Business Model Canvas Uber [2022 major update]

Crucial key partners are the participants on the supply side:

1. Drivers: The drivers are on the supply side of Uber’s business model and they can join or leave at a moment’s notice (or multi-home on an ongoing basis with other ride-hailing businesses). It is essential to have a sufficient number of them to be able to provide the customer proposition (timely pick-up at low cost). This is not just a static consideration but also at peak traffic times, when events are on, etc. Indirect network effects (crucial to the business model) do not kick-in without a critical mass of drivers. This fact is best demonstrated by the fact that  Uber accelerates supply when they enter a new city. But it’s broader than that. While sometimes underappreciated, drivers still have a choice to participate or not. It’s a complex topic and it will be interesting to see what – as one example – will happen in the post-pandemic world. Competition over workers is intensifying: the scenarios outlined in this discussion from Aug 2021 have only further intensified as we know now a year one.
2. Restaurants: Like drivers, restaurants are essential and can join or leave at a moment’s notice. They, too, can multi-home using one of the many competitor meal-delivery offers (including on bike). It’s an ambivalent space due to the high commission that Uber takes. The importance of Uber Eats was highlighted during the covid crisis when Uber Rides basically collapsed while Eats soared alleviating the financial fallout (somewhat). Eats is also one of the biggest growth prospects, yet, this space is highly competed over. DoorDash is spending a lot of money on digital advertising. This can have a considerable impact on Uber. A really fascinating space to observe will be whether DoorDash’s more specialised network effects on Dining will succeed or Uber’s hybrid ones. Losing (or not being able to achieve potential) on UberEats, could affect the entire business model because it appears that there is more payout for riders on Dining platforms (this would be pretty bad new in a tight labour market),

Participants on the demand side are of course in the customer segments category of the biz model canvas.

The next important tier of key partners are:

1. Commercial partners:

   Uber partners with a multitude of corporates and commercial partners. These types of partnerships differ and have different purposes (e.g. better pick-up/drop-off points, new channels to local markets, enhanced loyalty and more). Many of these partnerships are very important because they are not easy to replicate for some of the smaller competitors with a lesser recognised brand and customer base. These partnerships have grown considerably in their importance and are the area that has changed most in the last 3-4 years (apart from restaurant partner).

   Here are some examples:

   • Uber is partnering with hundreds/thousands of

     malls and attractions

     to become the preferred ride-share partner of the respective partner and then ease pick-up through defined pick-up points, this includes

     airports

     (which has been one of their biggest revenue generators), malls, attractions and more (one example:

     Universal Studios in LA

     ). 

   • Many

     commercial partners

     for shared rewards and as an additional sales channel, e.g. Starwood Hotels & Resorts, American Airlines, Hilton Hotels, American Express, PayPal and Pepsi.

   • Loyalty program partners:

     e.g. collaborating with frequent flyer program provider: such as partnering airlines

     , tiered rewards programs or here

     Capital One

     in the US.

2. Lobbyists were more important at the earlier stages of the company in that there was an (albeit unlikely) risk of being banned or significantly curtailed. Lobbying work continues on a number of fronts (in particular the employment status of drivers). They can also be crucial for the trajectory of future innovations (in particular autonomous vehicles). We can also see that Uber has backlashes where lobbying is more difficult, esp in Europe.
3. Cities / communities: Are also very important for various aspects – we will elaborate a bit more in the customer relationship section to keep things more succinct here. But it is listed in the second tier of key partners for a purpose (ahead of tech partners!).

Other partners:

It is pointless to call out underlying technologies as key partners if all competitors have access to it. Yet, that is what you will find basically everywhere else listed first and as crucial (where you will read that AWS is a key partner of Uber – a saddening case of junk “insights”). Were the underlying technologies not present (maps, app stores, umm.. smartphones), then there would be no Uber (nor any of the competitors). What an insight, hey?

1. Technology partners: If the same technologies are accessible to all companies, including all of Uber’s competitors, it becomes a non-distinguishing factor in terms of competition. A closer look reveals (to no surprise) that distinguishing differences are developed by Uber themselves. Therefore, these are to be listed among the key assets / resources. Two examples are the back-to-back routing algorithms and Uber’s work on better pick-up/drop-off points for ExpressPool (since June 2022, this has been rebranded as UberX Share). Nevertheless, there are always some leading-edge technologies that can play an important role in being able to provide better value propositions than competitors. For Uber, this is clearly in the space of AI / algorithms. But here too, insights that come from AI, are always based on questions asked by engineers and this then brings us back to key resources (being Uber’s skilled engineers)
2. R&D Partners: R&D partners are those that collaborate with Uber on longer term business opportunities. One of the most important ones would be those on autonomous vehicles (AVs)
3. Other partners involved in the non-core value proposition or supporting activities, some examples are Hire car partners (Uber-ready vehicles), insurances, and partner on driver incentive programs (this is a long topic in itself that can be of considerable importance for the full-time drivers)
4. Investors/venture capitalists were crucial in the early days. Since their IPO, this is less relevant (though there have been post-IPO capital injections). Uber Executive will vehemently deny the lesser importance of investors these days. But the truth is that capital injections into R&D and growth via shares are simply rare. It rather goes into driving the share price (which is beneficial for the Execs but less so for the company’s actual growth)

What you should know about Key Partners (and all other aspects of tech biz models):

No aspect of a business model is static and this includes the list of key partners. Granted, in 2010, Uber’s technology partners would have been on the list of their absolute crucial key partners. But we are now in >2022 … The standard technologies that are now accessible and programmable by basically any competitor and even relatively new startups are not a distinguishing and competition-deciding factor anymore. Uber is no longer predominantly fighting against Taxis but against other ride-hailing companies.

Our list of Key Partners (and all other areas of the biz model) needs to be constantly adapted (at least every few years). This is the 4th major revision of our article and the list of Key Partners has changed considerably in this time.

Being the 4th major upgrade of this article since it first appeared 5+ years ago means we have updated it about every 1.5-2 years! A review of other high-ranking articles on Uber’s business model shows the poor state of affairs: almost all of them are 4+ years old. Some of them are copies of our initial article (some completely unaltered!). But even more reputable sources have not updated their material ever since and – thus – have rendered themselves irrelevant. We have been passionate about digital tech biz models for over 8 years and make sure our material is always up to date. All course material as an example is as up-to-date as 2022 (and a few small bits are 2nd half 2021).

Looking at the blatant copies of our previous articles on other sites, including learning management systems, we note how much of an evolution there has been within Uber (and of course all other tech companies) that we are covering. Apart from some brilliant, less time-invariant insights that we shared at the time, all parts require constant updates! And we have kept the passion and spirit to do so. And we are very proud of this!

Now, let’s continue on Uber’s BMC.