Tuesday, June 10, 2014

Uber in Bangalore, and the Impact of Social Networking.

Uber, the Silicon Valley startup transportation company that recently raised a capital of $1.2B at a "post-money" valuation of $18.2B, has transportation services that serves the city of Bangalore, along with other prominent Indian cities.

What is interesting about this startup company? According to CEO Travis Kalanick:
"So what is that vision?… It’s a reflection of our mission to turn ground transportation into a seamless service. Basically make car ownership a thing of the past…"
Make car ownership a thing of the past. Wow! With cloud computing, we have made, for most enterprises (and people), "big" computer ownership a thing of the past. With streaming music and video, we have CD and DVD ownership a thing of the past. Now, entrepreneurs are working to make car ownership a thing of the past. Nice. What is next? I digressed.

Having experienced the Uber service in the United States, and as a frequent visitor to Bangalore, it was necessary for me to conduct an exercise of comparison between Uber, and a particular taxi service I have used in Bangalore, Meru Cabs.

From the screenshot you see at left, of a page from Meru Cabs' web site, you can see the following:

Rate for first 4 km = ₹80
Rate after 4 km = ₹19.50/km

So, for a 40 km ride, say from the airport, you would incur a fare of ₹80 + (40-4)*₹19.50 = ₹782.

The UberBLACK service, which is somewhat similar and whose screenshot you see on the right, has the following tariffs in Bangalore:

Base fare = ₹80 (irrespective of total distance)
Time component = ₹2/minute
Distance component = ₹18/km

So, for a 40 km ride, involving 1 hour, then, you would have a total fare of ₹80 + 2*60 + 40*₹18 = ₹920.

If you are able to avail of the service when certain discounts are offered — say of 49% between 11:00 am and 5:00 pm as seen by the tweet on the Uber screenshot — you could incur only 51%*₹920 = ₹470. And, Meru charges a slightly higher rate, between midnight and 6:00 am.

Thus, the power of social networking may provide Uber a slight advantage of being able to attract a larger number of customers provided, of course, you can make use of social networking as you land in Bangalore.

Of course, the comparison may not be perfect; but, nevertheless, it is useful to have this comparison in mind.