2 September 2015
2 min read
Uber has permanently changed business. Is your company up to standard? Three questions will tell you all you need to know.
Uber has scaled faster and achieved more in six-and-a-half years than most companies do in a lifetime. Consider these mind-boggling statistics:
- As of June, Uber was operating in 58 nations and 311 cities. No taxi company in the world can make a similar claim
- At a reported $50 billion valuation, Uber is more valuable than Twitter and LinkedIn combined ($40 billion), and its worth is nearly 270 times the market cap of taxi financier Medallion Financial ($185.4 million as of this writing), which loans money to people wanting to buy or lease taxi medallions in order to drive licensed cabs
How did we get to this point? Like most hypergrowth companies, Uber developed an interesting way to satisfy an unmet need (i.e., good, clean, enjoyable transportation service accessed on demand), tested it thoroughly and then expanded as rapidly as new markets would bear.
3 questions every business must answer in the post-Uber era
That investors have taken to Uber so quickly speaks volumes about what venture capitalists and other providers of growth equity expect now. They're less likely to be satisfied with slow growth and capital-heavy bets that could take years to play out. Instead they're looking for the next Uber. And in that spirit, you can expect these three questions when seeking capital:
How will you scale to new markets?
When Uber needs to make its app available in a new country, it turns to cloud communications platform Twilio to send its driver update text messages. Eliminating the need to negotiate business development deals with local telecoms carriers surely helps to explain how the company has entered so many territories so quickly.
Do you have the right inventory?
When CEO and cofounder Travis Kalanick first envisioned Uber, it was as "a lifestyle company" interested only in getting a black car to arrive on demand, generally in eight minutes or less. Owning the car fleet itself wasn't important. Nor was owning the maps or the network for delivering the order.
The lesson: invest in what you must in order to grow, but nothing more.
Is pricing tied to value?
Uber is well-known for charging a premium during peak hours, but is that really so bad? Consider that Uber riders have the convenience of cash-free payments made through the app, and rides that arrive mere minutes after they're requested. That's a valuable service and Uber charges accordingly. Seek to do the same.
What makes Uber unique is how it expanded. Rather than try to own every level of a traditional car company infrastructure, Kalanick developed an ecosystem connected by technology.
Today, Uber is a network of willing, app-armed drivers as much as it is one of the world's most valuable private companies. So these questions aren't just for businesses seeking capital. They're also for every size and style of company seeking to benefit from networked technology, which may as well be every small business in the world.
What are your answers? Are you using technology to scale faster, preserve capital and capture maximum value? Leave a comment to let us know how you're doing it.