Uber has some Über problems

Uber, the controversial startup taxi company has been shaking up the taxi business in cities around the world and growing rapidly. Uber has now raised even more money to fund this massive expansion with this financing round valuing the company at $40 billion.

Uber has grown to 250 cities from 60 cities a year ago and operates 50 countries worldwide up from 21. This growth wouldn’t be possible without the customers to fuel it. It seems that the customers are more than satisfied with Uber. However, Uber has also been very successful at alienating everybody else – the established industry, the government officials and the ‘old-school’ cab drivers. All of these players have vested interest in maintaining the status quo, so they are looking for any opportunity to make life difficult for Uber.

In the aftermath of the rape incident in India, Uber is fighting about payment using credit cards after being shutdown in New Delhi. Even in Uber’s home town San Francisco, the district attorney has concerns with the way Uber does background checks on its drivers. Where is the love?

This stream of bad news for Uber continues.

The Uber Android app was found to have been sending private information about its customers to Uber servers. Even though this personal information has been collected, to what end the data is being used by Uber or potentially other groups is not clear. What is clear is that Uber has no comment.

As a successful market innovator, Uber is expected to make a few enemies but right now it would be prudent to start finding a few friends. Uber’s new business model is breaking down the old monopolies, but in doing so it also significantly lowers the barriers for entry for similar companies. Soon there could be thousands of Uber-like companies and the cost to switch from one service to another for drivers and customers is close to zero. Before Uber knows it, they will find themselves squeezed from both sides of the industry and out of business (and $40 Billion).