Under the normal course of business, a good idea follows a fairly regular path. An entrepreneur has an idea for solving a problem and if they're able to convince enough people that their idea is worthwhile, they can turn it into a business. Do that well, and the business may thrive, barring unforeseen external factors. We'll get back to those in a minute.
Uber was once considered such a good idea that any number of companies branded themselves as the "Uber of..." whatever service they offered.
How things have changed.
Now, the ride sharing company is looking to buy food delivery service Grubhub, a rival to its Uber Eats division. While it might be easy to think that Uber is merely trying to capitalize on a good deal during a tough time, in reality, there's more to it. I would argue Uber isn't looking to grow, it's looking to survive.
Even before people stopped getting into strangers' cars as a result of the coronavirus pandemic, Uber had challenges. It hasn't made a lot of friends, either with the local governments it operates in, or the contractors who actually deliver the service Uber promises. It also poured huge amounts of resources into researching new technology like driverless vehicles and has had a hard time actually generating a profit.
Now, of course, nothing is normal.
According to the company's latest earnings report, it posted a loss of $2.9 billion for the first quarter. That's despite the fact that the company's food delivery service, Uber Eats, is up 50 percent in the month of April. The company's CEO says that he expects that to be a lasting trend
While it's helpful, it didn't make up for the fact that Uber's primary business, ride sharing, was down 80 percent in April. That very well could be a lasting impact of the pandemic.
I wrote last week about an IBM survey that examined how attitudes have changed as a result of the Covid-19 outbreak. One of the most interesting findings is that "more than half of people surveyed who used ridesharing apps and services said they would either use these less or stop using these services completely."
Food delivery, on the other hand, is likely to be around for a long time. I mean, it was already a thing, but now that restaurants are closed--and the ones that are open are operating at reduced capacity--it's become a necessity.
It's no wonder that Uber is trying to figure out how to shift its business in order to survive. In that sense, buying Grubhub absolutely makes sense for Uber. The combined service would represent roughly 55 percent of the total market--a market that is likely to continue growing for the foreseeable future.
That doesn't mean it will be easy. As of now, the two companies can't even agree on a potential price, with Uber rejecting Grubhub's offer that would value the deal at $6.25 billion. In addition, members of Congress and state regulators have already said they would be opposed to the deal.
Still, Uber is facing enormous challenges and an almost complete shift away from the "good idea" that got it this far. You can't ride out a storm (no pun intended) when it turns out to be something more akin to a biblical flood.
In reality, the same thing is true for almost every business right now. There's a good chance that the way you worked before the pandemic won't be the same after. Your job is to figure out how to best position yourself for whatever comes next--and that may mean making a big move. The future of your idea may depend on it.