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HomestartupsUber, brash darling of Silicon Valley, stalks new markets

Uber, brash darling of Silicon Valley, stalks new markets

Uber Chief Executive Travis Kalanick knows the value of a good controversy.

After his start-up company, which lets people summon rides at the touch of a smartphone button, provoked a flurry of social media outrage in December over pricing policies that can result in exorbitant fares, Kalanick addressed prospective New Year's Eve customers.

Travis Kalanick, co-founder and CEO of Uber, talks during a session of LeWeb 2013 event near Paris in December 2013.Eric Piermont | AFP | Getty Images

"If you absolutely need a ride between 1 and 3 a.m., Uber will be very reliable,'' Kalanick said in a YouTube video. "But it will be a pricey ride, and you just have to accept that.'' The company's pricing policies can sometimes result in fares that are eight times higher than usual.

Like the message or not, plenty of people heard it—and fewer complaints emerged about Uber's New Year's Eve rates.

Kalanick has taken a similarly tough tack with regulators, local officials, taxi-company foes and emerging competitors as he moves to build Uber into a global force.

But it will take a lot more than a popular smartphone app, a loyal Silicon Valley following and a knack for turning free-market ideology into publicity to fulfill Kalanick's vision of a "lifestyle and logistics'' company that delivers far more than rides.

Uber has entered more than 60 markets, ranging from its hometown of San Francisco to Berlin to Tokyo. Leaked financials in December indicate that the company, which began connecting passengers with drivers of vehicles for hire about 3½ years ago, is generating $200 million a year in revenue beyond what it pays to drivers.

(Read more: Pitch your start-up, and have a few drinks to boot)

Investors, led by Google, have given Uber around $400 million and valued it at $3.5 billion. With a service that stitches together the buzziest categories in entrepreneurship—among them mapping, smartphones, and local services—Uber is widely seen as one of the hottest properties in Silicon Valley.

Yet Uber still faces daunting regulatory hurdles that have left it shut out of major markets such as Miami. Lawsuits, many from taxi companies, are piling up. Competitors such as Hailo, Sidecar and Lyft are coming on strong. And aside from publicity stunts involving delivery of kittens, ice cream and Christmas trees, Uber has yet to provide anything beyond rides.

Delivery "can become an extremely complex thing,'' said Kerry Rice, a digital media analyst at Needham. "It's about the scheduling and the software and the ability to manage a fleet.''


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