Is It All Ober for Uber?
With its latest acquisitions, particularly Postmates, the
company seems to be staking out territory everywhere and nowhere. That's a
strategy, but not necessarily a plan.
Uber's on its way to another painful visit to
the dunk tank with its latest grandiose announcement, post the Postmates
acquisition, that it's acquiring Routematch, which works with mass transit
agencies to match riders with rides. In other words, Uber is planning to be all
things mobile for all people. Another doomed attempt to be a mile wide and an
inch deep. Although, in all honesty, the new strategy isn't really for all
people. It sounds more like they want to build the next-gen operating system
for newly affluent Millies - if they're still even riding and running around
these days - on the backs of their drivers and now other gig workers as well
who are still being badly ripped off.
And, of course, with the virus likely to
linger another year or two, Uber's timing for the latest re-launch, given our
reluctance to jump back into the shared-ride world with strange drivers, stale
and stagnant cars, and unknown prior passengers, couldn't be much worse. But I
guess everyone's got to have some sexy story to tell these days. You would
think, however, that the guys at Uber itself would know that not every business can
be Uber-ized.
I actually feel somewhat sorry for Dara
Khosrowshahi, Uber's beleaguered CEO, and his repeated acts of
desperation. It feels a lot like he's once again the guy dressed as a circus
clown who's walking behind the elephants with a shovel and a satchel. He's been
trying to clean up the mess at Uber for what seems like forever and
nothing appears to be going all that well. Starting with the busted
IPO, then the rulings in the U.K and other places that drivers are employees,
and there's still the continued rash of deviate drivers who seem to be constantly
conspiring to embarrass the brand and scare off customers. Talk about stranger
danger.
And, let me say right up front about
this $2.6 billion Postmates deal, that combining two lukewarm cups of coffee
doesn't get you a hot drink however hard you try and however far you try to
stretch the synergy. Not to mention that trying, in a space already crowded
with tech behemoths, to do everything for everyone means you'll most
likely end up with a big bag of nothing. Maybe in a different time and place
where time, talent and resources are abundant, seizing the moment and trying to
grab every opportunity and running full speed ahead with the whole bunch made
some sense. But not today.
Moving a bulked-up Uber Eats front
and center on its newly-designed app and launching 2 or 3 other new pickup and
delivery services (groceries, packages, people, etc.) obviously made some
opportunistic sense at the height of the virus. It was a reasonable and
inevitable choice in response to the abrupt disappearance of Uber's core
offering. And sadly, I do think that the virus and its consequences are going
to be with us for years, not months, so the artificially enhanced, upscale,
urban-centric, and principally U.S. based demand for those services won't
disappear any time soon.
But the short and obvious list of
all the major and deeply entrenched players who are already well-established in
these markets and just waiting to eat Uber's lunch is pretty
intimidating. And, when the elephants are up and dancing, the grass and
everyone else standing around takes a beating. I've been an advocate of the power
of platforms forever, but this expansion adventure feels
like "platform madness" gone wild combined with an
approach driven by what I call the Galloway "big bite" theory. It's a
specious strategy driven by ever-escalating market growth expectations rather
than good solid business sense.
Scott Galloway's an NYU professor and
tech gadfly who looks at the tech giants (Uber has become a wanna-be at best at
this point) and - in every case when he's talking about their future plans -
comes to the same basic conclusion. In order to meet forward-looking Wall
Street growth projections, the big tech players (and the aspirants
like Uber watching from the sidelines) are going to have to
find arguably adjacent markets of enormous size and try to take a "big
bite" out of those markets. This is essential because nothing else,
including continued sizable organic expansion, will make the New York market
mavens and the growth-crazy greed heads and commentators happy.
Galloway's
current favorite target industries for tech takeovers are education and health
care, but no one doubts that the grocery business, as one other example, and
last mile logistics for another, are also pretty large. However, not
even Amazon with Whole Foods has yet demonstrably mastered the food
space and Walmart and Target are gearing up to stomp even more
aggressively into the game as well.
Uber is overmatched, outgunned, and
trying to play catch-up in spaces where there's barely room to maneuver between
the big guys. It feels like Dara's playing checkers on a chess board. Or, in
more appropriate chess jargon, it's Zugzwang. A chess position where any move
loses.
JUL 21,
2020