How Uber’s fleet rollups helped it corner supply and defy sceptics

The management of Uber must be feeling vindicated big time. Its share price has tripled in the last twelve months, giving it a market cap of $160B+. There’s a $7B buyback. Oh, and Uber’s CEO has unlocked a cool $136M in options awards! 

What’s happening? 

It’s not an AI play.  

It’s not a microchip manufacturer. 

It’s not a defense contractor. 

There are multiple factors at work, however, I am going to pick just one. Uber’s has come to profitably dominate ridesharing ($5B segment EBITDA in 2023) because it has cornered driver supply. 

In this article, I’m going to explain why:

• Uber’s in-house fleet experiments largely failed

• Uber’s investments in fleet rollups succeeded

All about supply

Until the mass adoption of autonomous vehicles becomes a reality, drivers will remain the lifeblood of the ridesharing business. 

On that basis, the three strategies for winning market share, in descending order of complexity, are:

1. Initially low prices / low take rates to incentivise adoption (Bolt’s playbook in London  and elsewhere)

2. Optimise driver utilisation through surge pricing, multiple shifts, access to fast EV chargers etc. 

3. Control supply to drive down ETAs and lock out competition

#3 is where rollups come in. All scaled-up ridesharing platforms (Uber, Yandex, DiDi, Ola, Bolt etc.) have invested into captive fleets to a degree. But no-one has matched Uber’s ingenuity or financial muscle. 

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