Why Is A Great Product Great? An Uber Example

Everyone has his or her own favorite products, and we can all fill pages on why we love one brand over another. But why is a great product a great product?

For most of us, what makes a great product is an esoteric question likely to provoke safer (and more interesting) discussion at your holiday party than say Presidential politics. For product managers, however, having a clear point of view (POV) on why a product is great is core to the craft.

A seemingly easy question, it’s not, so much so that I often ask a variation during product manager interviews. I find this open-ended question enables me to gauge how observant a product manager is about product details; a good answer will explain how features enhance the business model or product vision.

Given that the question is an open book test based on one’s personal observations and experience, however, I’m surprised at the poor quality of answers. Perhaps a reader will gently remind me that I am asking a flavor of the dumbest interview question possible, “Tell me everything you don’t know.” Absent such a mistake, I want to use the next few paragraphs to compare and contrast a superficial answer with a complete answer, with an eye toward explaining how one tests for great spidey sense (e.g. product instinct). Great product instinct is the essence of what I look for in a great product hire.

Let’s start.

Q: Tell me about a product you know well, perhaps use regularly, that you love, and you think is a great product?

A. Uber. I love Uber — I think it’s a great user experience.

Q: Why?

When I have used this question recently, the two most common answers are Uber and Airbnb. Both are great businesses, so these are solid choices by candidates. Uber, in particular, offers a target rich environment to show off real product manager attention to detail.

Here is what a decent but very incomplete answer might sound like:

A: What I admire about Uber is that it offers a great user experience. The app is super easy to use, and when I request a ride, it comes quickly and reliably. No more fumbling with Taxi receipts — it gets sent to my email if I need a receipt. I think Uber is much better than a Taxi.

Q: Yes, those are great points and it’s a great service. Why do you think Uber can reliably beat Taxis?…

While a good start, the first answer focuses almost entirely on laudable aspects of the consumer experience, but fails to explain how each aspect contributes to Uber’s sustainable competitive advantage versus industry incumbents. Uber has a deep moat compared to most competitors, possibly even Lyft, and the product features tell the story. A good product manager, even one who has not worked for Uber, can guess at how products attributes contribute to build a deep moat. You want to test to see if your product manager can put features into the bigger context because that is exactly the spidey sense you should hire.

With this in mind, a more complete answer might sound like:

A: Uber is a great product because at the core it attacks the fact that Taxis are less than 50% utilized and often operate as low as 33% occupied. The low utilization creates all kinds of bad user experience that Uber solves — Taxis are expensive to compensate for low utilization; service is poor, especially for short distances as drivers prefer long fares over short; Grandma is likely to get stood up on a short fare across town and tourists are likely to get hustled on “flat rate”, meter and a half rules, or for a tip, primarily because drivers are trying to make their personal economics work.

Uber solved the low utilization problem. First Uber aggregated a much larger base of “medallions” than any single Taxi company had previously by tapping into part-time drivers using personal vehicles. These drivers don’t have to recoup the $200-$250 for the daily Taxi rental. Rather, they are just happy for the extra income provided it is above the marginal cost to operate the vehicle. Once Uber locked in a pool of part-time drivers, it could offer riders a much larger dispatch than any taxi dispatch, save perhaps Yellow Cab in NYC. Larger dispatch enables better smoothing of supply and demand, enabling shorter pickup intervals. Faster, more reliable pick-up is why people chose one Taxi company over another in the past.

Uber purposely priced super low because if they could get driver utilization above 50%, they could generate the same cash per day per car while charging significantly less. For example if typical utilization for a Taxi was 33% and Uber achieved 66% utilization, that means they could offer the same service for as little as ½ the price.

In such a Utopia, it doesn’t matter if the fare is long or short — just keep the car filled, and for that you need lots of low cost, no hassle rides. Rather than a burden, taking elderly people to the doctor, or teenagers to the burger joint is additive to the model. Short rides become essential to fixing the utilization problem.

This is why Uber did not offer tipping as an option in the app. Tipping and the related interaction with the driver are a friction that discourages short rides. And why should a driver who is 75% utilized need a tip, as they are making more than save a few traditional Taxi drivers?

Like “no tipping,” all of Uber’s other main features are intended to enhance this economic advantage around increasing driver utilization, and thus deepen their competitive moat:

• See nearby cars: Uber shows you visually how close rides are to build confidence that an Uber ride is always available, like a water fountain, and not a special treat like a limo ride.
• Super low cost/ reliable cost estimate: A key aspect of Uber’s product offering is “radically cheaper” than existing Taxi or car service. Fares that once were absurd are now possible for most. For example, a 1-way trip from Sunnyvale to downtown San Francisco once cost $250+ in a Taxi but today costs $65-$70 with Uber.
• Fare distance hidden from driver: Uber never lets the driver know in advance the length of the fare because distance should not matter. If a driver is sneaky and cancels because your fare is too short, and you report that driver, they will likely get fired after just 1 or 2 offenses.
• Car Rental forgiveness: This one is brilliant as Uber has helped drivers who don’t own a car to rent one. Uber forgives the weekly cost after the drive completes 20 trips. I learned this from a young woman who was set to start medical school, did not have a car, and was spending a few weeks earning extra money driving for Uber, before she tackled saving lives.

We could have a much longer discussion on how these features and others translate into a much nicer experience for the passenger than traditional old, dirty Taxis that have an average of 200,000 miles, but hopefully the product magic of Uber, created by attacking the utilization problem is clear.

Let me dissect the second answer and explain why it shows a deeper understanding of the product manager craft. First the answer is long, and probably would need to be broken into parts, but the key insight that scores 90% of the credit is merely connecting that the features must tie cohesively to the underlying competitive advantage that is delivering the radically better user experience — in this case, it is recognizing the importance of solving the utilization problem as the basis for disrupting the old competitive landscape.

All the other feature details will vary from candidate to candidate depending on how observant they have been and how many questions they have asked Uber drivers (or Taxi drivers) while sitting in the back seat. My perspective which is the basis for the second answer is only my best guess based on talking with drivers and not from any formal study of Uber, and certainly not from any inside information from the company — but in this case the product / market fit seems clear and tight because Uber attacks the low utilization which is at the core of why many Taxi experiences are poor, expensive, and inconsistent.

Please offer your critique as I am curious know if there is an even better answer. For the purpose of evaluating great product managers, however, I hope the compare and contrast is illustrative.

Good product managers need great product instincts (spidey sense) which is a gift. Some rare individuals have an innate ability to imagine how some feature or functionality addresses a previously poorly understood need that is linked to big economic problems. It is hard to directly test for such instinct.

Still, the instinctive product manager will struggle to be effective if they can’t clearly explain the logic. That is because the magic of product management happens when a product manager clearly defines a previously poorly understood customer problem, bringing clarity to chaos. Once the picture is painted, the engineers can go to town solving the really hard, well understood problem.

My approach is that I test for product instinct by asking candidates to describe a product experience they love. If in conveying that product experience, I hear the candidates take the time to connect the experience to the underlying problem and economics, I have a good sense that this PM strives to dig deeper than feature and functionality; they strive to understand how their product gets “Big”. For me it’s even more comforting that the candidate can explain these relationships about a product outside their day to day job because it suggests both intellectual curiosity, and it gives me comfort that they can explain complex connections to engineering teams. In short, this seemingly softball question is one of my favorite ways to find great product managers.