Why a New Generation of On-Demand Businesses Rejected the Uber Model | Hacker News Reader

Why a New Generation of On-Demand Businesses Rejected the Uber Model

fastcompany.com

42 pointsDiabloD39 comments

As the co-founder of an on-demand service company [1], I have to agree partly with the core argument about trust, but disagree with its conclusion about the model's viability. It is definitely hard to ensure trust and satisfaction among customers without owning the entire process end-to-end. At our (currently small) scale, we manage this by offering fanatical customer service and communicating aggressively with our service providers. However, only time will tell if this will scale. I think there is a middle ground between a company shrugging it's shoulders and forcing the responsibility of vetting onto its customers, and completely guaranteeing quality. For instance, we add a layer of reviews that otherwise can be hard to find for tax preparers, stringently vet service providers, and also add a layer of customer protection by not charging them until they are satisfied. The article makes it seem as if the on-demand model implies no responsibility for quality by the company.

It seems that the real issue is that on-demand companies that charge a premium to "traditional" alternatives have a hard time justifying that premium if all they provide is a thin tech layer on top of said services. Uber is not only more convenient, but also now cheaper in many cases than taxis. I still think (albeit with strong bias) that if you can offer convenience AND cost savings, there is a legitimate value for the on-demand model.

[1] Taxaroo, https://www.taxaroo.com

The real problem is can you run your service with the quality of labor you will get as you scale. The reason you can offer fanatical customer service is your people are better than the average in the industry. It is very hard to scale labor quality.

That's a fair point, but it's so far down the road that for the foreseeable future it won't be a problem (at least for us). We're not under VC-backed pressure to grow at some unsustainable pace, so we can choose to bring on service providers at a pace that allows us to maintain quality. This definitely is a problem for the large on-demand companies out there, but that itself is part of a bigger problem where every startup thinks they need to be a billion dollar company (for many reasons)

The pressure to be a billion dollar company comes from the need for the investors to get a return on their money.

Rapid growth and quality are not normally compatible. I am glad to hear you have the freedom to grow at the right pace.

The real problem with the "Uber for X" comparison is that most of these startups are just "delivery for X." Uber's core business isn't delivery. The economics on both the supply and demand side are very different for Uber than, say, an Instacart or Postmates.

No Uber core business is regulation arbitrage. If the industry you are trying to disrupt is not significantly corrupt you will have problems.

Precisely. Uber created a new market by enabling people who need rides to connect efficiently with people who can supply them. Uber works because personal automobiles are typically underutilized and cab services in many locations are awful.

This is what Hailo did https://www.hailoapp.com/ connected existing cab drivers with customers and skipping the cab company middle man, and it's a win-win for everybody (customer, cabby, hailo) but the inneficient middle-man.

Uber did more than this, it also created a new pool of "people who can supply" by hiring their own drivers with less stringent quality screening than is in many localities for standard cabs, and then charging more or less the same price for this lower quality product.

In the Uber case it's a win for Uber certainly, but whether it works for customers really depends on the level of quality customers expect in a local market. Established local drivers lose out.

Thanks, I unaware of Hailo. It sounds like what I was hoping services like Uber would actually be.

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