An American multinational, Uber Technologies Inc. is an online transportation network company based in San Francisco, California. Consumers owning smartphones can download Uber app, which has been developed, marketed and is operated by , allowing them to send in a trip request which is then transferred to Uber drivers, who use their own cars for pick and drop. The company has well expanded itself and as of May 28, 2015, the service was made available in 300 cities and 58 countries.
The successful business model is also being copied by many others, such trend has been name as “Uberification” In 2009, the company was founded as UberCap by Garett Camp and Travis Kalanick and the app was made available to the people in 2009. They also experimented with various carpooling features and also added other updates. Uber was also ranked as the 48th most powerful company in America in 2014 and by the end of 2015 the company’s net worth is stated as $62.5 billion.
So the question rises, with such a huge success, why is the company not going public and offering its shares? What is making them think so much, even after such a huge success? Given their success as discussed above, one might come up with such questions, especially if you are a business background person and anxiously waiting for such successful business model to go public where you can invest. So here we shall discuss top 5 reasons why Uber is waiting to go public?
The CEO of Uber, Travis Kalanick opted to make an announcement at The Wall Street Journal’s WSJD Live conference, that Uber will be taking its time before it goes on an initial public offering (IPO). Uber is not going to pull that tiger until they feel the time is in their side of the court. Kalanick also further added the company still needs a few more years to be mature enough that’s when the time will be right.
On the other hand, we see Bill Gurley, a board member of Uber and a partner at a Silicon Valley venture capital firm has a different mindset and approach to this matter. He believes that startups should focus on initial Public Offering as its objective.
Let’s now jump into the major 5 reasons and understand Kalanick’s view point of still holding back to go public:
Reasons why Uber is waiting to go public?
5) Because Money Is In The Private Market.
One of the main reasons Uber’s reluctance makes sense is due the company’s ready access to cash from private investors. The just in time and on demand car service has raised more than $5 billion up till now and likewise has a worth of over $50 billion. Kalanick expressed that they feel good about their current position and likewise the future of Uber as to where they are heading towards.
4) Uber Is An Eighth Grader
The company CEO equals his venture to an eighth grader. Entering in to Public market an offering an initial public offer is equivalent to going to the prom and that’s too early for an eighth grader. Uber needs to stay focused on where it is now before it steps into high school and think likewise. In simple words, 5 years old company doesn’t cut for a public market. Any pressure from the market and working accordingly, along with the extra scrutiny of the business will distract the Uber from its core business. Instead of concentrating on innovation and technology, the company will have to shift towards satisfying its shareholders.
3) The Company Is Scared Of Didi Kuaidi
With a huge competitor, Didi Kuaidi, a Chinese comparable of Uber who has Tencent Holding Ltd. As its investor, makes sense why Uber is scared. The huge investor has created many hurdles for Uber to operate in China; one of the major troubles Uber faces is Tencent Holding Ltd. blocking Uber from China’s messaging platform called WeChat. Not only longway away from home Uber faces challenges, but also in its homeland too, Didi Kuadi’s investment in Lyft Inc. an Uber’s competitor based in USA. Uber really needs to have an organized and strong home front to keep off any attacks from Lyft. Inc and should come to level their playing field with Didi Kuadi.
2) It Needs To Get Ahead In China
30% of trip comes from China, which suggests that China is a big market for Uber. The number of trips matches the trips with US figures. Therefore, instead of going public, Kalanick wants to grow Uber in China. Likewise, Kalanick also made a decision to spend $1 billion annually in China, being a tough competition to Didi Kuadi by giving it a run for its money.
1) Uber Eyes Autonomous Cars As The Future
By now, everyone is aware of how various motorcar companies are working as driverless cars to be the future of automobile industry. With that future yet to come, Kalanick is more focused to bring the same technology under Uber and has made driverless cars their top priority as of now. What we know is that Google’s cars have already made a revolutionary stride in this category, however it shall still take them 5, 10 or even 15 years to go up to 99.9% success rate. The growth of any organization is to converge itself towards the new technology as soon as possible to get that edge and we understand this when Kalanick says “Does Uber want to be part of the future, or do we want to resist the future like maybe the taxi industry before that?”
Let us know in our comments section below, what else could be a possible reason for Uber to hold back from going public?