Uber’s Biggest Problem: Its Business Model

Christopher Mims, in his column for The Wall Street Journal:

But even when it steers through that thicket of crises, Uber will have to come to grips with a fundamental vulnerability that is increasingly apparent in the company’s business model. Uber may be great at technology, but unlike the businesses of Google, Facebook, Apple or Amazon, technology hasn’t proven to be a significant barrier to new entrants in ride-sharing. Across the globe, Uber has dozens of competitors, and in many markets they have grabbed the lion’s share of the ride-sharing market.

Even if Uber fixes all of its current problems, it’s increasingly unlikely that it can live up to the inflated expectations that come with the nearly $70 billion valuation that have made it the world’s most valuable startup. There are barbarians at Uber’s gate, and it’s sorely in need of a moat.

This is why they’re pursuing self-driving technology so aggressively. There’s simply no way that Uber is worth $70 billion without some sort of exclusive technical advantage. That’s the interesting flip side to Kalanick’s ouster — I’m not sure who would want the job.

★ Thursday, 22 June 2017