Start Ups: UBER “decoded”, for maximum market pull.
Simple solutions might work, complex solutions never do! The inherent simplicity of UBERs solution is in its ability to create an extraordinary market pull. Market Pull = Moved the market from a dependency on an age-old Marked Physical Locations System, to Real-time Mobile System + Focus on sufficient supply and demand density, to ensure realising full value + Mutual rating system to make it reliable and convincing
Frame of reference for Market Pull Decoded: Extraordinary Market pull is dependent on the combination of three essential components:
- The intrinsic market value (removing a limitation or dependency for the market);
- The market’s ease of realizing the value (an enabling value model); and
- The reliability of the market realizing the value (conviction)
#1 The Intrinsic Value (removing a limitation)
UBER’s founders (amongst others) were playing with the idea of developing a smart phone application, that, by the push of a button, a rider would highlight his or her location on a map, while all the drivers within an acceptable range, would also appear on the screen. The rider would decide on one of the cars, and the rest of the process would unfold automatically. They immediately realised, that they would in fact be removing a very significant limitation, that had constrained the taxi industry, for as long as it had existed. The limitation they were addressing was; Drivers and their riders were limited to physically marked locations, to find one another. Up to that point, the taxi industry was shaped mainly around the efficient positioning, and use, of these marked taxi locations.
Drivers and riders would always therefore move to the closest physical locations, where the probability of finding each other would be the highest. These locations were either clearly marked, or generally known, by both (such as hotels, airports, shopping malls, etc.). You could also call for a cab, but you’d pay more, and could wait longer for one to be dispatched – it was not the most efficient way, but it was available. There were irritations and challenges, but in general people accommodated for the limitation.
Having the ability to connect the rider and the driver in real-time, anytime, anywhere, moved the boundaries significantly. The reliability of finding one another, was now to be simplified, and both would no longer have to move to physical locations, as before. The world can now move from a marked physical location system, to a real-time mobile system. A major limitation was removed for mankind, and we could now explore its full intrinsic value!
#2 Ease of realizing the full value (an enabling value model)
A prerequisite for the real-time mobile system to operate efficiently, was a sufficient density factor for both riders and drivers. As a direct result of the required density factor, the full value could only be extracted in the major cities around the world, where there would be sufficient riders and drivers to make it effective and efficient.
In order to ensure car availability, UBER had to look beyond the normal taxi industry. They found that lots of people have cars, and would willingly use their spare capacity to earn additional income.
In order to ensure sufficient demand, for the drivers to realize the full value, UBER had to offer the cheapest rates, and launch with special offers including free rides, to get people to fall in love with the new way.
The rest of the technical solution already existed; it was just a matter of putting them all together.
#3 Reliability of realizing the full value (conviction)
Finally, to mobilize a global system of this size, it needs to be very convincing. In their wisdom, UBER decided to use a rating system, to ensure the rider rates the driver, and vis-a-versa. This way, the power gets distributed equally between both parties, thereby contributing towards continuously improving the system. This basic rating system is very convincing, to and for, both the rider and driver. Satisfaction levels and general feelings now count, all round!
Market Pull = Moved the market from a dependency on an age-old Marked Physical Locations System, to Real-time Mobile System + Focus on sufficient supply and demand density, to ensure realising full value + Mutual rating system to make it reliable and convincing.