What is driving Uber's global impact?

By Catherine Cheney 05 August 2016

Uber has evolved from an app that would summon fancy town cars to the most highly valued startup in the world. Photo by: Núcleo Editorial / CC BY

At the San Francisco headquarters of Uber, three televisions greet visitors and employees just past the check in desk. The central screen plays a video on repeat: “Moving riders, moving partners, moving newlyweds, moving ice cream, moving Kenya, moving China, moving Australia, moving anywhere.” On the opposite wall, bright green dots are plotted on a black world map, demonstrating the spread of this ride hailing company that just completed its 2 billionth ride.

Uber has evolved from an app that would summon fancy town cars to the most highly valued startup in the world. The transportation company, which has caused some controversy and made some enemies, sometimes activates its platform for social good, providing free rides to give blood or cast votes or donate clothes. But it is through its hyper focus on efficiency that Uber may have the most potential to benefit riders and drivers across the 473 cities and 76 countries where it works.

Uber is focused on building its business, which is what has made the brand so ubiquitous that it has become, like Google, a verb as well as a noun. The company has expanded its mission from providing rides on demand to reinventing transportation as we know it. While sustainable global development is by no means Uber’s goal, the byproduct of its business has early stage impact and long term potential in areas like safe roads and clean air that have traditionally fallen within the domain of aid agencies.

Turning every car into a shared car 

Uber CEO Travis Kalanick is an engineer turned entrepreneur known for his obsession with efficiency. He described the original idea behind the company, which launched in 2009, as allowing him and his friends to “roll around San Francisco like ballers.” That mission has since expanded to putting more people in fewer cars.

It is efficiency that has led to new services that can reduce costs as well as emissions, the most notable of which is uberPOOL. POOL, which matches riders heading in the same direction for a shared trip, now makes up 20 percent of Uber rides globally.

“What has succeeded in making carpooling and ridesharing mainstream is a company that set out at the beginning to make a high end black car app, moved to uberX to get a lower price and expand the market, and moved to uberPOOL as part of a commercial imperative to use space and driver time more efficiently,” Andrew Salzberg, head of transportation policy and research at Uber, told Devex. He previously worked as an urban transport specialist for the World Bank, one of many agencies that has considered ways to incentivize ridesharing to make transportation more sustainable.

The road map for every Uber city includes POOL, which has expanded to 41 cities across the world, with recent launches in Bogota, Colombia, and Jakarta, Indonesia. The carpooling service has yet to reach sub-Saharan Africa, where general managers are first working to attract enough riders to make the service viable. Still, even without combining passengers, the Uber platform maximizes the number of rides that individual cars are providing daily in these markets. 

While Uber is a data driven platform with software that guides most of its operations, POOL is “by far the most interesting thing” the company has done with data, Salzberg said. Algorithms determine how much riders should pay for POOL, constantly integrating new insights and adapting as a result. And the company is gathering information on the hundreds of thousands of gallons of gas and thousands of metric tons of carbon dioxide the service saves.

“With the technology in our pockets today, and a little smart regulation, we can turn every car into a shared car,” Kalanick said in a recent TED Talk. If the startup can make car free lifestyles more realistic in markets where mass car ownership has not yet happened, there would be significant impacts extending from infrastructure to environment to health. Still, the public sector plays a critical role.

“Uber is a testament that the global development community needs to continue pushing the envelope in terms of innovations that promote sustainable transport,” said Christopher Kost, Africa program director at the Institute for Transportation and Development Policy. The success of the company thus far demonstrates the way technology can gather actionable data, monitor system performance, and improve customer experience, he said.

“Bringing these features to public transport systems will require more action from governments and entrepreneurs to innovate; measure societal impacts; and tackle policy, market, and cultural barriers,” Kost added.

Accelerating expansion and employment

While the app is only useful to those who have smart phones and spare income, it is quickly expanding in the developing world, with recent additions in Africa including Dar es Salaam, Tanzania; Accra, Ghana; and Kampala, Uganda.

“Uber's ambition is to be everywhere — any progressive, forward-thinking city that has a need for safe, reliable and efficient transportation, we want to be there,” Alon Lits, ‎general manager of sub-Saharan Africa at Uber, told Devex via email. “We are part of a broader mobility movement, establishing smart cities of the future, and we are constantly exploring our options of where to go next.”

But regulatory roadblocks remain. In many countries, regulators have tried to level the playing field between traditional taxis and smartphone apps they say have an unfair advantage. Other countries are making new ridesharing laws that recognize Uber and related services as “transportation network companies.”

While Mexico City was the first city in Latin America to regulate Uber, a year after the rules were created, the city government has yet to create the fund it announced to collect revenue from ridesharing apps.

The city, home to the largest taxicab fleet in the world, has seen violent confrontations between Uber drivers and official taxi drivers. Battles such as these are being staged on streets across the world because cab drivers say Uber is undermining their businesses by driving prices down and offering services that taxis cannot. But Mexico City also represents an example of the pace at which Uber is expanding from urban to suburban areas, including less wealthy areas historically underserved by transportation, Matthew Devlin, who leads international relations at Uber, said at Devex World.

“So you think about what that means in terms of creating access to jobs, to education, to healthcare, allowing people to participate in the social and civic life of their city,” he said.

Because Uber is a marketplace that matches riders with drivers, the company is constantly adding to the 1.1 million active drivers on its platform to keep up with demand. While driver complaints about the downsides of the freelance model, including the lack of benefits, has led to the launch of new startups focused on making drivers happy, Uber advertises the flexibility the platform gives drivers to be their own bosses.

Last year, the company committed to create 1 million jobs for women drivers on the Uber platform by 2020. But while this offers a public relations boost, the 1 Million Women initiative is — like every Uber priority — ultimately all about operations.

“The reasons why this initiative matters are so fundamental to our business,” Blaire Mattson, global lead for the initiative, told Devex. "I deeply care about it. All the people I work with closely care about it. But because it’s embedded in our business, caring about it is not a prerequisite to actually getting things done on it.”

Uber is partnering with local nongovernmental organizations to implement the initiative, including iCare Life, a social enterprise that trains women drivers in India and takes them through the commercial licensing process.

While the global taxi industry is male dominated, the technology behind Uber minimizes some of the safety concerns that can be a barrier to entry for women. Before accepting a ride, Uber drivers can see the ratings of their passengers, and those riders have a digital trail including trips tracked by GPS. Uber is drilling into its data to understand the differences between male and female driver behavior, identify the gaps between signing up for the service and taking the first trip, and design ways to incentivize women drivers to use the platform.

“Think about the nature of our business: push a button to get a ride. That is a simple concept, but you unpack that, and so many factors come into play to make that happen,” said Ebi Atawodi, the general manager of Uber Nigeria. “Wherever you go and whatever business you take to market, if you don’t understand your market and adapt your service for that market, it creates a disconnect.”

Ebi Atawodi in an Uber car in Ghana. Photo by: Uber

Like every Uber country office, Uber Nigeria is a locally incorporated company that hires employees, runs support services, and adapts the platform to meet the demands of local consumers. For example, while Uber riders in most markets pay via credit card through the app, riders in Nigeria and across sub-Saharan Africa have the option to pay in cash. Many of these riders and drivers handle these transactions via mobile money transfers such as M-Pesa.

The most populous city in Africa, Lagos, Nigeria, serves as an example of why cities simply cannot afford a future in which ridesharing and carpooling are not the norm, Atawodi said.

Data-driven driving  

While some customers are simply making the switch from taxis to apps, others have entirely new options to get from point A to point B now that Uber has come to town. Take Saudi Arabia, the only country in the world where women are not allowed to drive. Women there make up more than 80 percent of the Uber customer base, and before they could simply open the app and request a ride, women had to rely on private drivers if they could afford them, make several calls to find an available driver, or wait half an hour for the limo companies Uber now works with.

But if companies such as Uber want to make a transformative impact on congestion, which can be a major drain on national economies, they should do more to share their data, said Holly Krambeck, senior transport specialist at the World Bank.

“Transport agencies currently spend enormous amounts of time and resources collecting basic data about the transportation network,” she told Devex. “If they could leverage the sizable GPS datasets generated by taxi hailing apps, there are opportunities for unprecedented economies of scale in traffic analysis and congestion management.”

Uber, however, has distinguished between anonymized and aggregated data and the personally sensitive information the company is often asked to share. While the company is forced to provide some data to cities and regulators, it also wants to preserve its trade secrets and protect the private information of its riders and drivers.

Silicon Valley is not the only source of large, successful car hailing app companies. Uber’s primary competitor is Lyft, also headquartered in San Francisco. But Didi Chuxing in China, Ola in India, Easy Taxi in Latin America, and Grab in Southeast Asia have also achieved economies of scale that make them formidable regional competitors.

Uber views competition not just as other smart phone apps, but as any other way people might get around the city — from bikes to buses to cars of their own. Still, the startup does face competition in the more traditional sense. Didi Chuxing is buying Uber China, creating a new company as part of the merger in which Uber will have an 18 percent stake.

In Kenya, the mobile network operator Safaricom announced a partnership with a local software firm to launch a new ride hailing service that could pose a real threat to Uber in that country. And Tesla CEO Elon Musk revealed in his recently updated “master plan” that the electric car company plans to develop fully autonomous vehicles that can make money for their owners when they aren't using them by picking up other riders.

Of course, shared taxis and microbuses — like jeepneys in the Philippines or matatus in Kenya — were popular modes of transportation in developing countries long before Uber arrived on the scene. But car hailing apps improve upon this model, which is usually frowned upon by local authorities as chaotic and unmanageable, in a few key ways.

“Smartphones have the ability to organize that chaos: introducing rating systems, convenient electronic payment, and the ability to have on-demand travel,” said Robin Chase, the co-founder and former CEO of the car sharing network Zipcar. “Uber is an example of how we can tame a mode of transportation that already exists.”

G-Auto in India, which is providing 4.5 million trips a month on 15,000 rickshaws that are owned by individuals, available on demand, and rated, is one example of local entrepreneurs “uberizing” their models. Chase said she would like to see more of these. But while Uber has inspired countless spin offs, the company has also caused the closure of similar apps, and generated opposition or even hostility from the taxi market and local startups.

If Uber expands to Kigali, Rwanda, Peter Kariuki, chief technology officer at the taxi motorbike hailing app SafeMotos, sees two possibilities. Uber could either crash and burn or succeed, in which case SafeMotos might be forced expand to serve new markets that do not yet have the population density Uber seeks.

As Uber aims to fill that world map on its office wall with new green dots, there will be tradeoffs. For example, the investment Uber is making in autonomous cars, which may make roads safer, could also eliminate the jobs the company is creating.

But, from uberPOOL to 1 Million Women to recently announced plans for a global mapping project, whatever will make the platform more efficient, and therefore enable Uber to put more people in fewer cars, will determine how the company handles forks in the road.

With potential to change the trajectory of crises, such as famines or the spread of diseases, the innovative use of data will drive a new era for global development. Throughout this monthlong Data Driven discussion, Devex and partners will explore how the data revolution is changing our approach to achieving development outcomes and reshaping the future of our industry. Help us drive the conversation forward by tagging #DataDriven and @devex.

About the author

Catherine cheney devex
Catherine Cheneycatherinecheney

Catherine Cheney covers the West Coast global development community for Devex. Since graduating from Yale University, where she earned bachelor's and master's degrees in political science, Catherine has worked as a reporter and editor for a range of publications including World Politics Review, POLITICO, and NationSwell, a media company and membership network she helped to build. She is also an ambassador for the Solutions Journalism Network and the Franklin Project at the Aspen Institute.


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