Uber's CEO Dara Khosrowshahi experienced some sticker shock during an interview.
For a conversation published in August, Steven Levy, who serves as Wired's editor at large, revealed he took a 2.95 mile Uber ride from downtown New York City to meet Khosrowshahi on the West Side. When asked to estimate the cost of the ride, the CEO incorrectly guessed it would be "20 bucks."
It turned out to be $51.69, including a tip for the driver.
"Oh my God. Wow," said Khosrowshahi.
But that's not all. Levy further explained that the fare originally came up $20 higher, to which Khosrowshahi attributed to surge pricing, despite it being a sunny weekday morning.
Khosrowshahi acknowledged that everything has become more expensive due to inflation, and he emphasized that most of the fare goes to the drivers. "Earnings per week for our drivers are up 40, 50 percent over the past four years, because that is the cost of time and the cost of labor. I think that's positive," shared the CEO.
According to CNBC, data compiled by Rakuten Intelligence shows that Uber's prices in the U.S. have been on the rise, with fares increasing by 92 percent between 2018 and 2021. Despite the higher prices, Uber announced its first-ever operating profit in the second quarter of 2023. Even prior to the pandemic, ride-share apps faced financial challenges despite rapid growth.
Uber and Lyft were initially subsidized by venture capitalists, which allowed the platforms to use tactics such as promotions, discounts, and reducing ride prices to attract new customers. A portion of the capital raised by those companies was allocated toward lowering overall ride costs and ensuring that drivers were content with their earnings.
Now that Uber and Lyft are publicly traded, their primary concern is becoming profitable.
"But once we get profitable, I'm going to come up with some other reason why we suck. Because that gets the team psyched up," confessed Khosrowshabi. "We have an underdog mentality I never want to lose."
