A start-up and an upstart: Uber is changing the rules of the game

Tanya Thomas | Updated on November 25, 2017 Published on August 18, 2014


The taxi-booking outfit has raised the hackles of operators with its app-driven model

On its Website, the San Francisco-headquartered Uber describes itself as a ‘rideshare, taxi and taxi alternative app’. You can use the app to hail a taxi in over 160 cities globally but not one of them is owned by the company or bears its logo. Ridesharing, somewhat counter-intuitively, means a customer shares a ride with the owner-driver of a cab.

Google the name and you will find that Uber, founded in 2009, is banned in Berlin and Seoul (for using unlicensed taxis), that it has faced protests by London’s cabbies (who accuse Uber of stealing their business and paying insufficient tax) and that it was recently in a spat with Lyft, another taxi app. The competitors accuse each other of ordering and then cancelling taxi requests in order to sabotage services to genuine customers.

In India, Uber has raised the hackles of radio taxi operators. Recently, Meru Cabs, Easy Cabs and Mega Cabs wrote to the RBI complaining about Uber’s payment system, which involves dollars in what is essentially a transaction between Indians on Indian soil.

Uber uses an international payment gateway to charge a customer (converting the rupees to dollars), routes the transaction through tax-friendly Netherlands and then converts 80 per cent back to rupees to pay into the driver’s account. (Uber charges the driver a 20 per cent commission on each ride.) This, they say, amounts to violation of foreign exchange rules.

Broadening footprint

Whether it is in the right or wrong, it is undeniable that Uber is rapidly gaining ground. The service was launched in India last August and is now present in six cities: Mumbai, Pune, Bangalore, Hyderabad, Chennai and Delhi.

So, what is Uber? “At heart,” says Santhosh Sarangan, its General Manager in Chennai: “Uber is a tech start-up.” And as tech start-ups go, it’s doing rather well for an app that connects the demand and supply of the taxi market. It’s most recent round of funding, in June, valued the app at about $17 billion.

Sarangan, who heads Uber Chennai, is tight-lipped about any statistic on how big or small the company’s operations are, whether it’s about the number of drivers, customers, bookings, rejections, rides or about revenue.

In India, Uber has close to 8,000 followers on Twitter. Make of that what you will.

Sarangan does offer a few operational details, though. The Uber operation in each city is treated as an individual start-up and is initially managed by a three-member team. Their aim is to continually shorten the amount of time a driver on Uber’s network takes to reach a customer.

In India, Uber offers the Uber Black standard service in all six cities, while the low-cost UberX and more expensive Uber SUV are only in a few. Tariffs vary by city. Bangalore, for instance, has a minimum fare of ₹125 and a per-km fare of ₹15 with Uber X and a minimum fare of ₹200 and a per-km fare of ₹18 with the Uber Black. Cancelling a ride request will cost you ₹100 and ₹150, respectively.

Uber cabs can be booked only through its app. Indeed, the company gauges the readiness of a city for its services on the basis of app downloads. “We look at this data point — how many people in a city have downloaded the Uber app even when we are not present in the city,” says Bhavik Rathod, also a general manager at the company.

You can use the map on the Uber app to point out your location and it will tell you where the closest driver is (or the ETA). When a consumer books an Uber cab through the app, a driver lands at the destination in eight minutes in Bangalore and 12 minutes in Delhi, says Rathod.

Cashless payment

Uber payments in India are made exclusively through credit cards — the app stores your card details when you sign in and charges you for every ride or cancellation, making the ride itself a cashless transaction.

Riders use a five-star system to rate drivers. (Reports from abroad indicate that drivers can be fired from the network for frequently getting poor ratings.) You can share the ride with a friend and split the fare. You can also let friends track the car online so they know where you are.

“Technology enables us to be efficient on the demand and supply side. We are able to keep costs low and work with just three-member teams in every city because we have strong technology infrastructure,” says Gagan Bhatia, another General Manager.

“We’re just six months old (in India) and our potential (here) is huge,” says Sarangan.

In the absence of any information to corroborate that fact, we will have to take his word for it.

With inputs from Rashmi Pratap

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Published on August 18, 2014
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