Uber’s Colossal, But There’s Still Room for Other Ride Apps


Every startup these days would like to position itself as the next Uber. But for other ride-sharing and car-hailing startups, it seems the trick to getting ahead is being able to prove that you’re anything but.


The fact is, the argument about who’s gunning for Uber has been had, and at this point, there’s no denying that with its meteoric growth and (some would say) insane amount of funding, Uber has taken the lion’s share of the on-demand transportation space. It’s unlikely any company can overtake that lead. So the question to be asking now is not who will beat Uber. It’s whether there’s enough space untouched by Uber to allow other—albeit smaller—players to carve out niche markets of their own.


In a way, Uber may have actually smoothed the path for competitors by defining the broader category in the first place, says Thilo Koslowski, an automotive industry analyst at Gartner. In other words, instead of having to explain their services from scratch, newer companies can just say, “We’re like Uber, but….”


“The challenge for any service in this space is to create a unique value proposition that isn’t ‘owned’ by another company yet,” Koslowski says.


That may be why lately, it seems other ride-related startups have given up on trying to race Uber to the top. Instead, they’re starting to seed the fertile pastures that Uber overlooked along the fast lane to growth. The most recent example is Ride, a startup that launched this week with an app that helps co-workers coordinate carpools to work and defray the cost of commuting. It distances itself from Uber by focusing on commuting and by marketing its service directly to employers instead of consumers.


More Than One Winner


But what may be most interesting about Ride is the fact that it was co-founded by Uber’s founding chief technology officer, Oscar Salazar, and is owned by TPG Growth, an early investor in Uber. This move suggests that although many people believe ride-sharing is a zero sum game, there are plenty of others with deep knowledge of Uber’s business who are willing to bet that it’s not.


“We’ve started a complimentary service, rather than a competitor,” Salazar says, of Uber. “They could do a lot of things, but this is not their focus.”


That’s lucky for Ride, since the commuting market is, itself, a rather large one, with the Census Bureau estimating that 8.1 percent of the American population commutes an hour or more to work everyday. And while Uber has taken hold with the business travel set, it would be a completely unaffordable option for daily commuters. Ride seeks to fill in that gap, helping users save what the company claims is an average of 40 percent on their commuting costs.


“Most of the competitors are in the dispatching space. They change the way you call a taxi or a town car, which is wonderful, but those things happen in large metro markets where black Lincoln towncars and taxis exist,” says Ann Fandozzi, CEO of Ride. “The reason we consider ourselves complimentary is we’re a service for people where that option just doesn’t exist.”


Room for Difference


Ride isn’t the only company trying to compete by differentiating itself from Uber. There’s also FlyWheel, an app that helps connect passengers with traditional taxis, which has taken to marketing itself as the “non-asshole” alternative to Uber. That’s partly because it has sworn off surge pricing and artly because it works with the existing taxi industry, instead of against it.


And then, of course, there’s Lyft, often considered Uber’s most direct competitor. (Its public scuffles with the car-hailing giant are so well-known that there’s now an entire website dedicated to documenting them.) But even Lyft, which still has substantial traction in the industry, has begun to emphasize the parts of its business that are least like Uber, which is to say, the softer side of Lyft.


“We attract the kind of driver who is someone you want to talk to and with whom you’d want to sit in the front seat,” says Lyft’s chief marketing officer Kira Wampler. “These are the kind of drivers for whom this is not being about someone’s chauffeur.”


Lately, that kind of touchy-feely positioning has been at the core of the company’s new products, like Lyft Line, its carpooling service, and Lyft Profiles, which are intended to help drivers and riders get to know each other better. It’s branding, of course, and yet, given Uber’s not-so-friendly reputation, a little branding can go a long way toward for those seeking a less utilitarian experience. “Think about flying between San Francisco and New York,” Wampler offers. “There are many choices, but a lot of us prefer to fly Virgin.”


According to Rajeev Chand, managing director and head of research at Rutberg & Co, there is ample evidence that smaller competitors can thrive even after a market leader has been defined. He believes that’s the likely outcome for the ride-app space. “There will be one major winner which is clear now is Uber, but I think there will be other winners, too,” he says. The challenge for these other players is finding a niche that matters to consumers when Uber’s existing service already works for so many applications.


“I do think it’s possible for some of these apps to survive, but it’s also easy to see there’s going to be a shakeout,” he says. “Then, the question will be: is the psychology of the niche segment different enough from the main car-sharing service that a niche is warranted?”



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