Quick Thoughts: Uber competitive practices

I’ve been meaning to try something different on here for a while now. Most of my posts are pretty long and in-depth, but every now and then I have a thought that’s too long to express clearly on Twitter and too short for an in-depth post. Those tend to either go unpublished or crammed awkwardly into a tweet (some of which do go on to become blog posts later). So today’s post is the first in what I think will be a regular series of what I’m calling Quick Thoughts.

Uber is in the news today for some of its more extreme competitive practices. Casey Newton at the Verge published a story, which got a prebuttal from Uber once they knew the story was coming. I encourage you to read both. Most people seem inclined to believe Newton’s piece, though Uber denies some elements of it while almost boasting about others.

Here’s the thing, though: what I think Uber is suffering from here is not so much the specific reporting as the fact that its previous behavior has made it so believable. There are two basic ways to compete in a market: focus on creating the best possible products and promoting them effectively; or spend most of your time focused on your competitors, and tearing them down. Both are common in the consumer technology market, and if we’re honest most companies engage in both to some extent, though the balance between the two varies widely.

But my point here is this: when your whole philosophy is beating the competition at all costs rather than building the best possible product, you create a culture in which employees will always be tempted to cross the line between aggressive and immoral, and between immoral and illegal.

I’ve seen this in lots of environments, perhaps most especially in enterprise software sales.¬†This descent into inappropriate conduct is especially likely if you’re competing in a category where you have relatively little differentiation and a winner-take-all market structure. Uber and Lyft are essentially offering the same product, and trying to use the same basic assets (car owners wanting to earn a little more money) to do it. Potential Uber drivers are also potential Lyft drivers, and vice versa, and the overall supply is limited. Both services benefit from having the largest possible number of drivers on their platform and the smallest possible number on the other platform. It’s a zero-sum game to a great extent, and neither company has significant advantages over the other from a product perspective.

I’ve been a somewhat regular Uber user when I travel on business, and I’ve found the service enormously useful. I like what Uber and Lyft are doing to the transport business. But I really dislike the way they’re choosing to compete, because it leads to the kind of shady business practices Casey Newton’s report highlighted today. Whether or not you believe the individual allegations (I’m inclined to believe them), none of us should be all that happy about the basis on which these two companies are competing. The problem is that it makes for great theater, and much of the tech crowd seems more prone to pull out the popcorn and watch rather than doing anything about it.

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