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What Exactly Is Uber? And Why Should I Care?

Uber. Airbnb. EatWith.

Any of these ringing a bell?

They probably aught to, because these three companies are prime examples of a fairly recent trend in business that effectively sells the services of one customer to another (Commonly referred to as a Sharing Economy).

“Okay cool parentheses Alex”, I hear you saying, “but why should I care?”

Well firstly I don’t appreciate your tone, and secondly the reason you should care is because this movement may just change the way we think about business forever. Worldwide.

So what is a Sharing Economy then? One pleasant definition I found describes it as,

“A socio-economic ecosystem built around the sharing of human and physical resources”
Source: thepeoplewhoshare.com

Or perhaps more simply; these businesses which feature a Sharing Economy model provide structures that support peer to peer interactions in order to exchange products, services or information.

How about an example?

Uber, perhaps the most famous of the above examples, provides a system whereby drivers can operate as unofficial taxis. The rates are predetermined and paid through the Uber App (whereupon Uber takes their ~10% cut of course) and those in need of a lift are connected to those closest to them using the phone’s internal GPS. Drivers have a profile to maintain and are anonymously reviewed to ensure that they offer a high quality of service. So how much is this business worth, do you think? Keeping in mind it doesn’t own any cars or drivers… well it might interest you to know that,

Uber is valued at over $18 Billion USD
Source: forbes.com

Now I am by no means advertising for Uber, personally I have never used them despite having heard quite a lot about them. I do profess to being quite a fan of the concept however, especially when it extends to things like car pooling (the benefits of which are easily understood).

Airbnb, another major player, offers a very similar service. Where Uber allows people to make money of their spare seats, Airbnb allows people to make money off their spare rooms. They have approximately 350,000 rooms available in countries all around the world… what’s that worth you ask?

Airbnb is valued at over $10 Billion USD
Source: techcrunch.com

I think this is just incredible.

These two are perfect examples of disruptive, perhaps better described as destructive, businesses and perhaps more importantly; they are just the beginning.

There are those out there, however, who are slightly less enthusiastic about the concept – some might even go so far as to say “actively opposed” to it…Many in the taxi industry argue that the system does not allow for a level playing field, and believe that the safety considerations for both drivers and passengers are not being fully addressed. The hotel industry echoes these concerns, raising fire safety and impact on neighbours as real and apparent risks to the system. (While also spouting somewhat less real claims of mobile drug dens and brothels…) This contention has helped to produce new legislation such as the “illegal hotel” act in New York City, as well as the recent undercover operatives handing out $1700 fines to UberX drivers right here in Melbourne Australia.

Despite the kinks… It’s certainly got me thinking about further applications for this model.

Here’s one right off the bat…

Would you pay someone to pop round on the weekend or after work to service your car?

I’m really interested to hear what you have to say on the matter, so please feel free to comment below or to chat to me on the Facebook group at facebook.com/engineermyway


 

If you’d like to listen to the podcast that brought this all into my frontal lobe, check it out at Freakonomics Podcast – “Regulate This”. It focuses heavily on the significant friction these companies are facing through local business and legislation – interesting stuff!

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Let me know what you think!