Despite Big Problems, Uber Will Likely Continue to Thrive

To say there's been a lot of recent bad news about Uber is, of course, a massive understatement. 

Rarely has a firm had as many problems, miscues and crises as Uber has had so far this year.

Recode even calls it Uber's no good, very bad 2017.

But despite all this, CityLab's Why Uber Will Still Dominate covers the reasons the company is very likely going to continue to be successful.

The key reasons are Uber (and Lyft) are cheaper than their competitors, have much greater name and brand recognition and have a huge data advantage relative to their competitors.

They're also fortunate in that their market continues to grow very rapidly. And regulatory pressures on Uber and ridesharing in general seem to be declining. 

A good example that Citylab points out is how quickly Uber has regained share in Austin, Texas since it reentered the market. 

Uber and Lyft left the Austin market last year due to what they felt were unreasonable local regulations. A new Texas state law overrode these regulations, so both firms reentered. 

Despite Austin being considered an anti-Uber town, they almost immediately returned to being a market share leader.

Florida also recently passed a state wide law favorable to Uber and other ride sharing firms. 

Uber's biggest strength is consumers like them.

The chart below (click to enlarge), from the excellent Quartz article There’s still one thing people like about Uber, nicely illustrates this.

 

The article also covers the myriad of scandals, problems and issues Uber is facing.  Key quote:

"The latest Uber headlines are straight out of a TV drama ... The facts in the stories are worse ... The stories would defy credulity if they weren’t about Uber, a company whose first half of 2017 seems better suited to fiction than reality."

But the article also points out:

"Despite all of it, there is one thing people still like about Uber: its service."

Uber's data advantage is simple. They have more data than their competitors. More data means better analytics, which means better business insights. Better insights provide competitive advantage. 

Before you send us an email about it, yes, we are aware of the various Uber boycotts. 

Two points about them:

1. Most consumers aren't paying attention to the news about Uber.
2. Most of Uber's revenue comes from outside of the U.S., where consumers are paying even less attention than they are here.

And we're also aware they are facing talent attraction and retention issues, especially in San Francisco. But Uber still shows up on top places to work lists and they've recently made several high profile hires. 

Also, as long as they offer compelling jobs - and their mission to re-engineer global transportation is very compelling - people will want to work there.

This is not to say Uber won't fail. They can and will if they don't fix their management team and bring in adult leadership. 

They also need to treat their drivers better.

But as long as they are winning with consumers and their industry is growing at what the DC think tank Brookings call "hyper growth", they have the time required to fix their problems.

And we think they will.

BTW, in case you are wondering Uber is not currently nor has ever been an Emergent Research (that's us) client.