Conference Notebook: Taking Uber Beyond Taxis, Kittens and Ice Cream
Don’t worry OpenTable. Uber isn’t going to start booking tables — at least, not yet. During an interview at the Business Insider Ignition Conference in New York on Thursday, the company’s chief executive, Travis Kalanick, ruled out markets like hotels and restaurant reservations that do not involve delivery as potential areas of expansion for the on-demand service while hinting at a future beyond the taxi industry.
The transportation service has exploded over the past year, expanding from 15 to 20 markets in the spring of 2012 to 55 cities today. While the company has added taxis and lower-end vehicles to its original black car service, there’s been little movement in terms of expanding beyond the transportation vertical. Maybe the most instructive moves have come from a series of marketing stunts, in which the startup allowed users to order products, in one case ice cream and another kittens, to be delivered directly to an office or home.
“We look at the company’s position, or the high level who are we, as the cross between lifestyle and logistics. Lifestyle is ‘Give me what I want and give it to me right now,’” said Kalanick. “But it’s bringing that to the physical world — the logistics — that makes Uber unique.”
Uber doesn’t plan to peddle kittens or ice cream full-time, but Kalanick says the stunts underline the platform’s flexibility. “If there’s always a car that’s five minutes away from you, we can make sure that a lot of things are five minutes away from you,” said Kalanick. “We’re thinking about whether we should experimenting in other areas in the long form. If you have this logistics network setup, you should do something with it,” he added. However, there’s an added challenge in selling products versus a services on-demand, as Uber found with both the ice cream and kitten experiments: retail requires a supply chain, a requirement that simply does not exist with most service businesses.
Uber is one of a number of startups that have popped up in recent years thanks to mobile, using the device’s capabilities to upend existing industries. Mobile, as a whole, continues to grow at a staggering rate, and the companies, which build on it, have moved from disrupting music and gaming to logistics and now retail, according to Simon Khalaf, chief executive at mobile analytics firm Flurry.
“Software is eating the world, and mobile is eating software,”said Khalaf. And the overwhelming majority of that activity is happening in apps. According to data presented by Kalaf, 87% of mobile activity occurs in apps, a 7% jump since the company’s latest numbers released in April.
At the center of this growth, is Apple. The iPhone still lags the overall smartphone growth rate but much of the innovation down the road may center around software and services – an area where the company has struggled. It’s passbook initiative, which the company launched with the iPhone 5, and many viewed as its first foothold into mobile wallet sector, has soured, with only 37 apps built since its launch, according to Piper Jaffery analyst Gene Munster.
“We believe payments will be fundamental to the mobile experience and Apple needs to be there,” said Munster. “We do not think Apple will get into the payments market to create a business; they will want to get into it to create an experience.”
It’s unclear how Apple would implement a proximity payment product, but given the rapid investment in local payment technology over the past 18 months the infrastructure for digital payments offline continue to grow, reducing the barriers to entry. The inclusion of Bluetooth LE in the iPhone 5s opens a range of new capabilities related to transferring information — namely, financial information — easily between devices locally.
The Invisible Subsidy
Even as it is perhaps the most obvious victim of digital disruption, the media industry is still struggling to adapt. Certain verticals like business and finance have found a second wind, but other sectors like news and local content have struggled to find its footing as a standalone business.
“Local coverage, to a large extent, does not work as a separate business,” Jacob Weisberg, chairman & editor-in-chief at Slate Group, said during a panel on Tuesday. “It bundles things that made a lot of money with things that didn’t make a lot of money — it was an invisible subsidy.”
Local content plays have taken a hit recently, with a number of once-promising projects collapsing in recent months. Aol’s Patch project, for instance, has struggled to marry the costs of creating content with the value generated from advertisers.
“We’re breaking the intrinsic limitation with form,” said Weisberg, referring to some recent innovations in digital content. “But we’re still running against the economic limitations of categories that cannot stand on their own.”
Steven Jacobs is Street Fight’s deputy editor.