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Advanced Competitive Positioning: Uber

Introduction
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 found themselves in Paris for the annual LeWeb
conference for startups and web entrepreneurs (Kalanick).
“What’s next?” That was the question both were asking themselves. In a blog posting, Travis
Kalanick wrote, “Garrett’s big idea was cracking the horrible taxi problem in San Francisco — getting
stranded on the streets of San Francisco is familiar territory for any San Franciscan.” The
conversation between the two co-founders marked the conceptual founding of Uber.
The initial vision to address the “taxi problem” involved connecting passengers with drivers using
mobile technology. Over the next several months, Camp worked with a small team on a prototype
for a mobile application. Travis Kalanick 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 market as a disruptive, mobile technology enabled alternative to the traditional taxi and
transportation options available.

Analysis of dynamic strategy
Though the company was founded in 2009, Uber didn’t officially launch until June 2010. In January
2011, just six months later, they had had between 3,000 and 6,000 users and had already done
between 10,000 and 20,000 rides. So what got them there?

This is the time for the incumbents to take action and innovate. but instead they usually ignore the new entrants. people will still order Yellow Cabs and other taxis. Airbnb has been pursued by the hotel lobbyists in NYC. the incumbents view the new entrants as specialized toys that could never threaten their decades-old franchise. the SFMTA and cab companies in San Francisco are now adding new medallions to increase taxi numbers in San Francisco. which means more taxi drivers switch to Uber. As the disruptive companies emerge. only a small subset of the most conservative prior generation of users will continue to use the dramatically downsized incumbents. 2. the taxi companies responded by forcing Uber to drop the word “cab” from its name and lobbied extensively on the regulatory side. Incumbents may survive for many years post collapse. For the next N years. Sudden realization that things have changed.e. In Uber’s case it is a network effect that drives fast compounding for itself. Downward spiral These sorts of downward spirals start off slowly (so the incumbents ignore them early on) and then hit a phase transition and shift into overdrive – often over the course of just a few months or a year. which means more people use Uber and fewer use taxis. the individual drivers will thrive as they move to Uber and Lyft. Too little too late.g. In the taxi example. For example. which means there are more cars on Uber. Overconfidence. or often try to delay them with regulatory actions. A sharp collapse in its business is often the singular signal that the industry has hit a tipping point and an irreversible downward spiral kicks in for the incumbent’s business. and a rapid phase shift/cliff for the incumbents. There will just be fewer and fewer drivers and customers for these traditional services. the incumbent unexpectedly misses a quarter in a big way when its business evaporates faster than anticipated. Similarly. but it is probably already game over in the long run. Realization is typically sparked in the incumbent through a drastic turn of events – e.g. Eventually.” i. Ongoing decline. BlackBerry). branded taxi companies will become an “old lady use case. should have been taken a few years ago when Uber first appeared on the scene as a black car centric company. such as forcing UberCab to change its name to Uber. Incumbents try to take action but often don’t do enough quickly enough. Instead they suffer from ongoing layoffs and downsizing of their companies with a subset going bankrupt early. . This and other actions (such as building their own on-demand taxi app). Instead. Uber and Lyft’s early skirmishes with regulatory bodies are good examples of this standard tactic. but are no longer really relevant (e. while the taxi companies themselves will suffer. 4.Below are the typical phases of disruption: 1. 3. Sudden collapse/downward spiral. This is happening right now with Uber – more taxi drivers are switching to Uber.

UberXL is similar to UberSUV but is 50 percent less. driving spikes in new riders and total rides. Despite the opportunities UberPOP provides. Consumers download Uber’s app onto their smartphones. UberSUV connects users with SUVs. UberBLACK is for consumers who desire to have their own private driver in a high-end sedan.” These accelerants indicate a concentrated. In Chicago—a city with great nightlife. Special events and holidays also provide an opportunity to showcase Uber’s model. Leverage Distinct Growth Opportunities In addition to providing an overwhelmingly superior solution. Uber has also leveraged some real life situations to spur growth. Its most used service is UberX. Drivers use their own vehicles to transport passengers. These new services are allowing Uber to branch out and expand its services into different businesses. while UberLUX is the most expensive service with luxury vehicles. Weather 4.Analysis of diversification strategy Uber’s products are all digital. For example. These include: 1. Restaurants and Nightlife 2. and UberPOP. and tons of sporting events — Uber’s initial viral growth was double what’s typical for them (see viral growth numbers cited below). which allows passengers to share rides and split the costs. These events created intense demand and pressure to get new users to take their first Uber ride. UberTAXI is an app that connects licensed taxi drivers to passengers. intense weather. and cities in which they coexist are especially receptive to Uber’s services. they can use the app to contact a driver in the near vicinity. Uber is also attempting to expand into other services. Other low-cost options include UberPool. a service costing less than UberX because it utilizes non-professional drivers and smaller cars. Sports Each of these factors makes driving yourself problematic at best (and in some cases downright impossible). Holidays and events 3. the low-budget option. UberFRESH and UberEATS are meal delivery apps that partner with local restaurants to offer meals to consumers within 10 minutes. and the company was able to deliver on key nights like New Year’s Eve in San Francisco—a city notorious for a lack of taxis—which drove buzz for the new service. Uber offers a few different services to customers based upon their preferences. When they want to request a ride. Uber focused on executing in cities where those problems are near constants to drive accelerated adoption. . its use of non-professional drivers have led to regulatory issues in different countries. Its UberRUSH app launched in New York is used for package deliveries. which Kalanick refers to as “accelerants. The Uber app allows consumers to track the location of the car and alerts them to when the car arrives. temporary need for Uber’s services.

Among the many problems Uber is tackling are: poor cab infrastructure in some cities. Kalanick explains. “There are a lot of drivers in this city who are out of work. Discussing Uber’s expansion to D. By avoiding the trap of smaller thinking. there are a lot of drivers and limo companies that are coming to us to basically help their drivers make a living. late cars. Uber provides a solution to a real problem that impacts millions of people. Uber set out to reimagine the entire experience to make it seamless and enjoyable across the board.Analysis of stakeholder strategy Completely Solves Problems for Riders First and foremost (as Gurley points out.. and this is certainly another factor contributing to Uber’s growth. . Benefits for Uber Drivers Not only does Uber transform the experience for riders.g. to no tips and driver ratings. seamless payments. drivers unwilling to accept credit cards. by making credit card payments more accessible in the car) they were able to create a wow experience that has totally redefined what it means to use a car service. which amounts to a week of work for some cab drivers. and more.C. In all sense of the word they have disrupted the monopoly of taxi cab transportation that exists in many cities and reinvented the experience from top to bottom. poor customer experience. and as with Square). the service acts as a liaison between people who need rides to drivers who are in the area. and iterating on one element of the taxi experience (say. Instead. they tackled the whole experience from mobile hailing. mobile payments for the existing taxi infrastructure). This arrangement can bring in more than $500 a day.” Uber doesn’t employ drivers. but it’s also good for drivers. it’s a win-win for all parties involved. Like any good service. sparking an avalanche of word of mouth and press. They didn’t fix one aspect of the system (e. poor service and fulfilment–including dirty cabs. Because of that. better cars.

International expansion is a major part of Uber’s marketing strategy. Because of the politics. with local efforts tailored to each new location. and account for those dynamics that makes Uber successful right from the start in new cities. many countries have regulatory hurdles that have caused trouble for Uber to successfully operate in these areas. including: Intensely Local. and freedom that its app services offer. moving parts.Analysis of international strategy Uber has adopted the motto "Available locally. Even though it is successful in some countries. In addition to the points mentioned above—which are still very much driving forces—Uber’s growth engine is comprised of several related. understand who the suppliers are. which is why they take it city by city. What worked for San Francisco may not be what’s right for Chicago or New York. and interests that make up each city. It’s this ability to go into a market. who the special interests are. convenience. regulations. and it has thus far established the ride sharing service in 58 countries. . Now. Uber needs to adapt their launch plans to suit the unique topology of each new market. expanding globally" to describe the opportunities it sees in global expansion. City-by-City Expansion But perhaps the reason Uber has expanded so quickly is because they acknowledge that growth is not one-size-fits-all. let’s examine today’s growth engine a bit more thoroughly. Uber is correct in assuming that consumers from other countries would also appreciate the low cost.

because of that. whereas Uber defines its services as “ride sharing” and Uber as an “agent” of their “individual contractors. When asked if this growth in D. And. “I think one can make that conclusion. has been called the Uber for truckers because it connect shippers with drivers who are looking for extra 10 shipments to haul. and the sort of overall demand we’ve seen has been unprecedented. For example. really likes our product a lot. reflects “that people are not happy with their alternatives. month over month. the company has become widely popular among consumers and independent contractors.” However.Kalanick explains: “We think that cities deserve to have another transportation alternative. it requires us to take a very local approach to how we go after a city.” Uber makes sure that their marketing and business efforts are in full support of fuelling that word of mouth engine. people who own cars and run car services.C. I like to say they drop in with parachutes and machetes [and] get highly involved with the suppliers. Laws that protect consumers specifically target taxi services. It sounds crazy to have to say that but you have to do that because you have incumbent interests which are often trying to curtail innovation and curtail sort of transportation alternatives that might compete with their existing business. There are similar firms that offer ride sharing services. driving local growth.” He claims that.” A city in which Uber has seen unprecedented growth is Washington D. They should also adopt controls to ensure that independent contractors using their app obeys relevant country laws.” Kalanick replies. It is therefore important for Uber to ensure the safety of their riders and the drivers. This is signaling a shift in the industry in which people are the infrastructure rather than buildings or fleets of vehicles. Uber has a bright future and expansion opportunities are great. but D. We have launchers that go into [cities] … and turn nothing into something. Uber faces a number of marketing challenges including regulatory and legal issues both inside and outside of the United States. Cargomatic. many courts do not view its services in the same way and are forcing Uber to comply with licensing laws or stop business in certain areas. Investors clearly believe Uber is going to be strong in the market in the long run. Supporters claim that Uber is revolutionizing the transportation service industry. and there are firms that want to be an Uber-type business in the way they deliver goods and services. Being local and speaking with local voice is important when you're doing transportation and means you know what's going on for the city. Kalanick explains. Logical synthesis of findings The emergence of Uber has influenced many services to follow the Uber business model.C. growth is in the 30 to 40 percent range. “We’re not really sure exactly why. That is reflected in our growth. Cargomatic has developed an app to help fill space on trucks. really.C. and really just make sure that we can launch a service that is high quality from the start. . Despite Uber’s challenges. Uber has to address these issues to uphold the trust of their customers and achieve long-term market success. which now operates in California and New York.

unm. of merely an application that marries other popular technology apps and creations together.tc.com/growth-studies/uber 3) UBER’S EVOLUTION : FROM SAN FRANCISCO TO INTERNATIONAL DISRUPTION http://www.edu/pdf/uber-case-study. It has created a platform that has generated envy that displays itself in copycat competition and worried taxi companies trying to create regulation to shut them down. Addendum of exhibits and research citations 1) Uber Technologies Inc.umn.What is Next for Uber? Uber’s branding and utilization of mobile technology has made its solution to transportation headaches more than successful.: Managing Opportunities and Challenges https://danielsethics.html .pdf 2) Uber — What's Fueling Uber's Growth Engine? https://growthhackers. Uber’s global success is noteworthy and it seems there is no stop in sight. Uber is not a cab company.edu/~ssen/IDSC6050/Case15/Group15_index.mgt.