With recent valuations north of $60 billion (somewhere around the market caps of Time Warner and Daimler), Uber is graduating out of the cute Silicon Valley unicorn years and moving up into the big leagues of the global economy. However, like many precocious teenagers, Uber seems to be going through a bit of a stormy experimental phase.
On the one hand we see Uber playing around with autonomous driving (which will probably be Uber’s adult occupation), but also churning through talent (in a way that sometimes resembles teenage romances and breakups), and all the while trying to sort out where its real competitive advantage may lie.
In the pioneering spirit of its founding, Uber seems set on leading the pack into the driverless age – amassing cash in San Francisco, experimenting with next-gen technology, trying out novel delivery service models, and making headlines with beta testing in Pittsburgh. Delighted customers rejoice in the streets.
Meanwhile, like many tech startups, Uber is led by a relentless and competitive college dropout who has a tendency to churn through blue ribbon talent. Obama administration alum David Plouffe and Google alum Brent Callinicos are among the big name hires who have come and gone through the executive ranks, as Uber struggles to find its footing.
Consistent with his passionate approach to business, CEO Travis Kalanick also does not shy away from letting city councils and regulators know what he thinks, particularly when it comes to what he sees as outdated models of competition.
My idea is my business model
All of this bluster and churn highlights the fundamental challenge Uber faces: how do you defend a business that is basically just built around a good idea?
Business models have always been at the heart of competitive advantage, which is still true in the digital age, and Uber is often feted as an archetype of the future of business in the sharing economy. But just ask Andrew Mason and Groupon what it feels like to try to defend a business that just boils down to a cool idea – it’s a tough way to make a living.
As such, before Uber can take the next step into the elite ranks of corporate America (and justify their lofty valuation) they will need to convince the market that their business model is actually defensible.
Most companies are built on pretty standard Lego bricks of advantage: physical resources + intellectual property + human capital = competitive advantage. When you think about Uber, what are the key resources it brings to the market? How vulnerable is its market position to companies like Didi, Lyft, or anyone else with an Amazon Web Services account and a pretty app? With a string of more than 10 rejected patents, it seems clear that the future will not be found in locking others out of the ride-sharing concept.
Reality check: there is no reason why we could not have five or ten companies doing what Uber does (essentially brokering connections between independent drivers and potential passengers). So what is Uber to do?
One answer to creating a sustainable competitive advantage is to create such a strong brand that it crushes new entrants and leaves competition trailing in its wake.
Toward this end enters Jeff Jones, a proven brand builder from the top ranks of Target. Jones has a strong track record of driving the narrative around Target's brand, and will now try to do the same for Uber. Whether or not he can bring his traditional bag of marketing tricks and brand-building to the sharing economy remains to be seen. However, in a market widely shaped by perceptions and speculative bubbles, you can surely expect to see stakeholders responding positively to Travis Kalanick taking steps to upgrade his middling in-house talent (notably early employee Ryan Graves) with some proven professional chops.
Let’s see if this new executive romance is as stormy as the last.