Can Lyft capitalise on Uber’s decline?
The only problem with being at the top is that it’s a very, very long way down. The latest behemoth company to experience this is Uber, the transportation giant with unwavering global ambition. Whilst the company has undoubtedly been successful, a string of controversies has seriously damaged their image. This week, things took a turn for the worse as five of Uber’s main VC firm investors demanded that co-founder and CEO Travis Kalanick hand in his resignation. As Uber’s position becomes more uncertain, their competitors are rallying to exploit a potential market opening. Can Uber recover before they lose out to challengers, and how will the rise of new transportation giants disrupt the industry?
Putting the brakes on Uber’s expansion
As well as battling with its own major investors, Uber has been criticised as a discriminatory and unfair corporation. Employees have levied claims of sexual harassment, and board member David Bonderman resigned after making a sexist comment whilst at a meeting about sexism. Ironic. On top of that, the company caught up in an ongoing legal dispute with Google’s self driving car division, Waymo, over intellectual property. Kalanick then took a seat on Trump’s economic advisory board, to the outrage of many. None of this has particularly strengthened the business – and that’s without going into the debate over the payment of drivers. As Uber grapples with these problems, their competitors are watching with avid interest. Perhaps the biggest threat comes from Lyft, a Californian transportation network company founded in 2012. After the #deleteuber hashtag, a direct public reaction to Kalanick’s involvement with the Trump administration, Lyft saw a 60 per cent increase in app activation. This month, Lyft entered a $25 million deal with Jaguar Land Rover to work on self drive technology. Earlier this year, the company launched in 130 new cities and has influential partners in south and east Asia. So, how will the rise of other competitors change ride hailing and sharing?
Disruption in transportation. . . again
Not a day goes by where something doesn’t happen to shake up the transportation industry. If it’s not a cutting edge, technological development, then it’s the rise (or fall) of a powerful company. Kalanick’s resignation isn’t particularly surprising, given the number of disputes Uber has faced in the last few years. A leadership switch up could be exactly what Uber needs to come back from its indiscretions, but it could equally accelerate the company’s decline. If the latter becomes a reality, it looks like Lyft will be there to fill the slot. The startup is particularly interested in autonomous vehicles, so their success would accelerate AV adoption. Lyft are by no means the only promising competitor, either. UK based MyTaxi claims to be Europe’s largest taxi app, and could potentially take on the global market. There’s also Israeli startup Gett which, unlike both Lyft and Uber, is compatible with licensed taxi drivers and offers flat pricing. Uber’s retreat could signal huge opportunities for the expansion of these companies, as well as diversifying the market and continuing the decline of car ownership. This, of course, is assuming that Uber can’t come back from the problems they currently face. Perhaps finding a new CEO is a good start, and could help the company to distance itself from the misdemeanours committed under previous leadership.
In a matter of years, Uber has risen to dominate automotive travel to the point that the company is almost an institution. Unfortunately for them, being centre stage has highlighted their mistakes. As the corporation struggles to retain its image and influence, competitors are gearing up to exploit the situation. Lyft is certainly a convincing alternative. However, there’s so much riding on the company that even their demanding investors are unlikely to abandon them. Travis Kalanick’s influence isn’t gone for good, either. It’s likely that he’ll continue to continue to sit on the board of directors. Even so, his forced resignation is a stark warning to any business – ambition is all well and good, but being too aggressive is a dangerous game to play.
Is Uber damaged beyond repair? Where do you draw the line between healthy ambition and damaging aggression in business? Share your thoughts and opinions.