Uber Plans To Exit Self-Driving Business As It Readies for IPO; A Great Strategy

Uber Plans To Exit Self-Driving Business As It Readies for IPO; A Great Strategy

Uber plans to exit its self-driving business. That is a good thing because I do think the company should focus on controlling demand and not supply. Under digital aggregation, the companies that thrive and win are those that control demand and not necessarily supply.

 A group of investors including SoftBank are in talks with the ride-sharing company to buy a $1 billion stake (paywall) in its self-driving vehicle unit ahead of its public listing. (QZ Newsletter)

That is so because supply is largely unbounded via the web: simply, making more cars available in the market, is not what will win the future, but controlling those that will use the cars. Uber already has a first-mover advantage via its platform. I do think it should focus on expanding that over spending efforts to add more cars in the world. Cars will always be here, and self-driving will make them super-commoditized. The entities that will win the race of future vehicular mobility are those with platforms like Uber.

Uber is the category-king ride-hailing business in North America. It makes more money than all the competitors in North America combined. But Uber made a very poor strategic decision many years ago: getting into self-driving business.  Sure, Uber’s major cost element is drivers, and removing drivers will improve its margins. But that argument does not account for the fact that Uber is not the right company to bring to fruition the generation-shaping technology leap of autonomous vehicles. Simply, Uber is a cash-poor company to fund and develop self-driving cars.

The saving on labour is marginal for the risk and distraction making cars will bring to Uber operations. Simply, the firm should build the largest demand mobility operating system and then define protocols for car makers to be integrated into it. It is a great call [I wrote in Aug 2018 that Uber should exit self-driving business] that Uber is thinking along this line: the self-driving unit should go; Uber already has a great business model on its aggregation framework.

LinkedIn Comment on Feed

Sometimes when you have plenty money to play around with, you tend to forget what made you wealthy in the first place.

Uber became wealthy without owning any taxi, no significant asset base, and suddenly it felt that by investing and owning autonomous vehicles; its greatness could become grander…

We see same in many businesses: as a start-up, you tend to be nimble, agile, offering unrivalled customer experience. Then when the money becomes plenty, you get entangled and muddled in unnecessary and suffocating bureaucracies; making sure that all the good things you were known for would be forgotten.

Well, when you are poor, there is a tendency to appear humble and gentle, and when you suddenly become rich? You know how most end up misbehaving.

Maybe Uber still have time to rediscover its root, and then shun any form of ‘misbehaviour’ in its business model.

Uber Should Exit Self-Driving Business


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