Takeaway — Why an Uber for X does not always work
The ease of creating something is not correlated to ease of that product getting traction. We have identified the sweet spots that a company needs to hit in order for their “Uber for X” to work.
Right margin
If the new product costs a lot more than the incumbent behavior, then it will not work. If the delivery cost of groceries is as much as the actual groceries, then it will not work. The way to handle this is through having minimum purchase prices. Usually something like delivery is a fixed price. But requiring a minimum order, let’s say $15, makes the cost a delivery smaller in comparison to the overall order. Cleaning startups such as Handy have a 2 hour work minimum and Uber has a minimum fare that it will charge.
Frequency
The frequency of the service or product that you are providing needs to be right in order to your company to work out. For Uber to work as a standalone car service company, the frequency of use needs to be there. That is why they are 1) lowering the price of Uber so it can rival public transportation 2) getting into more frequent business lines such as food delivery. People need to eat several times a day, but maybe require a car service once a week. Startups like Handy, which provides instant booking for home services, started off with providing home cleaning. People need to get their home cleaned maybe once a month. So they are rolling out other features such as painting, electrical, plumbing, and furniture assembly.
Natural Habit Zone
How “abnormal” is your company’s behavior? It is normal for a home cleaner to come to a home, but does it make sense for a car wash come to a car (Cherry)? For doctors, does it make more sense for a patient to visit a doctor’s office, or does it make more sense for the doctor to visit the patient (Pager)? The question to ask here is if the “bigger thing is coming to the smaller thing?”
Ease of Use
In order to disrupt the incumbent, your offering need to be easier to use. For example, Uber has to compete the actual action of hailing a cab. Is it easier to take out your phone, fire up an app, and click around, or is it just easier to raise your arm to hail a taxi? Clearly in cities that have excellent taxi systems Uber had to compete on other fronts. Fronts that they could control. Uber worked on decreasing prices and turns riding in an Uber into an experience. One of the biggest complaints with taxis, especially in NYC, is that they are smelly and dirty. Uber realized that they could win this front and pride themselves on the cleanliness of their vehicles.
Training
When creating an Uber for X service, in order to command a higher price point, the skill of your labor would be a bit more expensive because it is more specialized. Uber has to do almost no training because everyone with a car knows how to drive. Driving is the primary skill for Uber. For an Uber for Massage company, their workers need to be skilled and qualified masseuses. For Uber for Car Washes it would be the skill of properly washing a car. For Uber for Doctors, it would be a fully certified doctors that went to medical school, did their residency, and has years of experience. Therefore, when considering an Uber for X, one must take into consideration the pool of people that have that skillset, and if it makes sense to train those people for that skillset.
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