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Brief history
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 met in Paris for the annual LeWeb conference for startups and
web entrepreneurs.
The initial vision to address the taxi problem involved connecting
passengers with drivers using mobile technology. Over the next several
months, Garrett worked with a small team on a prototype for a mobile
application. Travis 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
Take off
Since it was founded in 2009, Uber has become one of the fastest growing
start-ups in Silicon Valley, with a reported $1.5 billion annual revenue and
an estimated worth of USD $62.5 billion, consistent exponential revenue
growth.
With its services now offered in more than 65 countries and over 450 cities
worldwide, Uber has been undergoing one of the mobile app industrys
fastest global expansions. Only 3 years after launching their first non-US city
in Paris in December 2011, Uber was reaching a growth rate of launching a
new city per day by the end of 2014.
has
experienced
these
challenges
and
turned
them
into
opportunities more acutely than Uber. Uber moved faster than any other
company going international.
And because of money that is earmarked for foreign clones of successful U.S.
companies, if you dont move quickly, the clones will pop up fast. This is a
well-known and adopted business models around the globe by local startups
and companies going after successful business ideas from elsewhere. Few of
the well-known ones to call out that forced Uber to rapidly expand globally to
be early movers in the market and not lose the market for local clones.
1. Lyft in US that launched around the same time as Uber could have
beaten Uber and gone global sooner
2. Curb is now available in more than 60 U.S. cities, Curb is a taxi-hailing
app that works directly with licensed taxi drivers, and allows payment
within the app, with cash or in any other method available in the
specific car (e.g., if the taxi takes credit cards). One benefit of Curb is
that you can schedule rides up to 24 hours in advance.
3. 99taxis is popular in Rio (and throughout Brazil), and is expanding into
Europe. The service connects riders with taxi drivers, and uses Paypal
inside the app to process payments.
4. Careem is available in many cities across northern Africa and the
Middle East, and offers multiple levels of service as well as the ability
to book in advance. Careem is a pretty robust service, and has some
also face competitors who understand the local environment far better than
they do.
Asia is a different market compared to US, Canada or Europe. Challenges are
different and culture is different, expectations are different, everything is
different. Only thing common is the transportation problem to solve.
Localization is a key ingredient of Ubers Asia Pacific (APAC) marketing
strategy as it battles to stay ahead of regional competition. However
localization goes beyond services. It might include cash payments for some
emerging markets where credit cards are not feasible, or in China, where
Uber has partnered with Alibabas Alipay system the preferred payment
method of Chinese consumers. Uber calls its globalization strategy launch
playbook, a list of business strategies and operating guidelines that have
been compiled by an internal team of about 40 employees. At the same
time, Uber is smart to have flexibility in different markets that local Uber
leaders can adapt and not have the same features everywhere: For example:
1. Lion City Rentals, the Uber subsidiary, has about 300 cars. Within two
to three years it will be by far the biggest car rental company
in Singapore. This is quite far from Uber core business value of not
owning cars.
2. Uber offers different products for different cities, such as UberAUTO,
which was launched in New Delhi in April to accommodate autorickshaw users.
3. The business has launched UberBOATS in Istanbul
4. UberCHOPPER in Shanghai.
Uber has not been so lucky outside the US. Beyond its well-documented
troubles in China, it is also struggling in Europe. The young tech company
has committed a classic globalization mistake: it naively assumed that its
business model and market approach, which ultimately solidified its marketleading position in the U.S., could translate just as seamlessly to other
countries. It severely underestimated the challenges of operating in
countries that embody totally different economic, political, and cultural
environments.
Political: When it comes to political differences, Ubers devil-may-care
approach of asking for forgiveness (instead of for permission) works better in
countries with legal systems based in common law. In common law countries
like the US, Canada and the UK, laws and regulations are more flexible and
subject to judicial interpretation. Uber is therefore afforded greater latitude
when arguing the legality of its case in the courts of law. In the U.S., Uber
has maneuvered to generate consumer enthusiasm for its service and then
bring pressure on local politicians to develop rules that allow it to operate.
Such an entry approach is difficult, however, in civil law countries like China,
France, Germany, Spain, and much of continental Europe. Civil law systems
have their foundation in Roman Law and are based on doctrine, core
principles, and codified rules. As a result, laws are more rigid and the role of
the judicial system is to enforce, rather than interpret, the law. In that sense,
an adversarial stance toward Ubers less-than-by-the-book adherence to the
law should have been expected.
Cultural: Critically, Uber also failed to properly acknowledge the subtle and
nuanced cultural differences between the US and foreign countries, thereby
failing to win in the court of public opinion. The US has a particularly strong
emphasis on individualist principles: individuals are encouraged to take
chances to assert their individuality and pursue their individual self-interests.
But in Asia, and in European countries like France and Spain, group harmony
and societal order are stressed over individual achievement. There is a
greater concern for others, a greater emphasis placed on personal
relationships, and a greater sense of kinship and solidarity built into each
countrys social compact. It is therefore not surprising that local consumers
are skeptical of Ubers aggressive entry tactics, lack of consideration for local
authorities, and inability to foster genuine and trusting local relationships
Because of misreading political and cultural environments and adopting a
flawed approach to global expansion, not only is Uber losing more than $1
billion in China, but it is at a distinct disadvantage to local companies like
Didi Kuadi and Ola in many of the foreign markets it operates. It has been
banned from operating in parts of France, Germany, Spain, the Netherlands,
and Belgium. It has been accused of willfully ignoring and breaking the law,
placing both drivers and riders in peril. And its presence in various countries
has generated an incredible backlash protests, riots, clashes with angry
labor unions, and an endless litany of customer complaints.
A brief international public-relations crisis ensued in October, when the Lyon
(France) office ran a promotion offering customers a ride with an incredibly
hot chick. The trouble blew over after executives from San Francisco
stepped in to stop the ad campaign. In India, Ubers biggest market outside
the U.S., the central bank threatened to shut it down for skirting
cybersecurity regulations by routing payments through a foreign subsidiary.
The company announced in a Nov. 12 blog post that it would comply with
Indian laws by hiring Paytm, a local mobile payments business, to set up
virtual wallets for Indian users.
Its been tougher for Uber to deal with local regulators and labor groups
complaining that the company operates as an unlicensed taxi service and
drains money from their transportation markets. Taxi drivers organized antiUber protests this summer that blocked streets in London and Western
European cities. In the past six months, governments in Australia, Belgium,
Germany, and the Philippines have instituted short-lived bans on the service
or levied stiff fines on its drivers. Cabbies barricaded the door at the party
celebrating Ubers Milan debut.
US and
Canada
South America
Middle East
Africa
Chuxing.
Both
companies
were
heavily
Asia
Australia
Yikes. In the end, the Uber team hit their target date and launched Paris at
the LeWeb Conference in December 2011. However, then they spent the
next 6 months completely revamping the whole system: rewriting,
refactoring, rebuilding, redesigning their original launch. You dont turn on
every corner of the world overnight. Rather, you work your way through
different geographies in some priority order.
Uber has exited from China market, not find success in Europe market, not
able to penetrate South East Asia market, tough competition in India.
Although Uber has seen significant success in US, Canada, Latin America,
Africa and Middle East. Its global expansion strategy is not sustainable unless
Uber makes serious changes to its launch playbook.
So how could Uber have avoided this mess and what to change?
1. The
young,
talented,
and
well-endowed
company
should
have
recognized that China, India, and Europe, though rife with economic
potential, differ in meaningful ways from the US.
2. It should have taken a careful look at its practices and policies to
consider whether they were appropriate to each specific country. Uber
would have fared better asking for permission to operate from the
proper authorities and thus conveying its respect for established
regulations and institutions, no matter how time consuming it may
seem.
Build tools and frameworks that help automate and optimize the
translation and update processes
Local problems are often global, often same solutions that work locally can
work globally. The key is in the localization and execution of solution that fits
the local market aspirations, economic, political and cultural values. Uber has
realized this after very expensive experiments, not all companies let alone
startups will have the capital strength for such expensive experiments but an
learn from Ubers evolution.