The Economics of Uber of X

If you could sms a wish; and someone whom you texted were a magician and made it possible! Chen designed an all-white landing page that makes anything on earth, possible. No wonder they call it Magic.

In two days of the launch, Magic team realized 18000 wishes – and then there was no time to re-think or improve the product!

It seems the desire for convenience knows no bounds. 

Uber of X

By this point, “it’s the Uber of X” is a phrase you’ve probably heard more than ‘Uber’.  Half of new startups either project themselves as Uber of something, or have been dubbed so by others. And it’s great news as Uber is valued $18 billion, not bad for a company that was founded in 2009. So here is a business model, that start-ups must leverage to re-define industries or create new ones.

Today, Uber looks like a mindless formula. There is an Uber of food, Uber of flowers, Uber of laundry, Uber of home services, Uber of Garages and Uber of X.

The business of building networks

I visited Tadoba National Tiger Reserve last year. In search of the Wagdoh Tiger (superstar of the reserve) we covered a stretch of 300 Kms in 4 days. We finally spotted the dominant big cat prowling the territory on the 4th day. The search was worth it; what amazed me more – is how our safari guide (who was also a resident of the forest) strategically discovered the tiger by carefully listening to the sounds coming from all directions in the dense forest. He later explained how birds, monkeys and other animals in the forest make a specific kind of noise when they sight a tiger – alarming all other animals of the tiger’s whereabouts. It took him 20+ years to learn what different kinds of sounds mean at distinct times of the day (& how are they different from other sounds in the jungle).

Animals in the forests have learnt to compete & collaborate; figured out a mechanism to survive and cleverly (constantly) spy the tiger to safeguard themselves. Each movement the tiger makes, is well announced. A well-understood-by-all sound alarms the jungle at the right time. Most sophisticated form of inter-connectedness and a brilliant network. And what better could you expect, tourist guides have learned to live on the network too.

In the same network, later I realized there are many forms of small, medium and large networks to support various forms of life. Some networks are built among animal-groups for their survival, some are focused towards young-ones of all species and some connections give information about change of seasons.

How different is this from Internet? I couldn’t find an answer. Or the internet(work) is no different! A network of ‘something’ can create and hold value for all in the network (and beyond). Essentially, a simple Uber app on your smart phone connects you to one such valuable network (the network of on-demand cabs) – and if the network is sufficiently efficient, it can save you from the tiger! If you know what I mean.

In The Name Of Uber

There is a difference between business of building inter-networks and business of forming connections. While both seem to be clones of Uber, there is much difference. I tried to use my paint brush skills to explain this.

Uber of X -1

The above figure illustrates how two distinct networks (in many cases more than two) learn to leverage upon the value provided by the other. While two different colors show two different entities, the network has essentially become one! It is not evident that there ‘is‘ a 3rd party involved in facilitating the interconnections, but that’s the glue!

Moreover such blended networks are highly automated, with little or no manual intervention the new colored network learns to work on its own.

Such platforms need to built, once. 

Uber of X -2

The second figure shows two networks sets of parties (service providers and seekers) on either side of a (3rd party tech) platform that aims to control the communication and prevents (intentionally or unintentionally) any direct connections. While it may seem like a network of networks from the outset, however in actual, it is the platform that is partially automated, highly governed and only as efficient as number of manual touch points. Most importantly, when either side of the platform grow in strength, the platform fails to cope-up and becomes a bottleneck.

Such platforms, once built, must be maintained well.

Both models have their own merits and demerits. The former, no prizes for guessing, is sustainable at scale.

What Went Wrong with HomeJoy?

One such Uber of X is shutting down this month, HomeJoy. We wouldn’t have paid any attention to it if it were a usual start-up failing. It is the first failure of Uber of X – and I am sure many would like to analyze ‘why’ and ‘how’ of it!

As I see HomeJoy, its the Clone 2 that defines them better. It is natural that a network would organically grow stronger when there are optimal rewards for everybody in the network. In Clone 2, the aggregation platform wants to suck most of the rewards, as it tries to control the communication. Not to forget, there’s much money gone in building such a platform + there is huge maintenance cost.

In case of Uber of ‘successful Xs’, there are investors that sit outside the system and fund (lots and lots of money) in finding the cohesiveness on which small and large networks thrive. While money & patience is necessary, it cannot be a mindless replication of connection business (read brokerage). The inter & intra network needs to learn to cooperate, compromise, understand the importance of connected-ness, most importantly cohesiveness should be built in and not forced & governed.

In case of Homejoy, it brought out another great survival essential – a network must not violate laws of existing large networks. With this failure, venture capitalists will now look for a market fit or scrutinizing metrics, that are usually missing in so-called “Uber-for-X” startups; in this case it was employee / associate contracts.

Can there be networks around anything?

Or are all Uber of X possible?

I also see it as – not all problems are equally painful.  Most people don’t consider the logistics around getting a massage or attending a yoga class to be the same level of pain and frustration as home renovation or trying to sell their old car. Immediacy, Reliability and Necessity are also some factors that goes into designing a network. Some networks add value and some only seem to.

Its only a beginning. We have just started to experience how small & large internal networks of online (Amazon) and hybrid (Uber) are learning to breathe. It will be exciting to see – if there is a place for Uber-for-everything? Or is Magic just that?

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