Wednesday, December 10, 2014

How Would you Beat Uber?

When I ride in a cab, I'm usually not eager to start a conversation. That's especially true when I'm headed to or from an airport - because those rides are pretty long and can be at some unfortunate hours.

But when the cab driver is interested in some kind of discussion, I'll usually humor them a bit. Of course, in the last couple years, I've noticed a distinct trend in the cab drivers who want to talk.

Many of them want to talk about Uber. And many of them want to tell me why Uber is evil and wrong.

They always start innocuously enough by asking if I ever use the service. And given that I'm trying to avoid a conversation, and I'm REALLY trying to avoid an argument, I'll always feign ignorance and tell them I've never heard of it. Of course, that doesn't stop them from going on and complaining about how the app is taking over the world.

That progress continues, with Uber recently announcing another fundraise at a mega valuation of $40B - more than tons of mature and well known corporations.

But for years, angry cab drivers, cab companies, legislators and other incumbent interests have tried to block Uber's advance.

But in lots of cases, these efforts have fallen short as the company continuously puts forth a technically easy, efficient and cheap car ride.

You have to feel for the cab/limo industry as it gets disrupted like crazy - granted, their disruption results in lower prices for us all - but I was thinking and trying to put myself in their shoes. If my company was a legacy limo provider and I had to compete with Uber, what would I do?

The first realization I'd need to come to grips with is that I absolutely can't provide a better experience than Uber, Lyft, or similar competitors. They have extremely low fixed costs because they don't operate their own fleet of vehicles. They also have a system that ensures most cars are clean and well maintained (their review system), and as long as they have enough people willing to drive their cars for little money, they have a pretty good supply of cars on the market.

If I can't provide a better experience, and I can't provide a better price, then I'm in deep trouble.

So what you've seen these companies do is try and play the regulatory angle, arguing that Uber is skirting the rules that real taxi/limo companies have to abide by. That's not a bad idea - but it's not going to work either.

First, customers aren't going to show you any sympathy. In fact, they'll likely tell whichever politicians you seek to influence to go the other way. Such actions make you look like you're just blocking progress to preserve your business (which of course, you are). That's not a long-term strategy.

I think the answer (to the extent there is one), is a slightly different tack on the regulatory angle. You can't beat Uber by turning regulators against them, but maybe, you can persuade folks to fear for their safety enough that they'll voluntarily move away from lower prices and a better experience.

You'd need some total William Randolph Hearst-style yellow journalism of Fox News fear-mongering, but maybe you could convince a lot of people that Uber drivers are dangerous. You would have to scour the news for any story, even minor ones that show Uber drivers doing bad things. Any incident involving Uber drivers would be another flashpoint to say, 'This company doesn't care about your safety'

Here's a great example that appeared today

"The online car service Uber says it has "removed" one of its drivers as police investigate allegations that he sexually assaulted a female customer in Lincoln Square last month."

Uber drivers sexually assault their customers? I know that would certainly make some folks a little leery of trusting a random guy from giving them a ride.

The same would go for car accidents. I'm still not clear on how Uber's insurance works, but if you can find passengers who were injured while riding in an Uber, you definitely need to get their story reported.

You'd need to find all these stories and blow them up, ideally out of proportion. Then you'd need to contrast that with your own company's operations - which would have more thorough background checks, insurance coverage, etc. Illustrating that difference at a high enough level, and maybe you can convince a good enough section of the population to eschew Uber, or you drive Uber's costs up, which would help you anyway. In a best case scenario, you could get a genuine interest from regulators to tighten their rules - at which point you'd come off less like a sore loser and could officially present yourself as the protector of public safety.

Now, with that said, I don't really think that would work. It's pretty tough to stop the snowball effect and now they have tons of users. But if you can't really compete, it might be worth a try.

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