Uber seems like a weird example of this. It was said (and remains said) that they're operating in a winner-take-all space, and they expanded as if they were a social network.
Despite the aggressive expansion and marketing, a majority of people I know in the Bay Area now use Lyft exculsively. The last few times I've said "I'll get an Uber," somebody's actually paused and said "Wait, why don't we take Lyft?" I'm not even sure why. When asked, they just reply that they don't like Uber for some non-specific reason.
They're expanding around the world and into new products and concepts, but haven't even seemed to nail down a loyal customer base on their home turf. Anecdotally speaking.
And then... Uber lowered their rates. Good for me, right? Rides are cheaper now. BUT... it appears that as a result, a LOT of local Uber drivers have quit doing Uber and over the past month, it's become increasingly difficult to even get an Uber here. More and more often, I fire up the app and get "No UberX available" (and usually no UberXL or UberSelect either). So I installed the Lyft app, and I consistently find that Lyft can get me a ride when Uber can't.
I still usually at least try Uber first just out of habit, but they're definitely ceding ground to Lyft in this area, just due to availability if nothing else.
OTOH, Uber does do some neat stuff... like I noticed that in Portland, they have "UberPedal" where you can get a car with a bike rack. I find myself hoping they expand that to our area, as it would be nice to be able to bike to work, knowing that if it's raining or cold or something later, I can call up an UberPedal bike-rack equipped car for the trip home.
That, to me, was the Zenith of Uber. The entire VC set of the city was waiting for cars and drivers gridlocked in the garage and lot, while some kid with an app summoned two fully appointed SUVs as if from nowhere.
I wore Uber shades, tried the various promotions. I was thrilled, absolutely certain that they were one partnership away from Google to automate city transport and leapfrog our ailing transport grid.
Then something changed. The lines between Uber and UberX blurred, and UberX drivers changed from well-dressed folks owner-operating, or working for car fleets, to guys with Jack Daniels hats, ponytails, and (this is literal) body odor.
Uber decreased in quality, both in fleet and drivers. Ubers used to be spit-polished tire-black shined towncars, and the drivers were excellent. Never an open door missed, a bottle of water offered, mints stocked, radio preference, and an AC at a comfortable temperature, which the driver would immediately offers to adjust.
It wasn't just the network that made Uber. It was the service. It literally outclassed the transportation of millionaires, with service options of the Four Seasons at the price of a Motel 6.
The service has now become so bad, that power users are like sailors following the rats off a sinking ship.
Then it's disclosed that one of the main showrunners has been spending all his time on some fucking branding project? And when it's finally released, the material he produced looks like it was created by a sentient bag of cocaine.
"We're particles that unite to form atoms, to something... something... interaction between meatspace and cyberspace.... unity, and particles and shit. Yo, you gonna hit that?"
Are you serious?
In summation: No moat, no network effect. It was nice of you to pave the way for self-driving car fleets, but unless you reorganize management from the bottom of the floor up, your balloon's about to deflate faster than Napster. Peace guys.
*Full disclaimer: I did turn down a second round interview at Uber due to their policies regarding the Americans with Disabilities Act. My consulting rate is $500/hr, and I'd consider fixing this mess with the ADA for half that.
I wish I had the opportunity to speak to your board for five minutes about the damage their ADA policies are causing.
Imagine a girl, unable to move unassisted, alone in the snow, as her driver throws her wheelchair to the curb screaming at how he doesn't accept people "like her."
I would conjecture that Uber constantly being under attack (i.e. having lots of negative articles about them) has played a significant role in this. So when people have to pick between Lyft and Uber, they go for the one that seems "less evil". Perhaps the reason Lyft doesn't come under fire as much is because they haven't grown enough to divert attention from Uber?
If we consider the long-term outcome, is this actually a problem for Uber? If you move between places where both Lyft and Uber are available, and places that only have Uber, it doesn't seem unreasonable that you'd just stick to using Uber. But anyway, once you have an account with one of the two services, what incentive do you have to create an account with the other one?
It's a disturbing trend that some of these unicorn startups are valuing growth at the expense of morals, and that VC's are complicit in pushing for growth above all else. It gives the industry a bad name, and I wish it wasn't so.
Luckily Zenefits seems to be dismantling itself because of its antics, so hopefully it will prove to be a lesson in how not to create a company culture for others in the future.
I can't speak for others, but that's why I always prefer Lyft.
[1]: https://pando.com/2014/10/22/the-horrific-trickle-down-of-as...
[2]: http://www.buzzfeed.com/charliewarzel/french-uber-bird-hunti...
[3]: https://pando.com/2014/02/27/we-call-that-boob-er-the-four-m...
[4]: http://valleywag.gawker.com/more-proof-uber-fights-dirty-aga...
[5]: http://www.buzzfeed.com/bensmith/uber-executive-suggests-dig...
To give you a comparison it's like those conspiracy theorists back in the days who claimed NSA was snooping on everyone and then later claimed the president is an Alien from planet Xenu.
Yeah, that's one thing Lyft definitely go right. For the life of me, I can't understand why Uber doesn't do that as well.
Maybe it's supported for different grades of service?
Maybe Uber has given up on the USA as a whole, the USA after all is only 300 million people in a world of 8 billion+
Why bother competing at all when you can go overseas where there's little to no competition.
I've heard a combination of complaints about Uber leadership being dudebros and Uber drivers sexually assaulting riders as the reason why. I don't know if Lyft actually provides a safer ride, but they don't say shitty things in public and don't have as many well known incidents.
What might still move uber from a fluent market into a winner takes all position some day would be a shift to their own fleet, either driverless or with employees. That would then be real investment and as such would be much harder to match by a newcomer than the day to day underselling they are currently doing to artificially to balloon themselves up.
And there are other factors. If a competing service let me choose what model of car turns up (say among nearby ones), I may pick that. After all, a big advantage of these over owning a car is that you can try different models.
I don't think the winner takes all, any more than restaurants are winner take all though in theory restaurants also benefit from higher utilisation, less food wastage, negotiating power over suppliers, etc, as the number of patrons increases. That hasn't led to there being only one restaurant in each neighborhood.
Also, just as cabs did, über will erect regulatory barriers to entry for smaller players.
And I don't think network effect is all that sustainable of a competitive advantage here. Switching costs are just downloading a new app and entering your credit card information.
Frankly, I think this market is still open in the very long term.
