uber

In my negotiation class at Stanford, we ran an exercise where we bargained contracts with one supplier, two suppliers, three suppliers, etc. The contracts were all different and randomized, so both sides didn’t know what each wanted and valued. However, one thing quickly became clear — even with just two suppliers, the probability of getting a good deal skyrocketed compared to dealing with just one. The more competition, the better for a customer.

That’s common sense of course, but it was illuminating to see it work first hand.

That’s why I have doubts about Uber becoming the next Google even with its amazing revenue growth. You may have heard it’s trying to raise $1 billion at a $17 billion valuation.

It’s impossible to determine Uber’s fair value without concrete numbers, but I do know this: Uber will face intense competition and struggle against it.

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There’s a fascinating article on Reuters on the state of Google Glass — in summary, that entrepreneurs, companies and investors are abandoning the platform because there is no market yet. I read it with mixed feelings.

In my entrepreneurship class at Stanford, my lecturer Andy Rachleff pointed out that being first to market is not a demonstrative advantage — rather, it’s first to product-market fit that’s critical. Google was not the first in search, but the first with the right search product. Once it built its lead, it was impossible for competitors to catch up.

So when Google opened up its Google Glass program, why did so many developers flock to it? I can’t recall a unicorn-level company ever winning because it was first to a technology platform. In mobile, Instagram and even Whatsapp had many predecessors. Uber was not invented at the start of mobile’s lifecycle; only later. I can’t think of a company that succeeded because it was simply there earlier than others.

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“You have to be in mobile,” venture capitalists will instruct you.  “We have to be in mobile,” tech giants like Facebook, Microsoft and Yahoo will echo.  Obviously, it’s because we’re living in a mobile-first world.

Yet, becoming the next Instagram or Snapchat is insanely difficult and increasingly so.  A hit app is a rarer unicorn than a hit website.  Why?  Unlike websites, apps aren’t linked to each other; you can’t click on a link to discover a new app, you have to purposefully search and download it from the app store.  Then you have to learn how to use the app before finally getting some value out of it.  Some apps — especially on Android but even from bluebloods like Facebook — behave badly and mistreat your phone’s battery or privacy settings.

The result of the above is that, according to Nielsen, most people use only 30 apps on their phone.  What are the chances your mobile app can make a person’s top 30?  Let’s break down how difficult a threshold that truly is.  What are the 30 apps you’d typically use?

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We wrote before how the future of driverless cars won’t be Toyota but Uber.  We hypothesized that car manufacturers won’t risk putting their brand behind such a project, and that you wouldn’t be able to walk into a car dealership in the next 7 years to buy one.  Instead, the future of driverless cars will be in services like Uber, where consumers don’t own the car but pay to ride it.

This excellent article from Reuters, chock full of insider reporting, supports all those hypotheses.

Car manufacturers won’t risk their brands:

Car companies, all too familiar with the devastating financial and brand damage of recalls, would see any hiccups with the self-driving car as a threat to their main business.

“We’re not going to put our name on a project like that because if something goes wrong, we have a lot more to lose.”  – Guy from major car manufacturer

It’ll be years before you can buy a driverless car from a dealership:

Some in the industry predict fully automated cars will be available as soon as 2020, though research firm IHS Automotive does not expect the cars to be widely available until 2035.

To start, driverless cars won’t be purchased but used on-demand:

Google co-founder Sergey Brin has described self-driving cars as an on-demand service that consumers summon when needed. That would represent a seismic shift from a longstanding model based on individual ownership.

Ahhh.  It does feel good to be right.  🙂

A couple days ago, at the Code conference, Google unveiled its start-from-scratch take on the driverless car.

It’s marvelous!

For many of us, a future of driverless cars will occur in our lifetime.  This charge won’t be led by traditional car manufacturers like Toyota.  Oh, they will be there eventually, but I predict it will be transportation services like Uber who will bring Google’s technology to the mainstream.

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