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    Number of active users has grown by 25%, says Uber India president

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    Number of active users has grown by 25%, says Uber India president

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    Uber is busy expanding to various modes apart from cars in the country and the number of its active riders has grown by 25 percent in a year, says Pradeep Parameswaran, president of Uber India and South Asia.

    Uber is busy expanding to various modes apart from cars in the country and the number of active users has grown by 25 percent in a year, says Pradeep Parameswaran, president of Uber India and South Asia.
    In an interview with CNBC-TV18, Parameswaran said the firm is deepening its engagement in the car segment and is now doing more than 14 million rides per week. “India is an investment market for us. We are in 52 cities in India and the rest of South Asia. Our plan is to cover at least 200 cities next year,” he pointed out.
    The ride-hailing major has launched a new campaign for Uber Auto, which also aims to empower riders with seamless shared mobility solutions. The company also launched an Uber Moto campaign for youth with convenient doorstep pickup to help them save time from the arduous commute and use that time to up-skill themselves.
    According to Parameswaran, the intercity travel segment has a lot of potential in India which remains untapped. “One of the biggest challenges in our country is travelling between cities. That has not been addressed by ride-sharing in its entirety. In fact, all the ride-sharing platforms put together is a very small percentage of that market. Lucknow to Kanpur, Lucknow to Allahabad… it is a huge opportunity by itself. Those will be important parts of the expansion strategy,” he observed.
    Edited excerpts from the interview:
    The name of the show is very appropriate, Riders in the storm, drivers in the storm, but 2019 has been a difficult year not just for Uber here in India but for Uber globally as well. In Q3 while the losses have come down to about $1.2 billion versus what you saw in Q2 which was about $5 billion, there are question marks on whether you are going to be able to globally achieve the target of attaining profitability by 2021. Sum up the year for us?
    It has been quite the year but I have to say quite the year in a positive way particularly as it leads to the India and South Asia business.
    I want to jog your memory a little bit to 2013. When we launched in India, we were a car product which means that we provided point-to-point car services in big cities and as we have evolved, that service got a lot of love from riders and drivers and we grew exponentially over the first five years.
    We took stock earlier this year and you go back to the mission. Uber was always created with the idea of providing safe, convenient and affordable transportation to everybody and if you think about India, I would argue India doesn’t move in air-conditioned cars.
    If we want to be true to our mission, we recast a little bit of our thought process to say how do you make Uber relevant to a large part of the people who use transportation. Ridesharing and technology should help not just people who can afford car services but also people who would move around in two-wheelers and three-wheelers and buses and so we recast our strategy.
    If you think about what we have launched and expanded, we now have a business in two-wheelers that is growing fast. A business in three-wheelers that has got a lot of traction and we are trying a number of things including a partnership with transport agencies so that Uber truly in its full expression becomes a platform for transport.
    I will pick up on each of these things and address the recast and strategy that you just spoke of but speaking of recast, you pre-empted my question, let us talk about recasting a business. You have seen a restructuring as far as the business is concerned, is that more to deal with regulatory compliance, what was the need for the restructuring at this point in time?
    On-shoring allows us a number of things that we can do in the country that are much easier to do as an on-shored entity. There are a variety of things. So this is not from a compliance standpoint, it is just a big enabler for the business. So being physically present here, allows us to take advantage of a number of rules and regulations in ways that we didn’t have as an offshore entity, but the recast to me has been more strategic – this is just one of the methods as part of that but the strategy has changed.
    So linking back, the recast in strategy to fund infusion and we have seen the largest tranche coming in, over Rs 1,700 crore into the India business. Is that going to be enough to fuel the kind of expansion plans that you have?
    India is an investment market for us. That has been public and on record. As we think about our journey as a country, we are still in very early stages of the tech-led disruption cycle and we believe that we are going to be in investment mode in India particularly as we see the bets for the future.
    It takes time to create a vibrant and sustainable market place, which means there are enough vehicles on the road so when somebody presses a button, you can get a ride in ten minutes and there are enough riders who have built a habit and that takes time for every new mode that you create. That is the investment we are making and we are substantially supported to make sure that that happens over the next three to five years.
    Now let us talk about numbers. In 2018, Uber India was about 11 percent of the total rides that Uber was doing globally, what does that number stand at today?
    We are roughly about the same. If you remember, last year in November we were about 11 million rides a week. That number is now north of 14 million rides a week. The number of active riders on our platform has also expanded by 25 percent in the same timeframe.
    Speaking of driving the rider growth now and clearly the bet seems to be on deepening penetration as well as moving more to two-wheelers and auto-rickshaws as you have suggested. How many cities are you currently operating in and what is the plan now for 2020, where will we see you?
    We are in 52 cities in India and in South Asia broadly. We are trying to go to a Bharat product and service which means that our expansion will now cover next year at least 200 cities and that expansion has already started in the second half of this year and will rapidly expand in 2020.
    This is going to be more on the two-wheeler and on the auto side as you head into tier-II, tier-III cities?
    I think you will see all modes but I do expect the volume to come from the two-wheeler and three-wheeler service. I will give you one example, one of the biggest challenges in our country is travelling between cities. That has not been addressed by ride-sharing in its entirety. In fact, all the ride-sharing platforms put together is a very small percentage of that market. Lucknow to Kanpur, Lucknow to Allahabad… is a huge opportunity by itself stand alone. Those will be important parts of the expansion strategy. Intercity travel will be quite big.
    So intercity and intracity travel is what you are focusing on. How much of this is going to have to be driven by partnerships and associations that you form with original equipment manufacturers for instance?
    If you think about our history, we had a terrific technology, a terrific product, we turned it on and we were pulling in partners who brought cars from all platforms.
    As you move forward, it is absolutely critical to partner with the OEMs in much tighter ways. They have a much deeper presence, they are present in many more cities than we are. They have physical infrastructure and vehicles that they were building; let us take Bajaj as an example, were never on our platform in the past. I will give you one great example, Bajaj has been working on the quadracycle platform now for a while. This year is the first year we brought the Qute into the Uber platform and I am thrilled to tell you there are now 100 Qutes on our platform in Bangalore alone. The feedback that we have gotten from riders and drivers both have been terrific. These are typically people who used to drive an auto, now have picked up the Qute, it is a much more comfortable vehicle to drive. Riders who used to go on the auto are now taking Qutes because it is a closed vehicle and provides a better experience. The ratings tell us that it is going to be something that is going to work.
    Are you taking it to other cities?
    Absolutely. As soon as they are ready. We are looking to expand this out from Bangalore to other locations.
    That is the partnerships with OEMs and clearly the big bet for you is also on micro-mobility and hence the partnerships with the likes of Yulu, how do you see that playing out for you?
    Again coming back to our mission, our mission is to provide transportation that is convenient, affordable and safe. Whatever that mode might be, in a city like Bangalore, we are seeing such tremendous adoption of new modes of transport. People are keen on trying new things that change the convenience of their transport as average travel speed in the city has dropped from 14 kilometres an hour to 9 kilometres an hour. So Yulu is part of that play. That has talked about Uber as a platform, we don’t need to do everything but as a platform, we do want to be the place.
    The operating system of the cities for your everyday life?
    Absolutely. So for us, we would love for Uber to be a discovery platform for a player like Yulu as an example, the same rider someday might just say I need to go 2 kilometres and electric bikes are a very interesting and convenient way for me to go there, let me take that today. The next day he might take a car and the third day might be a metro. But Uber is a platform on which he will come to figure out what is the transport mode that most works for him.
    Let us talk about electric and it is clear now that the government isn’t going to mandatorily push people towards electric, but of course, there are incentives to do so. Give me a sense of where the electric mobility plan for Uber stands today?
    This is very personal and you live in the city that is now carrying the moniker of that we don’t want. I have two kids, a boy and a girl, 11 and 7. My son has been asthmatic since birth, hospitalised multiple times because of the quality of the air, so this is deeply personal to me. When we announced our intent to be major shapers and contributors to this journey in this country, we are very committed to playing our part. Let me give you a few examples, almost all viable electric car models today are already being trialed on the Uber platform whether that is the Mahindra car or the Tata vehicle, partners like Blu Smart, more than 200 cars are already plying on our platform. Two-wheelers, CNG options like the Qute, electric two-wheelers, we are already starting to see this starting to play out.
    Our role is going to be… think about this as the innovation platform for everybody to put their electric vehicles. I would be surprised if we don’t have at least 1,500 electric vehicles live on our platform. We expect that the two- and three-wheeler adoption is going to be very fast because the math is terrific, the product is fantastic and our ecosystem is evolving very quickly.
    Since you brought but viability and unit economics, let us talk about the viability of the business here in India and let us start by talking about ride-hailing. Cumulative losses according to reports in excess of Rs 3,000 crore odd for the India business today, give me a sense of the kind of visibility that you see especially both in terms of revenue and profitability for the ride-hailing business, I will address Uber Eats separately.
    We are a public company, so there are no secrets on the numbers. We are a for-profit company and so profitability is actually very important for us. It is an important milestone, publicly declared by our CEO. Our India unit economics have got better with every year. Obviously, we are still in investment mode and we don’t have a firm timeline as to when we will be profitable, but the math has moved in the right direction every month.
    Give me a sense of how much it has moved in the right direction?
    It is positive, obviously, we are not talking about numbers at a country level and at a product level yet. In 2020 we are going to be public about being profitable on a consolidated basis. India is one of our largest investment markets, that means we have to make a pretty big shift on profitability over the course of the next two years. A lot of that work has already been done, in 2017, 2018 and 2019 we have already moved on along that path and we will continue to move down that path.
    Specifically for India and I know that globally, Uber has embarked on a coast reduction exercise which has also meant layoffs. I think the last number that I saw was about 2 percent globally of the workforce having been laid off. What can we expect here in India both in terms of the kind of commissions being offered to the drivers, discounts, there has been a lot of regulatory back and forth on discounts. Give me a sense of what we should expect now on each of these pillars?
    On the people side, in history, we are the fastest growing company to get to this scale in a very short period of time and the choice that we made was to grow in a dramatically decentralised fashion. Which means that we invested a lot in the frontlines to be able to get to that growth that was about building rider awareness and building supply, many of those pieces are done and as that happens we are now shifting to a mode to try and build more efficiencies into our systems. The changes that we have seen on the people side were part of that shift of a company growing up from that decentralised hyper-growth investment mode to something that is still fast-growing but pushing towards greater efficiencies.
    The second question you asked was about commissions and obviously there are live regulatory conversations that have been in the public press. I think on that I want to stay and I am sure we will chat a bit more about the kind of the environment there. Our service works again if all three pillars work together which means that the pricing needs to be attractive enough for the riders to come, earnings need to be attractive for the drivers for it to make sense and the margins need to be attractive for us for it to be a viable business. One of the things that - if you ignore the headlines for a second as we engage with the government, we have found a very patient ear in terms of understanding the dynamics of the business and trying to put rules in place that makes sense over a period of time.
    Let us now talk about Uber Eats and since you go back to Dara Khosrowshahi’s strategy and his vision, he has been very clear that unless you are the number one or the number two player in a segment, it doesn’t make sense for you to be around. You are clearly a very distant number 3 here in India, you are losing a significant amount of money, do you still want to bet on Uber Eats?
    Let us put this in context, we were late in entering the eats market. Today 44,000 restaurant partners are already on our platform, we are in 40 plus cities in a very short period of time. It is very true that for this business to be viable over a period of time we would like to be in a leadership position and I don’t want to speculate about news but definitely moving towards fast growth equally important moving towards sustainability and I think that will be equally applicable as it is to the rides business as it is to the eats business.
    Nelson Chai spoke of the fact that in India for Uber Eats, you are paying for the restaurant, you are paying for the customer and you are paying for the courier as well. So, when do you believe given the competitive landscape – Zomato and Swiggy are entrenched incumbents, why do you want to continue to pour money into this business?
    Think about ride-sharing, on the mobility side every market, China, South East Asia, Latin America, the US, Europe and India, has gone through the same cycle, which is that it takes time and energy and investments to build up the service. Our quarterly reports last quarter will tell you that industry can move towards sustainability and frankly the food business collectively needs to also get there over a period of time.
    So, who is ahead in the ride-sharing and the ride-hailing business today, is it you or is it Ola?
    Let us take cities like Delhi, Kolkata and Hyderabad, we are two out of three rides in ride-sharing. If you take any of the other big cities, we are the platform where more rides happen and we are still not playing in all of the spaces that ride-sharing players have played in, whether that is in the intercity movement between cities, whether that is in the corporate segment whether that is in 2-wheelers, 3-wheelers, we are in very early days. So, we are very confident that we will be the platform of choice for both riders and drivers.
    I want to also get a little bit of sense from you on the backend. What is happening on the tech side, you have been hiring in a big way here in India and also on safety because that has been a critical challenge specifically in India and globally as well which Uber has tried to address. How many driver partners have you been able to train, what is beyond the tools that you have put on the app, what else can we expect in terms of safety?
    When Dara took his role he made safety our global number one priority and it continues to remain that way. We have made a ton of investment on the tech side. Given that you have asked the question around what else, tech is part of the solution but not the entire solution. We recognise the fact that this notion of gender sensitisation and actually physically engaging in a conversation is critical. Earlier this year we kicked off a programme with an NGO by the name of Manas which has done a lot of this work in the city of Delhi and started a pilot effort. The results of that pilot effort were tremendous. This year we have just crossed 50000 driver partners who have physically gone through a workshop experience which is 2-3 hours in duration and I have sat through that workshop. I would say it is an uncomfortable conversation where we confront the realities of the safety issues that we face on our platform and the response from our driver partners has been tremendous.
    Let me ask you, what did you make of this entire debate on auto sales have declined in India because of Ola and Uber, and let us talk about the penetration and where you currently are and as you said, even a few years down the line you do not see yourself being more than 10 percent. So how do you see this argument?
    I think we should look at the facts. The facts are the following; the number of people owning cars in India is minuscule. We have 20 cars owned for every 1,000 people. China is at 120 and the US is at 800. I hope we are not like the US and even to be like China, which means 6 times the number of vehicles we already have on the roads, can we build enough roads, can we afford it, and is that the right answer? Possibly not, but people will continue to buy cars because of the cycle where we are and it is a status symbol and so people will probably continue to buy cars.
    Only one out of 10 cars today are commercial cars, 9 out of 10 vehicles that are being added on a day-to-day basis are private vehicles. So, one thing I would say is that I do think the vision of having sustainable transportation in the city should not be built around private vehicle ownership. I think that was the era of the past, think about that as the landline of the past. We have a chance in India to truly leapfrog that because the technology is now available. My hope is that we find a way to partner with public transport where we can have more people in fewer vehicles that take vehicles off the road over a period of time; that needs to be one of the important considerations in the way we shape the transportation model of the future.
    You said that you feel confident about the India business, you are doing a lot in being able to scale the business, but also reduce costs and ensure that you have profitable and sustainable growth. As I said, cumulative losses over Rs 3,000 crore in 2019, where do you see 2020? Do you see a significant decline, significant drop given the fact that you continue to be in investment mode?
    Our mandate is clear which is to grow. We fully expect India to be one of the biggest drivers of global growth over the next 10 years. Given the population, adoption of smartphones, adoption of technology, data coming through, and the state of transportation in our country this provides an incredible disruptive opportunity over a long period of time. So, it is very much our collective belief that India is going to be one of the long term big growth drivers for Uber.
    In that context, our mandate is to grow fast, and obviously make the business more and more sustainable as we move forward. So, one thing I will assure you, profitability does matter and particularly as a listed public company it is critical for us to achieve. The challenge for us is to do both, we are working on both.
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