Advanced Competitive Positioning: Uber

Introduction
Silicon Valley entrepreneurs Garrett Camp and Travis Kalanick had a big year in 2007. Garrett Camp
had completed the sale of StumbleUpon to eBay and Travis Kalanick had sold Red Swoosh to Akamai
Technologies. In December 2008, the two found themselves in Paris for the annual LeWeb
conference for startups and web entrepreneurs (Kalanick).
Whats next? That was the question both were asking themselves. In a blog posting, Travis
Kalanick wrote, Garretts big idea was cracking the horrible taxi problem in San Francisco getting
stranded on the streets of San Francisco is familiar territory for any San Franciscan. The
conversation between the two co-founders marked the conceptual founding of Uber.
The initial vision to address the taxi problem involved connecting passengers with drivers using
mobile technology. Over the next several months, Camp worked with a small team on a prototype
for a mobile application. Travis Kalanick joined in 2009 to assist in guiding the initial product launch,
which involved building up a network of drivers and refining the business model. In June 2010, 18
months after the founders began discussing the idea in Paris, Uber officially launched in the San
Francisco market as a disruptive, mobile technology enabled alternative to the traditional taxi and
transportation options available.

Analysis of dynamic strategy

Though the company was founded in 2009, Uber didnt officially launch until June 2010. In January
2011, just six months later, they had had between 3,000 and 6,000 users and had already done
between 10,000 and 20,000 rides. So what got them there?

Below are the typical phases of disruption:

1. Overconfidence. As the disruptive companies emerge, the incumbents view the new entrants as
specialized toys that could never threaten their decades-old franchise. This is the time for the
incumbents to take action and innovate, but instead they usually ignore the new entrants, or often
try to delay them with regulatory actions, such as forcing UberCab to change its name to Uber. Uber
and Lyfts early skirmishes with regulatory bodies are good examples of this standard tactic.
Similarly, Airbnb has been pursued by the hotel lobbyists in NYC.

2. Sudden collapse/downward spiral. Sudden realization that things have changed. Realization is
typically sparked in the incumbent through a drastic turn of events e.g. the incumbent
unexpectedly misses a quarter in a big way when its business evaporates faster than anticipated. A
sharp collapse in its business is often the singular signal that the industry has hit a tipping point and
an irreversible downward spiral kicks in for the incumbents business.

This is happening right now with Uber more taxi drivers are switching to Uber, which means there
are more cars on Uber, which means more people use Uber and fewer use taxis, which means more
taxi drivers switch to Uber.

Downward spiral

These sorts of downward spirals start off slowly (so the incumbents ignore them early on) and then
hit a phase transition and shift into overdrive often over the course of just a few months or a year.
In Ubers case it is a network effect that drives fast compounding for itself, and a rapid phase
shift/cliff for the incumbents.
3. Too little too late. Incumbents try to take action but often dont do enough quickly enough. For
example, the SFMTA and cab companies in San Francisco are now adding new medallions to increase
taxi numbers in San Francisco, but it is probably already game over in the long run. This and other
actions (such as building their own on-demand taxi app), should have been taken a few years ago
when Uber first appeared on the scene as a black car centric company. Instead, the taxi companies
responded by forcing Uber to drop the word cab from its name and lobbied extensively on the
regulatory side.
4. Ongoing decline. Incumbents may survive for many years post collapse, but are no longer really
relevant (e.g. BlackBerry). Instead they suffer from ongoing layoffs and downsizing of their
companies with a subset going bankrupt early. In the taxi example, the individual drivers will thrive
as they move to Uber and Lyft, while the taxi companies themselves will suffer. For the next N years,
people will still order Yellow Cabs and other taxis. There will just be fewer and fewer drivers and
customers for these traditional services. Eventually, branded taxi companies will become an old
lady use case, i.e. only a small subset of the most conservative prior generation of users will
continue to use the dramatically downsized incumbents.

Analysis of diversification strategy

Ubers products are all digital. Consumers download Ubers app onto their smartphones. When they
want to request a ride, they can use the app to contact a driver in the near vicinity. The Uber app
allows consumers to track the location of the car and alerts them to when the car arrives. Uber
offers a few different services to customers based upon their preferences. Its most used service is
UberX, the low-budget option. Drivers use their own vehicles to transport passengers. UberTAXI is
an app that connects licensed taxi drivers to passengers. UberBLACK is for consumers who desire to
have their own private driver in a high-end sedan. UberSUV connects users with SUVs, while
UberLUX is the most expensive service with luxury vehicles. UberXL is similar to UberSUV but is 50
percent less. Other low-cost options include UberPool, which allows passengers to share rides and
split the costs, and UberPOP, a service costing less than UberX because it utilizes non-professional
drivers and smaller cars. Despite the opportunities UberPOP provides, its use of non-professional
drivers have led to regulatory issues in different countries. Uber is also attempting to expand into
other services. Its UberRUSH app launched in New York is used for package deliveries. UberFRESH
and UberEATS are meal delivery apps that partner with local restaurants to offer meals to
consumers within 10 minutes. These new services are allowing Uber to branch out and expand its
services into different businesses.

Leverage Distinct Growth Opportunities

In addition to providing an overwhelmingly superior solution, Uber has also leveraged some real life
situations to spur growth, which Kalanick refers to as accelerants. These accelerants indicate a
concentrated, temporary need for Ubers services. These include:
1. Restaurants and Nightlife
2. Holidays and events
3. Weather
4. Sports
Each of these factors makes driving yourself problematic at best (and in some cases downright
impossible), and cities in which they coexist are especially receptive to Ubers services. Uber focused
on executing in cities where those problems are near constants to drive accelerated adoption. For
example, In Chicagoa city with great nightlife, intense weather, and tons of sporting events
Ubers initial viral growth was double whats typical for them (see viral growth numbers cited
below).
Special events and holidays also provide an opportunity to showcase Ubers model, and the
company was able to deliver on key nights like New Years Eve in San Franciscoa city notorious for
a lack of taxiswhich drove buzz for the new service. These events created intense demand and
pressure to get new users to take their first Uber ride, driving spikes in new riders and total rides.

Analysis of stakeholder strategy

Completely Solves Problems for Riders
First and foremost (as Gurley points out, and as with Square), Uber provides a solution to a real
problem that impacts millions of people. In all sense of the word they have disrupted the monopoly
of taxi cab transportation that exists in many cities and reinvented the experience from top to
bottom.
Among the many problems Uber is tackling are: poor cab infrastructure in some cities, poor service
and fulfilmentincluding dirty cabs, poor customer experience, late cars, drivers unwilling to accept
credit cards, and more.
Uber set out to reimagine the entire experience to make it seamless and enjoyable across the board.
They didnt fix one aspect of the system (e.g. mobile payments for the existing taxi infrastructure),
they tackled the whole experience from mobile hailing, seamless payments, better cars, to no tips
and driver ratings.
By avoiding the trap of smaller thinking, and iterating on one element of the taxi experience (say, by
making credit card payments more accessible in the car) they were able to create a wow experience
that has totally redefined what it means to use a car service, sparking an avalanche of word of
mouth and press.

Benefits for Uber Drivers

Not only does Uber transform the experience for riders, but its also good for drivers. Discussing
Ubers expansion to D.C., Kalanick explains,
There are a lot of drivers in this city who are out of work. Because of that, there are a lot of drivers
and limo companies that are coming to us to basically help their drivers make a living.
Uber doesnt employ drivers. Instead, the service acts as a liaison between people who need rides to
drivers who are in the area. This arrangement can bring in more than $500 a day, which amounts to
a week of work for some cab drivers. Like any good service, its a win-win for all parties involved,
and this is certainly another factor contributing to Ubers growth.

Analysis of international strategy

Uber has adopted the motto "Available locally, expanding globally" to describe the opportunities it
sees in global expansion. International expansion is a major part of Ubers marketing strategy, and it
has thus far established the ride sharing service in 58 countries. Uber is correct in assuming that
consumers from other countries would also appreciate the low cost, convenience, and freedom that
its app services offer. Even though it is successful in some countries, many countries have regulatory
hurdles that have caused trouble for Uber to successfully operate in these areas.
Now, lets examine todays growth engine a bit more thoroughly. In addition to the points
mentioned abovewhich are still very much driving forcesUbers growth engine is comprised of
several related, moving parts, including:

Intensely Local, City-by-City Expansion

But perhaps the reason Uber has expanded so quickly is because they acknowledge that growth is
not one-size-fits-all. What worked for San Francisco may not be whats right for Chicago or New
York, which is why they take it city by city, with local efforts tailored to each new location.
Because of the politics, regulations, and interests that make up each city, Uber needs to adapt their
launch plans to suit the unique topology of each new market. Its this ability to go into a market,
understand who the suppliers are, who the special interests are, and account for those dynamics
that makes Uber successful right from the start in new cities.

Kalanick explains: We think that cities deserve to have another transportation alternative. It sounds
crazy to have to say that but you have to do that because you have incumbent interests which are
often trying to curtail innovation and curtail sort of transportation alternatives that might compete
with their existing business. And, because of that, it requires us to take a very local approach to how
we go after a city. We have launchers that go into [cities] and turn nothing into something. I like to
say they drop in with parachutes and machetes [and] get highly involved with the suppliers, people
who own cars and run car services, and really just make sure that we can launch a service that is high
quality from the start. Being local and speaking with local voice is important when you're doing
transportation and means you know what's going on for the city.
A city in which Uber has seen unprecedented growth is Washington D.C. Kalanick explains, Were
not really sure exactly why, but D.C. really, really likes our product a lot. That is reflected in our
growth, and the sort of overall demand weve seen has been unprecedented. He claims that, month
over month, growth is in the 30 to 40 percent range. When asked if this growth in D.C. reflects that
people are not happy with their alternatives, Kalanick replies, I think one can make that
conclusion. Uber makes sure that their marketing and business efforts are in full support of fuelling
that word of mouth engine, driving local growth.

Logical synthesis of findings

The emergence of Uber has influenced many services to follow the Uber business model. There are
similar firms that offer ride sharing services, and there are firms that want to be an Uber-type
business in the way they deliver goods and services. For example, Cargomatic has developed an app
to help fill space on trucks. Cargomatic, which now operates in California and New York, has been
called the Uber for truckers because it connect shippers with drivers who are looking for extra 10
shipments to haul. This is signaling a shift in the industry in which people are the infrastructure
rather than buildings or fleets of vehicles. Uber faces a number of marketing challenges including
regulatory and legal issues both inside and outside of the United States. Laws that protect
consumers specifically target taxi services, whereas Uber defines its services as ride sharing and
Uber as an agent of their individual contractors. However, many courts do not view its services
in the same way and are forcing Uber to comply with licensing laws or stop business in certain areas.
Despite Ubers challenges, the company has become widely popular among consumers and
independent contractors. Supporters claim that Uber is revolutionizing the transportation service
industry. Investors clearly believe Uber is going to be strong in the market in the long run. Uber has a
bright future and expansion opportunities are great. It is therefore important for Uber to ensure the
safety of their riders and the drivers. They should also adopt controls to ensure that independent
contractors using their app obeys relevant country laws. Uber has to address these issues to uphold
the trust of their customers and achieve long-term market success.

What is Next for Uber?

Ubers branding and utilization of mobile technology has made its solution to transportation
headaches more than successful. It has created a platform that has generated envy that displays
itself in copycat competition and worried taxi companies trying to create regulation to shut them
down. Uber is not a cab company, of merely an application that marries other popular technology
apps and creations together. Ubers global success is noteworthy and it seems there is no stop in
sight.

Addendum of exhibits and research citations

1) Uber Technologies Inc.: Managing Opportunities and Challenges
https://danielsethics.mgt.unm.edu/pdf/uber-case-study.pdf
2) Uber What's Fueling Uber's Growth Engine?
https://growthhackers.com/growth-studies/uber
3) UBERS EVOLUTION : FROM SAN FRANCISCO TO INTERNATIONAL DISRUPTION
http://www.tc.umn.edu/~ssen/IDSC6050/Case15/Group15_index.html