Uber’s recent hiring of President Obama’s former election campaign manager suggests the company is in it for the long haul despite push back from local governments, while its launch into delivery services points to aspirations beyond transporting people.
Uber and other mobile-enabled taxi-alternatives face growing challenges from local governments intent on enacting regulations that would hamper growth, something David Plouffe, who helped president Obama get elected in 2008, will tackle as the company’s new senior vice president of policy and strategy. The timing of his hire is significant, as Uber’s quick adoption by consumers potentially opens the door to translating the model for other services.
“At it's core, what Uber has done and will continue to do is understand its customer's needs and find innovative and cost competitive ways to solve those needs,” said Ned Elton, managing partner at Rosetta, New York. “For now, the core need is automobile transportation, but they have already extended that to Helicopter rides and are exploring things like using Uber as a delivery service or to provide people with a personal Chef.
“Jeff Bezos named his business Amazon because his vision was always to be more than 'bookstore.com,’” he said. “Uber's is using technology to help supply meet demand – in a user friendly and reliable way.
“You have to believe that Uber has similar ambitions to bring technology to bear in order to create new business models that disrupt the status quo.”
Minimal restrictions
Brands have already recognized Uber’s influence with consumers, which is why companies such as United Airlines, TripAdvisor, OpenTable, Starbucks, Hyatt Hotels & Resorts and others adding the on-demand car service as a feature on their mobile apps.
While brands are embracing Uber, local governments have not been as welcoming, posing a real threat to the company’s aspirations. This is why the company has hired Mr. Plouffe, who will start at the end of September. The hope is that he will be able to leverage his knowledge of politics to pave the way for Uber to enter other markets and operate in existing ones with minimal restrictions.
“Uber is getting push back from most governmental agencies for a variety of valid reasons,” said Steve Brumer, partner at 151 Advisors, New York.
Per Mr. Brumer, Uber needs to convince local governments that it can generate tax revenue, work with the existing unions, ensure that all vehicles and drivers are covered fully with liability insurance and bonded, ensure all private vehicles are inspected and safe and financially back up its model.
If Uber is able to adequately address these concerns, there is significant room for growth.
“I’m not sure I am ready for government to just leave them alone until the above listed action items are addressed fully and the public is fully aware,” Mr. Brumer said.
“The concept of Uber does have the potential to play a huge role in transportation,” he said. “Specifically, in my family’s case, if a cost-effective and safe option existed to transport my elderly mother to and from the doctor’s office, appointments and the grocery store and avoid the hassle and expensive modes of transportation available today - whether they are reimbursed by Medicare, insurance companies or the family - I would consider it!
“Outside of transportation, it does make sense considering how our society is progressing. However, it must be priced right, safe for all involved and prove that the service being provided is needed by the masses.”
The sharing economy
The rise of Uber points to how mobile is enabling growth in what is being called “the sharing economy.” By linking self-employed drivers to customers, Uber is more of a ride sharing service than a taxi company.
Mobile devices open up opportunities for sharing because they provide access to systems that enable efficient sharing and payment mechanisms. As a result, just about anything can be shared, including homes, cars, food, media and more (see story).
Mobile-enabled services have already disrupted a number of industries and there is potential for it to impact others as well.
“We’re seeing a similar scenario in the telecom industry right now with OTTs like Skype, WhatsApp, etc. stealing market share away from traditional operators, and we saw this several years ago with the music industry being forced to partner with companies like Apple and Spotify,” said Tristan Barnum, chief marketing officer at Voxox, San Diego.
“The consumer expectation is very different now and brands seem to understand this,” she said.
Consumer affinity
While Uber is facing challenges from local governments, it is clear that consumers have recognized and are embracing mobile for its capacity to provide access to what they want, when they want it. So, if Uber is unable to successfully address governmental concerns, then someone else likely is.
While Uber is facing challenges from local governments, it is clear that consumers have recognized and are embracing mobile for its capacity to provide access to what they want, when they want it. So, if Uber is unable to successfully address governmental concerns, then someone else likely is.
“Uber's genius and leverage is the rapid acceptance and affinity they are building with consumers,” Rosetta’s Mr. Elton said. “Doing so puts the consumer, and voters, on Uber's side as they face barriers to change with local governments.
“Over the course of just a few weeks, Uber has been adopted by partygoers in places like the Hamptons as the way to safely and convenient hop from hot spot to hot spot,” he said. “In many cases, those partygoers are well-connected and wealthy residents.
“That groundswell of interest and adoption makes it harder for governments to keep Uber out on the basis of what seem like petty 'permitting' issues and archaic transportation regulations. Do you want to be the Mayor who tells his prominent constituents that they can't have a service they really want and like because they need to apply for a permit first?”
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