Uber CEO shocked to learn cost of 3-mile ride in company’s cabs.

Uber CEO shocked to learn cost of 3-mile ride in company's cabs.

Uber CEO Khosrowshahi: A Pricey Mistake

In a recent interview, Uber CEO Dara Khosrowshahi revealed a surprising lack of knowledge about the cost of Uber rides in New York City. He underestimated the price of a 2.95-mile journey by more than half, guessing it would cost around $20 when it actually totaled $51.69. Even more surprising was his explanation for the high fare: surge pricing, despite it being a sunny morning at 10 a.m. On realizing the mistake, Khosrowshahi exclaimed, “Oh my God. Wow!”

Although this anecdote may elicit a chuckle, it sheds light on a larger issue – rising prices on the Uber platform. While $51.69 for a short ride may be an anomaly, data suggests that Uber’s overall prices have been steadily increasing over the years. Bloomberg’s Second Measure found that the average fare for Uber trips in the U.S. rose by 30% from early 2018 to Q3 2019. Further analysis by YipitData revealed a subsequent 41% hike between Q3 2019 and Q3 2022, amounting to an 83% increase over a 45-month period.

Addressing this issue, Khosrowshahi acknowledged the impact of inflation, stating, “Everything is more expensive. Inflation has become a part of our everyday life.” He also pointed out that Uber’s competitors, such as Lyft, have been forced to raise prices as well.

The chief reason for Uber’s price increases, according to Khosrowshahi, is driver pay. He emphasized that the majority of riders’ fares go to the drivers, who have seen a significant increase in their earnings over the past four years. This rising cost reflects the value of drivers’ time and labor. Khosrowshahi sees this as a positive sign for the industry, along with the fact that Uber’s user base continues to grow, with 130 million people accessing their platform monthly.

Ensuring fairer pay for drivers has been a priority for Uber since Khosrowshahi assumed the role of CEO in 2017. Previously, the company had to pay $20 million to settle charges from the Federal Trade Commission, which accused Uber of exaggerating earnings claims in order to recruit more drivers. Khosrowshahi’s focus on driver pay aligns with his goal of maintaining Uber’s position as a leading rideshare platform, even in the face of competitors and changing market dynamics.

• Beyoncé’s $157 ‘listening only’ Renaissance Tour ...
• The largest Western bank in Russia distributed an additional $220 m...
• I’m a 3-time NBA champion turned climate entrepreneur. Global...

Uber’s Challenges and Growth

The interview with Khosrowshahi coincided with the announcement of Uber’s financial results, which received mixed reactions. On one hand, shareholders were pleased to see Uber finally achieving an estimated operating profit of $326 million in Q2 2023. However, on Wall Street, concerns arose due to the company’s slowest revenue growth since Q1 2021, with a 14% increase to $9.2 billion for the same period. These figures sparked fears that Uber’s pandemic-fueled boom might be coming to an end.

As a result, Uber’s stock price experienced a 5.7% drop to $46.65, the largest decline since October. Despite this setback, Khosrowshahi remains optimistic and undaunted. He believes Uber will achieve GAAP profitability this year, referring to the globally accepted accounting standard. He further remarked that his team should maintain an “underdog” mentality, not becoming complacent, even with Uber’s dominant 74% share of the rideshare market.

The Future of Uber and the Price of Success

While the gaffe regarding pricing knowledge may have momentarily overshadowed the conversation, it highlights the challenges that Uber faces in maintaining customer satisfaction amidst rising prices. Khosrowshahi’s commitment to fair driver pay and his emphasis on the continued growth of Uber’s user base demonstrate his dedication to enhancing the customer experience and keeping Uber competitive.

As Uber continues to navigate economic fluctuations, competition from other rideshare platforms, and evolving consumer preferences, the company’s ability to adapt and maintain an “underdog” mentality will be crucial. Only time will tell if Uber can strike a balance between profitability and attracting customers with fair pricing — an ongoing challenge in an ever-changing market.