Page 60 - Forbes - Asia (April 2019)
P. 60
TECHNOLOGY
Eats was this interesting part-time en-
Dara Khosrowshahi, Uber’s CEO,
has left much of Eats to Droege: deavor,” says Khosrowshahi, who took
“Honestly, I’m there to do the over as CEO in August 2017. “It has
corporate grunt work,” he says. since exploded, in a good way, into a
truly significant business.”
But despite the growth, Uber Eats is
losing lots of money, and even Khos-
rowshahi doesn’t know when it will be
profitable. Potential Uber investors will
have to decide: Is food delivery a smart
bet on future growth or a fool’s errand
in a crowded market?
It’s a question familiar to Jason
Droege, the 40-year-old protégé of for-
mer CEO Travis Kalanick. Droege has
run Uber Eats since its 2014 inception,
and some of the most critical voices he
had to overcome were from Uber’s pre-
IPO investors, who thought the compa-
ny was on a path to recreate the terrible
economics of Web 1.0 failures—Web-
van, which blew through over $700 mil-
lion trying to reengineer grocery deliv-
ery in the late 1990s, and Kozmo.com,
which spent nearly $300 million trying
to deliver videogames and convenience-
store fare. Droege shrugs off the com-
parisons—and the competition. “The
world was telling us this was a crowded
space. But our hypothesis was it wasn’t,”
he says.
Making money on delivery isn’t easy.
Sure, Uber Eats gets a hefty chunk of
a restaurant’s bill and charges a deliv-
ery fee, generally between $2 to $8. But
Uber has to pay the driver to pick up
and drop off the food, plus market the
service. Uber’s share of the bill is lower,
on average, than in the ride-hailing
business. Restaurants are, at best, semi-
core ride-hailing business is worth that much. LAST YEAR, FOUR willing partners that can ill afford a 30%
Its explosive growth is showing signs of slow- OF EVERY TEN blow to their bottom lines. And since
ing, and internationally the taxi service has PEOPLE WHO USED Uber isn’t (yet) willing to have your
struggled, selling its China operations to local EATS WERE NEW meal share a ride with a paying custom-
rival Didi Chuxing in August 2016, as well as its TO UBER, GIVING er, there are fewer network efficiencies
stakes in Southeast Asia. Uber’s self-driving-car THE COMPANY to capitalize on.
business, once considered the answer to rising ACCESS TO FRESH Its largest competitor, publicly trad-
driver costs, suspended testing and fired work- CUSTOMERS WHO ed Grubhub, has proved you can make
ers after an autonomous Uber killed a pedestri- a profit in this business. That success
an in March 2018. Now, as Uber prepares to tell MIGHT LATER BE has made it a formidable rival, and it’s
investors why they should buy its stock instead CONVINCED TO not the only one: Just in the U.S., Uber
of rival Lyft’s now publicly traded shares, Uber GIVE THE CAR competes against Square subsidiary
Eats looks like a distinguishing factor. SERVICE A TRY. Caviar, well-capitalized startups Door- WINNI WINTERMEYER
“When I first joined Uber, I think Uber was Dash and Postmates, and the potential
much more associated with ride-hailing and giant in the wings, Amazon.
56 | FORBES ASIA APRIL 2019
