Ride-sharing service Uber Technologies Inc. said Thursday a new round of funding valued it at $41 billion, a bet by some of the world’s top investors the firm can sustain a breakneck global expansion pace despite fierce challenges from regulators and taxi companies.
The San Francisco-based company collected $1.2 billion that enables it to expand its workforce, lure new drivers, test a delivery service and subsidize prices in some of the 250 cities around the world where it operates. The closely held company has raised eight times as much as its closest ride-sharing rival, Lyft Inc.
The funding is a vote of confidence in Travis Kalanick, Uber’s co-founder and chief executive whose brash personality has courted controversy. A recent privacy scandal stirred by one of Mr. Kalanick’s deputies appeared not to faze investors focused on Uber’s business prospects.
Uber is now valued at $41.2 billion, easily the highest for any private startup now backed by venture capitalists, and above the market capitalizations of publicly traded companies including Delta Air Lines Inc., Charles Schwab Corp. , Salesforce.com Inc. and Kraft Foods Group Inc.
Now, the five-year-old company must prove it can turn a mobile app for hailing a ride into a significant and profitable global business. Its app, which lets people hail a car from professional or nonprofessional drivers with a few clicks and a credit card, has become a part of daily life in cities from Anchorage to Shenzhen, China.
Some of that cash will go into defending its services. Uber is in fierce fights with local regulators in many places where it operates. It has faced protests by taxi drivers, shutdowns and laws aimed at forcing ride-sharing services into compliance with safety measures and work rules governing taxi operators.
Uber also is exploring using its fleet of drivers to transport goods and services in addition to people. The company has tested deliveries of items including ice cream, flu shots and fresh meals and recently poached the head of Google Inc. ’s same-day delivery business.
The latest financing assumes that Uber’s rapid expansion overseas will overcome these hurdles and continue apace, said Bill Gurley, a partner at Uber venture investor Benchmark and a board member of the ride-sharing company.
“International expansion probably is the key theme of the fundraising,” said Mr. Gurley. “We feel remarkably good about where we stand in the domestic market and our real growth initiatives are focused internationally.”
Uber profits by keeping 20% of the fare paid on most rides on its service and gives the rest to its drivers, who work as independent contractors.
It made hundreds of millions of dollars in revenue last year and is growing sales at a clip of more than 40% a quarter, said a person familiar with the company’s operations. That is an increase from earlier this year, when Mr. Kalanick said revenue was doubling every six months.
By the end of next year, Uber expects to be operating at an about $2 billion net annual revenue rate, excluding driver pay, according to the person familiar with the company’s financials. Such growth is coming from a cookie-cutter global expansion, where the company moves quickly to open up shop, splash out incentives to sign up drivers and then hire lobbyists and lawyers to gird for legal challenges from taxi companies and regulators.
“They are doing exactly what they need to do to change the market,” said Dave Ashton, co-founder of SnapCar, another app-based car service in France that competes with Uber. “They don’t even make any effort to comply with what they think are bad laws.”
That plan doesn’t always work. Uber last week suspended operations in Nevada after a judge issued an injunction against the startup amid accusations that it competes unfairly with taxis because it doesn’t follow the same rules regarding drivers, insurance and more. Elsewhere, regulators in Brussels are readying new laws that would allow Uber and taxis to coexist, while a decision from a French court over the possible banning of Uber is due Dec. 12.
In Europe, Uber has been the focus of violent protests by taxi drivers and regulatory bans on a carpooling service it calls UberPop that was unveiled this year. UberPop, which uses drivers without professional taxi or chauffeur licenses, is banned in Brussels and facing court challenges in Berlin. In France, the national consumer-protection agency and the Paris prosecutor say the new service is illegal and are backing a suit against Uber in commercial court.
Uber’s response last month was to hold a news conference at its Paris office to declare that the firm would expand UberPop in Paris. In a presentation before giving televised interviews, executives said their goal is to have 70,000 drivers without professional licenses picking up fares across Paris in two years.
Uber executives say they are operating under outdated laws that they fully expect to change once lawmakers see the service’s popularity with constituents.
“If every time somebody wants to ban us, we just go along with that, we wouldn’t be in business,” said Mark MacGann, Uber’s main lobbyist in Europe and the former head of government affairs at NYSE Euronext in Brussels.
Uber’s strategy has been to get a foothold in a market in any way possible, whether it offers a way to hail traditional metered taxis, livery cabs or drivers without professional licenses through its ride-sharing services. The key is to get potential customers to download the app and then expand the range of services.
In London, the company has tried to recruit taxi drivers, but many drivers of London’s iconic black cabs refuse to work with a company they believe is breaking the law. Cabdrivers say the smartphone app that calculates fare based on time and distance is tantamount to a taximeter, which is only allowed to be used by the more expensive black cabs.
Any delay into a city costs Uber potential market share. Uber hasn’t successfully cracked the Dublin market, for example, where the London-based competitor Hailo Network Ltd. is widespread.
Authorities in Berlin and Hamburg banned the service. In response, Uber lowered the fares drastically in an attempt to appease passengers. But the low fares make it unattractive for drivers to offer their services. In recent weeks, Uber cars have been unavailable in the city.
Mr. Kalanick said in a blog post on Thursday that the Asia Pacific region is a priority for the company’s international growth. It recently opened in Vietnam and Singapore, joined with a rental-car firm in Jakarta and plans to add rickshaws in India.
But the company also faces increased scrutiny in Thailand, Vietnam and Singapore, where regulators are examining the service’s legality. On Monday, Thailand’s transport minister, Prajin Juntong, said the government would ask Uber to cease its operations there because it uses private cars that lack fare meters, among other issues.
Uber hopes to recruit prominent investors in India, Latin America and the Middle East as it raises $600 million, with the goal of fostering powerful new allies who could help the company clear obstacles to growth, according to people familiar with its goals.
Uber is also seeking to rebuild its public image in the wake of controversial comments made last month by one of its executives, who suggested in a private dinner that the company should do opposition research on journalists critical of its business. The incident sparked concerns about Uber employees’ access to its customers personal data, and Sen. Al Franken (D., Minn.) called on the company to explain what data privacy policies it has in place.
“We also need to invest in internal growth and change,” Mr. Kalanick said in the blog post. “Acknowledging mistakes and learning from them are the first steps.”
Uber’s latest valuation is double the amount set by investors just six months ago and is nearly 12 times last year’s total. The company didn’t disclose which investors participated in the funding.
No other private tech startups are valued anywhere near Uber. Four companies currently have $10 billion valuations—home-rental site Airbnb Inc., software company Dropbox Inc., mobile-messaging service Snapchat Inc. and Chinese smartphone maker Xiaomi Inc.—though those valuations could climb quickly with a newly announced funding round. Various reports have said Xiaomi is raising funding at a valuation above $40 billion.
Uber has now raised more than $2.7 billion from a wide range of investors, including mutual-fund managers Fidelity Investments and Wellington Management; venture-capital firms Benchmark, Kleiner Perkins Caufield & Byers and Menlo Ventures; and private-equity firm TPG Growth.
—Chase Gummer, Newley Purnell and Friedrich Geiger contributed to this article.
Authored by Douglas MacMillan at email@example.com
Original article found here.
The Web is full of personalized content, whether it’s a Netflix recommendation or the results of a Google search.
But consumers have protested when e-commerce companies have extended their behind-the-scenes personalization to prices, charging different sums for the same goods, or pushing some people toward higher-priced offers.
A new study of top e-commerce websites found these practices—called discriminatory pricing or price steering—are much more widespread than was previously understood.
The study, by a team of computer scientists at Northeastern University, tracked searches on 16 popular e-commerce sites. Six of those sites used the pricing techniques; none of the sites alerted consumers to that fact.
Among the study’s findings: Travel-booking sites Cheaptickets and Orbitz charged some users searching hotel rates an average $12 more per night if they weren’t logged into the sites, and Travelocity charged users of Apple Inc. ’s iOS mobile operating system $15 less for hotels than other users.
Home Depot Inc. shows mobile-device users products that are roughly $100 more expensive than those offered to desktop-computer users. And Expedia and Hotels.com steer users at random to pricier products, the study said.
“In the real world, there are coupons and loyalty cards, and people are fine with that,” said Christo Wilson, an assistant professor at Northeastern who led the research team. “Here, there’s a transparency problem. The algorithms change regularly, so you don’t know if other people are getting the same results.”
Travelocity, a unit of Sabre Corp. , didn’t respond to a request for comment.
Home Depot didn’t dispute the accuracy of the findings, but the home-improvement retailer wasn’t “intentionally steering search results,” said company spokesman Stephen Holmes.
Many factors could influence what a customer sees on the company’s sites, Mr. Holmes said, including prior browsing and purchase history, the location of the store, and whether the customer is on mobile or not.
Home Depot didn’t charge users different prices for identical products but showed more-expensive products to people who shopped using a smartphone, the researchers found.
Chris Chiames, vice president of corporate affairs at Orbitz Worldwide Inc., said in an email that the company clearly advertises its loyalty programs and other deals. He said the discounts some members see on the site apply to just a small proportion of hotels—fewer than 5%. So, it wouldn’t make sense, and might even be misleading, to advertise lower prices to all members, he said.
“The Northeastern study states that ‘overall, most of the experiments do not reveal evidence of steering or discrimination,’ and so we are curious as to why a handful of exceptions to searches on thousands of hotels is the basis of this paper’s conclusions, or even worthy of a story,” Mr. Chiames added. “Would you be as interested in a Kmart ‘blue light special’ deal that was made available to shoppers who happen to be in a certain store at a certain time?”
Moreover, some deals are priced by Orbitz’s hotel partners, he added. “The hotel might have limited inventory of that price, and so they choose to display the rate on a more-limited basis, akin to the flash sale,” he said.
On Orbitz and Cheaptickets, also owned by Orbitz Worldwide, consumers who registered through the websites’ free log-in were shown a tab labeled “members only” that offered lower hotel prices. The company didn’t advertise that users could receive discounts for logging in.
Orbitz has been accused of price discrimination in the past. A 2012 Wall Street Journal investigation found the company charged Mac users as much as 30% more than PC users for a night’s lodging. The company discontinued the practice, which it characterized as a month-long experiment. The Northeastern researchers confirmed the company no longer discriminates between Mac and PC users.
Expedia and Hotels.com, both units of Expedia Inc., don’t show different prices because of users’ differing characteristics but because the company constantly refines its pricing strategies using a method called A/B testing, the researchers said. Shoppers are randomly placed in a group that highlights either less or more costly hotels. “Either way, the user has no idea what bucket they’ve been placed in,” said Northeastern’s Mr. Wilson.
One group of users, for example, were shown an average hotel listing price of $187 a night. The other group saw prices that were $17, or roughly 10%, less.
“Presenting different booking paths and options to different customers allows us to determine which features customers appreciate most” said Expedia spokesman Dave McNamee, in an email. “Pricing is not manipulated by Expedia.com.”
Consumers have long protested price discrimination. In 2000, Amazon.com Inc. Chief Executive Jeff Bezos apologized for an internal research program in which consumers were shown different prices for identical products. He called the experiment a “mistake.” (Amazon and eBay Inc. weren’t included in the Northeastern study because those companies’ services have little power over the prices they charge, the researchers said.)
Staples Inc. varied its online prices based on users’ locations, according to a 2012 article in The Wall Street Journal. The researchers didn’t examine Staples but pointed out that retailers might vary prices by region because the cost of procuring a given product can differ in different parts of the country. They didn’t study geographic variations for that reason.
In their study, the Northeastern researchers devised a statistical method to weed out what they called “noise,” or legitimate factors that might cause prices to vary—a technique they hope will be used in future studies of online personalization.
The research team recruited 300 beta users, who allowed the researchers to track their experience on different sites.
The team also developed hundreds of fake accounts to see whether historical purchase patterns and clicks through the sites had an impact on price personalization. They didn’t examine the impact of consumers’ overall Web-browsing behavior on pricing because they would have no way to know how e-commerce sites tracked participants across the Web.
Write to Elizabeth Dwoskin at firstname.lastname@example.org
United Parcel Service Inc. said Wednesday that a data breach at 51 of its UPS Stores may have compromised data on approximately 105,000 customer transactions between January and August.
Customers won't receive individual notification letters because the company doesn't have all cardholder data, a UPS spokesman said. Customers will need to check the UPS Store Inc.'s website to see if they have shopped at a store that might have been affected. The company said it doesn't know how many customers might have been affected—only the number of transactions.
The data breach was limited to the affected stores—about 1% of its more than 4,400 UPS Stores—which run on independent private networks, UPS said. The data breach affected stores in 24 states, including California, Florida, Texas and New York. Other parts of the UPS network weren't affected.
UPS described the breach as being related to malicious software that may have resulted in stolen customer information, including names, postal addresses, email addresses and credit- or debit-card data.
The stores, which are individually owned as franchises, eliminated the malware on Aug. 11, and UPS says it has no evidence of fraud as a result of the breach.
"As soon as we became aware of the potential malware intrusion, we deployed extensive resources to quickly address and eliminate this issue. Our customers can be assured that we have identified and fully contained the incident," said Tim Davis, president of the UPS Store subsidiary.
UPS has set up an information website and will offer identity- protection and credit-monitoring services to any customers who may be affected.
The data breach is the latest in a string of intrusions at retailers such as TargetCorp., Neiman Marcus Group and grocery chain SupervaluInc., and restaurant chain P.F. Chang's China Bistro Inc. Typically, a malicious software attacks the point-of-sale, capturing data when a card is swiped for payment. The attack on Target compromised tens of millions of credit and debit accounts over the holidays last year.
The rise in data breaches has intensified pressure on banks and retailers to introduce a new generation of credit cards embedded with microchips, which are designed to be more secure. Already widely in use in Europe and other parts of the world, chip cards scramble the data as a transaction occurs.
UPS said it recently received a notification from the government alerting it to the malware, which it said wasn't detectable by then-current antivirus software. UPS then hired a security firm to review its systems, prompting the discovery.
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Bruce Dickinson has spent his life singing in the rock band Iron Maiden. Now, the frontman is working on an altogether different type of metal: airplanes. Mr. Dickinson just finished a three-year world tour with his legendary metal band, but he's also been a pilot for 25 years, and is now focusing on a new solo act: He set up last year a company that mixes airline leasing, plane maintenance and pilot training—all in the Welsh valleys.
The business, Cardiff Aviation, plans to build an airline fleet of up to 10 aircraft within a few years and fill a market niche from its 132,000-square-foot hangar in St. Athan, Wales, Mr. Dickinson says.
Having clocked more than 7,000 hours flying time working part time as an airline pilot for British World Airlines and Astraeus Airlines, Mr. Dickinson also occasionally flew his band around the world for gigs. In 2008, Iron Maiden decorated an Astraeus Boeing Co. BA +0.14% 757 in their own branded livery and flew it on a world tour.
At Cardiff Aviation's hangar, he sells maintenance and repair services to aircraft-leasing companies and airlines. The facility can work on all Boeing and Airbus Group EADSY +1.63% NV narrow-body jets.
Mr. Dickinson also aims to convince leasing companies to turn over their old, unused and unloved planes. He'll refurbish them, sublease them, and use his pilots to fly them, to help bolster airlines' fleets in busy periods, like the summer holidays.
Cardiff Aviation will provide the plane and pilots on ad hoc charters in Europe—"wet leasing" in industry jargon—and then fly the planes south for the winter to Asia to offer the same service to customers there. Mr. Dickinson hopes to begin wet leasing next year and plans to offer training for airlines pilots from his hub in Wales.
"It's knowing the niches that all these areas occupy and seeing how they fit together," Mr. Dickinson said on the sidelines of the Farnborough air show in England last month.
Authored by Rory Jones via wsj.com.