2-5% of the market
Source: http://www.foxbusiness.com/features/2015/08/28/leaked-documents-show-ubers-cost-structure-best-performing-cities.html
Year 1 Year 2 Year 3 Year 4 Year 5
($200,000,000)
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
uberHome's 5 Year Financial Projections
Gross Bookings Net Revenues Contributing Margin
Key growth drivers for market
• Market is growing again – sales back to pre-crisis levels• Consumers look for style and personalization• Ageing baby boomers lean towards “Do-it-for-me” solutions• Increasing per capita disposable income• Large number of businesses• Rise of the sharing economy• Sustainability and safety of materials is critical – requiring
professional intervention
Source: Home Improvement: Category Overview (July 2015, Euromonitor International
Risks & Contingency
• Signing up sufficient contractors• Screening of qualified handymen• Legal concerns around repairing homes•Dealing with organized unions
Summary
• Uber has established itself as a reliable, easy to use and affordable service provider.
• We believe that Uber’s brand and business model is ideal to capitalize on other markets with low customer satisfaction.
• uberHome can be a suite of services to satisfy a fragmented market with no established major player.
Questions?
Thank you!
The finances (costs based on uberX’s)Year 1 Year 2 Year 3 Year 4 Year 5
Revenues$500,000,00
0 $600,000,00
0 $720,000,00
0 $864,000,00
0 $1,036,800,0
00
Gross Bookings100.00
%$500,000,00
0 100.00
%$600,000,00
0 100.00
%$720,000,00
0 100.00
%$864,000,00
0 100.00
%$1,036,800,0
00 Service Provider's
Commission(90.00
%)($450,000,0
00)(90.00
%)($540,000,0
00)(85.00
%)($612,000,0
00)(85.00
%)($734,400,0
00)(80.00
%)($829,440,00
0)Service Guarantee Fee 5.00% $25,000,000 5.00% $30,000,000 6.00% $43,200,000 6.00% $51,840,000 7.00% $72,576,000
Incentives(3.00%
)($15,000,00
0)(3.00%
)($18,000,00
0)(2.50%
)($18,000,00
0)(2.50%
)($21,600,00
0)(1.50%
)($15,552,000
)
Returns(1.00%
)($5,000,000
)(1.00%
)($6,000,000
)(0.75%
)($5,400,000
)(0.75%
)($6,480,000
)(0.50%
) ($5,184,000)
Net Revenues 11.00%$55,000,000 11.00%$66,000,000 17.75%$127,800,00
0 17.75%$153,360,00
0 25.00%$259,200,00
0
Payment Fees(2.50%
)($12,500,00
0)(2.50%
)($15,000,00
0)(2.50%
)($18,000,00
0)(2.50%
)($21,600,00
0)(2.50%
)($25,920,000
)
Mobile (Net)(0.20%
)($1,000,000
)(0.20%
)($1,200,000
)(0.20%
)($1,440,000
)(0.20%
)($1,728,000
)(0.20%
) ($2,073,600)
Network(0.30%
)($1,500,000
)(0.30%
)($1,800,000
)(0.30%
)($2,160,000
)(0.30%
)($2,592,000
)(0.30%
) ($3,110,400)
Other COGS(2.00%
)($10,000,00
0)(2.00%
)($12,000,00
0)(2.00%
)($14,400,00
0)(2.00%
)($17,280,00
0)(2.00%
)($20,736,000
)
Sales & Marketing(5.00%
)($25,000,00
0)(5.00%
)($30,000,00
0)(4.00%
)($28,800,00
0)(4.00%
)($34,560,00
0)(3.00%
)($31,104,000
)
Insurance(3.50%
)($17,500,00
0)(3.50%
)($21,000,00
0)(3.70%
)($26,640,00
0)(3.70%
)($31,968,00
0)(4.00%
)($41,472,000
)
Other OPEX(3.80%
)($19,000,00
0)(3.80%
)($22,800,00
0)(3.80%
)($27,360,00
0)(3.80%
)($32,832,00
0)(3.80%
)($39,398,400
)
Contributing Margin(6.30%
)($31,500,00
0)(6.30%
)($37,800,00
0) 1.25% $9,000,000 1.25% $10,800,000 9.20%$95,385,60
0
Source: http://www.foxbusiness.com/features/2015/08/28/leaked-documents-show-ubers-cost-structure-best-performing-cities.html