What startups can learn from Uber's success

Ease of use

Startups are increasingly looking towards streamlining existing services rather than reinventing the wheel. Uber does nothing new per se, but it makes the customer experience intuitive and easy. With such a user-friendly app, Uber tracks your car, estimates your ETA, offers reviews and even allows you to split the fare with your friends. Many of these features will be particularly useful in countries like India, where many customers are put off by unreliable haggling practices. 

Price

Due to its devolved setup, Uber manages to avoid most of the initial costs associated with normal businesses. It doesn’t have to pay for controllers and it subcontracts its work out so it doesn’t have the overheads of actually employing a workforce. Interestingly, it passes a good chunk of this saving to its customers. This is especially important in a market that has seen prices skyrocket, as Uber’s pricing model has become a potent USP.

Innovative Business Model

Uber’s setup brings about some quite unique dynamics. For example, its rating system empowers the customer to monitor and provide feedback for its drivers. This means Uber can delegate quality control to its users, effectively making them ever-present and cost free middle managers. Usually quality control systems run into the observer’s paradox ­– it’s impossible for a manager to stand over their staff and see their actual performance. However, Uber’s system exploits this, as its drivers know that they are being constantly “observed” so work hard in order to secure good reviews. This has even led drivers to offering complimentary bottles of water and snacks.

Barriers to entry

By subcontracting to unskilled and unqualified workers, Uber forgoes all the costs associated with recruiting and maintaining an experienced, salaried workforce. Relying on inbuilt sat-navs in smartphones, it’s a far cry from the infamously difficult black cab “Knowledge”. Moreover, startups generally have a high initial outlay whereas Uber’s drivers foot the bill for the purchase of assets such as cars and navigation systems.

Uber’s success, therefore, isn’t down to just one factor. However, at the heart of its business model is customer experience. From its easy to use app and incredibly competitive pricing model to its innovative quality control system, Uber works hard to ensure that its user experience is hassle-free.  At the end of the night, it’s actually meant that I will use a cab in London. 

 

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