Harry here. We talk a lot about the bonuses Uber offers new drivers and the guarantees dangled in front of existing drivers, but when you add in all the passenger subsidies too, you start to wonder how Uber ever plans to turn a profit. Today, senior RSG contributor John Ince takes a look at Uber’s business model and more importnatly how their quest for profitability might affect the bottom line for drivers.
Recently there have been a flurry of articles about Uber’s finances, and they’re all sniffing around the same question: Is Uber’s business model sustainable?
With good reason, this is the 69 billion dollar question. $69 billion just happens to be Uber’s valuation in its most recent funding round, making Uber the most valuable startup in the history of the world. Valuable, yes, but profitable? No, most emphatically no. According to figures obtained by Bloomberg, Uber last year lost more money – over $2 billion – than any startup in history. The question of sustainability is the real issue facing the company now, and there are arguments for each side, depending on your perspective.