JOIN USUber wants to rule the world. First it must conquer India.
Nandini Balasubramanya’s office on the southern edge of India’s technology capital does not look as if it would play a key role in the world’s most valuable startup’s plans for global conquest.
On many days, the tiny space has no electricity. So Balasubramanya keeps the door open, the noise and dust of Bangalore’s traffic-choked streets streaming in. On one wall, next to a table where she greets a stream of neighborhood job seekers, is a large menu of the documents she asks of each applicant — driver’s license, proof of insurance, vehicle registration permit, proof of bank account, and a half dozen other chits to pass through India’s bureaucracy.
There is also a framed photograph of a smiling Travis Kalanick, chief executive of the U.S. ride-hailing company, Uber.
Balasubramanya, 32, does not work for Uber, though. She is an “UberDost” or “friend of Uber,” an independent recruiter who is paid by the company for each driver she brings on. The work is rewarding but often difficult, she said.
After all, this is India, and some drivers have little actual driving experience. Balasubramanya has trained people who have never worked before, and those with little experience managing money or interacting with middle-class customers. Many also don’t know how to use a smartphone app — the beating heart of the Uber ecosystem — or they struggle with basic map reading.
“I show them how to use Uber, teach them about how to use navigation, or how to use a phone,” Balasubramanya said.
She has a team of recruiters constantly out scouting for new drivers. And she recently hired a few more employees to call those drivers, making sure that the ones she has found are sticking with Uber, not quitting the service out of apathy or confusion.
Balasubramanya’s is just one of hundreds of UberDost offices that Uber has set up across India, where the ride-hailing company now operates like a military division bent on subcontinental conquest. After last year’s bruising retreat from China, where the company was outgunned by local incumbent Didi Chuxing, Uber is diving fully into this nation of 1.3 billion people, pouring money, engineers and logistical expertise into dominating what could one day be the world’s largest market for transportation services.
Uber is famously aggressive, and that trait shines through in its ambitions for India. Relatively few people own cars here, so Uber’s long-term goal is to leapfrog Western-style car-ownership culture and move directly into a society where people don’t buy cars, they hail Ubers.
India is also where Uber’s vision of itself as a lean software company has come crashing into the sobering realities of analog life in a rapidly developing country. Its aim of blanketing the world in hail-able cars remains complex and daunting.
“The way to think about it is that India is a super-important place in the world that has huge cities, with huge transportation needs, that we want to serve,” Kalanick said in an interview. “We want to be there, and want to be there in a big way.”
That interview, in which Kalanick was by turns combative and charming, took place in mid-January, just before Uber descended into a sustained series of corporate crises. The company is dealing with a sexual-harassment scandal and greater scrutiny of its freewheeling culture. Kalanick has since pledged to “fundamentally change as a leader and grow up.”
The troubles have cast a shadow over any plans the privately held company, which is valued at nearly $70 billion, might have had to launch a public stock offering. The particulars of its operation in India also highlight the fact that, for a business dependent on global domination, Uber still has a long way to go.
Uber, which hung up a sign in India in 2013, now operates in 29 cities, including some of the most congested on the globe. Throughout the country, the roads tend to be terrible; clogged with traffic, potholes and pedestrians, marked by ever-shifting routes and a freewheeling interpretation of automotive rules that is almost balletic in its lawlessness.
It’s not just the roads. India’s cellular networks can be spotty and slow, and banking, credit cards and other financial mainstays cannot be taken for granted. More than that, vast differences in education and wealth create a social dynamic between riders and drivers that cannot be smoothed over by improving an app interface.
Not only are many of Uber’s drivers here unfamiliar with smartphones, some are illiterate. Often, drivers and riders don’t speak the same language. Many drivers need financial help to purchase or lease cars, and then require continuing help to manage their finances and other details of their small businesses.
On top of all this is competition. Uber faces an aggressive and well-funded Indian rival, Ola Cabs, which operates in 100 cities and offers a wider range of services than Uber does.
Both Uber and Ola argue that the long-term payoff for their efforts in India could be transformative. Ride sharing is changing Indian urban life; getting around cities has become cheaper and safer, especially for women. It is also altering life for hundreds of thousands of drivers, many of whom are drawn from India’s poorest ranks.
Yet Uber’s quest toward remaking transportation in India, which the company sees as a template for other developing nations, is bound to be long, expensive and complicated. Uber said Friday that it lost $2.8 billion in 2016. The company did not break out losses in India, but Kalanick said the company’s investment here is “an order of magnitude lower” than the spending on its misadventure in China.
“We are not profitable in any of the cities we’re in now,” Amit Jain, president of Uber India, said in a phone interview. “We have a path to get there, and we are confident we will.”
The India Opportunity
In San Francisco, where Uber has its headquarters, hailing a car is simple: You open the app and press a button. A Prius, or something like it, pulls up in less than two minutes, with the payment and mapping handled by the app.
Such supreme ease of use was Uber’s founding stroke of genius. Everything unpleasant about using a cab — finding one, getting one to stop for you, figuring out a way to pay if you didn’t have cash, and fretting about whether you were being ripped off — had been improved by software.
In India, too, Uber saw a transportation sector ripe for remaking. As India’s economy grew over the past 40 years, hundreds of millions of people have moved to urban areas from villages. India now has three cities — Mumbai, Delhi and Kolkata — with more than 15 million residents, and it has dozens more with more than 1 million.
Yet India’s urban infrastructure has not kept up. By the turn of the century, transportation scholars began warning of an urban transportation crisis that had driven air and noise pollution, traffic, and road fatalities to some of the highest levels in the world.
It is especially difficult for India’s poor to get around. A tiny slice of the wealthiest Indians can afford private cars and drivers to ferry them. Others make do with an array of lesser choices: bicycles, scooters, bicycle rickshaws, motorized rickshaws, buses so crowded that passengers hang out the door. Most Indian cities lack adequate public transportation, and because of the foul air and the dearth of sidewalks, walking can be perilous. In Bangalore, three pedestrians are killed on the roads every two days.
For both Uber and Ola, this presented an opportunity. Both thought technology would enable them to provide rides that were cheaper than other forms of transportation and more accessible to a wider swath of Indians.
“Before we existed, getting a cab in most Indian cities was expensive and difficult,” said Pranay Jivrajka, a founding partner of Ola. “You’d have to call one day in advance. We started booking cabs with 12 hours notice, then four hours, and then we started on-demand. And today, if an ETA is more than five minutes, people start complaining.”
Uber had a grander goal. Kalanick has long said Uber’s primary competition is private car ownership; if Uber can give you a cheap ride instantly, it could conceivably beat the cost and associated hassles of owning your own vehicle. In developed countries like the United States, car ownership is entrenched, but not in India. There was a chance, then, for ride-hailing companies to vault over private car ownership entirely.
“You can’t have every resident of Delhi driving a car — that just wouldn’t work,” Kalanick said. “They just don’t have the infrastructure to support it, so why build it out? So that will be a big deal.”
The Long Hail
The leapfrogging of private car ownership remains far off. At this point, Uber has 200,400 active drivers on its platform in India. Ola said it has 640,000. Those numbers sound large, until you consider that nearly 400 million people live in India’s cities.
Still, citizens of a certain professional class — tech workers, frequent travelers — said Uber and Ola had become part of the fabric of Indian urban life.
Before Uber, “folks were rather locked up at home,” said Christian Freese, general manager for Uber’s Bangalore office, where the company has placed its only dedicated engineering center outside of San Francisco. “Now you can see people go out, especially on the weekend. You just press a button and the car is there.”
Well, sometimes. Often in India, you open the Uber app, press a button, and then — nothing. The app selects a driver, but the driver does nothing. His car’s icon just sits there, unmoving.
This is something of a cultural mystery. “Drivers in India take forever to start, and we are still trying to figure out why,” said Apurva Dalal, Uber’s head of engineering in Bangalore. “We’ve tried to do research on it, but we don’t know why it happens.”
One reason may be the drivers: Many are unaccustomed to smartphones and may not trust the digital notification that comes in over the app. Most Uber rides in India involve riders phoning drivers to confirm that the ride is for real.
On top of that, Uber’s digital maps sometimes don’t match India’s ever-shifting road patterns, so riders may have to tell drivers how to find them.
For instance, just outside one of Uber’s offices in Bangalore, two roads meet in a Y-shaped junction. The junction is often snarled with traffic, so in January, someone — either a local authority or a concerned citizen, it’s not clear — placed a makeshift concrete median in the road to better manage the flow. A two-way street was turned into two one-way streets, but because the Uber app’s map didn’t know about the change, Uber’s cars entering the area suffered long delays, for several days.
“When we look at the average time to begin a trip — from the time a driver accepts a trip to when he picks up the rider and starts the trip — that is the highest in the world for Uber here in India,” said Jain, the president of Uber India. “So our task is, how do you reduce that time?”
About half the Uber cars I tried in Bangalore were pleasant, and seemed in good physical and mechanical order. Others had no seat belts, or lacked air-conditioning.
The drivers were uniformly friendly, if sometimes unschooled in the ways of customer service. On a trip from the airport, one driver suddenly pulled off the road without a word. I panicked until I saw he was just heading for a gas station.
If I had feared trouble, I could have pressed the in-app panic button, a feature that alerts law enforcement to your location. Both Uber and Ola added the button to their apps in 2015, prompted by a horrific 2014 case in which an Uber driver sexually assaulted a passenger; the driver was convicted and sentenced to life in prison.
Compared with other options available to most Indian riders, Ola and Uber represent an improvement in access to transportation, and a steep drop in price. In Bangalore, a 22-mile Uber ride that lasted nearly an hour cost me 548 rupees, or about $8.50. That was on UberX, the company’s middle-tier service; with UberGo or OlaMicro, which use smaller cars, it might have been a dollar or two cheaper. A taxi taking the same route might have cost more than $10.
At these prices, Ola and Uber are becoming everyday options for India’s rising middle class.
Drive for Us
Uber has made several adjustments to its practices to get along in India.
Cash is king here because credit cards and other digital payment systems aren’t widely used. It was an issue for Uber’s just-get-out-of-the-car-when-you’re-done payment method. So in 2015, in a move that Kalanick said took him “a little time” to get used to, Uber began accepting cash payments for the first time in the city of Hyderabad. Soon it started accepting cash across India, as well as in Southeast Asia and South America.
By fall, when the Indian government began a plan to cut down on the use of cash in the economy, about 80 percent of Uber’s Indian rides were paid for in cash.
An even bigger change came in how it recruits drivers. In the United States, sharing economy companies depend on untapped labor and capital: You’ve got a decent car, a phone, and you need money? Why not spend your weekends driving for Uber?
But the dynamics of untapped supply don’t line up in the same way in India. Lots of people need work, but relatively few have cars or know how to drive. Drivers must also secure a commercial driver’s license and special registration status for their cars.
Most of Uber and Ola’s losses in India stem from their vast operations used to attract drivers — for example, the network of UberDost contractors. Both companies have also set up leasing deals with banks and car manufacturers to get special terms for drivers in need of vehicles.
The companies must also spend time educating drivers on the social dynamics of working for themselves. Many drivers arrive after working as private drivers for middle- and upper-class Indians; those jobs can be grueling — drivers work long hours, are expected to be constantly on call, and often aren’t accorded much respect for their work. When they come to Uber and Ola, the same drivers have to adjust to a job in which they finally have some agency, and the change can be terrifying.
“Most of these guys used to work as private drivers, and they weren’t treated that well — they were almost invisible to their employers,” said Kalpana Behara, head of Uber’s driver training center and customer service in Hyderabad. “But now they have their car, and it’s their business, and they’ve never been in this sort of a role before.”
Finally, there are the incentive payments. Over the past few years, to persuade drivers that joining ride companies was worth the cost of a long-term commitment to a new car, Uber and Ola gave drivers bonus payments on top of their standard fare for each ride, as Uber had done in China.
All this money created a new economy surrounding the car business in India. Several Uber and Ola drivers described the services as life-changing. They make 30,000 to 60,000 rupees a month, or $450 to $900, far above the median income.
Lokesh N., a driver who lost his business and who now owns a fleet of cars on the Ola platform, said, “In India, there is a social stigma about driving, but now the public is starting to accept it. People who come into my car accept the dignity of my labor.”
The ecosystem these drivers depend upon rests on a shifting economic calculus controlled entirely by two companies. In the past few months, both Uber and Ola have begun substantially reducing incentive payments, sparking protests and strikes by drivers. Uber has said the subsidies will continue to decline.
A Sure Thing
Back at Uber’s headquarters in San Francisco in January, Kalanick, sitting at the head of a small conference table, offered a proud assessment of his company’s role in India. Sipping an iced tea, he said he planned to spend 20 days a year in the country, more than in any other market outside of the United States. (He made headlines on a recent trip for offering to become an Indian citizen if it would help Uber’s prospects there.)
Betraying his famously obsessive manner, Kalanick showed a ready command of Uber’s Indian operations. When I asked if India was Uber’s second-biggest market, he rolled his eyes to the ceiling, as if accessing a spreadsheet stored behind his eyelids.
“Hold, let me check, let me think,” he said, and then made a “boop boop boop” sound as the numbers came to him. “We’ll say India’s No. 2,” he declared.
At other times during the 40-minute conversation, Kalanick seemed to grow agitated at questions about some of the difficulties of working in the Indian market.
Indian cities do not present any problems that Uber couldn’t overcome, he said, or that it hadn’t seen anywhere else in the world.
What about the traffic, the low ownership of cars, the local competitor?
“I’m losing your angle,” Kalanick responded. “I feel like I’m getting asked the same question over and over again. I don’t get it.”
Then he excused himself to get a second iced tea. A few minutes later, he returned and I asked again if he was sure Uber would be profitable in India.
“Yeah,” he said. He didn’t elaborate, so I prodded him on how he might know that to be true.
“I mean, I know all the data,” he said.