Getting a cab when required used to be quite a hassle until the innovative mobile-based service—UberCab (now Uber)— changed all that in 2009.

Just over 13 years ago, UberCab made it possible for riders to book a ride within minutes. In 2015, it became the most valuable startup globally. Now in 2022, the company is the world's largest ride-sharing company.

Founded by Travis Kalanick and Garrett Camp, Uber's disruptive technology, exponential growth, and association with controversy make it one of the most intriguing enterprises to arise in recent times.

Uber Technologies Inc. (Uber) is a ride-sharing, taxi cab, food delivery, and transportation network company. The company is headquartered in San Francisco, California, and operates in over 72 countries.

Stick around to see how an on-demand cab aggregator business that introduced its service in New York with only three cars in 2010 went international in less than a year.

From a Simple Idea to a Worldwide Phenomenon

Uber's story begins with two friends, Travis Kalanick and Garrett Camp. The story originated in Paris in December 2008, where the two were attending the yearly tech conference "LeWeb," but couldn't get a cab one snowy night.

Prompted by the situation, Camp spoke with Kalanick about an idea he had: "What if you could request a ride from your phone within a matter of minutes?" They also felt that sharing the cost of direct transportation with other people could make it affordable.

Travis Kalanick, born August 6, 1976, is an American businessman. He grew up in Northridge, California— a neighborhood in the San Fernando Valley. Growing up, he loved running track and playing football.

After high school, he got into UCLA to study computer engineering. However, his entrepreneurial itch led him to drop out of UCLA in 1998. He then co-founded Scour Inc. (a peer-to-peer search engine and file-sharing service) with some friends.

In October 2000, peer-to-peer companies were getting sued for copyright infringement. Scour, too, got sued (for $250 billion) as major media companies complained their content was getting shared freely via Scour. Consequently, Scour did not have the money in their back pockets, so they decided to file for Chapter 11 bankruptcy.

Not allowing the state of failure to crush him, about four months later, in 2001, Kalanick created Red Swoosh (a peer-to-peer file-sharing company). Then, in 2007, he sold the company in an all-stock transaction to competitor Akamai Technologies for approximately $19 million. He then focussed on his next chapter—Uber.

Kalanick conceived cab aggregator & ride-sharing company Uber, in 2009, along with Garrett Camp (a year after they discussed the idea in Paris). "Uber" originates from a German word meaning "above all the rest."

Garrett Camp, born October 4, 1978, in Calgary, Alberta, is a Canadian Businessman and investor. He completed his Bachelor of Science (B.Sc.) in Electrical Engineering and a Master of Science (M.Sc.) in Software Engineering, both from the University of Calgary.

Before Uber, Camp co-founded StumbleUpon. A web discovery platform that he later sold to eBay (EBAY) in 2007 for $75 Million.

Rewinding to the Paris conference, the entrepreneurs went their separate ways at the end of the event. However, Upon returning to San Francisco, Camp remained hooked on the idea discussed with Kalanick in Paris.

Anxious to solve San Francisco's serious taxi problem, Camp decided to buy the domain name UberCab.com. He then worked on a prototype with his school friends Oscar Salazar and Conrad Whelan. As the founding CTO of Uber, Salazar designed the architecture of on-demand transportation worldwide.

At this stage, UberCab was Camp's side project while he was still CEO of StumbleUpon in 2009. In mid-2009, Garret convinced Kalanick to join as the "chief incubator" of UberCab.

Moving the project along, Kalanick and Camp decided to find Uber its first CEO during their hiring spree. Kalanick's tweet looking for a manager caught the attention of Ryan Graves. That little tweet would eventually make Graves, the new hiree, a billionaire.

Graves joined as a general manager but became CEO soon after (in early 2010). Uber's ride had just begun.

Soon after its official launch in San Francisco in mid-2010, the service started in New York with only three cars.

In October 2010, Uber dropped the "Cab" in "UberCab. The founders reasoned that Uber wasn't a taxicab company in the traditional sense. Around the same time, the company expanded by raising $1.25 million in capital funding.

The ride service was an immediate hit among San Francisco's tech-savvy, urban professionals that weren't yet looking to buy a car.

In May 2011, Uber's continuing rollout in New York met heavy resistance from the massive taxicab industry in the city. However, the relentless company went international just six months later— not surprisingly, they started with Paris.

The company raised a lot more over several funding rounds over the next few years. By 2015, Uber became the most valuable startup globally, valued at $51 billion.

An Uber-Cool Business Model

Uber has a transparent business model. The Uber app leverages the company's massive network and technology to transport people and goods from one point to another.

Uber does not have its own fleet of cars. Instead, its drivers use their own cars to provide cab services. The drivers pay Uber a 25% commission on the fare received from customers.

The commission received by Uber is likely higher, as reports suggest Uber cuts hidden charges. Subsequently, on average, Uber rakes in up to 30% of the fare.

At times of peak passenger demand, Uber adds a surcharge. So the ride, at those times, can cost around 1.5X, 2X, 3X, or even more, depending on the extent of the demand.

There are great lessons for entrepreneurs from Uber's business model.

First, the model suggests entrepreneurs need not require large equity to begin a business. Second, you don't need to own a fleet of cars to provide over a million rides a day. Finally, Uber's business model proves that a simple, genuine solution can solve a real-world problem in a given industry.

Other key takeaways from Uber's business model include treating the workforce as partners and growing the business step by step. For example, Uber began with cars and is now also operating with bikes, boats, and helicopters.

Uber Technologies Inc.’s Rise

Uber rose rapidly because of the four factors that made up the company's pure blue ocean strategy. The ease of use of the technology was the first. Getting a cab quickly was the second. Next was the marked increase in the availability of cabs made possible by Uber. The fourth factor that led to Uber's rise is that you would no longer experience stinky cabs— Uber cabs were kept exceptionally clean.

The rapid success that followed Uber's initial launch in San Francisco and New York made it clear that the service was a great alternative to taxi cabs and public transportation systems. Since then, Uber has expanded into smaller communities and become popular worldwide.

The ease of use of the Uber app fueled its popularity among users and investors. As a result, the startup quickly became among the biggest companies in San Francisco and later the largest ride-hailing company globally.

Uber’s Ethical Challenges

The rise wasn't exactly a cakewalk. Like most entrepreneurial journeys, Uber, too, faced challenges and controversies along the way.

An example of one of the many challenges Uber faced worldwide is the 2014 judgment in Spain ordering a halt to Uber for unfair competition. Another example is the 2019 settlement of $20 million paid to drivers' by Uber after a driver in the United States sued the company for misclassifying drivers as independent contractors.

Controversies were behind the fall of Uber co-founder Travis Kalanick. From December 2010 to 2017, Kalanick served as Uber's CEO. His reign ended after he was forced to resign following growing pressure from reports about the company's unethical corporate culture at the time.

The Road Ahead for Uber

Uber wrapped 2021 with a strong performance, witnessing annual revenue of $17.44 billion, up 57 percent from 2020. In 2022, thus far, the company's trailing 12-month revenue is $21.40 billion.

Until Uber's IPO in May 2019, it had raised nearly $25 billion. It became among the highest-funded startups in history. The IPO accrued an additional $8.1 billion. However, Uber's post-IPO market cap decreased due to the effects of the Covid-19 pandemic.

Uber's competitive advantages include its global brand power, a diversified selection of businesses, and international availability.

Uber's global availability means customers do not need to re-download the app when traveling to another nation. And saving on customer acquisition costs means higher margins for Uber.

Furthermore, Uber's global brand recognition helps the company safeguard itself from getting banned by local regulators in other countries.

Uber has created multiple revenue streams through its growing global reach by expanding into various other business lines. For instance, when Uber's ride-hailing business almost came to a standstill, its Uber Foods business carried the company through the Covid-19 pandemic.

Currently, Uber is on track with its vision of becoming a transportation super app. For instance, at the start of the 2nd quarter of 2022, it added rental cars, buses, planes, and trains.

Uber will monetize from the introduction of additional options. Also, the app is now stickier as users will find all existing and new options through a single app.

Uber’s Future Plans

After Kalanick left Uber, Dara Khosrowshahi took over as the new CEO. A position he's still holding.

Uber presently has around 3.9 million drivers globally. However, in his strategic outlook for the company, Khosrowshahi sees a potential world outside cars for Uber. As part of a pilot test, Denver, Colorado, is the first city where the Uber app has included bus and train timings and the option to buy bus and train tickets.

There's more. Uber elevate—an aerial ride-sharing system— is also in the pipeline for the future. With such tremendous planning and a great team, Uber is poised to continue its growth pattern globally.