WSJ – Uber Has Powerful Customers in Washington

A Tribute to Freedom
In ‘Uber Has Powerful Customers in Washington’, journalist Reid Epstein highlights the high ground of digital advocacy whereby prominent Washington DC legislators on both sides of the aisle rely on Uber as their transport of choice.

A study analyzing Federal Election Commission data by Hamilton Place Strategies “found the number of Uber trips charged to congressional campaign committees rose to 2,800 in the 2014 election cycle, from fewer than 100 in 2012 and zero in 2010. In the 2014 cycle, Uber rides accounted for 60% of all cab fares for congressional campaign committees.”

Picture of Uber LogoAs Uber has faced resistance from entrenched taxi competitors from coast-to-coast and beyond, its helpful to have raving fan customers, who also happen to be legislators.  By example, Senator Rubio “publicly embraced the company and called for Miami to lift regulations prohibiting the car-sharing service.”  Masterfully, the company has hired David Plouffe, a former strategist for President Obama, to be the company’s chief lobbyist.  While few companies have the good fortune of Uber’s rapid ascent, it is a notable reminder of the power of product placement and effective digital advocacy.

The Staggering Economic of Uber’s Business

The economics of Uber’s business are staggering, which is driving its aggressive business plan.  The Wall Street Journal  reports in ‘Uber and a Fraught New Era for Tech‘ that the company’s valuation is approaching $30 Billion and “it might soon reach $10 billion a year in revenue.” (User’s Net Revenue is approximately 20% of gross revenue = $2 Billion).

An Uber presentation leaked to Business Insider sheds insights on the company’s staggering economics:

“San Francisco generated nearly $18 million of revenue that month. (Uber’s revenue is the total amount it collects from riders, most of which Uber then pays to drivers.) A year of revenue at that monthly rate would make San Francisco alone a $212 million business annually for Uber. And that’s just one market. That calculation also assumes no growth, and Uber has expanded to 230 cities since then”.  (Business Insider – LEAKED: Internal Uber Deck Reveals Staggering Revenue And Growth Metrics).  Revenue metrics for other cities in December 2013 are revealed by Business Insider:

Business Insider - Uber Revenue in Top Markets - December 2013

Source: Business Insider

  • Washington DC:  $11.7 million (a ~$141 million annual run rate).
  • New York City:  $26 million in New York City (a ~$312 million annual run rate).
  • Chicago:  $12.7 million (a ~$152.4 annual run rate)
  • San Francisco:  $17.7 million (a ~$212.4 million annual run rate).

Ingredient’s of Uber’s Success

WSJ reporter Christopher Mim’s highlights, with seemingly some cynicism, the ingredient’s of Uber’s success:  “Enter new markets without asking regulators for permission, then build enough of a customer base to make classifying the service as a traditional taxi company politically expensive for regulators. Tell investors who want to put their money in the company that they are banned from investing in its competitors. Aggressively recruit drivers from competitors, while also interfering with those drivers’ ability to make a living by ordering and canceling rides”.

To read additional fascinating insights on Uber’s business model, read:  Business Insider – ‘Now I Know Why Investors Are Going Hog Wild About Uber’

To read ‘Uber Has Powerful Customers in Washington’ on the Wall Street Journal web site, click here.

By Nick Mavrick

You can find Nick Mavrick on Google+

Intelligent Response specializes in operationalizing Predictive Analytics, Market Research, Quantitative Marketing and Digital Advocacy in Washington DC.

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