Uber’s Shrinking Ambitions

Uber never wanted to be just a rideshare company. To hear the company tell it, revolutionizing the taxi market was only the beginning. Travis Kalanick always thought the future had to look like cities full of self-driving Ubers. He said in 2016 that, “If we weren’t part of the autonomy thing? Then the future passes us by, basically, in a very expeditious and efficient way.”

  • The more-than-a-taxi feeling didn’t go away, even under new leadership. “What began as a ‘tap a button and get a ride,'” Dara Khosrowshahi wrote in the company’s S-1, “has become something much more profound: ridesharing and carpooling; meal delivery and freight; electric bikes and scooters; and self-driving cars and urban aviation.”

But Uber’s ambitions are now shrinking as it goes from “ultra-ambitious startup” to “company that actually needs to make money.”

  • Uber handed off its Elevate flying-car project to Joby Aviation yesterday, a day after offloading its Advanced Technology Group, which was trying to crack self-driving cars, to Aurora.
  • It sold its Jump bike-and-scooter arm earlier this year, and sold a chunk of Uber Freight in October as well.

So what is Uber now? Well, in 2020 it’s been mostly a food delivery company, with delivery revenue up 125% as of the most recent quarter. (Mobility revenue was down 53%, because everyone was staying home.) It completed its $2.65 billion Postmates acquisition last week, too, pushing even further into that space.

  • It’s investing in the companies taking over its ambitious projects, too, buying into companies like Lime.
  • And it’s also increasingly a logistics company, putting more services inside the Uber app rather than trying to build them from scratch. Amazon of transportation, remember?
  • “What we want to make sure is as that technology is developed, it’s developed for Uber network and is available for the Uber network at scale,” Khosrowshahi told CNBC.

Truth is, moonshots are an exclusive affair. When air taxis and autonomous cars will become a mainstream reality is still hard to know, but it won’t be next quarter, or the one after that, and the list of companies that can afford to keep throwing billions of dollars at these far-out transportation projects continues to shrink. It’s increasingly just two names: Amazon and Alphabet.

But Khosrowshahi is still claiming to be ambitious, at least in front of his employees:

  • “I know there are questions about whether Uber has any ‘big, bold’ bets left,” he wrote to staff, per The New York Times. “I understand that question, but I think it misses the big, bold bets right in front of us: to become the undisputed global leaders in both Mobility and Delivery.”

Big debuts and bigger debuts

The good news for Uber: There’s a heck of a lot of money in delivery. DoorDash is reportedly pricing its IPO at $102 a share, which is more than a 36% increase from the company’s initial target. That means DoorDash is likely to go public at about a $32 billion valuation, which is roughly double its last private figure. Not bad!

  • DoorDash is trading on the same thing Uber does: ubiquity. It controls about half the U.S. food delivery market, and both the company and its investors are betting that even when we’re allowed outside again, we’ll still be using DoorDash.
  • There are certainly reasons to be bullish on DoorDash, but it really seems like investors are willing to bet on literally any tech company going public right now. Airbnb has raised its share target ahead of its IPO tomorrow, and Wish is also planning to list well above its last private valuation.

Why the optimism? A lot of strong recent performances. Snowflake’s a good example: Its stock has more than tripled since the company went public in September. DataDog’s has almost tripled. Even most of the relative “failures” have been successes, with Asana up over its IPO price and Palantir rising despite a lot of people’s early worries.

  • Tech-IPO lows aren’t very low, and the highs are really, really high. As long as that’s the case, it’s going to be a lovely world in which to take your company public. (Unless you’re WeWork. There’s always WeWork.)

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