By YS Chan
UberCab was founded in 2009 by American Garrett Camp to reduce the cost of private black car rides, which were already cheaper than licensed executive cars, although both services use black Lincoln limousines.
Camp realised that costs could be reduced substantially if passengers share rides. Together with two friends, he built a mobile app and launched the ride-sharing service, allowing users to hail private black cars.
Although charges were 50% higher than normal taxis, passengers would pay less when fares were divided among themselves.
Travis Kalanick was brought in as adviser and the first employee was Ryan Graves who joined as general manager in February 2010, and named CEO three months later. In December, he stepped down to COO and Kalanick became CEO of UberCab.
In 2011, the company changed its name from UberCab to Uber. In July 2012, UberX was introduced, allowing private car owners to drive for Uber, subject to background checks and vehicle requirements.
The launch of UberX caused reverberations in cities around the globe, as charging fares lower than taxis caused many passengers to migrate to Uber. In 2017, it was revealed that on average globally, passengers pay only 42% of the fare, with the rest subsidised by Uber.
The business model of Uber was not only unconventional but also devoid of values. It was ruthless against taxi drivers and had no respect for local authorities. Its sole aim was to capture market share and had no concern for the livelihood of millions of taxi drivers or their families.
It achieved phenomenal success in raising its company valuation, from US$60 million (RM257 million) in 2011 to US$68 billion by December 2015.
It lost US$2.8 billion last year, and US$708 million in this first quarter. On June 21, Kalanick was pressured by investors to resign as CEO in the wake of numerous controversies surrounding Uber, caused by its toxic work culture.
Kalanick has referred to his business as “Boob-er” and co-authored corporate values that included “Always Be Hustlin’,” “Meritocracy and Toe-Stepping” and “Principled Confrontation”.
On the other hand, Grab’s co-founder Anthony Tan started his business with a noble cause. He was genuinely concerned with the safety and security of passengers, especially women, riding in taxis hailed off the street, particularly at night.
This was related to me by Tan whom I met twice in Kuala Lumpur together with several others, who were in the MBA class of 2011 of Harvard Business School based in Boston, US. I shared my past experience as a limousine and taxi driver with them.
As a stop-gap measure, Tan started a service called Chauffeur Safe, using budget cars registered under “Hire and Drive” to make it more affordable, instead of using luxury models licensed as limousines.
As I also had experience operating car rental and limousine businesses, I cautioned that such a chauffeur-driven service would not be sustainable, as the market was too small. Tan disclosed that he was also working with a telco to introduce a mobile app for booking taxis.
The MyTeksi project emerged as business track runner-up in a new venture competition by Harvard Business School for 2011. MyTeksi app was launched on June 5, 2012 and received 11,000 requests on the first day.
Tan was reported to have said: “My team and I started calling the customers to find out how quickly they needed the service and tried to find the nearest driver to pick the person up”. When MyTeksi first started, it was difficult to get people to support them and Tan had to go door to door to convince them.
On Aug 7, 2014, UberX entered the Malaysian market with RM1.50 as starting fare, RM12 per hour and 55 sen per km, compared to RM3, RM17.14 and 87 sen respectively for budget taxis.
On Oct 9, 2014, my article “Much confusion over Uber” was posted online by an English daily, as there were many gullible supporters of Uber swallowing hook, line and sinker the many spins it dished out.
Uber has succeeded in publicising to the world that Malaysia has the worst taxi drivers, particularly those in Kuala Lumpur. The smokescreen succeeded in allaying actions by the authorities for operating chauffeur-driven services without permits.
It portrayed itself as the antidote for toxic taxi drivers but actually has nothing to do with them, as it was competing with taxi apps and not street-hailing passengers preyed upon by unscrupulous cabbies.
In 2014, taxi apps included our home-grown MyTeksi, UniCabLink and EzCab, and foreign brands such as Easy Taxi and TaxiMonger. Since then, taxi apps have grown to a dozen. Because of much lower fares, Uber swiftly captured the market share from taxi apps.
MyTeksi had no choice but to take the bull by the horns by adding private cars to compete with Uber, and morphed into Grab. It managed to compete successfully against Uber in seven Asean countries.
Last September, Grab’s valuation exceeded US$3 billion (RM12.84 billion), after it successfully raised US$750 million in a new equity financing round led by SoftBank.
Organisations founded on sound values and sustained by caring cultures are likely to thrive, while those that have no respect for others will eventually implode.
YS Chan is an FMT reader.
With a firm belief in freedom of expression and without prejudice, FMT tries its best to share reliable content from third parties. Such articles are strictly the writer’s (or organisation’s) personal opinion. FMT does not necessarily endorse the views or opinions given by any third party content provider.