Tuesday, May 12, 2015

Peak "Like Uber For...": "Why there won’t be an Uber in every vertical"

For the record we completely agree with FT Alphaville's David Keohane that the "Like Uber for..." formulation should be banned and go further than he in postulating that it's usage is a sign of a weak mind and probably indicates underlying pathologies in the user's character in addition to retarded social development.
And poor fashion sense.

From Version One's blog:
The success of Uber has inspired hundreds of startups to call themselves the “Uber of X, Y, or Z.” There are now apps to order groceries, have you car washed, get legal counsel, and much more. Uber is part of a broad category of on-demand mobile services. Thanks to smartphones and cloud computing, it’s easier than ever to connect people who need a job done with people looking to take on some extra work and monetize their spare time.

This new marketplace model is responsible for shaking up numerous industries. Uber and Lyft drivers are disrupting the taxi industry. Homejoy and Handy traditional cleaning companies. Entrepreneurs and investors are excited by the massive opportunity potential, while others worry that the Uberification of our economy will turn every good full-time job into a flex-time gig. However, amidst all the fear and exuberance, it’s important to realize that the on-demand service model that has lifted Uber to its $40B valuation won’t work for every industry.

Several underlying factors made the taxi industry ripe for disruption by on-demand marketplaces. While these ingredients certainly aren’t unique to hiring a ride, they do not cut across all industries and verticals. Consequently, finding an untapped market and saying you’re going to build the “Uber for X” is hardly a surefire route to success.

So what are the underlying drivers that enabled Uber to thrive in the car service industry? There are three key elements: it’s a commoditized service with a high purchase frequency that is truly time-sensitive.

Underlying Commoditized Services
When it comes to hiring a ride, most of us are happy as long as a driver brings us from Point A to Point B in a clean car without getting lost. This makes us pretty flexible in terms of who delivers the service. Yet the more complex the service, the harder it becomes for consumers to accept the idea that somebody at random will show up each time. We develop preferences for who cuts our hair, babysits our children, performs home repair, and gives out legal/medical advice.

To overcome the trust-barrier, marketplaces can leverage user reviews and Facebook profiles. For example, through Facebook Connect, Airbnb has managed to make people feel safe and secure when opening up their home or staying in a stranger’s place. Other strategies are to certify the service provider pool, tie into existing review sites/peer testimonials, and offer money-back guarantees.
Sites do exist for non-commoditized services today. But they operate more like a lead generation engine than an actual marketplace capable of facilitating the entire transaction with the couple-of-taps simplicity of Uber....MORE