Uber has become a market leader in transportation but that wasn’t always the case. The startup had humble beginnings in San Francisco before it expanded to other cities.
It did this methodically with a playbook, a method which helped it scale to cities of different sizes and countries around the world. As a business, Uber is an interesting mix between a technology business and a physical business (one that moves people to physical places), and because of that, Emil Michael, the SVP of Business at Uber, said partnerships are critical in building the business.
Above is a podcast conversation I had with Uber’s Emil Michael about how Uber emerged from being an underdog into a market leader, how Uber expanded in the U.S. and in international markets such as China, and how partnerships and deals are done in an efficient way. Michael also talks about how Uber has made its way into China and how Uberpool is one way to deal with traffic congestion in growing cities.
From Underdog to Market Leader
Scrappy startups don’t have all of the complicated dependencies big companies have. Michael and Uber CEO Travis Kalanick have talked about how building a big company is similar to building a civilization. The communities of people who use Uber has an impact on its immediate society. It is important that Uber is benefiting the communities it operates in by providing rides for handicap passengers or serving areas that have limited transportation options. For this reason, Michael feels that Uber becomes the fabric of the city or country, and thus, there is a moral responsibility for acting like a good citizen.
Uberpool and Adding to the Infrastructure of the City
If Uberpool works, the amount of congestion on the road is reduced, less infrastructure is needed. For instance, in a city like San Francisco where there are no plans to build a subway and the buses are packed, Uberpool can be a part of the solution for the infrastructure problem.
Find Product Market Fit
Getting around is a basic human need, so in every city Uber launched in, there was product-market fit. Michael said “if you have a simple product that works, people all over the world want to use it. And so when you find that out you’re like, holy cow, the only thing limiting my growth is how fast I can launch, and how I integrate myself into that community or that city.” Seeing that Uber worked in Saudi Arabia, Vietnam, Nigeria, and Tokyo, Michael saw the potential of Uber as a real global business.
How to Make a Deal
Partnerships matter, depending on the type of business you are in. Uber is as much a tech company as it is a business since cars are metal objects that pick up people and drop them off at destinations. Michael said in his time at the company, they’ve done deals with big car fleets, auto manufacturers, loan providers, and gas companies. If you’re Facebook or Google, you’re designing a product and rely on partnerships less, and can grow through scaling your server space. Michael believes even if you have a technology business, it’s important to build relationships because someday you will need partnerships to accelerate your business, to take it into new territories, to do M&A, or all of the above.
The Uber Playbook
Uber stayed in San Francisco exclusively for a year until it launched in its second market, New York, and was there for nine months before launching in a third market. Michael credits this focused approach with helping Uber perfect how to operate in both markets. Therefore, a playbook was created to help hire and plan out how to launch in other markets and accelerate hiring. After launching in ten cities in the US, one city was launched on every continent which allowed Uber to know that they could build a business within those local markets.
Partnerships Are Essential for Expanding in China
In China, you have to have the balance sheet to go the distance. Michael said it is important to have local Chinese people in your company who can interact with the government and who understand the ins and outs of the business culture. Uber’s partner in China is Baidu, one of the three big internet companies after Tencent and Alibaba.