Success and Adaptation
In part 1 we looked at Uber’s influence in shaping the Access Economy, as well as the difficulties that many are facing while trying to replicate Uber’s success. Why are so many facing these difficulties? It largely involves oversaturated markets and artificially lowered prices made possible by the investor money bump. With this investment money, Access Economy start-ups hope to hook customers on a service before raising prices and finally turning a real profit. However, many companies drown in the competition and run out of money before their sales margins make up for the initial losses. Thus the world is littered with companies that tried and failed at the Uber model. But there are also many successes amongst the failures, so let’s take a closer look at where these successful companies differ.
Don’t Copy, Adapt
Inc.com contributor and CEO of 1871, Howard Tullman, succinctly summarizes the previous state of the cab industry to demonstrate why the Uber model worked but cannot be directly translated. “UBER benefitted by taking advantage of the unique circumstances in the cab industry…crappy customer experience; high, regulator-protected prices; monopolistic markets; huge numbers of daily users; lack of viable alternatives.” Tullman acknowledges these aspects and then makes the case for how to avoid the flawed cookie-cutter business model. According to Tullman, Uberized replicators must create their own set of rules that align them with the right customers, services, and markets.
Tullman’s 5 Rules for Adaptation:
- The individuals supplying the service are highly skilled, hard to find and specialized.
- There is unmet/growing demand in every business segment.
- There is no single supplier of any size presently able to meet the new demands.
- When you need the service, you need it now and there are very few alternatives.
- Price is inelastic and controlled entirely by the seller.
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