How Would You Beat?

How Would You Beat Uber Using Jobs-to-be-Done?

May 10, 2022 thrv Season 2 Episode 8
How Would You Beat?
How Would You Beat Uber Using Jobs-to-be-Done?
Show Notes Transcript Chapter Markers

In this episode, we will look at how you could beat Uber. Uber currently has a market cap of about $60 billion. Its peak share was around $60 or so. They famously disrupted the taxi industry. But if you open the app, you can see what else they're getting into such as food delivery, rental cars, mass transit, and package delivery. Their main direct competitor is Lyft. So what has Lyft done to take share and differentiate? They targeted different needs at one point, for example, safety and emotional needs around connecting with drivers. Essentially trying to make a trip a social experience. So did that work? Well, their market cap today is about $12 billion or so. But they're still only worth about 20% of Uber. So how would you compete with Uber?

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Key moments from today's topic on how you would beat Uber:

00:00 Intro to Uber and the customer needs they meet

07:06 The complications of Uber's job beneficiaries using JTBD

11:18 The future limitations of just seeing Uber in a "A ride sharing"  market

16:05 Could municipalities to beat Uber?

19:42 Taking the customer's perspective when trying to get into the marketshare Uber and Lyft are fighting in

24:43 Competing with people commuting less in a ride share market

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Jay Haynes:

Welcome back to How would you beat where we discuss how you can use jobs to be done innovation methods to beat your competition. Remember to subscribe and like this podcast. In this episode, we will look at how you could beat Uber. Uber currently has a market cap of about $60 billion. Its peak share was around $60 or so they famously disrupted the taxi industry. But if you open the app, you can see what else they're getting into such as food delivery, rental cars, mass transit, package delivery, their main direct competitor is Lyft. So what has Lyft done to take, share and differentiate, they targeted different needs at one point, for example, safety, and emotional needs around connecting with drivers essentially trying to make a trip a social experience. So did that work? Well, their market cap today is about $12 billion or so. So they have a nice business, obviously, a multi billion dollar business, but they're still only worth about 20% of Uber. So how would you compete with Uber?

Jared Ranere:

That is a great question. So we always start by trying to understand what market is the the incumbent in? What are they helping customers do? In this case, I there's the primary one is get to a destination on time, it's pretty straightforward that you're you're hiring an Uber to help you get to a location when you want to get there. And that's what the taxi industry helped you do. That's what your own car helps you do. That's what a subway helps you do. There are a lot of solutions in this market and Uber satisfied unmet needs and got explosive growth and doing so they have expanded into other markets such as, you know, get food. That is a very blunt way to put it. But that's essentially what food delivery is helping you do right you get a meal. And package delivery is a logistics market where you know, you're trying to get a package to the right location at the right time at the right cost without damaging it. And they're they're competing, you know, with UPS, USPS, small courier services, all kinds of companies. So you'd kind of have to break down in order to take share from Uber, you'd have to break down all these different jobs and figure out what you want to focus on first. So yeah, how would you think about that?

Jay Haynes:

Yeah, well, I think you'd first want to think about who is actually competing with Uber, which is interesting. And what's what's kind of fascinating about analyzing Uber is this goes back to theater, love it, the 1960s the origin of jobs be done thinking was actually theater love its question about industries, and one of them was the railroad industry. And he was asking how did the railroads miss the opportunity for, for cars, and then eventually planes as well, different modes of transportation. And, and that's what, you know, his his point, there was, you know, people don't want railroads, cards or airplanes, they want to get to a destination on time, they want transportation. And that's, you know, the foundation of jobs, you know, thinking now, jobs are very, very complex. So getting to destination on time is extremely complex. It's not just, you know, thinking, Oh, we're gonna, we're gonna compete with Uber because we help people get to destinations on time, you have to really analyze each of the needs in the job, all the variables, what people struggle with, are there a segment you know, so if you were if you were to go head to head in this kind of competition, you'd want to, you'd run a really analyze the detail of those jobs, and then do segmentation work, and, you know, make sure you had a good assessment of what the market opportunity was to compete. Now, what I think what's interesting about Uber, is Uber is part of a transportation system for any city or county, or state even, and then even countries. And if you look at who the customer is, in Ubers case, of course, it's a two sided market and we've seen this in a lot of examples with you know, Airbnb, you know, buying and selling a used car, you know, in Craigslist, there's lots of markets where you have two sides and of course, in this market, you have two sides to it, you have the providers of the jobs and and the riders. So you'd want to look at the jobs on both sides. But another customer for this is of course the municipality, you may make, maybe the you can consider it the mayor of the city or the head of the Department of Transportation, where the that would be a way to think about who will you know, we refer to as the job beneficiary who benefits from getting this job done. Clearly riders benefit from getting to destination on time drivers, you know, benefit from providing rides and generating income. You, you could then look at the beneficiary from the city's perspective. And they really were a customer in a way for the taxi industry because they, you know, they they issued the medallions or the licenses. And clearly they weren't doing a good job. You know, Uber famously started in San Francisco, where it was incredibly hard to get a taxi. You know, I lived in San Francisco during this time when Uber started up, and it really met a need just in sheer capacity of transportation.

Jared Ranere:

Anything having moved to San Francisco from New York, I can tell you, the public transit left a lot to be desired to you. There's no just hopping on the BART and going wherever you want in the city.

Jay Haynes:

Yeah, yeah. I mean, the famous, you know, San Francisco, cable car is great for about 100 yards of transportation and everywhere else, like you're really struggling to, to get there. And, and that's bad for cities, because cities don't want congestion, they don't want traffic, they want goods and services and people flowing through the city, that's what effectively generating the revenue and the tax base is that you have a good flow of goods and services, when you don't have that. And it moves away, like in Detroit, you end up with, you know, the largest municipal bankruptcy in history. So you really do have a job beneficiary who's in this market. Now, of course, Uber took an approach that was, you know, you could describe in lots of ways, Renegade, reckless, you know, illegal gray, gray area, aggressive, you know, there's lots of different ways to describe it. And they, they had to deal with some, you know, consequences. And they also use that as you know, promotion in to get recognized, you know, brand awareness and all that. But, but the problem was real, the functional problem of getting to destinations on time was real.

Jared Ranere:

Yeah. And, to Ubers credit, or at least part of Ubers credit, I saw a talk from a head of design there. This was about three or four years ago, at a conference where they were talking about system design. And what they meant was that by that is you have your users, your primary customers were using whatever product you have. And then you have other people that are impacted, as the use of your product grows. And so in this case, they were talking about, if you have a lot of drivers, who is one of their primary customers, Uber, driving around looking for people to pick up, it can create congestion, which then can cause problems for a lot of other people in the city who are not using the product. And when that happens, Ubers brand gets damaged. People don't want to use it because they think they're causing harm in the city, the politicians get upset, and they start fighting back against the presence of Uber and some of the legal graces they've given Uber over the years. And you have all kinds of problems. And so they are aware of this. And I think it's just an incredibly complex thing to study when you're looking at the the organism of a city. Yeah, the ripple effect of 10s of 1000s of people using your product to move around and create traffic in the city or hundreds of 1000s is very complex. So I think it's an interesting issue. It's very rare that you hear a designer say I've got a I've got a design for somebody who's not even using my product.

Jay Haynes:

Yeah, and I think that's, that's a good example of where, within any job domain, as we call it, there, there. This is a great example, there are a lot of different job beneficiaries and job executors, who you need to consider in the big equation. And I think this is where jobs are done is so useful is it helps break down that complexity. If you just took a step back and said, like, wow, this is an enormously complex problem, because you've got the cities, you've got different modes of transportation, and you got the people who operate those modes of transportation, you have the riders, you're trying to do all this simultaneously while trying to optimize traffic and you know, the flow of goods and services. It's just an enormous problem. But what's really nice about jealousy, Dawn is those problems are independent of any solution. So whether or not Uber exists, or whether trains or planes or buses exist. The problem is they're the goal. All these different constituents that are beneficiaries are trying to achieve are knowable, and they can be broken down into a series of variables to tell you know where they struggle. And, and so if I think you are going to compete with Google That's all right with Uber. Same thing if you're committed Google, actually, but the process you'd want to use is to look at those job beneficiaries, whether it's, you know, the head of the Department of Transportation, the providers of rides the riders themselves, and break those down and say, Okay, what, what is what are the big struggles here? And do we need to create a a rideshare system, like ride sharing is one solution? Or is there another way to solve this problem. And this is where if you are a car company, you know, if your Ford or if your GM or you know, any any car company, you this could be a type of problem that you can solve with innovative solutions. Of course, one of them that we know is coming as autonomous cars, you know, they're getting better, eventually, we will have, you know, autonomous cars will be safer than humans driving cards. Having met a lot of humans, I'm amazed that cars are already safe as they are, you know, people are like very distracted on the road, obviously. And so I think autonomous cars will get safer than humans. And I don't think that's yeah,

Jared Ranere:

and this is, this is an important point that we kind of glossed over at the beginning, if you're going to compete with Uber, you're not entering the ride sharing market, right, you are entering, entering the get to a destination non time market, the get food when you want it market and all the other markets are trying to play in. Because it's it's very clear history has already shown in the the 10 years that Hoover has been around has it been 10, even 2023? Yeah, 10 ish, that a lot of people have tried to enter the ride sharing market. And essentially a handful have survived in the US, Uber and Lyft have survived. And in some other countries, you have some local players that are doing pretty well. And they have done a an extremely good job of developing their experience to satisfy more needs in the that main job of get to a destination on time, they might be struggling a bit to satisfy the needs of the other jobs in the domain that we've been talking about where you have other customers at play. And so ride sharing could be reaching its limits as a solution. Yeah, you just can't use that platform and really advance far beyond what well lift have already done.

Jay Haynes:

Yeah, I would say two things. The other thing is to focus on optimizing, optimizing a, you know, municipalities, flow of goods and services, right? So don't even think about the problem differently than just like getting to a destination on time, you have this optimization problem to you know, mitigate traffic. The other thing is it ride sharing has not yet proven to be a good business. Right? The public markets are willing to finance venture investments, that's the we can't, you know, ignore the unique capital markets, which enabled the funding of Uber, they still do not make money. So the $60 billion question is, will they ever make money? And if the answer is no, that's $60 billion, at some point will go to zero? I mean, they have to make money. And I know, there are famous examples of companies that were building to scale. And once they did, they became super profitable. And you know, Amazon, of course, is very famous. And that that's to be seen, right? That is, and there's a lot about the economics of this business of ride sharing, that may never be profitable. So what's interesting about that is, that's where actually a big competitive threat could come from the municipalities themselves to Uber, which is, if if some if a big car company, for example, like Ford or GM, decides we're going to we're going to work on solving this optimization problem, which is, which is not just like, Can I get a ride? Or can I get, you know, takeout food delivered? It is a much more complicated problem that can be broken down, you know, using the job and figuring it out. That that would enable a municipality to say, Okay, we're now going to control the flow of goods and services and people in transportation in our municipality to optimize for us and it doesn't necessarily have to be profitable for them, because they're effectively running the city better. So obviously, there's there's, you know, political capital they would get from that, you know, whoever is the you know, politicians in power, but also all the commerce that goes to the city would benefit. So, yeah, it doesn't have to be a you know, $60 billion market cap or venture for the municipality. Now, it may be very, very proud. affordable for, you know, whatever accompany provides this optimization solution to the municipal municipality.

Jared Ranere:

Yeah, one way to think about it is the unit economics of the get to destination solution for a municipality do not have to be profitable, because it could if it enables the flow of goods and services, you have more employment, economic growth, and then they make the money back on taxes. And cities have a long history of doing this, the investment in public transit is essentially this bet, they take a small loss on public transit, because they know that enabling the movement of goods and people around a city or metro area will benefit and economic growth, which then leads into taxes, and the whole thing works out eventually. And it's very hard to compete with that as a private company that eventually has to be profitable in order to survive. So I do think that is one of the biggest threats is that public transit just gets better, and we don't need private ride shares anymore?

Jay Haynes:

Yeah, and I would say it's, it's a solution to this would also be public private partnership. This is why if you are looking to compete with Uber, I mean, certainly setting up your own ride sharing network, you know, that's not going to, I mean, it's not profitable. And if louver Uber and Lyft, both compete on prices, I mean, now almost every Uber I've taken recently, the the driver has Uber and Lyft logos on their car. Yeah, so they're just looking for who's going to get them the ride, which means that you're in a very, very price competitive, very hard to differentiate, because you're you're literally taking the app is a little bit different, but not that different, you know, what you really care about is can I get the ride? And at what cost so that you're always competing in an undifferentiated product. I mean, you know, you buy an iPhone versus an Android, you know, you're getting a very, very different product, there's, there's no doubt you just you know, it's proprietary way that Android and Google, you know, solve problems for you. But the car, the drivers literally the exact same, in the case of Uber or Lyft, that usually ends up in no one being profitable. So the way to approach this would be to say, Okay, for this municipality, what are the municipalities a city willing to pay for a solution that helps them optimize this and it could be that you know, for just says, Okay, here's a fleet of autonomous cars, you, you, you pay for them and and operate them, and we provide the software platform will build the cars for you. And in that case, Ford could lose money on the car, like literally just subsidize the price of autonomous vehicles that are all within their network. And they, they say, okay, Jared, you know, you're going from point A to point B, J, you're going from C to D, and we know how to optimize when you're gonna go when you're gonna get there, and, and you pay a fee to do that, then, you know, it's provided back to Ford's, you know, city optimization system. And, and, you know, people are, of course, working on this. It's that job's done and can help make it, you know, more efficient to figure out where to prioritize, because that's an enormously big problem, you know, job domain, as we say, with lots of different jobs and lots of beneficiaries and executors, but it's it's solvable. And you know, that's very hopeful, because I don't think the world can take any more traffic. And only keep doing whenever you build more lanes, you just get more traffic, it never solves a problem. I lived in LA when they were expanding the 405 North and South. It's It's insane. I mean, it's like 16 different lanes, and it's just traffic all the time. It just can't get worse.

Jared Ranere:

Yeah, it's true. It's true. So I think this has been an interesting discussion about, you know, what does it mean to compete? Does it mean to build a similar product? That's better? We clearly know, it's about how are you taking share in a market? And if you are a giant company, if you take a lot of share of your competitors, if you're a small, it's how do you carve out a small segment and grow as a business? When, you know, your customers could choose to use the incumbent? And then finally, it's other players you don't expect? You know, it's municipalities who have an interest in getting a slightly different job done. That could take you know, customers away from the large private company.

Jay Haynes:

Yeah. Yeah. And and I think I think that's right. And it means before you do your competitive analysis of the product do you think you're competing with which would be very classic to say, like, you know, and I'm sure Uber and Lyft both have teams who are studying you know what What features does Lyft have in its app, what features as you were having there, they're constantly copying each other and, and catching up. And you know, we, we've seen that, that that likely doesn't pay the dividends you want, because you're just in an undifferentiated feature catch up game. So the way to figure out how to do this type of competitive analysis is take the customer's perspective, look at the look at the customer, and really empathize. And you know, they've got a goal, they've got a job they've got to be get done, figure out where they're struggling, and then analyze the weaknesses of ride sharing solutions using the customers job. And it's in those cases, especially if you combine, you know, other constituents and other, you know, stakeholders who are in this market in this job domain, which definitely includes the cities, then you can start to say, Okay, what that analysis enables us to say, we need another solution. So then from the competitive analysis, you can generate ideas that aren't necessarily ride sharing, or a new feature on a ride sharing app, you know, or a new service that a rider can provide, like, you know, which music do you want, right? That leaves you to think differently, you know, in the famous apple phrase to say, how are we going to compete, like, let's, let's not think that we need another ride sharing service, because that's not that's not what the customers want. They don't want ride sharing. They want to get to destinations on time. And of course, you know, they cities want to optimize their flow of goods and services and people's city.

Jared Ranere:

Yeah, and I was pretty excited about Elon Musk's boring company and the electromagnetic platforms, he was creating to go through these tunnels at 200 miles an hour in a system where there would be no traffic because the platforms space the cars out appropriately. It's a very, very cool vision. It's extremely expensive to execute. And I think he's been attempting to, but it hasn't quite succeeded yet. But it's, it's at least a different way to think about the problem. You know, let's Yeah, let's, instead of another ride sharing app, it's a different solution to move people around. And I think that's what's required at this point.

Jay Haynes:

Yeah, it's really fascinating, because this is also a software problem, which is very interesting, because any sort of optimization. And this is, of course, you know, the market reasons famous Software is eating the world. The reason that's true is because all goals that people are trying to achieve. jobs they need to get done, as we say, are do require information, you have to get information, you have to understand that information, you have to make decisions about it, you have to assess whether the information is accurate, you have to revise it and necessary, you know, etc, to get to your goal. And that's what software does incredibly well. And I saw one solid demonstration, which try and find this and put this in a leg of an algorithm to do this. I think it was out of MIT, where the information, of course, is the flow of all the cars and trucks going through a city or you know, even on a on a freeway. And then what are the destinations? What are their speeds? Where are they coming to an intersection? What's the relationship with the other cars? I mean, obviously, this is a huge problem, but it is a data software optimization problem. And what they demonstrated, which was amazing, is traffic in a city instead of stopping at red lights, IT Optimize, like you were saying, with the boring company is IT Optimize the speed of the cars and the distance so that you could fly through an intersection at 60 miles an hour, and none of the cars in either direction stopped? It just ensured that you could screen through the intersection and made sure you know, you weren't you weren't gonna crash. And it's incredible to watch. But obviously, if you're trying to optimize flow at not having anybody stop intersections or red lights, it's just you know, it's extraordinary. And in that it's a non trivial problem to solve, obviously, but yeah, that's the type of thing where when you're looking at the job, rather than saying, how do we compete with ride sharing, you're thinking about optimizing the flow of traffic.

Jared Ranere:

Right, right. Right. That's great.

Jay Haynes:

Yeah, I think the other thing you know, we talked about this in in other episodes as well, but the alternatives are also to not not go to the destination. You're, you're going to a destination for a reason. Now, Uber is partially in this I mean, One of the reasons is because you're hungry and you need a meal and you know, you're gonna go to a restaurant. But this is, you know, we've talked about this a lot, but this is what happened with Zoom and the airlines, right? Just the pandemic just made it very obvious that like, you could hire a zoom not have to travel to a destination on a plane. But that's, that's also true. You can hire zoom and not have to travel to, you know, a work meeting, which is, of course, a lot, you know, a lot of Transportations in cities or work meetings. And it'll be interesting to see what happens as a result of our kind of post pandemic living or, you know, if we have to hunker down and another pandemic mode, you know, if Coronavirus is likely not the last virus in evolution to evolve, we'll see other ones. So that how does that is? Is there a permanent consequence to that with, you know, companies saying, Hey, you don't have to come into the office, if you know, you're a knowledge worker, and you can work at a zoo?

Jared Ranere:

Well, I think we've certainly seen a decrease in commutes, which absolutely eats into the revenue of ride sharing companies, and, you know, gas, everything that goes into making a commute happen. Yeah, I think New York City is now as an advertising campaign to get people to ride the subway more frequently, because they just stopped going to work. And so that changes a lot. It changes the the ability for goods to flow as well. Yeah, so it's a dynamic situation right now.

Jay Haynes:

Yeah. And I think that's, you know, all those, all those things are important to factor in why jobs are done can be really useful, because it can give you that market pulse. So if you were looking at, at all these jobs, and continuing to, to understand where people struggle, and you know, there's techniques to do that you kind of quantitative techniques to figure out where the unmet needs are, and the underserved segments and all that if you keep that market pulse, you can stay ahead of it. And that's what I think is interesting is there's this predictive element to what's happening in the market. And you could analyze what's happening with remote workers. And this would expand the domain as well. So you're trying to get a whole bunch of different stuff done, you know, at work, obviously, that are jobs and goals you're trying to achieve. And you could look at those and say, Okay, well, clearly, there's just there's going to be a big percentage of the market where commuting is less efficient, and a can all their work and what they can do can happen remotely. Now some of that's cultural changes. You know, I think one of the big investment banks just like, put the hammer down, so everybody must come back to work, like whether or not that's a good decision, we'll see. But, but it's a way to compete as well to say, Okay, well, we are going to focus on these people who don't want to commute and can get their jobs done more efficiently. So what tools can we provide for them? And for Uber, that that's definitely outside of the box thinking like that, that they should not think of their market as ride sharing, but helping, you know, knowledge workers get their jobs done, and

Jared Ranere:

well, yeah, well, food delivery, I think, is an investment of that. Yeah, if everybody's home, there's a lot more delivery that needs to happen. And so I think they can cap they might be able to capitalize on that better.

Jay Haynes:

Yeah, yeah. It's, it's, it's interesting to see because it is a different way to think about, you know, their markets. And clearly they've, they've done some of it, you're absolutely right, like food delivery is not ride sharing. But they clearly recognize, you know, their platform can be used for more, but what I would say is that they shouldn't restrict it to delivering a person a food or a package, right, the next level, I mean, with obviously, with food, you have to like physically eat the food or package has to be delivered, but what the humans are doing when they're trying to get to the destination. That's an interesting way to think about it in the same way that Zoom was doing this with, you know, salespeople who aren't getting on planes to close deals, they're Zoom's building features to help those salespeople acquire customers faster. Right? So there's, there's clearly markets that that Uber or a competitor who was thinking about competing with you, or would think this way, we look like an entirely different market, from traditional market definitions. But what it actually is, is the underlying goal that people are trying to achieve when they're getting to a destination on time, and that that can be even bigger opportunity, and potentially more profitable, because remember, still today, the it's not a good business. I mean, there's there's arbitrage you know, because the capital markets are funding, you know, unprofitable companies, which is a relatively recent thing in history, you know, you couldn't go public without profits before the last you know, couple decades. So, and that could that could close, that's a risk, right? The capital markets do shut off. They, they, they contract and they do stop funding, you know, these kind of things and, and if Uber can't figure this out where its profitability is going to come from, and it proves out that you just can't scale it, because it's just as you said, the use and unit economics don't work. That's a very, very big risk for Uber. And, in obviously, its equity investors. So, yeah,

Jared Ranere:

it's an interesting question, if this is a different question than how would you beat them. But, you know, if that were to happen, if the capital markets shut off Uber, you know, went belly up? Should all of the people who have already made a lot of money on it not have invested in it in the first place and built it in the first place? It's, it's an interesting thing to think about, I don't know the right answer to that question.

Jay Haynes:

Yeah, that's I mean, that's, that's a little bit off topic here. But yeah, my my assessment is, is that's arbitrage not investing. You know, if a company is really growing fast, and you think it's just going to continue to grow its top line without growing its profitability. Sure, you can buy low and sell high in any market. But if you're what you're really doing as a product team and accompany executives is really trying to build a resilient, profitable business that helps customers and creates a lot of customer value. That's, I think, incredibly important to stay focused on. I mean, if you want to be an arbitrage investor, you know, great, it's really hard to do that successfully over the long term, right. So that's fine. But I think if you're an innovator, if you really want to figure out how to create customer value, and then you know, market value out of that customer value, that's where these questions are, you know,

Jared Ranere:

yeah. I often tell people about jobs to be done. You know, it's a great way to help you figure out how to solve real problems for real people and then grow business out of that. Yep. And if that's what you're interested in, it's a great framework for that.

Jay Haynes:

Yeah. Great. Well, that's a great place to stop. So if you have any questions, feel free to reach out to us remember to like and subscribe to the podcast and contact us through T hrv.com.

Intro to Uber and the customer needs they meet
The complications of Uber's job beneficiaries using JTBD
The future limitations of just seeing Uber in a "a ride sharing" market
Could municipalities to beat Uber?
Taking the customer's perspective when trying to get into the marketshare Uber and Lyft are fighting in
Competing with people commuting less in a ride share market