Assessment of the Company Uber’s Progress in the Market
By: Ramazan Akkoyun
Tags: Agile Development, Uber, Growth Mindset

The evolution of transportation

In this article, I will try to answer questions such as what helped Uber get to where it is today, what they did or what they did not do.

Uber was founded in 2009 in US by entrepreneurs Travis Kalanick and Garret Camp. Originally company’s name was ‘UberCab’ where uber inherits from the German word ‘über’ meaning ‘above’ combining with cab the meaning is roughly aimed to have the meaning “way better than cabs”. Initially, the aim of the project was to connect executive riders with unoccupied private black cars targeting the Silicon Valley area. Analyzing the needs, the aim and design have changed drastically through out project’s lifetime. The company has seen that not only executives, but everyone needs occasional rides for short and long distances and there are drivers who want to reduce their travel cost by sharing their rides. Name of the company itself is a proof that concept and aim of the project was changed throughout time, since ‘UberCab’ is chosen probably for having a catchy name in a local place like United States where many people have German ancestry and somehow familiar with the language, yet with time the project was expanded to global and shorter name is possibly considered to be more catchy eluding its importance in the meaning.

Uber Business Model Canvas

Who are Uber’s customers?

People who don’t own cars

People who can’t drive a car

People who don’t want to drive themselves to parties

People who like to travel in style and luxury

People who are looking for a cost-effective transport option

Uber’s Value Proposition

For Customers:

Don’t have to wait long for a taxi.

Get free rides or discounts on certain occasions from time to time.

Prices lower than the normal taxi fare.

Fixed prices for common locations like airports, stations, etc.

For Drivers:

An additional source of income for drivers.

Allows flexible working schedules where drivers can work part-time, full time, or whenever they want.

Offers easy payment procedure and earning management platform.

Those who wish to earn money and love to drive can pursue this as their hobby.

So? What’s So Special About Uber?

Uber has shown and followed various taglines over the years. Here are a few of them:

Everyone’s private driver

Get there. Your day belongs to you.

Connecting you with the people, places, and things you love.

Evolving the way the world moves.

If you can observe, there is a common theme going on with these titles; the company’s care for its passengers. Uber has always been firstly concerned about the experience that their passengers get, and the company has done more than someone can expect from a multi-billion company.

The company has many times shown where its true dedication lies. There have been speculations in the past that Uber has served its customers amazingly, but only at the expense of their drivers. Uber took these comments as creative criticism and for the past couple of years, has shown equal care for its drivers.

How Does Uber Ride Work?

High level diagram for Uber usage

Iterating Growing Approach

Like any start up project, Uber has started up with an idea to fulfill a need within a limited area. The ideas come with our perspective and the way we see the life, but those ideas are realized only when they are in the air.

Uber has started to see that from very beginning after they launched their first idea in Boston and San Francisco.

Product management of the Uber has decided to controllably expand their launch after seeing this diversion; offering the project to market in 12 US cities, where 6 of the cities were hold as control cities to see long term effects of the design where 6 of the cities were taken as treatment cities to make changes in the design and see their short term effects.

As for the aforementioned reasons, product management of the Uber has decided to take incremental approach in response to rider/driver feedbacks and based on controlled experiments company ran.

In an open-loop system (no feedback), an input happens, and it’s processed into an output. No data is captured along the way and fed back into the system. One practical example is hailing a taxi (without the use of an app like Uber’s).

In the traditional taxi example, you hold up your hand signaling you want a ride (input), the taxi driver sees you — not because he knew you wanted a taxi at that place and that time but because he just happened to be driving there. You take the ride, pay your fare, and get out.

Other than knowing a ride happened and you paid your fare, no data about who you are as a customer, where you were or what you were doing is saved by the taxi authority to make future taxi experiences better.

By comparison, a closed-loop (feedback) system like Uber takes your input action, measures your activity and behavior, tracks the output, and uses all that information to inform the rest of the system.

Data Science Investments

By the time Uber has started up, the concept was brand new and outcomes were hard to foresee. The product management has decided to take confident steps and take appropriate actions by employing large number of data scientists many of them holding doctoral degree from prestigious Colleges.

Out of 200 staff members, Uber had 60 data scientists to solve complexity of the product’s uniqueness for the time being.

Unlikely many applications with straight-forward designs, it is found to be crucial not to have an engineer-driven project management here but strongly supported by statistics.

Data scientists have collectively worked on manual steps of data collection, gaining the experience and automating them to have faster analysis.

Uber knows the exact supply and demand for transportation in a given city in real-time, allowing it to optimize pricing for rides and match demand (ride requests) with supply (cars) to make the market more efficient.

As businesses and products become more digitally connected, the world’s best and fastest growing companies are the ones building these closed-loop systems, where software and data science are always optimizing for increasingly more customer value and organizational responsiveness.

Application Design Impact Analysis

Data scientists wanted to test users’ propensity while using the application by choosing one treatment and one control group.

Intentionally application is designed to have same features but in different order or design and offered to users as application A and B.

As instance, for the control group, application opens the standard UberPOOL in the opening screen whereas treatment group sees the exclusive options in the opening screen. All the options are made available for both type of users here but in different sections or orders. The critical choices made by users are aimed to be analyzed.

Switchback Analysis

This analysis approach switches back and forth for a feature to be implemented.

For a prefixed period of time, application acts as it acts as usual and for the same prefixed time, desired change is invoked and this is constantly interchanging.

The time is less likely to be a selected as long as a day but for a shorter period of time like an hour to minimize time-based affects as like rush hours, rainy days etc. This approach has been used to decide on the waiting time debate between 2 and 5 minutes.

Synthetic Control Experiments

Synthetic control experiments aim to avoid contamination in data.

While numerous of changes invoked in the applications, it is hard to see if all the changes in users’ reactions if many changes are combined. Synthetic control experiments invoke small number of changes or a single change in one controlled area at a time without noticing the user of the change. Keeping changes arbitrary, area specified effects are also minimized.

Synthetic control approach also helps the application to free itself from its west-based design. After application is started to span all over the globe, controlled areas are selected randomly and effects are also less likely to be cultural based.

Obstacles

Besides design problems, there has been two major problems that Uber has faced up with. Uber was the avantgarde in this field, yet it did not take long before imitators started to emerge. After Uber gained know-how in the field, many competitor start-ups have piled up.

Taking Root

Introducing a new alternative to a traditional way often causes bias. Before Uber, people were unaware of this kind of opportunity and had their own ways for transportation. 7 years after the company Uber was founded, a questionnaire made among community has revealed the following results:

33% is unaware of the shared ride’s existence

14% has never used shared riding

3% uses shared ride once a week

In summary, 1% passenger/mile among all travels was done by shared riding.

Authorities

There have been many pushbacks that Uber had to deal with from both taxi industry and governments. Regulations and rules to be followed were also differing in different areas, even within US.

Many government authorities made it obligatory for a Uber driver to hold medallion or a taxi driver license which makes Uber less attractive for former black drivers.

Some countries have banned the company until company gets an appropriate license to work.

By a high-level view US has allowed ride-sharing companies to operate in 48 states out of 50.

The Good, The Bad, The Competitors

Every application has the design footprints of the piece of land it was founded in. These footprints have the possibility to have disadvantages when the product was introduced to global market, since needs of the aimed customers’ needs vary.

Having an application like Uber in the hand which has strict bound with the people and community; it is inevitable to avoid the idea to be stolen by people around the world, considering local requirements can be analyzed better locally.

In that approach many competitors have emerged:

Didi was founded in 2012 and taken over 80% market share in China. Uber has come to an agreement with the local founded company buy 18% of Didi and letting Didi invest in Uber.

In India, Ola was founded in 2010 and had 1 million drivers in 110 cities in India whereas Uber had 450.000 driver in 31 cities.

Grab was founded in Singapore and had 4 million posts a day in South East Asia. Uber has come to agreement with Grab for a stake share in Grab in the exchange of ceasing its operations in Singapore.

Uber’s competitors

What Did Uber Do Right?

Uber digitized the taxi industry

Uber removed the fear of unfamiliarity

Uber brought real-time notification

Uber introduced smart route suggestions

Uber launched cashless payment

Bonus: Some Technical Stuff For Agile Development Process

Examples of User Actions and Possible Problems

Possible Situations and Implications

Sketch diagram example-1

Sketch diagram example-2

Example of Class Diagram

Example of Functionality Diagram-1

Example of Functionality Diagram-2

Example of UML Diagram