5 Reasons Uber Technologies Is One of the Hottest Startup of 2013

While in San Francisco this week, I had lots of meetings with cool companies like Dropbox and Veeva Systems (VEEV). But to get around town, I used a service called Uber Technologies.

uber-technologies-ride-sharing-startupsWondering, What is Uber? Well, Uber Technologies operates a ride sharing app that makes it super simple to hail a driver. For the most part, I was able to get picked up within a few minutes each time.

My experience is certainly no exception. I know many loyal customers of Uber Technologies. And as should be no surprise, Uber is a darling of the tech space and is a often mentioned as one of the hottest IPO prospect.

So what are the big drivers — so to speak — for the success of this ride sharing app? Well, here’s a look at five things that have helped make Uber Technologies one of the hottest startups of 2013:

Uber Technologies – The Service

uber-technologies-ride-sharing-startupsUber Technologies has a ride sharing service that is purely based on Apple (AAPL) and Google (GOOG) Android apps.

When folks sign up for Uber, users enter credit card information, which means they do not have to figure out the fares or tips. It’s easy and convenient for ride sharing.

But the Uber app also has a photo of the driver, the model of the car and a location on a  real-time map. It will estimate how long it will take for the ride to reach you.

Oh, and the car will have bottled water and mints!

Uber Technologies – The Category Leader

uber-technologies-ride-sharing-startupsLaunched in 2010, Uber Technologies was the pioneer in the on-demand ride-sharing business. And the ride sharing company has been aggressive in taking advantage of its first-mover advantage.

To this end, Uber Technologies has raised $307 million from top-notch investors like Google Ventures, Benchmark Capital, TPG Growth and even Amazon’s (AMZN) Jeff Bezos.

The current valuation of Uber is about $3.4 billion.

With the capital, Uber Technologies has expanded its platform to over 60 cities across the world. That potential definitely makes it one of the hottest startups.

Uber Technologies – Infrastructure

uber-technologies-ride-sharing-startupsA big issue for Uber Technologies is dealing with intense competition and other startups, fighting against well-funded operators like Lyft, Hailo and Sidecar. While its top-of-mind brand and strong technology is a plus, Uber realizes it needs to do more to create loyalty with its drivers.

How? Well, Uber Technologies recently launched a new program that provides low-cost financing for cars for 100,000 drivers. That is, they get to benefit from the deal so long as they continue to provide Uber rides.

It’s a smart plan because Uber Technologies is relying on partners like General Motors (GM), Toyota (TM) and various financial institutions. So there is no financial risk for the company and its ride sharing incentive.

Uber Technologies – PR

uber-technologies-ride-sharing-startupsWith so many ride sharing apps on the market, it’s tough to stand out from the crowd. But as for Uber Technologies, it has been a master at public relations.

For example, Uber has used its cars to pull off creative things like partnering with Home Depot (HD) to deliver Christmas trees. According to an Uber blog post: “With the help of The Home Depot and a bit of holiday magic, Uber will deliver a live tree to your doorstep with the touch of a button.”

But the PR moves have been more than just about generating buzz. They have also been a clever way to experiment with new businesses models, at least according to a recent presentation from Uber Technologies CEO Travis Kalanick.

He said these campaigns provided ideas on expanding Uber into areas like deliveries of products.

Uber Technologies – Growth

uber-technologies-ride-sharing-startupsAnd that brings us to a key quality of any of the hottest startups: Growth. Growth is king in the tech world, and Uber Technologies has it in spades.

On a month-over-month basis, revenues are ramping at an amazing 18%. For 2013, it looks like Uber ‘s net revenues will exceed $200 million.

But the market potential for Uber Technologies could be huge, especially if the company moves into broad-based delivery services. After all, companies like FedEX (FDX) and UPS (UPS) have substantial amounts of revenues but could be vulnerable to disruptive approaches.

And interestingly enough, Uber Technologies recently changed its tag line from “Everyone’s private driver” to “Where lifestyle meets logistics.”

All in all, Uber Technologies has all the right boxes checked to be one of the hottest startups — both this year, and beyond.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

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