Uber Boston: $9M of Fares in 15 Months, Barely Denting Cab Market

8/2/13Follow @curtwoodward

Smartphone car-booking startup Uber has made a big splash since its debut in Boston, inciting political battles and court fights with competitors seeking to protect their turf.

But according to revenue figures disclosed as part of a lawsuit, the well-funded startup still looks like a pipsqueak in the city’s lucrative car-for-hire market.

Between its October 2011 debut in Boston and January 2013, Uber collected about $9 million in “gross fares” from rides provided by more than 500 drivers, a judge’s ruling revealed Thursday. That breaks down to $600,000 of revenue per month on average, before paying drivers their considerable cut.

As a percentage of the city’s market for cab rides, that’s peanuts. In its investigation of industry corruption, The Boston Globe recently estimated that the Boston-area taxi industry generated $250 million in fares last year, or almost $21 million per month on average.

The gap between those figures illustrates just how difficult it can be to get consumers and service providers to adopt new ways of doing business. While Uber is a household name in startup and tech circles, there are apparently a lot of average Joes to still win over.

Uber started out in its hometown of San Francisco, offering consumers a quick, simple way to hire spendier black-car services on demand with a few taps of its smartphone app. The startup, which has raised some $50 million in venture investment, has since expanded to new cities and new types of rides as well.

Today, the company books rides in sedans, regular taxis, and personal vehicles driven by everyday people who want to make some cash by charging for rides (so-called “ridesharing”).

Uber’s move into ridesharing, which came this spring, was somewhat surprising—Uber had pointedly avoided that market even as other startups, such as Lyft and Sidecar, tried to build businesses around amateur drivers.

But with 15 months of pretty well-publicized efforts in Boston only making a small dent in the market, it makes sense that Uber would want to seek growth by jumping into the ridesharing market, too.

It looks like these revenue figures actually weren’t supposed to see the light of day. Uber originally filed its sales information with the court confidentially, to protect the private company’s business data.

But some of the previously sealed information was included in a ruling Thursday by federal Judge Denise Casper. Casper used the fare totals to calculate that potential damages in the trial were too low to justify a federal case, which sends the lawsuit back to state courts.

The lawsuit in question accuses Uber company of skimming cabbies’ tips. David Lavitman, a Boston-area driver, sued the startup in December. Uber denies the allegations.

It’s not possible from reading the legal document to say how much Uber is collecting from the $9 million in gross fares, versus how much is going to its drivers. The court documents don’t break down how many of the fares were from taxi rides versus sedans—Uber takes 20 percent of the fare for black-car rides, and 10 percent of the base fare plus a $1 fee for cabs.

Uber declined to comment on the court ruling, saying it doesn’t discuss ongoing litigation.

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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  • steve

    If someone stole 9mm from atm s it would be a federal suit. I guess it is different when you steal from cab drivers.

    • Mark

      $9 million was the total revenue for all use of the service. The amount in dispute was a small fraction of the driver tips.

      • steve

        Wrong suit. The other suit is for the entire amount. Good news is damages keep accruing. RICO actions in that suit.

  • Charles Rathbone

    Investors have poured tens of millions of dollars into “ride share” companies but may lose interest now that the California PUC has ruled them to be transportation companies, and not technology companies. The companies are not a tech play, but rather an investment in a transportation business. The ride share companies are actually discount cab companies, whose cars don’t have meters or commercial plates, and whose drivers don’t have hack permits. Not worth rich valuations.

    • steve

      Yea, transportation companies trade for 5times ebitda. Lawyers are going to have a lot of fun with unprofessional drivers in law suits. Negligent entrustment for uber, lyft, sidecar is a concept their general councils will need to understand. They are now going to be responsible for ever driver they sign up. Who is going to insure that? So much for we are just an app :)

  • Rob Davy

    Taking 3% of an extremely traditional market and concept in a little over a year sounds pretty impressive to me…

    And stealing Steve? How is this stealing?
    Stealing $9m from an ATM would be a crime. Taking $9m of business from an industry that is too stubborn to fix it’s problems is called a good marketplace

    • steve

      Illegal activity is breaking the law. That is what the court will decide. The rule of law still has a place in society.

    • curtwoodward

      Yeah, I went back and forth with the right way to think about the market share question. In the end I settled on the view that, now that we can see the revenues, we know that it’s still a small player in the market – has a big hill to climb.
      Also should be noted that the overall market share is actually *less* than 3 percent, because that’s just relative to cabs – I couldn’t find reference to the size of the “black car” market, which is more lucrative per ride for Uber, and grows the base.
      In any case, there’s another interesting argument here: If Uber is less than 3 percent of the cab + black car market (as of January), why are traditional companies freaking out about it so hard?

  • YamaTask

    It is very interesting to see how these crowd sourced service application are rapidly changing the taxi service industry. We think it is good that the entrenched taxi cab companies are getting some serious competition. They have too long been a stagnant monopoly and are ready to be disrupted.

  • Joshua Jachimczyk

    Use promo code: ridebos135 to receive your first uber ride for free up to 15$. Code works worldwide and does not expire. Enjoy