The Disruptive Economist

The Disruptive Economist

Uber needs its old maverick identity back – and quick

Uber Horizontal Logo.

Uber is tearing me apart at the moment. As a professor of entrepreneurship, I love Uber. It took an industry that had hidden in the regulatory shadows and made it an order of magnitude more usable for many people. Put simply, I don’t know anyone who loved their old taxi service. Perhaps taxis were under-appreciated – a taxi driver’s lot is not a great one – but it was hard to get one, they weren’t always the best in finding the quickest route, they frustratingly didn’t have GPS to help them with traffic and directions, everyone has a story of going to some location and being ripped off by one because you didn’t know the local conditions and it was always a pain to pay. Uber have shaken this entire thing up.

What is more, Uber did so in a ‘mavericky’ way. They just launched its service knowing full well they were skirting the boundaries of a half a century of regulations that had bound taxi services to a single model around the world. They then fought the good fight against those regulations from city to city and brought them into the 20th century. And that fight continues. What is more, by undertaking that fight, Uber opened the door to its competitors including Lyft and Sidecar as well as forcing traditional taxi services to up their game by partnering with other entrepreneurial firms such as Hailo. To be sure, no one believed Uber was doing this out the goodness of their heart but what is also true is that there were substantial positive externalities being generated.

The Uber as ‘fun maverick’ is the Uber I identified with. So much so that I have supported them again and again in the media. Indeed, just today I was in the Globe and Mail (in Canada) decrying the City of Toronto’s moves to ban Uber rather than think about how Uber and its like should operate there. But this time I had to grit my teeth and think of the bigger picture (shaking up taxi regulations) rather than about Uber itself.

Why? Because Uber is currently failing in its entrepreneurial strategy. All start-ups need to have a focused entrepreneurial strategy because they face many things they could do but only a few things they have the resources for – usually financial (although that isn’t Uber’s issue) but most certainly managerial. An entrepreneurial strategy is, broadly speaking, comprised of four broad sets of decisions that must cohere with one another. They have to choose their customer, technology, competition and identity.

For Uber, their strategy is anchored in their choice of technology – to use mobile devices to order stuff (in particular, someone to pick you up and deliver you somewhere). That was an obvious choice. But at the same time, to make that work, Uber needs to gather lots of data and use it in a responsible manner. When you collect such data you walk right into a trust issue. Uber needs to know about how you and others like you use their service so they can improve the service and personalize it for you. This is a tricky issue for start-ups but we know that start-ups who build the idea of respecting privacy into their DNA while undertaking all of this are more likely to build up trust and a sustained competitive advantage. People may worry about Facebook but on this score they are the top of the heap.

Speaking of DNA, Uber had identified itself as the maverick taking on the old industry. That is something we can get behind. But, more recently, it has made a choice as to the competition it is taking on and has appeared to be very aggressive in its competition with Lyft. Lyft was even more maverick and a little hippier than Uber by going for the low-end and putting more ordinary drivers into the transport industry. They called it ‘sharing’ but it is really just entry. Again, this is something that is good in my opinion and actually drives a harder set of regulatory challenges than anything Uber was doing. Uber could have just sat back and seen how that played out. In contrast, they changed their focus. They moved away from the high-end they were targeting (Uber limos and taxis were more expensive) and launched UberX – a direct competitor to Lyft. The problem is that they had now chosen to fight a two-front war. Taking on the old taxi industry is maverick. Taking on the upstart like itself seems … bullying.

That seems like a strong word and I don’t quite mean it that way. But Uber appears to be very aggressive in its competition with Lyft. This means that its identity is harder to define. Why is that important? Uber is no ordinary start-up. There are hundreds of people invested in its eco-system. In order for them to make the right choices they need to know what Uber is about. From that perspective, it is hardly surprising that some Uber employees may end up trying to recruit drivers from Lyft in ways that can at least play as unsavory in the media.

Finally, we arrive at this week’s news that an Uber executive toyed with the notion of hiring journalists to dig up dirt on those hammering it in the press. And all this will managing to look sexist in the process! If you want to be a maverick and not a bully as your identity, that doesn’t play well. I am not deleting my Uber app as some are doing – after all, there are too many well-meaning people making their living off it – but I really want Uber to take a stand on what their identity is.

So here is my plea – Uber meet me at Camera 2: Uber, look I know that things are tough. Every little misstep that happens to anyone involving Uber ends up being reported. But you have to understand, you embarked on a game of political change to open up new businesses. Yes, that is an obviously laudable goal but you have to expect that the fight will be rough, tough and unfair. The only way to win that is to take the higher ground every single time and make that your identity. There is a future in which the world looks far different because you embarked on that journey. But you are in danger of sabotaging that completely – not just for you but for everyone – because you have lost focus. Move your gun barrel back to the old and away from the new like Lyft. Clean your decks and re-establish your roots. After that, I’ll come back and help you fight with as much as I can offer as a disruptive economist.