Growth at all cost
Uber has created a new way of transportation. It’s not just about the on-demand connections with a driver. It changes the way people approaches transportation. You have to order a ride in a massive city to really grasp this aspect. If you look at New York for exemple, you have a massive fleet of vehicles always in movement and ready to pick you up at anytime. The bigger it gets the more efficient it becomes.
Uber growth is impressive. It took them 5 years to reach 1 billion rides, then only 6 month to reach 2 billion rides. 😳
What kind of growth is that?!
But despite these insane numbers, Uber is operating at loss. In just the 9 first months of 2016, Uber lost $2.2b! Though, Uber relies on network effects to reach its peak efficiency and grow even faster.
Uber objective is clear, it wants to become the one and only on-demand ride service. And it’s likely they continue to operate at a loss until that point. Actually affordable and reliable on-demand transportation can’t generate profit, yet. But it also won’t disappear. Recently, Uber and Lyft left Austin, creating a huge mess. The next day, Facebook groups and new services were available, but with an efficiency, reliability, and security, far beyond what Uber or Lyft were able to provide.
The only possible hurdle to slow down Uber’s growth is regulation. In many country, Uber has faced severe opposition from taxi companies, quickly followed by governments. France is good exemple of that, between attacks on Uber drivers’ status, unfair competitive advantage (bullshit, Uber is just much better), prices… Uber had it difficult in many country, but this didn’t stop them from growing.
The future of transportation
In a few years, it is very likely that none of us will be driving anymore, unless for pure pleasure, and you may have to go on a track because it would have become illegal for humans to drive on roads.
Self driving cars will be taking over and will just act as an autonomous fleet picking wherever you need whenever you need it. Will you own it, or will it be Uber style? This is still quite uncertain at the moment as both models will be tested. Elon Musk is planning on Tesla fleet regrouping every Tesla own by the consumer to be available for anyone at anytime, and Uber is, well, planning to do Uber but they will own the car. With Uber, your experience as a rider will be the exact same as it is now but without a driver to entertain you during your rides.
Despite few incidents, self driving cars have already proven their better reliability than human.
Have you seen this video of a Tesla avoiding an accident even before it happened?!
Really the only bumpers left on the roads for massive self driving car acceptance are prices and regulations. But those are likely to evolve in the good direction quite fast.
Self driving cars is without a doubt the holy grail for Uber, this is when they will be able to start making huge profits out of each rides. Once the largest part of the operating cost of a car will be taken out of the equation (aka, the driver), the road to hefty profits will be paved.
Uber has given itself the resources needed to develop leading edge self driving cars technology. In addition of in-house development, it acquired 2 startups: Otto and Geometric Intelligence.
Otto is working on self-driving car technologies, they have developed small robots for indoor transportation notably, the kind of things that can be used in the industry. But their main baby is a self driving tool that can be adapted on any vehicles!
Geometric Intelligence is an AI startups developing machine learning algorithms able to be more efficient with less data.
As of today, if you compare the different on-demand rides platform, Uber is the one with the best UX, the largest fleet, the ones that collect the most data, and the most efficient.
I don’t think Uber is even thinking about developing their own self-driving car. Their first real life test in Pittsburg was indeed realized in collaboration with Volvo.
Though I think Uber wants to develop the best portable self driving car technology. This will enable them to constitute the largest fleet of self driving cars possible without having to add tremendous manufacturing costs. I am convinced that Uber will have its own fleet but I don’t think they will ever create it themselves.
Uber is very likely to become the Operating System of the future of transportation.
At least, this is were I think it’s heading (or I think it should). This solution presents only advantages to all the parties involved. For the riders it is the best, most efficient, most affordable?, and more reliable transportation mean. For the car producer, it is benefiting of state-of-the-art technology to equip their vehicles (that will probably be leased to Uber). And it will make Uber one of the most influential company in the world enabling them to control the entire transportation industry (this might sounds a little bit scary and I haven’t decide yet if it’s a good or a bad thing, but Elon might save us).
Before this happens, there are 3 things I think Uber should do.
The 2 first ones are obvious: keep developing self driving cars technology and keep growing at all cost.
As we saw earlier, regulations are one the biggest hurdles to Uber growth. But people can’t live without Uber anymore, and they sure don’t want to go back to the traditional cab industry.
Instead, Uber could simply license their software to enable other incumbents to operate efficiently in these markets while leaving them to deal with regulatory issues. It would also be a rehearsal for Uber to operate as the OS of the future of transportation.
And I have few reasons to think it will happen this way.
They are clearly backing off of car production as shown by their partnership with Volvo, or their acquisition of Otto whom objective never was to produce actual self driving vehicles (to go on the road) but rather a system that can be adapted on every vehicles.
Only recently, they started to release some of their precious operating data. Giving access to these data seems like giving access to an API to enable other developers to play with and come up with complementary solutions.
Bottom line, Uber seems to be left mostly unrivaled to become the OS of the future of transportation. There will other companies developing great self driving car technologies challenging Uber, like Google, Apple, or car manufacturers, but it is unlikely that a company will be able to match Uber efficiency in managing the fleet.
I see only one likely rival as of today, and it’s Tesla. Elon Musk has it planned to have his entire fleet of Tesla being readily available to any users anywhere at anytime. But this solution would be limited to a fleet of only Teslas compare to a fleet of all the rest.