3 ms·

It seems like a lot of things are coming home to roost right now for Uber. As with many things, I think that Uber is the first player in an arena where the seco

by debacle 12y ago

It seems like a lot of things are coming home to roost right now for Uber. As with many things, I think that Uber is the first player in an arena where the second player tends to survive (because they learn from all the first player's mistakes for free, the groundwork is laid, etc). The barrier to entry for an Uber competitor is quite low and trust is the only thing that keeps Uber afloat. If they don't realize that and act accordingly, they could die relatively quickly.

imjk 12y ago
I keep hearing this argument that the barrier to entry is so low for an Uber competitor, but I think people massively underestimate the difficulty of successfully running a system like Uber. Here in Boston where Uber has wide adoption, I just watched a competitor with an impressive team (Hailo) fold up shop as they struggled to gain traction and compete. Where are all these other competitors that are going to come along and easily compete with Uber. Not to mention, there's huge advantages that network affects have in the vertical.
- debacle 12y ago
  The hailo model seems very different from the Uber/Lyft model. More upscale, so I'm guessing a higher barrier to entry for drivers (and it looks like a smaller driver pool).
  - imjk 12y ago
    I find this ironic. When I used Hailo in Boston, it actually only integrated with taxis then moved to private drives. Uber on the other hand, contrary to what you're saying, started with only black cars then shifted to include taxis, and eventually UberX.
kjksf 12y ago
The "low barrier to entry" is repeated on every Uber story and I don't get it. It's a business with a very strong network effects: you need both sides of the market because without drivers, users are not interested and without users drivers are not interested. Uber seems to have a big lead over competition here, is growing like crazy and they raised insane amounts of capital so that they can grow faster than competition. But even without network effects, I don't see that as an easy to replicate business: * you need a great iOS app * you need a great Android app * you need a backed that is both fast and has rock solid 24/7 reliability. it can't be like Twitter in early days * you need to become a payment processor that interjects itself between users and drivers, which I'm sure comes with its own set of legal and logistic challenges * and you need to do it internationally * and you need a massive operation team whose job is to onboard new drivers (recruit, train, supervise) * you need a legal team because every state can have different rules * and you need them also internationally I really don't see any of the above as easy to pull off and to do it all well, that requires both technical and operational excellence that few have.
- debacle 12y ago
  > you need a great iOS app > you need a great Android app Neither of these is rocket surgery. Good devs can create an app very quickly, especially if your directions are "clone this other app." > you need a backed that is both fast and has rock solid 24/7 reliability. it can't be like Twitter in early days So you need something that isn't node + redis + mongo + riak running heroku through cloudflare. This is also quite easy. > you need to become a payment processor that interjects itself between users and drivers, which I'm sure comes with its own set of legal and logistic challenges * and you need to do it internationally > and you need a massive operation team whose job is to onboard new drivers (recruit, train, supervise) > you need a legal team because every state can have different rules > and you need them also internationally The beauty of all of these things is that Uber has already done many of them for you. Unless they have all of their drivers under NDA (possible, but unlikely) and haven't published any of that informaton on their website, you're going to profit from hundreds of thoussands if not millions of dollars of legal work that Uber has already done for you. It's not as simple as a sed script on a legal document, but it's way (way way) easier than starting from scratch. The best part is that your drivers can also be Uber drivers, so you don't need the volume that Uber has today - you can slowly build up both sides of your market as long as the friction for drivers is minimal and the ease for users is equal or better. Is it easy? Fuck no. Is it about 1000% easier for you now that Uber has done all of the hard work? Hell yes.
  - LunaSea 12y ago
    Nice theory you have there but Uber uses Node.js.
  - gregpilling 12y ago
    And you could start in your small college town, work out the bugs in your process and then go national, then international. @debacle I agree. Micro-Ubers could pop up all over.
- yummyfajitas 12y ago
  Building a few pretty apps is hardly a barrier to entry. It might be beyond the reach of a single founder bootstrapping but it's quite reasonable to build with a small VC investment. Note that autowale.in (an Uber competitor, currently profitable) was started on an investment of about 30 lac - roughly speaking 1 year runway for 3-5 engineers. Various tricks: start in 1 city, do the onboarding manually, and ignore the legalities until you are big enough to be noticed. Autowale.in dealt with the bootstrap issue directly buying inventory from drivers. I.e. autowale.in pays the driver for 20km each day, and then tries to find customers to use that inventory. The major barrier to entry here is the fact that Uber is really good. But if Uber decides to exploit their market condition and rip people off, that will change.

by debacle 12y ago

imjk 12y ago

I keep hearing this argument that the barrier to entry is so low for an Uber competitor, but I think people massively underestimate the difficulty of successfully running a system like Uber. Here in Boston where Uber has wide adoption, I just watched a competitor with an impressive team (Hailo) fold up shop as they struggled to gain traction and compete. Where are all these other competitors that are going to come along and easily compete with Uber. Not to mention, there's huge advantages that network affects have in the vertical.

debacle 12y ago
The hailo model seems very different from the Uber/Lyft model. More upscale, so I'm guessing a higher barrier to entry for drivers (and it looks like a smaller driver pool).
- imjk 12y ago
  I find this ironic. When I used Hailo in Boston, it actually only integrated with taxis then moved to private drives. Uber on the other hand, contrary to what you're saying, started with only black cars then shifted to include taxis, and eventually UberX.

kjksf 12y ago

The "low barrier to entry" is repeated on every Uber story and I don't get it. It's a business with a very strong network effects: you need both sides of the market because without drivers, users are not interested and without users drivers are not interested. Uber seems to have a big lead over competition here, is growing like crazy and they raised insane amounts of capital so that they can grow faster than competition. But even without network effects, I don't see that as an easy to replicate business: * you need a great iOS app * you need a great Android app * you need a backed that is both fast and has rock solid 24/7 reliability. it can't be like Twitter in early days * you need to become a payment processor that interjects itself between users and drivers, which I'm sure comes with its own set of legal and logistic challenges * and you need to do it internationally * and you need a massive operation team whose job is to onboard new drivers (recruit, train, supervise) * you need a legal team because every state can have different rules * and you need them also internationally I really don't see any of the above as easy to pull off and to do it all well, that requires both technical and operational excellence that few have.

debacle 12y ago
> you need a great iOS app > you need a great Android app Neither of these is rocket surgery. Good devs can create an app very quickly, especially if your directions are "clone this other app." > you need a backed that is both fast and has rock solid 24/7 reliability. it can't be like Twitter in early days So you need something that isn't node + redis + mongo + riak running heroku through cloudflare. This is also quite easy. > you need to become a payment processor that interjects itself between users and drivers, which I'm sure comes with its own set of legal and logistic challenges * and you need to do it internationally > and you need a massive operation team whose job is to onboard new drivers (recruit, train, supervise) > you need a legal team because every state can have different rules > and you need them also internationally The beauty of all of these things is that Uber has already done many of them for you. Unless they have all of their drivers under NDA (possible, but unlikely) and haven't published any of that informaton on their website, you're going to profit from hundreds of thoussands if not millions of dollars of legal work that Uber has already done for you. It's not as simple as a sed script on a legal document, but it's way (way way) easier than starting from scratch. The best part is that your drivers can also be Uber drivers, so you don't need the volume that Uber has today - you can slowly build up both sides of your market as long as the friction for drivers is minimal and the ease for users is equal or better. Is it easy? Fuck no. Is it about 1000% easier for you now that Uber has done all of the hard work? Hell yes.
- LunaSea 12y ago
  Nice theory you have there but Uber uses Node.js.
- gregpilling 12y ago
  And you could start in your small college town, work out the bugs in your process and then go national, then international. @debacle I agree. Micro-Ubers could pop up all over.
yummyfajitas 12y ago
Building a few pretty apps is hardly a barrier to entry. It might be beyond the reach of a single founder bootstrapping but it's quite reasonable to build with a small VC investment. Note that autowale.in (an Uber competitor, currently profitable) was started on an investment of about 30 lac - roughly speaking 1 year runway for 3-5 engineers. Various tricks: start in 1 city, do the onboarding manually, and ignore the legalities until you are big enough to be noticed. Autowale.in dealt with the bootstrap issue directly buying inventory from drivers. I.e. autowale.in pays the driver for 20km each day, and then tries to find customers to use that inventory. The major barrier to entry here is the fact that Uber is really good. But if Uber decides to exploit their market condition and rip people off, that will change.