**Rising Uber Prices: CEO Dara Khosrowshahi’s Gaffe Exposes Knowledge Gap**
Uber CEO Dara Khosrowshahi recently made a revealing mistake regarding the cost of a short ride in New York City. In an interview with Wired, Khosrowshahi significantly underestimated the price of a 2.95-mile Uber journey, stating it would cost “twenty bucks” when the actual total was $50. The cost had actually increased by $20 in just five minutes before the booking. Khosrowshahi attributed the high cost to surge pricing, although this seemed misplaced given it was 10 a.m. on a sunny morning.
Uber’s prices have been on the rise, with data indicating a 30% increase in the average fare trip in the U.S. from the beginning of 2018 to the third quarter of 2019. YipitData, a data analytics firm, recorded another 41% hike in fares between Q3 2019 and Q3 2022, resulting in an overall increase of 83% over a 45-month period. Khosrowshahi acknowledged the issue of rising prices, citing inflation as a contributing factor.
**Uber and Competitors Forced to Raise Prices**
Uber is not the only rideshare company dealing with increased prices. Lyft, Uber’s main competitor, announced a service fee hike in October, resulting in a 3% increase in the average ride. Lyft attributed this increase to higher insurance costs.
Khosrowshahi explained that Uber’s price hikes are necessary to ensure fair pay for drivers. He mentioned that earnings per week for drivers have increased by 40-50% over the past four years, reflecting the costs associated with time and labor. Despite the higher prices, Uber’s audience continues to grow, with 130 million people using the platform on a monthly basis.
Uber’s CEO has been focused on achieving fairer pay for drivers ever since he took over the company in 2017. During his tenure, the company faced charges from the Federal Trade Commission for exaggerating earnings claims to attract more drivers, resulting in a $20 million settlement.
**Mixed Reactions to Uber’s Financial Results**
In addition to the pricing issues, Uber recently announced its financial results. While shareholders were pleased to learn that the company made an estimated operating profit of $326 million in Q2 2023, Wall Street was concerned about the slower revenue growth. Uber’s revenue increased by 14% to $9.2 billion, the slowest growth rate since Q1 2021. This prompted fears that the company’s pandemic boom may be coming to an end. As a result, Uber’s stock price dropped 5.7% to $46.65, marking the largest decline since October.
However, Khosrowshahi remains undeterred by these concerns. Despite dominating 74% of the rideshare market, he wants his team to maintain an “underdog” mentality. He confidently stated that Uber would achieve GAAP profitability this year and emphasized the importance of maintaining an underdog mindset to keep the team motivated.
In conclusion, Uber CEO Dara Khosrowshahi’s recent gaffe regarding the cost of a short ride in New York City highlights the issue of rising prices faced by the company. Although Uber is not the only rideshare service experiencing price increases, competitors like Lyft have also had to raise prices to cover rising insurance costs. The higher fares are necessary to ensure fair pay for drivers and reflect the increasing costs of time and labor. Despite concerns about slower revenue growth, Khosrowshahi maintains an optimistic outlook for Uber’s future, aiming to achieve profitability while preserving the company’s “underdog” mentality.