Uber’s cheap and popular Pool ridesharing service lost the company as much as $1 million a week in San Francisco alone (UBER)

• Uber’s early aggressive promotions like $5 rides on UberPool burned through hundreds of millions each year, sources tell Insider.
• The company suspended UberPool at the beginning of the pandemic and is now debating how to restart it.
• CEO Dara Khosrowshahi has raced to cut losses to meet profitability by later this year.
• See more stories on Insider’s business page.

In Uber’s push to dominate ride-sharing, the company lost billions hoping to lure riders with perks and subsidies. In San Francisco alone, Uber lost $1 million per week on its UberPool shared ride service, Insider has learned.

This was at the height of Uber’s aggressive price wars with Lyft in 2015, according to a person directly familiar with the matter. The company for a time offered $5 rides on any UberPool trip in the city, dramatically driving up the number of rides people were taking while burning through cash at a furious rate.

But that strategy has come back down to earth in the last few years, as Uber has shifted away from growth and toward reaching profitability. It suspended UberPool at the start of the pandemic, and sources tell Insider the company has used that time to overhaul its thinking on UberPool. Inside Uber, the plan is to cut back the service dramatically, bringing it back at a much higher price point than before, and only on certain routes, according to people familiar with the matter.

That thinking is at the core of Uber’s strategy under CEO Dara Khosrowshahi as he pushes to make more parts of the company’s business produce a profit. But kneecapping low-cost ride-hailing options also risks limiting the number of people willing to use the service, potentially pushing Uber into a niche as only a high cost options for well-off consumers. 

Uber’s losses in San Francisco were previously reported by BuzzFeed News.

In 2015, in the early days of UberPool, Uber leaned heavily into discounts as a way to build the new service. In San Francisco, the company ran a series of campaigns that offered customers artificially cheap rides. A famous one in the early days was for a flat $5 fee for anyone taking an UberPool in the city. 

Internally, the project was called “Jared,” named after Jared Fogle, the Subway spokesman who promoted the sandwich chain’s famous $5 footlong sandwiches, according to a person familiar with the matter. (This person said the team chose the name before Fogle was sent to prison, also in 2015, for possession and distribution of child pornography and traveling across state lines for sex with a minor.)

For Uber, the discounted rides on UberPool helped the business during a critical period. It was growing aggressively and using the skyrocketing number of people using the service as a way to lure investors, according to current and former Uber employees. It also was trying to beat Lyft in competitive markets. But Lyft had its own shared rides product, Lyft Line, and the price war between the two drove prices down even further, causing even more losses. At the height of the shared-ride price wars in 2015, UberPool was losing almost $1 billion a year, according to two people with direct knowledge of UberPool’s finances.

The company cut down on losses — and rider discounts — leading up to its public market debut in 2018. By the beginning of the pandemic it had removed most of the subsidies and broken even on UberPool, these people said. But as the company debates restarting the service in the coming months, these types of discounts will be even more scarce, with UberPool looking very little like the product that was launched seven years earlier.