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CASE 16
Uber

Uber, a company providing peer-to-peer shared car rides through a smartphone app, went public at a valuation of $82 billion in
May of 2019, raising $8.1 billion at $45 per share.1 Prior to this, Uber had announced that it expected to reach a market value of
$120 billion at its initial public offering (IPO), which created a frenzy in Silicon Valley and on Wall Street, as Uber would become the
biggest American company to initially list on an American stock exchange—larger even than Facebook, which went public in 2012
at an impressive $104 billion valuation.2 However, Uber was not able to capitalize on the $120 billion promise and never reached a
market cap greater than $82 billion that year. Uber would not exceed its IPO market cap until November of 2020 during a historic
run up of the stock market.3

Dara Khosrowshahi, who had become CEO in 2017, had already faced numerous challenges as he moved the company toward its
IPO. Challenges included charges that the culture was rife with sexism, that drivers were involved in hundreds of sexual assaults
and other crimes on passengers, and that the company still had not turned a profit. Hired to “clean up the mess” left by former
CEO Travis Kalanick, Mr. Khosrowshahi had quietly listened to employees and steadied the ship.4 Yet, while negative headlines
finally began to subside, operating losses continued to expand unabated. That problem was made worse in March 2020 as the
global coronavirus pandemic cut demand for rides. Serendipitously, as demand for rides fell, a silver lining emerged in the form of
rapidly expanding demand for Uber Eats, the food delivery service owned by the company.

The stark ability of one growth business in the portfolio to make up for some of the downturn in another business proved crucial
during the pandemic. But Mr. Khosrowshahi also knew that the core business of ridesharing continued to face numerous
challenges of regulation, lawsuits, competition, and operating losses. This presented an ongoing need to either find a profitability
fix for the core business or to find new businesses that could potentially supersede or replace ridesharing. Beyond food delivery in
Uber Eats, another obvious place to look was to autonomous vehicles, which were seen to have the potential to replace drivers
with a fleet of robotaxis. Uber had been investing heavily in this area, and yet success in a future vision of autonomous vehicle-
based transportation was anything but assured. Other competitors were also investing heavily in the space and no company had
yet reached the goal of 100 percent autonomy with