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Most "Uber for X" companies are not actually "Uber for X". That's why they're struggling. "Uber for X" does not mean "on-demand for X". On-demand has always bee

Most "Uber for X" companies are not actually "Uber for X". That's why they're struggling. "Uber for X" does not mean "on-demand for X". On-demand has always been a tricky business. SpoonRocket, one of the companies mentioned in the article, is clearly "food on demand", not "Uber for food". What are the essential differences? Uber delivers a simple product, a car ride, that even a minimally skilled contractor can complete. SpoonRocket delivers pre-made meals. Complication is added in having to design, cook, and package pre-made meals. For SpoonRocket, overhead costs exist in the forms of delivery fees: for Uber, no such fees exist. The delivery itself is the product. For SpoonRocket, the real product is the (instant) meal, not the delivery. SpoonRocket had so many costs that in order to turn a profit, they ended up trying to save on meal quality -- and in turn promptly lost their userbase. SpoonRocket cannot meaningfully differentiate itself from its competitors: who really wants to try another service for delivery meals when you could just order GrubHub or Seamless? The folks at SpoonRocket were effectively trying to start a restaurant, which is a hard business with tons of near-equivalent competition. On the other hand, Uber clearly and meaningfully beats taxis, both in terms of price and experience. We know that on-demand businesses are hard. We know that food businesses are hard. Combining them, guess what? Not easy. Let's talk about an actual "Uber for X" companies that is doing well: take Airbnb. Airbnb allows you to take your existing property (spare room, couch, whatever) and with extremely little effort begin renting out access to that property, but only when you want. This is similar to Uber, which allows you to take your existing property (car) and make some extra money by driving every now and again. The conclusion here is that Uber is an on-demand service from the customer side only. From the service-providing side, Uber is among the very first of its kind (you can tell that from the fact that Uber has completely subverted the employee/contractor distinction -- there's extremely little legal precedent for a business like Uber). Thus, it is a severe mistake to look at other businesses that provide on-demand services from the customer side, and to conclude that such a business is "Uber for X". It's only "Uber for X" if it's similar from the service-providing side, which very few businesses are.

refriedbeans3 10y ago
Great points. Also important to note, that Uber does a few things exceptionally well that most other "Uber for X" companies fail with at least one or more: 1) Dramatically increase convenience / quality of service 2) Lower or comparable costs to alternative (esp UberX vs Taxi and vs your own car) 3) Have a demo-able product. Viral word of mouth is so simple when you can literally take your friend for a ride. Most other on-demand services fail at one of these. Spoon rocket in your example, first started as a more expensive convenience play, then as they tried to scale up, lowered quality (violating #1) in order to compete on price (#2). This is why I stopped using them and also why I don't use their competitors like Sprig and Munchery, just too expensive for what it is.
- drewrv 10y ago
  I'd add 4) Flagrantly violate existing regulation. Uber/AirBnB just straight up ignored laws regulating their industry. They bet that regulators wouldn't crack down too hard and they were right. But not every industry is regulated like taxis/hotels. Imagine a food startup that violates health and cleanliness regulations, or a finance startup that ignores the SEC.
  - sunshinerag 10y ago
    Or a Auto industry that violated Horse Transport Regulations.
  - mcpherrinm 10y ago
    I think the food startup equivalent to Uber would be people preparing meals in private homes/kitchens: There's certainly regulation around commercial kitchens, but it's not obviously bad if a home kitchen is used to prepare a meal: I do that all the time for my friends. But there's a lot of things that can go wrong in a home kitchen too as they don't have a lot of the normal commercial food storage stuff like a blast chiller, so I think that type of startup would definitely invigorate the same kind of regulation fight Uber did.
    - wuliwong 10y ago
      I was thinking about this recently. A friend of mine started selling cupcakes and made a website to do it. I don't really know what it takes for Little Debbie to get a new product approved but I would assume some regulatory body has to be appeased before they start selling. I can't imagine my friend went through any of that. If anyone knows about the regulations in this area, I'd love to hear. I'll dig around and report back if I find anything of note.
      - wuliwong 10y ago
        This basically addresses it http://www.moneysideoflife.com/cottage-food-law http://www.moneysideoflife.com/cottage-food-law Looks like in 2012 Georgia was "pending." I'm in Atlanta, so there were no regulations in place when my friend started.
LoSboccacc 10y ago
food services is one of the most hard to start up anyway, right after biomedics and hardware, no wonder they are having a bad time, especially if instead of breaking new ground they brand themselves as Uber for x
mikerice 10y ago
It's interesting, however, that Uber is now in fact doing "Uber for food"/"food on demand" with https://ubereats.com https://ubereats.com.
- antonioevans 10y ago
  they just announced closing of UberEats in NYC.
  - alexyim 10y ago
    Actually, it's just UberEats "Instant" and not the whole service. http://www.upi.com/Business_News/2016/04/19/UberEats-to-end-instant-service-in-NYC-after-one-month/1621461052782/ http://www.upi.com/Business_News/2016/04/19/UberEats-to-end-...
phillmv 10y ago
It's ironic that you'd pick Airbnb, since there is a very straightforward argument that the same effect is in play there - Airbnb is successful because of regulatory arbitrage. It's not like "booking places to sleep in foreign countries" was waiting for a new technological innovation; rather, the existing regulatory frameworks in play placed a cost floor and a high barrier to entry for competitors. Much the same way that a municipality artificially constrains the amount of cabs on the road, a municipality artificially constrains hotels by zoning specific parts of town for hospitality use. Most cities won't let you open up a bed and breakfast in any given residential neighbourhood. -- In this view, as articulated by TFA, both Uber and Airbnb owe their success to a) being cheaper and b) having greater supply, both artifacts of their ability to _skirt existing regulation_ their competitors can't avoid. Can you think of a different successful 'Uber for X'?
Systemic33 10y ago
I'd imagine a proper "Uber for food" company would instead offer a service where people who maybe like to cook, offer to deliver sell some of their home-cooked meals. Sort of like a restaurant. PS. If anyone makes this a business, please just credit me for the idea :)
- astrange 10y ago
  Apparently a lot of delivery restaurants in NYC on Grubhub etc. are actually run out of people's kitchens under fake names. Can't be the safest thing.
khuey 10y ago
Also people are willing to pay more to have themselves delivered than to have their stuff delivered.
danieltillett 10y ago
I don’t think we need to overanalyse Uber and why it worked. It basically is a highly successful raid on the owners of taxi medallions. In the markets where Uber is doing well the medallion owners cartel allowed their share of the taxi revenue get too high. This resulted in the price of medallions reaching astronomical prices - for example NYC medallions reaching over a million dollars [1]. Since Uber and Lyft entered the picture the price of these has fallen to $400,000 [2]. Most (all) other "Uber for X” businesses don’t have such an asset to raid. 1. http://www.nytimes.com/2014/11/28/upshot/under-pressure-from-uber-taxi-medallion-prices-are-plummeting.html http://www.nytimes.com/2014/11/28/upshot/under-pressure-from... 2. http://nycitycab.com/business/taximedallionlist.aspx http://nycitycab.com/business/taximedallionlist.aspx
djloche 10y ago
>"Uber for X" does not mean "on-demand for X" Agree. "Uber for X" should really mean "Supply and Demand clearing house/exchange for x". Uber: the x is personal transportation. Demand = people that need to be transported, Supply = people that have room to transport people. Uber provides a technology based solution - a clearinghouse that pairs the demand to the supply for a fee. AirBnB: the x is short to mid term rooming/housing. Demand = people that need housing, Supply = people that have extra rooms / houses. AirBnB provides a technology based solution - a clearinghouse that pairs the demand to the supply for a fee. If you find a market that has excess supply and excess demand, but no modern software / technology based clearinghouse that VC hasn't tried, you should go for it - chances are you'll be able to corner the market and become very successful. (Just how much will depend on the size of the market...)

refriedbeans3 10y ago

Great points. Also important to note, that Uber does a few things exceptionally well that most other "Uber for X" companies fail with at least one or more: 1) Dramatically increase convenience / quality of service 2) Lower or comparable costs to alternative (esp UberX vs Taxi and vs your own car) 3) Have a demo-able product. Viral word of mouth is so simple when you can literally take your friend for a ride. Most other on-demand services fail at one of these. Spoon rocket in your example, first started as a more expensive convenience play, then as they tried to scale up, lowered quality (violating #1) in order to compete on price (#2). This is why I stopped using them and also why I don't use their competitors like Sprig and Munchery, just too expensive for what it is.

drewrv 10y ago
I'd add 4) Flagrantly violate existing regulation. Uber/AirBnB just straight up ignored laws regulating their industry. They bet that regulators wouldn't crack down too hard and they were right. But not every industry is regulated like taxis/hotels. Imagine a food startup that violates health and cleanliness regulations, or a finance startup that ignores the SEC.
- sunshinerag 10y ago
  Or a Auto industry that violated Horse Transport Regulations.
- mcpherrinm 10y ago
  I think the food startup equivalent to Uber would be people preparing meals in private homes/kitchens: There's certainly regulation around commercial kitchens, but it's not obviously bad if a home kitchen is used to prepare a meal: I do that all the time for my friends. But there's a lot of things that can go wrong in a home kitchen too as they don't have a lot of the normal commercial food storage stuff like a blast chiller, so I think that type of startup would definitely invigorate the same kind of regulation fight Uber did.
  - wuliwong 10y ago
    I was thinking about this recently. A friend of mine started selling cupcakes and made a website to do it. I don't really know what it takes for Little Debbie to get a new product approved but I would assume some regulatory body has to be appeased before they start selling. I can't imagine my friend went through any of that. If anyone knows about the regulations in this area, I'd love to hear. I'll dig around and report back if I find anything of note.
    - wuliwong 10y ago
      This basically addresses it http://www.moneysideoflife.com/cottage-food-law http://www.moneysideoflife.com/cottage-food-law Looks like in 2012 Georgia was "pending." I'm in Atlanta, so there were no regulations in place when my friend started.

LoSboccacc 10y ago

food services is one of the most hard to start up anyway, right after biomedics and hardware, no wonder they are having a bad time, especially if instead of breaking new ground they brand themselves as Uber for x

mikerice 10y ago

It's interesting, however, that Uber is now in fact doing "Uber for food"/"food on demand" with https://ubereats.com https://ubereats.com.

antonioevans 10y ago
they just announced closing of UberEats in NYC.
- alexyim 10y ago
  Actually, it's just UberEats "Instant" and not the whole service. http://www.upi.com/Business_News/2016/04/19/UberEats-to-end-instant-service-in-NYC-after-one-month/1621461052782/ http://www.upi.com/Business_News/2016/04/19/UberEats-to-end-...

phillmv 10y ago

It's ironic that you'd pick Airbnb, since there is a very straightforward argument that the same effect is in play there - Airbnb is successful because of regulatory arbitrage. It's not like "booking places to sleep in foreign countries" was waiting for a new technological innovation; rather, the existing regulatory frameworks in play placed a cost floor and a high barrier to entry for competitors. Much the same way that a municipality artificially constrains the amount of cabs on the road, a municipality artificially constrains hotels by zoning specific parts of town for hospitality use. Most cities won't let you open up a bed and breakfast in any given residential neighbourhood. -- In this view, as articulated by TFA, both Uber and Airbnb owe their success to a) being cheaper and b) having greater supply, both artifacts of their ability to _skirt existing regulation_ their competitors can't avoid. Can you think of a different successful 'Uber for X'?

Systemic33 10y ago

I'd imagine a proper "Uber for food" company would instead offer a service where people who maybe like to cook, offer to deliver sell some of their home-cooked meals. Sort of like a restaurant. PS. If anyone makes this a business, please just credit me for the idea :)

astrange 10y ago
Apparently a lot of delivery restaurants in NYC on Grubhub etc. are actually run out of people's kitchens under fake names. Can't be the safest thing.

khuey 10y ago

Also people are willing to pay more to have themselves delivered than to have their stuff delivered.

danieltillett 10y ago

I don’t think we need to overanalyse Uber and why it worked. It basically is a highly successful raid on the owners of taxi medallions. In the markets where Uber is doing well the medallion owners cartel allowed their share of the taxi revenue get too high. This resulted in the price of medallions reaching astronomical prices - for example NYC medallions reaching over a million dollars [1]. Since Uber and Lyft entered the picture the price of these has fallen to $400,000 [2]. Most (all) other "Uber for X” businesses don’t have such an asset to raid. 1. http://www.nytimes.com/2014/11/28/upshot/under-pressure-from-uber-taxi-medallion-prices-are-plummeting.html http://www.nytimes.com/2014/11/28/upshot/under-pressure-from... 2. http://nycitycab.com/business/taximedallionlist.aspx http://nycitycab.com/business/taximedallionlist.aspx

djloche 10y ago

>"Uber for X" does not mean "on-demand for X" Agree. "Uber for X" should really mean "Supply and Demand clearing house/exchange for x". Uber: the x is personal transportation. Demand = people that need to be transported, Supply = people that have room to transport people. Uber provides a technology based solution - a clearinghouse that pairs the demand to the supply for a fee. AirBnB: the x is short to mid term rooming/housing. Demand = people that need housing, Supply = people that have extra rooms / houses. AirBnB provides a technology based solution - a clearinghouse that pairs the demand to the supply for a fee. If you find a market that has excess supply and excess demand, but no modern software / technology based clearinghouse that VC hasn't tried, you should go for it - chances are you'll be able to corner the market and become very successful. (Just how much will depend on the size of the market...)