NY Times – Uber’s Real Challenge: Leveraging the Network Effect

Picture of Uber Logo

Uber’s $18.2 Billion valuation is discussed in an excellent NY Times article – ‘Uber’s Real Challenge: Leveraging the Network Effect’.

The success and rapid ascent of Uber have many wondering about the value of mobile as powerful ‘remote controls’ as they evaluate businesses including TaskRabbit (‘outsource household errands’) and Exec (house cleaning service).  The allure of ‘pushing a button’ to control our experiences & gain instant gratification, has the interest of consumers & investors alike.

Picture of New York Times LogoThe New York Times article fast forwards from the discussion of regulatory issues (which it predicts Uber will prevail) to the genius of the network effect (enabled by big data & predictive analytics) – “the concept in which users of a service benefit from the fact that everybody else uses the service as well.”  Uber’s valuation is based on investor’s prognostication that the company’s network will lead to durable competitive advantage- similar to what Google has accomplished with data and Microsoft has accomplished with Windows.

New York Times journalist Neil Irwin writes that the “bullish case for Uber, then, is that it rapidly becomes entrenched as the biggest, most vibrant marketplace for both buyers and sellers of ride services. Competitors may arise, offering lower commissions and better software, but the fact that everybody already uses Uber will make it impossible for them to get a toehold.”

Uber has accomplished many things on the disruption checklist:

  1. Eliminated customer pain points.
  2. Dramatically reduced complexity.
  3. Provided user-based pricing (Uber-X & surge pricing).
  4. Make the customer experience smarter & more streamlined.
  5. Used automation to interface with customers.
  6. Invoked transparency.
  7. Personalized services to drive loyalty.

As Irwin notes, Uber will “try to entrench the advantages it has from being first: continually refining its offerings to have the best possible user experience”, and moreover, “the best data analytics to ensure that people can get a car when they need one”.

To read ‘Uber’s Real Challenge: Leveraging the Network Effect’ on the NY times web site, click here.

Logo-for-the-Wall-Street-JournalWhile the network is the enviable position to attain, the Wall Street Journal writes of “at least a few dozen of these ‘sharing-economy’ business” that have failed since 2012.  In ‘Startups Want to Be the Next Airbnb, Uber”, WSJ journalists Sarah Needleman and Angus Loten feature well-funded startups “that have failed since 2012” including BlackJet (‘Uber for Jet Travel’), Tutorspree (‘Airbnb for tutors’), Ridejoy (‘carpooling start-up), HiGear (‘luxury car-sharing’), and Neighborrow.com (‘sharing of household items such as vacuum cleaners).  To read ‘Startups Want to Be the Next Airbnb, Uber’ on the WSJ web site, click here.

By Nick Mavrick

You can find Nick Mavrick on Google+

Intelligent Response specializes in operationalizing Predictive Analytics and Digital Advocacy projects from start to finish in Washington DC.

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