They started in Toronto in 2015, chosen because competition was lighter than in a city like New York, and then expanded to Miami, Houston and secondary cities like Tacoma, Washington. Internally the team quietly started work on Project Agora (Greek for marketplace) to launch Uber Eats. Magical as it was to have a driver show up with a burrito in 5 minutes at the tap of an app, Droege realized customers would wait 30 minutes if they could order any meal they wanted. It was the right market but the wrong product.

On launch day in Los Angeles in August 2014, the Uber team sold hundreds of meals in an hour and a half, a giant leap from the eight orders a day for deodorant. Fresh had drivers circling city blocks with coolers full of soups and sandwiches ready for delivery within minutes. Nothing worked-except food.Īfter a few stunts like delivering ice cream and BBQ on the Fourth of July, Uber made its first serious attempt with Uber Fresh. Droege tried delivering everything from diapers and deodorant to daisies and dry cleaning. His mandate: Find a service that could become as big as ride-hailing. Kalanick recruited Droege, with whom he had cofounded a file-sharing startup as undergraduates at UCLA, in March 2014 to head what was loosely called Uber Everything. That success has made it a formidable rival, and it’s not the only one: Just in the U.S., Uber competes against Square subsidiary Caviar, well-capitalized startups DoorDash and Postmates, and the potential giant in the wings, Amazon. Its largest competitor, publicly traded Grubhub, has proved you can make a profit in this business. And since Uber isn’t (yet) willing to have your meal share a ride with a paying customer, there are fewer network efficiencies to capitalize on. Restaurants are, at best, semi-willing partners that can ill afford a 30% blow to their bottom lines.

Uber’s share of the bill is lower, on average, than in the ride-hailing business. Sure, Uber Eats gets a hefty chunk of a restaurant’s bill and charges a delivery fee, generally between $2 to $8. But Uber has to pay the driver to pick up and drop off the food, plus market the service. But our hypothesis was it wasn’t,” he says.

“The world was telling us this was a crowded space. Droege shrugs off the comparisons-and the competition. Droege has run Uber Eats since its 2014 inception, and some of the most critical voices he had to overcome were from Uber’s pre-IPO investors, who thought the company was on a path to re-create the terrible economics of Web 1.0 failures Webvan, which blew through over $700 million trying to reengineer grocery delivery in the late 1990s, and, which spent nearly $300 million trying to deliver video games and convenience-store fare. It’s a question familiar to Jason Droege, the 40-year-old protégé of former CEO Travis Kalanick.

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