Uber's on its way to another painful visit to the dunk tank with its latest grandiose announcement, post the Postmates acquisition, that it's acquiring Routematch, which works with mass transit agencies to match riders with rides. In other words, Uber is planning to be all things mobile for all people. Another doomed attempt to be a mile wide and an inch deep. Although, in all honesty, the new strategy isn't really for all people. It sounds more like they want to build the next-gen operating system for newly affluent Millies--if they're still even riding and running around these days--on the backs of their drivers and now other gig workers as well, who are still being badly ripped off.
And, of course, with the virus likely to linger another year or two, Uber's timing for the latest re-launch, given our reluctance to jump back into the shared-ride world--with strange drivers, stale and stagnant cars, and unknown prior passengers--couldn't be much worse. But I guess everyone's got to have some sexy story to tell these days. You would think, however, that the guys at Uber itself would know that not every business can be Uber-ized.
I actually feel somewhat sorry for Dara Khosrowshahi, Uber's beleaguered CEO, and his repeated acts of desperation. It feels a lot like he's once again the guy dressed as a circus clown who's walking behind the elephants with a shovel and a satchel. He's been trying to clean up the mess at Uber for what seems like forever, and nothing appears to be going all that well. Starting with the busted IPO, then the rulings in the U.K and other places that drivers are employees, and there's still the continued rash of deviant drivers who seem to be constantly conspiring to embarrass the brand and scare off customers. Talk about stranger danger.
And let me say right up front about this $2.6 billion Postmates deal--combining two lukewarm cups of coffee doesn't get you a hot drink however hard you try and however far you try to stretch the synergy. Not to mention that trying to do everything for everyone, in a space already crowded with tech behemoths, means you'll most likely end up with a big bag of nothing. Maybe in a different time and place, where time, talent, and resources were abundant, seizing the moment and trying to grab every opportunity and running full-speed ahead with the whole bunch made some sense. But not today.
Moving a bulked-up Uber Eats front and center on its newly-designed app and launching two or three other new pickup and delivery services (groceries, packages, people, etc.) obviously made some opportunistic sense at the height of the virus. It was a reasonable and inevitable choice in response to the abrupt disappearance of Uber's core offering. And sadly, I do think that the virus and its consequences are going to be with us for years, not months, so the artificially enhanced, upscale, urban-centric, and principally U.S.-based demand for those services won't disappear any time soon.
But the short and obvious list of all the major and deeply entrenched players that are already well-established in these markets and just waiting to eat Uber's lunch is pretty intimidating. And, when the elephants are up and dancing, the grass and everyone else standing around takes a beating. I've been an advocate of the power of platforms forever, but this expansion adventure feels like "platform madness" combined with an approach driven by what I call the Galloway "big bite" theory. It's a specious strategy driven by ever-escalating market growth expectations rather than good, solid business sense.
Scott Galloway's an NYU professor and tech gadfly who looks at the tech giants (Uber has become a wanna-be at best at this point) and--in every case, when he's talking about their future plans--comes to the same basic conclusion. In order to meet forward-looking Wall Street growth projections, the big tech players (and the aspirants like Uber watching from the sidelines) are going to have to find arguably adjacent markets of enormous size and try to take a "big bite" out of those markets.
This is essential because nothing else, including continued sizable organic expansion, will make the New York market mavens and the growth-crazy greed heads and commentators happy. Galloway's current favorite target industries for tech takeovers are education and health care, but no one doubts that the grocery business, as one other example, and last mile logistics for another, are also pretty large. However, not even Amazon with Whole Foods has yet demonstrably mastered the food space, and Walmart and Target are gearing up to stomp even more aggressively into the game as well.
Uber is overmatched, outgunned, and trying to play catch-up in spaces where there's barely room to maneuver between the big guys. It feels like Dara's playing checkers on a chess board. Or, in more appropriate chess jargon, it's zugzwang. A chess position where any move loses.