Uber IPO: From Value to Growth to Profit Growth

Whether you love or hate Uber, there is no denying that its story is an extraordinary one.  While many of the elements of the Uber story are fascinating, the overall path to IPO is not that unique. In fact, an analysis of the core stages of Ubers life cycle is analogous to most other tech startups. Then if you look to Uber’s future you see where the profit growth will

Stage 1 Create value by easing a pain point - Like all successful start-ups, Uber address a consumer pain point. Taxi oligopolies were controlling supply of cabs and there were huge shortages, especially at certain times in big cities. It also facilitated the ability for more people to earn a little cash without requiring

Stage 2 Grow Aggressively – Once they knew they had something, grow as fast as possible. Goal is not profitability; it is market share as quickly as possible.  This is why Uber is worth more than their identical competitor Lyft. Uber grew faster. In fact, a lot of their poor reputation was earned in this phase to win at growth.

Stage 3 Pivot to Profits – Uber is still not profitable, and as this post humorously demonstrates, they may never get there. But if Uber does not make this pivot, like Facebook and Google did, they will not be a sustainable innovation. Once they IPO, there will be a grace period, but inevitably investors will turn against the company unless they can first generate profits and then generate more profits.

Why is this important to reform capitalism?

Because even great value driven innovations eventually morph into the pursuit of growth and profitability. The leadership team at Uber objective is no longer about solving a pain point for consumers. Their primary focus is pain points for their stockholders and board of directors.

As long as growth and profits are the key measures v. value provided, then you will continue to have companies that are in conflict with its employees/independent contractors and companies that encourage to lying and cheating.