Here’s a speed summary of the cover story of the June 2015 edition of Wired Magazine offering 40 lessons from big industry leaders – including Richard Branson, Clayton Christensen, and Rachel Botsman – on what businesses can learn from the poster child of digital disruption – Uber: “Love it? Hate it? Uber – 41 Lessons from a $40bn Phenomenon“.
The article actually contains just 12 big lessons, broken down into sub points. Worth reading in entirety (love the acronym of WEIRD markets – and the challenges of expanding beyond them – Western, Educated, Industrialised, Rich, Democratic), but for the time-pressed here’s the summary of what the Good and the Great have to say on what we need to learn from Uber, the biggest Unicorn on the planet – valued at over $40bn.
- Disruptive innovation is still a killer business model (technology is rarely disruptive, business models are – such as the marketplace model of Uber) – Clayton Christensen, Harvard
- Do one thing really well – then figure out what the second leap is – Josh Elman, Greylock
- Free agents are the future (If you want loyalty, get a dog – Uber drivers are free agents, monetising their car with multiple apps) [You can buy people’s attention ($500 bonus to Lyft drivers switching to Uber), If you start with a price – stay with price, When rates drop, will drivers follow? Be flexible, and follow demand, Diversify and keep your options open] – Harry Campbell, The Rideshare Guy
- Expand quickly, efficiently and effectively [Put users first, Hire an operations wizard, Partner up, Don’t push your suppliers too far, Adapt your products, Defend your margins, A good product sells itself, Control pricing, Expand fast, Keep it simple] – George Berkowski, former product head, Hailo
- Make a habit out of your product – Nir Eyal, author
- If individuals are willing to leverage their assets, the whole world can benefit (asset 1: Home (AirBnB, asset 2: car (Uber), asset 3: bank balance (Funding Circle) [hat tip to Julian Grainger] [Accountability is king, Private data can offer social good, The sharing economy is good for cities] – Carlo Ratti, MIT
- Successful products spring from a passion to improve people’s lives – Richard Branson, entrepreneur
- Disruption gets results, but you also need to be liked – Uber could learn from Microsoft – to be respected and feared is not enough… You need to be liked – Russell Davies, Government Digital Service
- Supply and demand doesn’t justify everything – If Apple couldn’t get away with surge pricing for iPhones in 2007 ($599 for first two-month orders), can Uber? – Tim Harford, FT
- Keep your app design simple, consistent and user-friendly [Keep it consistent, Be distinct, Style it out] Harry Pearce, Pentagram
- Sometimes it pays to play safe (make safety a priority, to fight the disruptive fight from the moral high ground) John Fingleton, regulation consultant
- Collaborate, disrupt, but also promote trust (Uber will need to build trust with drivers, passengers and new users of its ‘mobility infrastructure’) – [It’s the data stupid, Fix what’s broken, Keep the liquid flowing, Loyalty is power, Protect your people] Rachel Botsman, thought leader
What does a Unicorn look like in 2015?
Below you’ll find the ‘Unicorn 100′ – a new list now over 100 ‘Unicorns’ have been spotted in the wild – privately held tech startups with investment valuations of $1bn and more. Taken from a new report from KPMG and CB Insights, the Unicorn 100 list is a glimpse of the future – if you believe in the truism – to see the future, follow the money.
The list is interesting in its own right, but peruse the the individual Unicorns below and you’ll spot some patterns and common characteristics emerging that are setting the agenda, investment and future of digital innovation.
Do you have any Unicorn DNA in you?
- Unicorns in Real Life (digital is no longer a channel, it’s a layer in real life),
- Unicorns like convenience (time and effort saving ‘convenience tech’ on the rise)
- Unicorns like FinTech (burgeoning financial tech)
- Unicorns like shopping (over-weighting on mobile commerce and e-commerce)
- Unicorns like marketplaces (marketplace models on the rise – Uber, Airbnb, Delivery Hero…)
- Unicorns don’t just live in the valley (US dominant, but Asia on the rise)
- Xiaomi Technology Co (CN) ($46bn: Consumer Tech – mobile/smart devices)
- Uber (US) ($41bn: Transport – mobile taxi app/service)
- Palantir Technologies (US) ($15bn: Enterprise Tech – Data)
- Shapchat (US) ($15bn: Mobile – Communications)
- SpaceX (US) ($12bn: Aerospace)
- Flipkart (IN) ($11bn: Ecommerce – B2C)
- Pinterest (US) ($11bn: Media – Photosharing)
- Dropbox (US) ($10bn: SaaS – Cloud)
- Airbnb (US) $10bn: Travel – B2C (Booking))
- Theranos (US) $9bn: HealthTech)
- Kuaidi Dache (CN) $8.75bn: Transport – Mobile taxi app/service)
- Spotify (SE) ($8.4bn: Media – Music)
- Meituan (CN) ($7bn: Ecommerce – B2C Group Buying)
- Square Inc. (US) ($6bn: FinTech – Payments)
- WeWork (US) ($5bn: Office space/services)
- Zenefits (US) ($4.5bn: Enterprise Tech – Health Insurance)
- Cloudera (US) ($4.1bn – Enterprise Tech – B2B)
- Dianping (CN) ($4.05bn: Media – Reviews)
- Stripe (US) $3.5bn: FinTech – Payments)
- Atlassian (AU) ($3.3bn: Enterprise Tech – SaaS)
- Jawbone (US) ($3.3bn: Consumer Tech – Devices)
- Fanatics (US) ($3.1bn: Ecommerce B2C Sports)
- Legendary Entertainment (US) ($3bn: Media – studio)
- Vancl (CN) ($3bn: Ecommerce – Fashion)
- Pure Storage (US) ($3bn: Enterprise Tech)
- Moderna Therapeutics (US) ($3bn: HealthTech)
- Slack Technologies (CA) ($2.8bn: Enterprise Tech)
- Bloom Energy (US) ($2.7bn Energy)
- Powa Technologies (UK) ($2.7bn: Fintech – Mobile Payments)
- Snapdeal (IN) ($2.5bn: Marketplace – C2C)
- Lyft (US) ($2.5bn: Transport – Mobile taxi app/service)
- Vice Media (CA) ($2.5bn: Media – magazine, music label, film)
- Ola Cabs (IN) ($2.4bn: Transport – Mobile taxi app/service)
- Houzz (US) ($2.3bn: Media – Interior Decoration app/magazine)
- SurveyMonkey (US) ($2bn: Software – Online survey service)
- Evernote (US) ($2bn: Software – Productivity)
- One97 Communications (IN) ($2bn: Mobile / Ecommerce)
- Coupang (KR) ($2bn: Ecommerce – B2C)
- Nutanix (US) ($2bn: Enterprise Tech)
- Domo (US) ($2bn: Enterprise Tech)
- Trendy International Group (CN) ($2bn: Retail – fashion)
- Instacart (US) ($2bn: Ecommerce – Grocery)
- Magic Leap (US) ($2bn: Augmented Reality)
- Prosper (US) $1.9bn: Fintech)
- Delivery Hero (DE) ($1.876bn: Online food ordering)
- Avito (RU) ($1.8bn: Marketplace – C2C)
- Intarcia Therapeutics (US) ($1.75bn HealthTech)
- Tanium (US) ($1.75bn Network Solutions)
- DocuSign (US) $1.6bn Enterprise Tech)
- mongoDB (US) ($1.6bn Software)
- insidesales (US) ($1.6bn Enterprise Tech – Sales)
- Adyen (NL) ($1.5bn: Fintech – Payments)
- Oscar (US: $1.5bn Fintech – Health Insurance)
- IronSource (IL) ($1.5bn Software – Distribution)
- Koudai (CN) ($1.4bn: Mobile Commerce)
- Jasper (US) ($1.4bn: IoT)
- deem (US) ($1.35bn: FinTech – Mobile)
- SoFi (US) ($1.3bn: FinTech)
- Sunrun (US) ($1.3bn: Energy)
- Lazada (KR) ($1.25bn: Ecommerce)
- Appnexus (US) ($1.2bn: Media – Advertising)
- Warby Parker (US) ($1.2bn Ecommerce)
- Infinidat (IL) ($1.2bn: Data)
- Sprinklr (US) ($1.170: Enterprise Tech)
- Automattic (US) ($1.160bn: Software – Publishing)
- Twilio (US) ($1.1bn: Communications)
- Good Technology (US) ($1.1bn: Enterprise Tech)
- Proteus (US) ($1.1bn: HealthTech)
- Actifio (US) ($1.1bn: Enterprise Tech – Data)
- Tango (US) ($1.1bn: Mobile – Social Networking)
- Nextdoor (US) ($1.1bn: Media – Social Networking)
- Docker (US) ($1.070bn: Software)
- Gilt Groupe (US) ($1.050bn: Ecommerce – Fashion)
- Transferwise (UK) ($1bn: FinTech)
- Shazam (US) ($1bn: Mobile/Media – Music)
- Shopify (CA) ($1bn: FinTech – B2B)
- CloudFlare (US) ($1bn: Enterprise Tech)
- Eventbrite (US) ($1bn: Ecommerce – Ticketing)
- Credit Karma (US) ($1bn: FinTech)
- Lookout (US) ($1bn: Mobile – Security)
- AppDynamics (US) ($1bn: SaaS – Software Performance)
- Hootsuite (CA) ($1bn: Media – Social Media Management)
- Kabam (US) $1bn: Software – Games)
- Klarna (SE) ($1bn: FinTech – Ecommerce Payments)
- Farfetch (UK) ($1bn: Ecommerce – Fashion)
- Funding Circle (UK) ($1bn: FinTech)
- Razer (US) ($1bn: Consumer Tech: Gaming)
- Fanli (CN) ($1bn: Ecommerce – B2C)
- Zomato (IN) ($1bn: Media/Mobile – Restaurants)
- JustFab (US) ($1bn: Ecommerce – B2C)
- Simplivity (US) ($1bn: Enterprise Tech – Data)
- Qualtrics (US) ($1bn: Enterprise Tech – Market Research)
- Mogujie (CN) ($1bn: Media – Fashion)
- Illumio (US) ($1bn: Enterprise Tech – Data/Security)
- Grabtaxi (MY) ($1bn: Transport – mobile taxi app/service)
- Beibei (CN) ($1bn: Ecommerce – B2C Infants)
- Yello mobile (KR) ($1bn: Mobile Incubator)
- Pluralsight (US) ($1bn: Education)
- Quikr (IN) ($1bn: Mobile – Classified Ads – IN)
- InMobi (IN) ($1bn: Mobile – Advertising – US)
Why do Uber-for-X businesses fail? Here’s a summary of the top reasons for failure identified by Juggernaut, a platform and consultancy for Uber-for-X businesses.
Beyond Juggernaut’s top reasons for failure, it’s important to understand the top reasons why Uber is successful.
- Uber is successful because it rationalises an inefficient market for repetitive high margin purchases with a marketplace model that matches demand spikes with under-utilised supply.
- Implication: Uber-for-X businesses will [only] thrive where there is an inefficient market for repetitive high-margin purchases
- Uber is successful because it rationalises consumer behaviour by allowing consumers to ‘value-optimise’ – get the biggest bang for our buck, not by reducing the price, but by reducing the other two costs associated with every transaction – time and effort. In other words,Uber reduces inconvenience.
- Implication: Uber-for-X businesses will succeed where there is a consumer dissatisfaction due to inconvenience.
- Uber is successful because it exploits irrational, incomplete or ambiguous market regulation, playing in the grey area between traditional taxis and unlicensed rides.
- Implication: Uber-for-X businesses will succeed where there are grey markets and regulatory ‘black holes’- between traditional provision and illegality
From this basic economics of Uber – ‘ubernomics’ – there are three key questions any Uber-for-X business needs to ask itself
- Is the market I want to enter an inefficient market for repetitive high-margin purchases?
- Is the market I want to enter characterised by a problem or pain point around inconvenience?
- Is the market I want to enter suffering from incomplete, ambiguous regulation?
Answer yes to all three, and you may have a wining business idea.
The key thing to understand is that Uber is not a merely a taxi service, it’s a blueprint for digital transformation – based on the fundamental insight that ultimately digital is not about technology, it’s about ‘rationalisation’. Digital has the power to rationalise whatever it touches, be it people, businesses or markets and does so by reducing waste, cost, time or effort.
But watch out for these top mistakes
- Not servicing a specific niche. Exec was an Uber-for-errands of any kind requiring a broad range of skills and runners. Solve one problem and solve it well.
- Not servicing genuine demand. HelloParking enabled people to share paid-for parking spaces, something that few people wanted to do
- Not solving a genuine problem. DinnrDinnr offered a same day ingredient delivery service for recipes, something that few people actually wanted
- Not making it convenient. TaskRabbit is an Uber-for-errands that had a time-consuming bidding system where runners would bid for work. Successfully pivoted to on-demand service with set prices
- Low margin product. Cherry was an Uber for car washing that allowed customer to park anywhere and get their car washed, but the low ticket price and low margin made the business unviable
- Premium pricing. Prim was on-demand laundry service including pick-up and delivery, but costs meant pricing was considerably higher than traditional drop-off laundry services
- Not enough focus on customer acquisition. Tutorspree was an Uber-for-tutors that failed because it did not priorities an effective customer acquisition strategy
- High costs of customer acquisition. Rivet & Sway online eye glasses retailer offered a convenient try-at-home-before-you-buy service, but the high cost of acquiring customers made the venture unviable
For more reasons for Uber-for-X #fails, check out Juggernaut.
You’ve probably seen the results. Switzerland, Iceland, Denmark, Norway and Canada are the happiest nations on Earth (Syria, Burundi and Togo are the least happy).
The 2015 World Happiness Report is out, ranking countries by average happiness of its citizens. You can download it here. It’s a great report and well worth a read, but not just for geo-bragging or geo-lust. The World Happiness Report is insightful for any business for which customer happiness is important.
First, though – a recap of the rankings…
2015 World Happiness Rankings
- New Zealand
- Costa Rica
- United States
- United Arab Emirates
- United Kingdom
Whilst there may be little value in this summary list itself for marketers, the World Happiness Report contains at least four useful insights for marketers.
1. A Simple Measure of Customer Happiness
How do you measure happiness? The simple answer is the ‘Cantril Ladder’. Simply think of a ladder, with the best possible life for you being a 10, and the worst possible life being a 0. Now rate your own current life on that 0 to 10 scale.
That’s your Happiness score, a measure of subjective well-being and life-satisfaction. So what? Well, one opportunity for marketers is to adapt the Cantril Ladder – used by the OECD – to measure customer happiness (…Think of a ladder, with the best possible product/service/brand experience for you being a 10, and the worst possible being a 0. Now rate our product/service/brand on this 0 to 10 scale). Of course, there are other proprietary measures of satisfaction the quality of experience – but why not stand on the shoulders of giants – and use the simple Cantril Ladder? If it’s good enough and useful for for the OECD and the World Happiness Report…
2. What Drives Customer Happiness
What’s perhaps more interesting for marketers is that the Happiness Report identifies the six drivers of human happiness. Together these six drivers explain three quarters of the variation of happiness in any one nation
- Health (Healthy years of life expectancy)
- Social support (as measured by having someone to count on in times of trouble)
- Household income/GDP (per capita)
- Trust (as measured by a perceived absence of corruption in government and business)
- Generosity (as measured by recent donations, adjusted for differences in income)
- Freedom (perceived freedom to make life decisions)
Although these are population level correlates of human happiness, they are insightful. Beyond communicating and delivering product/service benefits, is there an opportunity to scale the happiness ladder, and demonstrate how your product or service delivers against these higher order drivers of human happiness?
3. Emotional Drivers of Customer Happiness
The Cantril Ladder is not the only measure of human happiness; the presence of positive emotions (joy, pride) and absence of negative emotions (pain, anger and worry) matter as well as cognitive evaluations of subjective wellbeing. So in addition to using the Cantril Ladder, the World Happiness Report measures happiness emotionally, capturing whether people remember experiencing positive or negative emotions yesterday.
Could we use this insight that the presence of positive and absence of negative emotions are indicative of happiness, to measure, and more importantly deliver emotionally charged customer happiness? (think of your last product/service experience, to what degree did you experience the following emotions pride, joy, anger, worry, fear). Interestingly, the World Happiness Report found that only three of the six happiness drivers listed above, appear to drive emotional (hedonic) happiness – freedom, generosity and social support.
Overall, these two strands of human happiness – cognitive and emotional – support the core insight from psychology (self-determination theory) that human happiness has an ARC:
The ARC of Human Happiness
- Autonomy (freedom)
- Relatedness (social connectedness/support)
- Competence (mastery)
The implication for marketers is that if customer happiness is your goal, focus not just on delivering promised benefits, but consider the ARC of human happiness – how does your product or service help the three core drivers of human happiness – autonomy, relatedness and competence?
4. Purpose and Meaning
Finally, in explaining the results, the World Happiness Report suggests that there may be a third strand to the DNA human happiness – and that is the degree we believe our life has purpose and meaning (known as eudaimonic well-being). Here the implication for marketers is that beyond product/service happiness, and in addition to cognitive and emotional happiness, we need ask ourselves how what we sell helps customers achieve their purpose and meaning in life?
Heady questions, but if we focus innovation and marketing on delivering human happiness, we’ll be doing something very special indeed.
Uber co-founder and chairman Garrett Camp has revealed his Next Big Thing, an Uber-for-stuff ‘request network’ that works like a Siri for shopping. Operator is a software-with-a-service app, like the experimental Magic service, that connects you with a network of virtual and human personal shoppers called ‘Operators’ who satisfy your shopper requests on-demand, and bring service with a digital smile to the world of e-commerce. Simply text what you want to Operator, and the app will automagically ping you back suggestions with pics, prices and links.
- Send an instant text message request in Operator (with photos if you wish) for what you want
- Request is routed to Operators working in the product category
- Operator texts back purchase options, details, and pics
- Tap the ‘I’ll take it’ button, and payment details on file are debited and the product is shipped to you automagically
Operator is another example of ‘convenience tech‘ designed to save us time and effort. Incase you hadn’t noticed, the digital world is betting big on ‘convenience tech’ right now as a solution to the problems of customer-centricity and digital transformation (see Amazon’s Uber-for-everthing service launch last week). Saving people time and effort – two of the three costs involved with any transaction (along with money) – is what digital does best. And it’s psychologically smart, shoppers are driven by the need to value-maximise, and by reducing time and effort costs, the perceived value of their purchases go up.
Forget content, convenience is king in today’s on-demand economy.