Uber's making a big bet on business travel
In the first half of this year, the company lost at least $1.27 billion, according to reports. To put that in perspective: Amazon's biggest loss ever was $1.4 billion for all of 2000.
But could the company's next big bet — "Uber for Business" — help stem the losses? Uber's global head of enterprise, Travis Bogard, told CNBC that it's going all-in on business travel, a market worth $1.25 trillion globally according to the Global Business Travel Association.
"Uber for business is a big bet that we're making," he says. "That means building technology that powers a wide range of transportation needs. Everything from business travel to daily commutes; from rides to company events and food delivery; and from caregiver and patient transportation to freight."
And in a rare look into the start-up's financials, he says it is predicting a run rate of $1.5 billion in this segment next year. That's a significant chunk considering leaked documents that show revenue on pace to top $1.5 billion in 2015.
Bogard was hired by Uber from Jawbone earlier this year to grow the enterprise travel segment and he branded it "Uber for Business" in a blog post on Uber's site Friday morning.
In the nearly five months since Bogard joined, he's added big corporate customers to Uber for Business like Goldman Sachs, Accenture and Salesforce. The business platform now offers premium services, like accounting, for a fee, he said. Importantly, the segment would create a recurring revenue stream for the company — an important metric for investors when Uber goes public.
Uber's push into the business travel segment is still in early stages, Bogard said. He expects the number of companies and users using Uber for Business to double by the middle of next year.
Still, a run rate of $1.5 billion for the segment in 2017 only goes so far at Uber's current burn rate. But Uber for Business may be another indication that the young, disruptive start-up is growing up and showing more discipline.
Earlier this year, Uber retreated from China where it was losing $1 billion a year to compete with local ride-hailing giant Didi Chuxing. In return, it washed its hands of losses, got a $1 billion investment and a 17.5 percent stake (worth $7 billion) in its rival.
"Twelve months ago, Uber was at war on a number of continents. With Lyft in the U.S., Didi in China, Ola in India, GrabTaxi in Singapore and Malaysia. Being able to focus their efforts where they can leverage what they already have is an opportunity," said Michael Moe, CEO of GSV Capital in Silicon Valley.
Uber's focus on business travel could eventually prove lucrative as well. But Bogard insists that profitability isn't the focus.
"As with all things at Uber right now, we're focused on building a great experience. And with that, profitability and the other things follow. We want to help businesses embrace the productivity that Uber consumers are seeing."
While the start-up may be showing signs of maturity, that's typical Uber (and typical for start-ups): Grow first, make money later. And it's still disrupting along the way.
This week, a group representing British Uber drivers is targeting Uber's corporate clients, protesting at Salesforce's offices in London. Leaders of the protest told Business Insider that further demonstrations are planned for other companies who are corporate customers in the new year.
Reported by: Cnbc.com
But could the company's next big bet — "Uber for Business" — help stem the losses? Uber's global head of enterprise, Travis Bogard, told CNBC that it's going all-in on business travel, a market worth $1.25 trillion globally according to the Global Business Travel Association.
"Uber for business is a big bet that we're making," he says. "That means building technology that powers a wide range of transportation needs. Everything from business travel to daily commutes; from rides to company events and food delivery; and from caregiver and patient transportation to freight."
And in a rare look into the start-up's financials, he says it is predicting a run rate of $1.5 billion in this segment next year. That's a significant chunk considering leaked documents that show revenue on pace to top $1.5 billion in 2015.
Bogard was hired by Uber from Jawbone earlier this year to grow the enterprise travel segment and he branded it "Uber for Business" in a blog post on Uber's site Friday morning.
In the nearly five months since Bogard joined, he's added big corporate customers to Uber for Business like Goldman Sachs, Accenture and Salesforce. The business platform now offers premium services, like accounting, for a fee, he said. Importantly, the segment would create a recurring revenue stream for the company — an important metric for investors when Uber goes public.
Uber's push into the business travel segment is still in early stages, Bogard said. He expects the number of companies and users using Uber for Business to double by the middle of next year.
Still, a run rate of $1.5 billion for the segment in 2017 only goes so far at Uber's current burn rate. But Uber for Business may be another indication that the young, disruptive start-up is growing up and showing more discipline.
Earlier this year, Uber retreated from China where it was losing $1 billion a year to compete with local ride-hailing giant Didi Chuxing. In return, it washed its hands of losses, got a $1 billion investment and a 17.5 percent stake (worth $7 billion) in its rival.
"Twelve months ago, Uber was at war on a number of continents. With Lyft in the U.S., Didi in China, Ola in India, GrabTaxi in Singapore and Malaysia. Being able to focus their efforts where they can leverage what they already have is an opportunity," said Michael Moe, CEO of GSV Capital in Silicon Valley.
Uber's focus on business travel could eventually prove lucrative as well. But Bogard insists that profitability isn't the focus.
"As with all things at Uber right now, we're focused on building a great experience. And with that, profitability and the other things follow. We want to help businesses embrace the productivity that Uber consumers are seeing."
While the start-up may be showing signs of maturity, that's typical Uber (and typical for start-ups): Grow first, make money later. And it's still disrupting along the way.
This week, a group representing British Uber drivers is targeting Uber's corporate clients, protesting at Salesforce's offices in London. Leaders of the protest told Business Insider that further demonstrations are planned for other companies who are corporate customers in the new year.
Reported by: Cnbc.com
