Sometimes, regular riders may be shocked by the cost of an Uber ride, but it's not something you'd expect the company's CEO to encounter.
But Wired Editor at Large Steven Levy recently took a 2.95-mile Uber ride in New York City to meet Uber Technologies Inc. CEO Dara Khosrowshahi. When Levy asked Khosrowshahi to estimate the ride's cost, he casually put it at $20. Much to everyone's surprise, the price turned out to be $51.69, including a tip for the driver.
"Oh, my God. Wow," Khosrowshahi exclaimed when he learned the cost of the ride, according to the interview.
And that wasn't the only shocking price discovery. When Levy initially tried to book the Uber for the interview, the price was $20 higher. Khosrowshahi attributed this to surge pricing, despite it being a sunny weekday morning without any special events.
Khosrowshahi blames the high cost of Uber rides on inflation. In the interview with Levy, he mentioned that inflation has become a part of daily life, resulting in higher prices. The majority of the fare now goes to drivers, leading to a significant increase in their earnings over the past four years, which the Khosrowshahi considers positive.
Uber is experiencing audience growth, with 130 million monthly visitors to its platform. While prices have risen, the services remain compelling, ultimately benefiting the company's business. Some reports indicate that Uber fares have increased at least four times faster than the rate of inflation.
Uber was one of the most successful startups of all time. It was founded in 2009 by Garrett Camp and Travis Kalanick, and it quickly grew into a global phenomenon. The company's early investors included Amazon.com Inc. Founder Jeff Bezos, Goldman Sachs and others. These investors saw massive returns when Uber went public in 2019, with their shares soaring by more than 1,700,000% for the earliest investors. Success stories among startup investments have been a large part of the recent growth of equity crowdfunding platforms like StartEngine and Wefunder, including StartEngine raising over $17 million from retail investors.
Some of the price increases are also because Uber is no longer subsidizing rides on a quest for growth and is instead focusing on profit. It seems to be working: This week, Khosrowshahi announced Uber's first operating profit. Uber's net income surpassed expectations at $394 million instead of the projected $49.2 million loss.
Uber's pricing has increased steadily in recent years because of a number of factors, including increased competition from other ride-hailing apps, investments in new features and services and the rising cost of living.
The impact of Uber's price increases on drivers has been mixed. Some drivers have complained that the increased prices are making it difficult for them to make a living, while others have said that the higher fares are worth it for the increased demand.
Khosrowshahi also revealed a unique approach to team motivation, stating that even after achieving profitability, he intends to find reasons to criticize their performance or find another reason why they "suck." This underdog mentality has been instrumental in driving the team to achieve their goals in the past. Embracing this mindset allows them to remain focused, hungry for improvement and committed to continuous success.