Uber – the transformative power of software applications and data analytics.

Last week there was a lot of noise about “Uber” – (ref #Ubergate – on twitter)- because an executive spoke something at a private dinner. Also, Taxi drivers formed large roadblocks in San Francisco downtown to protest Uber and other ride sharing services. Two completely unrelated events – highlighted by national and international media, bring Uber right at the center of media attention. Success – a 4 billion $ revenue in 4 years – has its problems and media scrutiny is one of them.

My friend Sangeet Paul (of Platform thinking), has beautifully described the feedback loop which Uber’s business model thrives (ref. simple diagram). Uber has executed on each phase described in the feedback loop with precision. They are super-star executors with a very humble and forward thinking CEO – who publicly apologizes for his exec’s “private dinner” gaffe…..

Uber has got multiple sides of their platform (the  driver’s side, the passenger’s side and payment gateway side) working well and at scale. It is easy to onboard a driver and it is easy to get a customer a car within a few minutes of requesting one. Their backend analytics which allows for dynamic pricing and matches cars to consumers works well. Their payment system integration operates superbly over mobile networks and lets customers travel without credit cards. These in themselves are engineering feats worth credit.

Overall, Uber is a classic product that solves a large societal problem – one pertaining to human transportation. It also gives many people (drivers on Uber(X)) a chance to add  to their income, without imposing time or location restrictions. At least for now, Uber allows markets to decide a fair price – and effectively gives consumers a choice against  taxi driver (or autorickshaw) lobbies, such as the ones in India.

In an economist’s language, Uber as a platform has made several constituents in their network better off (or increased social welfare) i.e.

a) the drivers, because now ordinary people can earn an additional income. b) the consumers (riders), because they have an accessible, reliable and affordable transportation service. c)  the car dealers because they see increased sales of a particular “black car.”d) the taxi industry – because they bring quality and price competition (UberX).

In general, societal welfare increases too – because Uber has enabled net demand in the economy by creating thousands of paid jobs where people earn money.  For me, Uber portrays a shining example of the transformative uses of the mobile internet technology on society.

As a frequent Uber(X) user – I love the service. On many occasions when I have traveled either alone or with my family, I have used it. Even  last week, my colleague and me were stuck at the mist covered Golden Gate bridge at 7:30 am. Uber – at the click of a button on my iPhone- helped us get back to the warmth of our hotel, within 2 minutes of waiting.

Imagine that you get off a train at San Francisco(or any other big city) during peak hours (6pm – 9pm), when it is very cold outside, after a long day of work, and, you find NO taxi waiting. The taxi service number you call  tells you that someone would  pick you up in 25 minutes, but you are not sure where to wait in the cold. Then you will know why Uber Rocks!!!