Uber’s CEO Talks Australia
This Wednesday, Melbourne was chosen as a pilot city for trialling Uber’s air taxi ride-sharing program together with two other US cities: Dallas and Los Angeles. The strong support from the Victorian government, coupled with Melbourne’s unique geospatial factors and culture of innovation, helped ensure Melbourne was the first non-US city for Uber Air.
Uber’s active global expansion has transformed it from an ambitious startup in 2009 to the all-pervasive ride-sharing giant today. It has operations in 60 countries and 20,000 employees, across which the company took $US50 billion in bookings ahead of its IPO. Uber’s chief executive Dara Khosrowshahi praised Australia as one of Uber’s global “bright spots”. Mr Khosrowshahi said, “If the world looked like Australia he might be taking a vacation next week.”
Regarding the fears that autonomously driven cars may impact job stability as Uber’s technology innovation may lead to fewer drivers, he struck back at the media’s rumour, claiming that automation technology is far beyond mature and those cars can only run on “incredibly simple, repeatable and predictable routes.”
On top of the criticism regarding developments in autonomous vehicles, Uber has also faced negative press that they were employing ‘cash-burning’ strategies, deteriorating the enterprise value since its initial public offering last month. Uber successfully raised $US8 billion by going public, as the most anticipated Wall Street IPO in years.
However, Mr Khosrowshahi claimed the recent escalation of trade wars between the US and China damaged investors’ confidence, causing Uber’s stock price to suffer. Uber’s rivals like Lyft also suffered in this tough period.
Uber reported $US1 billion net loss for the first quarter at the end of last month; Mr Khosrowshahi said that the loss reflected investments Uber was making in its search for a market of “historic proportions”. He justified the investments as an aggressive profile in the field of movement of people, food and freight, and for not cheating investors.
During the low-interest period
The global economic slowdown amid the uncertainties of the trade dispute between the US and China added to the anxiety of global investors. To boost people’s confidence in sustainable economic growth, Central banks around the world are setting out plans to cut base interest rates. The yield on a ten-year Treasury bond has plunged from 2.5% to 2.1% in the past month and Ten-year Bond yields have turned negative again, reaching a new all-time low.
Mr Khosrowshahi was a former banking industry analyst. He joined the investment bank Allen&Company in 1991 and then became the CEO of Expedia, an online travel booking firm in 2005. In 2017 he replaced Uber co-founder Travis Kalanick after a series of scandals over toxic corporate culture and an aggressive approach to regulators.
He acknowledged that the low borrowing rates, that critics have blamed for asset bubbles, were helping Uber’s precarious business model. He then stated there was no doubt that a low-interest rate period would create an environment that may pay for growth and Uber was going to take advantage of this environment.
As for the threat from trade wars, Mr Khosrowshahi said, “Based on the tone of politics that I see, the relationship is going to get more hands-off, and there’s going to be greater separation than less separation, and there’s going to be a period of some difficulty.”
As the company is in an early growth stage, the de-globalisation phenomenon won’t hurt the ride-sharing business too much and Mr Khosrowshahi said one or two percentage points did not make a difference when the company was growing at forty plus percent.
Uber’s investment in Australia
Apart from the proposed Uber Air program in Melbourne, the ride-sharing company also has a partnership with Qantas where riders can earn Qantas points by using Uber to get to Australian airports through their frequent flyer loyalty program. This is the first commercial relationship that Uber has had with an airline.
Mr Khosrowshahi said since Australia is an English-speaking country with infrastructure such as mature wireless spectrum and payments functionality, the operation in Australia is as easy as it originally was in America. He appraised the Australian team as second to none.
By Frank Zhang
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