The news about Uber rolling out self-driving cars later in August underscores the reason why Uber has become a multi-billion dollar brand within seven years: Uber’s core competence is not ride-sharing — it’s disruption.
Uber has consistently developed and modified its business model to either drive or participate in disruption. Consider these examples:
- In 2009, Uber initially upended the auto transportation industry by launching a ride-sharing service that liberated consumers from the tyranny of taxicabs that dictated terms and pick-up schedules to passengers. The launch of Uber was the big bang, which ushered in an era of on-demand, peer-to-peer services in multiple industries.
- Uber set its sights on home delivery with the launch of UberRUSH in 2015 and UberEATS in 2016. UberRUSH delivers goods for retailers ranging from Nordstrom to boutique florists. UberEATS focuses on food delivery for restaurants. The service is moving its way across the United States by forming relationships with dining establishments in major cities such as Philadelphia, where more than 100 restaurants partnered with UberEATS on the first day of its launch.
- The deployment of self-driving automobiles is part of a broader disruption of the automotive industry, which has involved an interesting partnership between automakers such as Ford and Silicon Valley titans such as Google, as car manufacturers seek to change their own industry with autonomous vehicles before someone else does. Self-driving vehicles, following their initial use in Pittsburgh, will permeate both transportation and delivery, potentially outmuscling the use of drones that other businesses are adopting.
How does the company continue to ride waves of disruption, even challenging the very service it launched in 2009? Three factors play a role:
- A knack for wedding technology with an understanding of human behavior. Uber initially succeeded not because it provided a cool app but because the company understood that people ordering taxicabs require responsiveness, ease of use, and transparency in pricing — needs that were unmet by the status quo. The Uber app filled the void by making it ridiculously easy to order a ride when you want it and where you want it. No longer was it necessary to navigate clunky phone trees to request a cab and then wait around wondering when your ride was going to show up.
- Creation of partnerships with like-minded brands. Uber doesn’t go it alone. For ride-sharing services, Uber has created relationships with businesses such as Foursquare to make it even easier to order an Uber. The success of UberRUSH and UberEATS relies on Uber’s ability to partner with retailers and restaurants. It’s no accident that one of UberRUSH’s delivery partners is Nordstrom — a company known for its innovations in customer service. (I expect Uber will expand its relationship to go beyond delivery and offer customer service options akin to a Nordstrom town car, shuttling loyal customers around for a day of shopping and in-car entertainment as an exclusive service.) Similarly, Uber is partnering with Volvo with self-driving cars.Uber finds not just any partner, but the right fit for Uber.
- A willingness to adapt. UberEATS initially rolled out in 2014 as a feature on the Uber ride-sharing app. But the experience was wonky. Uber realized that people are in two different frames of mind when we order rides and food: when we want a ride, we want to get from point A to point B. We don’t want to bother with ordering food delivery. So Uber decoupled the feature as a standalone app. Uber has also constantly changed its ride-sharing app, introducing greater levels of information transparency. Now Uber is revised its business model with a driverless service. Uber also recently introduced UberPOOL, which encourages passengers to share rides and split their transportation costs. UberPOOL could cut down on congestion and pollution by combining multiple rides in one car. UberPOOL has reportedly taken 7.9 million miles off the roads and 1,400 metric tons of carbon dioxide out of the air in Los Angeles within its first eight months of use.
What’s next for Uber? What industries might the company upend? Here are some candidates:
- Entertainment. Uber can become an entertainment brand in a number of ways. Live Nation and Uber already have a basic ride service partnership for people to order rides to events, but I think Uber is capable of much more, especially by bundling entertainment with ticketing and transportation. Uber is big enough to offer the entertainment itself through partnerships with artists. Uber already hosts private concerts for customers. Uber may also capitalize on the car itself as a source of entertainment. The company already offers ad-free streaming via apps such as Pandora, which just hints at the kind of in-car entertainment options Uber could provide, ranging from music to streaming movies for longer rides. Cars provide much more than transportation. They’re already mobile content machines.
- Healthcare, by bringing medical providers to patients (and vice versa) and by managing the delivery of pharmaceutical products. Companies such as Pager exist already to bring physicians to patients’ locations on demand. But Uber has the scale to pull off on-demand medical care nationwide. Already Uber has a relationship with Relatient to offer transportation services to patients. More to come here.
Uber could also expand payment, customer loyalty, and advertising services through partnerships with other companies, becoming an all-purpose customer acquisition and service platform based on the data the company collects on its customers.
Uber will also go beyond the app interface if it needs to do so. If the economics make sense, Uber could penetrate wearables to provide even more frictionless, on-demand services.
What do you think Uber will do next?