(This was originally posted on: www.shrutigandhi.com)
As someone originally from India, a woman investor, and a techie I have a lot going in my head since I read the news this morning about Uber’s unfortunate banning in Delhi.
As the service economy picks up, I have been very excited not just as an investor but as a user. It creates opportunities for the temporary workforce and it’s great for the economy but what I’m really excited about is what these services can do for innovation.
The Services Economy is good for Innovation
Let me begin with how most middle-class people in India grow up. Most homes have hired help — someone who does the dishes, someone who does the laundry, someone who delivers groceries, and even someone to drive the family around. Usually these are all different people. How many of these services you have and how often they are performed can vary. For example, live-in maid vs. someone who would come twice a day. Having seen this from an Indian and an American perspective, it’s fascinating to see how it works out. The biggest complaint most Indian people have if they move to the U.S. is that they have to do it all. Which brings me back to innovation — when you do not have to do the daily chores and get the time to just focus on intellectual matters that’s good for innovation. Which is why I predicted early-on that we’d see companies emerge in the personal services area. I was just looking to replicate all the help my parents got at home for myself — without breaking the bank!
Services re-introduced in non-US markets with a digital bent
Turning back to Uber: I am not surprised to see their dramatic growth in the U.S. or abroad. What has happened is now these services companies are expanding into markets and re-introducing services with a digital bent. This is appealing to the younger, more travelled, and savvy Indian consumer. They are already used to these services in other markets and it’s just so convenient. I was most recently in Thailand and used Uber in Bangkok; I just loved it. No hassle, no haggle, no tourist-like communication and pointing to a map, no fear of being duped; it just worked. How could I not like it? And like other users, I am willing to pay more for this convenience.
I am trusting
But the problem lies exactly there. When I use these services, I am now much more relaxed. I am not watchful. I trust these companies without question because they are exported from America. Whereas typically when traveling abroad, and especially in certain countries, I am more cautious and watchful. Including my home country. To this day I am angry that my parents worry when I leave my home after 10pm in India. They go out of their way to make their reliable driver drives me wherever I need to be until late. They do not trust local taxis, cool cabs, Ubers, or anything else.
In San Francisco, I am comfortable letting someone into my house when I am not around to clean it, to rent my home to a stranger when I am not around, to eat food mailed to me in a box or even made by strangers — you get the point. Getting in a car at any hour of the day and maybe even closing my eyes on the ride back home after a late night at holiday party has become par for the course. We are becoming more trusting as a generation. And I love it.
The other day I got into a car with a random woman in Palo Alto and I loved the back and forth on Facebook from my friends on whether it was a good idea or not. I love trusting people and I don’t want to exercise my caution muscle when I am dealing with the world if I don’t have to.
The problem lies when I go to the other markets and expect the same service, same background checks, and same trust-level. It’s just not possible because the data doesn't exist; there are no ready to use APIs you can plug into. In many countries records are not even digitized or inaccurate. In India today you can bribe anyone to get a fake license, delete your name off the crime books, or even get a new birth certificate and a whole new identity. The local systems worked because the maid my mom hired was vetted by most neighbors. Other checkpoints included someone going to the maid’s house to verify her physical address, seeing if they are registered with the police (I know), and strong referrals. Growing up all this seemed unnecessary, but now I get it. Especially as a woman taking a cab at 2am in Mumbai I feel better driving back with my dad’s hired driver versus the local top of the line cab company because he put all those checks in place already.
Global Brands built based on Trust
With Uber, I am using my American trust levels when I’m not in America. I hope and expect that they have the same checks and vetting in place to ensure my safety after a late-night dosa run in Mumbai as they do to ensure my safety after 2am tacos in SF. That belief puts me at ease. I inherently trust the brand and where it comes from. As these companies grow, outside of the US they have to realize what the local market constraints are and add double the check points necessary in the local markets. That’s how they can differentiate.
I don’t have a direct examples for you today to prove this point. Brand expansion is very tricky and tech services companies need to take a page from CPG companies such as Yum! Brands, Subway, Starbucks, or Pepsico. Taco Bell and Starbucks took a long time before they entered India and when they did they catered for the Indian taste buds. McDonalds changed their menus to fit into the local market and added items like McSpicy Paneer Burger. ThumsUp is India’s favorite drink but Coca Cola managed to replace that over time by eventually buying them. So maybe it’s local partnerships with verification companies, or partnering with local brands, or buying local brands maybe the US companies need to think about that during the expansion.
As an investor, I want the companies to grow and scale fast but what I don’t want to see is people losing their trust in these companies. It’s in my best interest to use the same company in any market so I don’t have to download another local cab app once I land in new markets. I have seen articles that talk about the challenges companies like Uber will face in Asian markets and if they will be able to keep up with local competitors and trust might be the angle they can leverage to grow.
Carelessness only leads to fragmentation and the rise of new local leaders, who will in turn master those markets and then expand to US (which is not as hard as expanding into their markets). So to Uber, Airbnb, TaskRabbit, and others: be cautious, thorough, and careful. Let’s make sure we do a good job at exporting trust.