Uber has quickly turned from media darling to media villain, but these stories distract from what’s fundamentally at the heart of it all: that Uber has risen from the soup of nascency and become a behemoth, no matter that it’s more like Goliath than a gentle giant
Uber has quickly turned from media darling to media villain, no thanks to accounts of rape and assault by Uber drivers, accusations of misogyny by white male execs, and Uber CEO’s subsequent botched apology.
But these stories distract from what’s fundamentally at the heart of it all: that Uber has risen from the soup of nascency and become a behemoth, no matter that it’s more like Goliath than a gentle giant.
The numbers say it all: Uber is on track to generate US$1.5 billion to US$2 billion in revenue this year, according to leaked documents. The company’s latest fundraising round values it at US$40 billion, and the craziest thing is that this seems reasonable if revenue projections are accurate.
The investments into Uber totaling over US$2.7 billion, and not counting the recent rumored Baidu round, is the product of its sweeping vision, as well as the outsized resources needed to achieve it. I’ve spoken to a couple of Silicon Valley investors who passed on the Uber deal and they’re regretting it.
In essence, Uber wants to bring on-demand transportation to everyone. While it’s ferrying people now, its grand vision is to disrupt logistics. Bearing this in mind, we can now set some context for the so-called taxi app wars in Asia and how it has affected startups.
Uber is pushing up valuations for taxi apps
When Uber started in 2009, it begun as a company that matched private drivers with passengers. It was only three years later that it launched UberTaxi, a move which upsetted taxi unions and set the stage for its legal battles today.
Around that time, a whole gamut of similar taxi services started around the world, and some debuted earlier than UberTaxi. Olacabs and TaxiForSure launched in 2011, while Easy Taxi in Brazil, GrabTaxi in Malaysia, and Didi Dache from China began in 2012. Not as headline-grabbing but still significant are logistics-on-demand services like EasyVan and GoGoVan. Both began operating in 2013.
On the surface, these companies have different strategies. Uber started out with livery vehicles, then branched out into taxis and now accepts all private vehicles in friendlier markets. It has just begun dabbling in logistics. GrabTaxi and Didi Dache used only taxis in the beginning and have now branched out into premium cars. While they may be miles apart now, collision is imminent.
This year, we’re already seeing taxi apps vying for dominance from city to city. Singapore alone has Uber, Easy Taxi, Grabtaxi, and Hailo sniping at each other. The competition could intensify next year as these companies encroach even more into each other’s turfs.
The eventual convergence between these companies is probably what investors had in mind when they backed these various services. It explains why funding for the competition after Uber’s humongous US$1.2 billion round in June 2014 have ballooned.
Taxi apps around the region began piling on the money at an alarming rate just months after Uber closed their round. The amount raised in a four-month span alone is worth almost 10 times the amount raised in the years before that.
Several factors are at play. These apps started seeing traction in their respective cities at around the same time. The venture capital scene in Asia is at the hottest it’s ever been. Uber’s headline-grabbing June round, which investors must surely have gotten wind of as they were negotiating with the various taxi apps, could’ve been the final trigger that inflated the valuations. This is an arms race to grab market share, and the bigger your war chest, the faster you can dominate.
Uber for X, Uber for Y
Uber’s runaway success has another effect: startup founders and wannabe entrepreneurs are looking to emulate the model in their own businesses. There’s even a poem dedicated to this phenomenon, which you can read in full on the Quartz:
There’s Uber for planes,
And Uber for jets,
An Uber for pills
And Uber for pets.
There’s Uber for dogs,
And Uber for cats.
Need a hot stone massage?
There’s an Uber for that.
This current infatuation with Uber echoes the Groupon craze from 2011 to 2012 and the beauty box craze in 2013. Everyone wants to wear the hottest trend of the month. It just so happens that this time, the pin-up model is Uber. To be fair, GrabTaxi and the rest are not Uber clones. The extent to which Uber inspired these services is unclear. Their taxi apps launched around the same time as Uber’s so it’s more accurate to describe these companies as part of the same zeitgeist.
And it wouldn’t be fair to call all “Uber for X” startups outright clones either. Some of these could hit the mark and become great businesses in their own right. And while some founders would happily call their startup an Uber for whatever, these characterizations are sometimes a media invention. We call a startup an Uber for something even when that’s not what the founders themselves have said. It’s just a mental shortcut to understand a business.
Broadly speaking, here are the sort of startups that typically get the Uber label slapped on:
- Web or mobile platforms that let you book services ahead of time.
- Some degree of seamlessness in the user experience, with search, filter, booking, and sometimes payment features baked in.
- On-demand, but many “Uber for X” services lack this feature.
They’re actually similar to another trend: Airbnb and the bevy of Airbnb for X startups, and that’s not a coincidence. Airbnb and Uber share a lot of similarities, though most significantly in how they’re part of the sharing economy, which involves using networks to better match market demand with an excess supply of existing resources. The main traits separating Uber and Airbnb are that the former is on-demand and deals with transportation, the latter scheduled ahead of time and tackles the hospitality sector.
So why’s everyone calling themselves an Uber for X rather than an Airbnb for Y? Perhaps it’s the valuation. At “only” US$13 billion, Airbnb no longer seems like the cool kid.
Here in Asia, Uber fever is just beginning. Tech in Asia’s Paul Bischoff wrote this great report on the peer-to-peer car services bonanza in China. Investors are pouring money into clones because Uber is the in-thing right now. Beyond cars, Bischoff also covered Edaixi, an on-demand laundry service that got funding from Chinese internet giant Tencent.
More Uber-like services are coming up in Singapore too. Grain is a nascent, on-demand food delivery service that promises to get piping hot lunch to your driveway in 15 minutes. Helpling, a Rocket Internet funded business that sends cleaners to your house, will launch in Singapore next year. It already has a bunch of competitors in the country – Properhands and Spickify. I’ve even come across an Uber for technical support, and it’s called – wait for it – Fynd.
With 2015 arriving and startup valuations rising, it’s a sure bet that more Uber for X businesses will pop up in Asia. Like the Groupon and beauty box fads, this one will die, and the ones who will make it are not those who photocopy Uber but also understand why it succeeded.
Uber’s brand name may have taken a hit recently, but critics who predict its doom will be in for a surprise. It’s a proven business, which means it’ll take a lot more than a few city-wide bans to stop the Uber train.
This post was originally published in Tech in Asia
Photo Credit: Shutterstock/ Uber logo