Uber looks to step up India investments
Bengaluru: Global cab-hailing giant Uber Technologies Inc. is looking to step up investments in India, build out more India-specific and global innovations through its presence in the country, and rapidly scale up growth and its engineering team in the country, even as it looks to move on from recent controversies and scandals.
In an interview, Daniel Graf, Uber’s global head of product, indicated that India was among the company’s most significant markets globally and that it would do whatever it takes to succeed in the rapidly growing internet economy. For US-based Uber, India became the most important international market after it sold its China business to local rival Didi Chuxing last August.
“What’s key for us is that we have a long-term sustainable business here. In many of our markets, we are actually profitable and we know that the fundamentals of our business are very healthy. In some of our markets where we are still in hyper-growth mode, we put in extra investments to get to a place where we’re in a sustainable phase. In India, we are investing. We are investing with technology, with promotions, etc.,” said Graf, a former top executive at Google who joined Uber in 2015.
“For us markets like India, Brazil, Indonesia, the Philippines, etc. are massively growing markets and very important for the company. We’re putting in a lot of engineering resources in India—we have 150 engineers here in Bangalore and in Hyderabad. The commitment to India as a technology centre is super important. We’re developing global solutions here in India in Hyderabad and Bengaluru, we’re going to continue to invest and grow these teams. No question about it,” Graf added.
He conceded that Uber had been affected by recent controversies, which have proved to be a major distraction for the world’s most valuable internet start-up, but added that the company had put most of its recent struggles behind it. Uber ousted its CEO Travis Kalanick—whose departure was one of the most significant events in the start-up world in the past decade—and named Dara Khosrowshahi in his place in August this year.
“If I would say (the recent controversies) haven’t impacted us, that wouldn’t be true. Of course, it impacts us. What I can say is that with Dara on board, with all the changes in place, we’ve changed in many ways. For example, the way we interact with driver partners, that’s a big change this year. When I look at what has happened, I would say it’s a new chapter, it’s moving forward and it’s learning from the past. Yes, mistakes have been made. Mistakes have been addressed and I think, not just from a business point of view, but also from a culture point of view, from a team point of view, we are a better set-up than ever before,” Graf said.
For Uber, succeeding in India has become one of its top priorities, given that it was forced to concede defeat in China. However, that will not be easy, according to analysts, given that it is up against an extremely well-funded local rival in Ola.
In October, Ola (ANI Technologies Pvt. Ltd) raised $1.1 billion in fresh funding from Tencent and existing investor SoftBank, giving it enough ammunition to keep Uber at bay.
Uber and Ola currently differ over who controls how much of the Indian market.
Ola executives and investors claim that Uber, currently, is less than half of Ola’s size while Uber executives claim that it is slightly bigger than Ola. There is no conclusive way of checking either claim.
But both Uber—which is currently set to raise fresh funding from SoftBank—and Ola need massive amounts of capital as they are locked in a bruising battle for market share. Whether Uber continues to increase investments in India remains to be seen, given that its new CEO said in a recent conference that the South Asia cab-hailing market is “over-capitalized” and that the company does not expect to generate profits from the region anytime soon.
Uber is currently also looking to tweak and improve its pricing algorithm, which has in recent times drawn considerable flak after it was revealed that the ride-hailing giant uses a “route-based pricing” system where it charges customers based on what the algorithm predicts they are willing to pay.
“Remember in the old days, when you requested a ride, you didn’t know the price upfront. At the end of the ride, sometimes you were positively surprised and sometimes you were negatively surprised. We don’t want those surprises. You want something to work reliably and be affordable. We introduced globally ‘Upfront Pricing’, which takes real time, real world conditions into account. Our model for upfront pricing is good, but we have room to improve there. We are trying to get it as accurate as possible. If two people sign up on Uber at the same time, and they are taking the same ride at the same time, we want both to see the same fare. There’s no reason for them to have different fares,” said Graf.