Uber Wins The Crowd By VietnamAdvisors LLC
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
As Proximo told General-turned-Gladiator Maximus,“Win the crowd, and you’ll win your freedom,” Uber has won the crowd by giving the masses freedom from taxicabs.
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Uber allows riders to avoid taxi lines, uncomfortable haggling with drivers on fares, route-stretching and ride-sharing, meter-gazing, and obligatory tipping. Uber solved these problems with their sustainable business model of users creating an online account linking to the Uber mobile app which synchronizes effortlessly to your cell phone. Users schedule rides, know fares and routes upfront and prepay the fare and tip before ever stepping into the Uber vehicle. Your receipt is emailed, so no cash or tiny receipts to keep track of. Uber customers quickly become repeat customers because the convenience is unmatchable, and the fare is fair.
One of the best upsides to using Uber are their drivers. Uber has a strong vetting/interview process and is doing a great a job of hiring reliable, hard-working people from local communities who want to make extra income. People from all walks of life are driving for Uber. My past five Uber drivers were a student, retiree, laid-off worker, housewife, and school teacher. Every one of these drivers were prompt, friendly, drove safely, and had clean vehicles.
Uber is expanding rapidly not only in the U.S. but also abroad.
Much has been written about Uber’s latest fundraising round that values the 5 year old company at $62.5 billion. According to people familiar with Uber’s current round, the company is telling investors it has a gross revenue run rate of more than $10 billion globally. That number is an extrapolation of the company’s current gross revenue so is not reliable. Without hard financial numbers, it is difficult to add to the ongoing conversation about reasonableness of the Uber’s valuation from a bottom-up, fundamentals basis.
From a global, macro top-down perspective, however, there are some noteworthy comments. An Uber rider anywhere in the world must have a smart phone and a debit card. In the emerging and frontier markets, a person who has both items is a person of means. In short, Uber’s riders are the ideal demographics for global consumption. That group is not only currently large, but it is also rapidly growing.
According to the Organization for Economic Co-operation and Development (OECD), a global economic research organization, the size of the “global middle class” will increase from 1.8 billion in 2009 to 3.2 billion by 2020 and 4.9 billion by 2030. The bulk of this growth will come from Asia: by 2030 Asia will represent 66% of the global middle-class population and 59% of middle-class consumption, compared to 28% and 23%, respectively in 2009.
Let’s look at Vietnam. Vietnam is a country of over 95 million people with 23 vehicles per 1000 people (2013). The US, by comparison, is 809 (2011). The low vehicle penetration rate suggests tremendous growth opportunities on many levels.
Uber’s access to this growing global middle class is key to its valuation because it allows Uber massive business opportunities. Once Uber moves into various businesses, it ceases to be a transportation company but a conglomerate growing on the back of the global emerging middle class.
At the moment, Uber $62.5 billion valuation does seem unhinged. But so did Facebook’s $104 billion market value when it IPO in May 2012. Today, Facebook is now worth over $300 billion.
San Diego based VietnamAdvisors.com talked with Uber’s Douglas Ma, Executive of International Expansion. Uber is wildly successful in Vietnam because people trust the brand. Doug shares his thoughts on how Uber’s expansion brings opportunity for Vietnamese drivers and support staff.
Q&A with Uber’s Douglas Ma
When I call Uber in Vietnam, do I have the ability to text/call the driver like I do in the US, get ride cost estimates, and split fares with another Uber rider? Can I see the car coming on my Uber map?
The great thing about the Uber app is that it is universal and it carries with it all the functions you use and already are familiar with. You have the ability to call and text your driver (international numbers will incur roaming charges), get fare estimates based on pickup and drop-off locations, split the fare with your friends, and watch real-time on a map as your car drive towards you.
What happens to the ride if I leave a hotspot and lose reception? How does the system know when the ride is over?
If you leave a hotspot area or lose reception, the driver will still head towards your pick up spot but you will not have the ability to track the car on a map in real-time until you go back online. Also, every ride ends after the driver confirms your final destination with you and “ends the trip” on the app.
How did you get involved in Uber?
I got involved with Uber out of pure luck. In 2013, I received an email from a friend who was asking if anyone was interested in working at a new startup called Uber. At the time, I didn’t know too much about the company, (they only had services running in the U.S. at the time and I had not been back in quite some time). After touching base with a couple of friends who used Uber in San Francisco and New York, they all had one thing in common…. they all loved the service even though most of them owned cars! During the interview process, I began to realize that Uber wasn’t your typical company. Everyone was smart, driven, and hungry and I wanted to be a part of this!
What kind of career opportunities are there for an American or a local Vietnamese at Uber Vietnam?
At Uber, we are always looking for the best people. We want people who are analytical, curious, fierce, and passionate about changing the world. For Uber Vietnam, we’re looking for the same people but Vietnamese fluency will also be a requirement. We always want local people to run our businesses and language is a very important part of being local.
If you think you have what it takes to work at Uber, please check our website for more opportunities because we are hiring everywhere.
What cities do you see Uber expanding into in the next several years?
Uber has plans to be everywhere in Vietnam. As long as people need reliable transportation at the push of a button, these are all places we want to be. During the summer, we did a marketing stunt in Da Nang to see the interest level of Uber. The results were incredible and exciting. Don’t be surprised to see Uber operating in more Vietnamese markets very soon.
What attracted Uber to Vietnam?
Vietnam was an attractive market for us because we understood that the population here is young, tech-savvy, forward-thinking, and growing with spending power. The government here has also been very supportive of new technology and innovation and so for us, it was a very attractive market to launch Uber in. With that foresight, Vietnam has been one of our fastest growing markets because people have adapted quickly to new technology and have made it part of their daily lives. This has been super exciting and we want to do more.
What are the opportunities and challenges of the operating environment in Vietnam? What do you see as Uber’s recipe for success in Vietnam?
There are countless opportunities in Vietnam right now especially as Vietnam continues to open up more and more. The Trans-Pacific Partnership (TPP) was a big milestone and a move in the right direction. Like all markets, the biggest challenge always involves adapting your business to find the right product/market fit. Our success here has been to focus our efforts for our customers. For Uber, we have two. Our customers are our riders and our partner drivers. We focus everything on them by understanding their pain points, providing the best value, the best service, and the best user experience. This focus has really led to our success in Vietnam.
As a US Uber user, how do I use Uber in Vietnam? What are the differences US Uber users should be aware of? Credit cards vs cash payment?
The beautiful thing about Uber is that it’s a universal app that you can use in over 360+ different cities around the world. Riders who use the app in the U.S. can use the same app and get the same exact experience they are used to. In Vietnam specifically, some riders will have the option to pay cash if they choose to do so. Riders will know if they have the cash option by simply going to their profile and checking their payment options.
If they see a cash option, it’s available. If they do no, it is not. Paying by credit card is still the default option and still preferred option especially with International travelers who want a hassle-free and seamless experience.
Is Uber available for pickup and drop-off at both the Ho Chi Minh City International Airport (SGN), and Hanoi International Airport (HAN)?
Uber is available for pickup and drop-off at both international airports in HCMC and Hanoi.
How much cheaper is Uber vs. Vietnamese taxi companies?
UberX is priced 35% cheaper than taxis in HCMC and 50% cheaper than taxis in Hanoi and UberBLACK is priced roughly the same as taxis.
How many jobs do you estimate will be created in the next two years for Vietnamese Uber drivers and staff?
In the 1.5 years that Uber has been in Vietnam, we have created over 10K+ jobs and our goal is to create more. We want to give everyone who has a car the opportunity to use their vehicle to make some extra money, empower Vietnamese entrepreneurs and help people get around their cities more easily.
What do you see for Uber Vietnam in 5 years?
The main goal of Uber is to be as reliable as running water and that continues to be our focus for Vietnam. Our average pickup time in Vietnam is under 4 minutes but we want to be better than that.