Why You’re Not Building the Uber of X
One of the more common phrases I’ve come across when discussing or reading about trendy startups is, “We’re the Uber of ________.” “We’re the Airbnb of _______.”
More times than not, that could not be further from the truth. Uber is Uber. AirBnB is Airbnb, and your startup needs to have its own identity. Both companies I use as examples are massively successful, unicorn companies. Their valuations start with a b, as in billion. Both also capitalize on the growing trend towards a sharing economy. Seemingly, this sharing economy can spread to all areas of daily life. To an extent, this is true. There are now outsourcing platforms to hire freelance workers at the drop of a hat. You can find someone to walk your dog or babysit your child. Someone with a few extra hours and a working vehicle can deliver packages after hours for a fee.
The times are certainly changing as we move away from a traditional economy where everyone had to work a standard 9-to-5 job for a corporation. Now, things are on demand and workers have the freedom to control their own destiny. It is a marvelous thing on many levels, but it simply does not work well with every application. Taking the Uber or Airbnb model and haphazardly transferring it to another industry is more often than not a recipe for failure rather than success.
Let’s take a look at two startup companies that made an attempt to take this concept of on-demand product. The examples come from Gimlet Media’s Startup podcast, a must-listen for anyone interested in the subject.
The first example comes from Season One of the podcast, and featured a company called Dating Ring. The company was launched by a group of women who had been wading through the murky waters of online dating on their own for a few years. Their goal was to create a more personalized, on-demand online dating service that could provide dates at the drop of a hat the way Uber provides rides. Logistically speaking, however, it is a lot harder to provide humans who share similar interests to the client, arrange a rendezvous at a trendy New York nightspot, and repeat on a weekly basis until a successful relationship is formed.
Dating Ring is still plugging along as a matchmaking service, but has hardly evolved into the “Uber of online dating.” It is simply not feasible to set people up at the press of a button. Many clients who spoke on the podcast had a difficult time meshing with their potential matches or simply were not interested in what the pool of potential partners had to offer. Building a pool of men and women who could be swapped interchangeably with other members of the pool on a constant basis proved an impossibility. Now, perhaps if Dating Ring had the perfect algorithm and the ability to pluck from every available dater in the greater New York area, an Uber-like model could have worked.
Another example, profiled a few weeks ago on the current season of Startup looked at an on-demand Asian restaurant based in San Francisco called Bento. Bento had hoped to be able to operate an app that would allow its users to build their own unique, freshly-prepared meal and have it delivered within minutes. A fleet of eco-friendly Bento Priuses would zoom around the Bay Area dropping off Bento Boxes. Like Dating Ring, Bento is still in business, but they are hardly the “Uber of Asian Food.” Bento shuttered their on-demand ordering service and now primarily gets by fulfilling orders for catering companies.
It’s ok to dream big when launching a startup. You practically have to, but it is also important not to get caught up in applying a business model that works in one industry to a completely different one. Yes, there will be sectors and services that can be disrupted by a new company with an “Uber-like” model. In fact, I would be willing to bet a great deal of money that there will be quite a few.
The Uber and Airbnb success stories are indicative of the time in which we live. Companies that can provide a service for both the end user and the seller will thrive in this new economy. Uber and Airbnb both allow ordinary people to essentially run their own private company. The extra income this provides will always be in demand, especially as the middle class continues to shrink. To truly succeed as the “next Uber,” a company must provide service to both parties involved in the transaction — the seller and the buyer. That’s where you’ll see the “Uber of X” emerge, be that in tutoring, package delivery, or dog walking. There is a fine line for startups trying to follow the Uber or Airbnb model of disruption, and only a precious few will succeed. Far more cautionary tales than unicorn myths will be written for startups trying to build the next Uber or Airbnb.
