Why Now? Part 1 (Uber, ClassPass, Square)

There have been a lot of concepts that have been tried before and have failed. Either it was because the technology was not there, or it was too expense to maintain, or the demand was not demonstrated by the market. An example is something like Netflix. For Netflix to work properly broadband speeds need to be very fast. It took a while for broadband operators to build out a large enough network to support the speeds to HD movies and shows.

Uber

The omnipresence of smartphone with enabled GPS is a huge catalyst of why Uber is available today.

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As smartphones get cheaper, the more people will be able to afford them, the higher of a market opportunity will have to reach those people.

According to a paper by the National Retail Federation, the average shopper will do 44% of their shopping online. People have become more comfortable with inputting their credit card numbers into apps and having the app access it when it needs to. The utility of the ease of checkout is higher than the threat of having your information stolen.

Cost of air travel has fallen significantly leading to more domestic and international travel.

That means more people will be traveling to cities and will need to use a taxi. Certain cities, such as Paris, are notorious for having a terrible taxi system. Also, because of the driver rating and transparency on trip route, the likeness of being ripped off decreases. Lastly, if you are in a foreign country, there will be no need to exchange your money to the foreign currency.

Finally, as cities expand due to growing populations, the public transit system will underserved it’s people. The need to fix this “last mile” problem will emerge and the simplest and cost effective way is through vehicle transport, rather than digging more tunnels for subways.

Classpass

In the traditional gym model, classes were part of your overall gym membership. However, not everyone was interested all facets of the gym, such as the weight room. Some people just came for the cycling studio. When the boutique gym was born, it was an unbundling of the gym experience. Some boutique gyms just are cycling studios, some are just bootcamp style workouts, and some are just yoga. And without having the large gym membership cost, customers feel as if they are getting exactly what they are paying for.

Now the issue arises on 1) how can a small boutique gym compete on marketing spend with a large conglomerate gym, and 2) how can one yoga studio differentiate from another? ClassPass fixes this issue with yield optimization. Because instructors are usually paid a flat fee per class, it doesn’t affect them if they are teaching 3 or 30 students. However, to expose a potential new client to the class by filling an unused spot is a tremendous marketing opportunity. And that is how ClassPass is solving those two issues.

Square

The omnipresence of smartphones is one of the largest reasons for Square being founded. By building tech that turns a headphone jack into a credit card reader, just enables anyone with a smartphone to become a business.

There was also a rise in small businesses. As Everette Taylor pointed out in his analysis of Square,

“Before Square, it was illegal for non-registered merchants to accept credit card payments. Registering was a costly and difficult process that most small business owners couldn’t afford. These business owners struggled with the reality that while most people carried plastic instead of cash, the costs and complexity of credit card processing made it impractical to accept credit cards.”

Lastly, people hate carrying cash. In 2011, 27 percent of all point-of-sale purchases were made with cash and that number is expected to drop to 23 percent by 2017, according to Javelin Strategy & Research, a market research firm.



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