Uber’s Eternally Bad Weeks

Pity Dara Khosrowshahi, who has done yeoman’s work neatening the Uber business in the wake of its uproarious startup years. He can’t get a break from the previous mischief committed by the company’s founder. Yet, I suspect Khosrowshahi is satisfied with his work to date, as the Uber board probably is, as well.

Last week, after finally resolving board conflicts with founder Travis Kalanick, Khosrowshahi admitted the company had, under Kalanick, covered up a massive data breach and paid off the intruders without reporting the event to law enforcement or regulators. Having swept its juvenile behavior under the rug, Uber will be dealing with these malignant hairballs for years to come. How long will the company hand competitive advantages, brand confidence-building opportunities, and market share to its competitors? Forever, because it established a huge early advantage over competitors that, like Microsoft’s PC market share, is permanent and of dubious value — because it distracted Microsoft from new markets for more than a decade while Apple and Google sopped up the mobile market like gravy.

Uber’s view of local transportation markets was an incredible asset, but the insights generated by Lyft, Didi Chuxing in China, Ola in India and Grab in Southeast Asia, now rival those of Uber. This has given Lyft, in particular, an opening in the U.S. to move into enterprise services. For example, Lyft signed an agreement with corporate travel giant Carlson Wagonlit this week, giving it convenient expense management for enterprise travelers. Volkswagen today announced a Chinese on-demand transportation service (cars on demand) that mimics Cadillac, Audi, and other carmaker services that promise to change the auto purchase process over the next decade. Meanwhile, companies, such as Stratim, formerly Zirx, and others, such as Ford and GM, are jockeying for part of the on-demand automobile management market, hoping to carve out a share of transaction revenue to pay for vehicle cleaning, maintenance, and, ultimately, customer relationships with car users.

From AutoNews: Even EY is working on a software management platform, called Tesseract, to connect fleet operators, service providers and passengers. The firm is working with automotive partners to develop a system that can manage payments among all parties in a mobility service, from the car’s manufacturer to the rider — another aspect of ride-hailing services Schondorf says consumers will expect to be quick, easy and trustworthy.

This is a business Uber should own, but seems prepared to cede, along with the revenue, to competitors Not Currently Struggling With Brand Reputation. If Uber’s primary role will be the acquisition of vehicle fleets, such as its $1B Volvo deal last week and $10B Mercedes deal in March 2016, the company is taking on inventory risk that voids its earlier scale-free growth strategy: Drivers paid for vehicles until now, and Uber’s customer interface will need to be transformed from the face of the driver (and their vehicle) into a remote service business represented by the Uber app. This will be Uber’s biggest pivot, yet. The bad weeks must end for the strategy to pay off.

 

About Mitch Ratcliffe

Mitch Ratcliffe is a veteran entrepreneur, journalist and business model hacker. He operates this site, which is a collection of the blogs he’s published over the years, as well as an archive of his professional publishing record. As always, this is a work in progress. Such is life.

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