Uber CEO: Carpooling Rides Are Less Profitable

An Indian cab driver displays the city map on a smartphone provided by Uber.
Saurabh Das/Associated Press

One of Uber Technologies Inc.’s fastest growing lines of business, carpooling, is also one of its least profitable, according to the company’s chief executive.

UberPool, the carpooling service rolled out to San Francisco, New York, Los Angeles and Paris over the past year, now has more than 100,000 riders a week in each of those cities, CEO Travis Kalanick said Wednesday during an interview on stage at Salesforce.com Inc.’s Dreamforce conference.

While each of those rides is cheaper for riders, who split the cost of their commute with another passenger, UberPool trips are less profitable for Uber than other trips performed on the service, Mr. Kalanick said.

“It’s profitable in San Francisco but it’s not as profitable as a normal ride because we’re trying to induce the carpooling thing,” Mr. said.

What he likely means is that Uber is subsidizing the cost of rides for carpooling passengers to offer lower, flat prices that attract more customers to the service. For example, it only costs a flat $7 rate to ride UberPool between most neighborhoods in San Francisco to another, which in many cases is less than what Uber pays the drivers on those rides.

Both Uber and its main U.S. rival, Lyft, hope to get enough density of passengers onto their carpooling services that their routes become more efficient, and, eventually, more profitable than a typical ride.

In his interview with Salesforce CEO Marc Benioff on Wednesday, Mr. Kalanick also said he is trying to do a better job of telling Uber’s story.

“If you grow like we’ve grown, you’re like a black box. If you’re not telling your story, then people fill that box with whatever gets clicks,” Mr. Kalanick said. “Getting out there and getting in front of it is one of those things we’re still learning how to do.”

The Uber co-founder has in the past been prone to making controversial comments to customers, press and potential investors.

The tech conference was Mr. Kalanick’s second public appearance in less than week, after appearing on “The Late Show with Stephen Colbert” last week. The taping of that show was complicated by a protester shouting from the audience about Uber’s impact on cab drivers.

Mr. Benioff also asked the Uber CEO about his progress toward turning the ride-hailing company into a logistics network for local deliveries, a plan that has so far been slow to materialize.

Mr. Kalanick said his company would eventually help merchants deliver all kinds of products within cities, without offering specifics.

“If something’s moving from somewhere to somewhere else in a city, that’s our jam,” he said.