Yesterday I used an Uber for the first time.
I’m not in the city without a car a lot: I rarely have the need for a taxi. However, yesterday I needed to get across town as soon as possible: it was extremely cold and the buddy I was meeting only had two hours before he had to go. I didn’t want to waste 40 minutes of it in a bus.
As I pulled up Google Maps a ad for Uber appeared at the bottom of the public transportation options. It promised 1/4 of the travel time. In context ads filling a real need I’m experiencing right now. Great job Google & Uber.
What I Learned From the Driver
I setup the app (awesome on-boarding experience; the app is great) and hoped in someone’s car within minutes. I have a curious mind and I love engaging with strangers, naturally I struck up a conversation. Here are some things I learned:
- He didn’t own the car. He rents the car for a $100/day. Interesting that business structures are forming to eliminate barriers to entry.
- You make more money being a traditional taxi driver. Uber takes 20%, traditional taxi service handles the complexity of owning a car and takes a flat fee.
- Uber grows the network by aggressively giving away free rides. Simple but effective strategy.
- All of the operational complexity is handled by software. Credit card processing, taxes, 1099s, customer support, dynamic cost adjustment based on demand, etc.
- Creates security for both parties: there is no chance of me not paying and Uber ensures that the driver is taking the most efficient route.
- It costs more, but it’s worth it. This is really a situation where value is added on both sides.
My mind was blown by the whole experience, not because of Uber, but because of what could come down the pike.
When Logistics is Handled by Software
Logistically tasks that suck up time are a pet peeve. A couple months ago I was changing the oil on my car and came up with this idea:
Business idea: an oil change company that does pick up and drop off. I'll be your first customer. 🙂
— Michael Bianco (@mike_bianco) November 18, 2014
What if the solve wasn’t a company, but instead of a service which connected you with local oil change service providers who came to your house to change your oil?
What if a neighbor came from down the street to cook your meal instead of going out to dinner? What if you just purchased their leftovers?
What if there was a marketplace for any service that eliminated the coordination cost normally associated a service businesses?
When the challenge of connecting with someone who wants the expertise you have is eliminated there is going to be more service providers, more purchases, lower prices, and more competition.