How Uber turbo-charged the

sharing economy business model

A comparison to Zipcar shows the large and subtle
differences that you can learn from
 Zipcar Uber

On-demand (=pay-per-use) Sharing economy based

business model business model
 Zipcar Uber

Zipcar uses an on-demand Uber also provides an on-demand

business model
It owns assets (=cars) that it
rents out as demanded by
their customers
service
But the more important aspect is that
it utilises already existing assets that
are owned by others
This is a characteristic of the sharing
economy and Uber combines this with
the benefits of platform businesses
Uber does not embody the sprit of the
sharing economy

Platform companies and sharing economy business can learn from Uber.
A comparison with Zipcar (a successful car sharing company) shows the
big an subtle differences that anyone can learn from
 Photo credit: http://www.freestockphotos.name/
Economic benefits of not owning a car:
• Average cost of ownership of a car per year in US: $8,558 ($23 / day)
• Cars are utilised only 5% of the time (72 mins / day)
• Economic benefit for consumer of $6.8b (in the US) in 2015 from Uber alone

Image credit: https://digitalsynopsis.com/wp-content/uploads/2014/06/supercar-wallpapers-bugatti-3.jpg

 Value propositions are not the same but similar

Using a car from 1 hour

Zipcar
(minimum) up to 1 day

Get picked up and

Uber
dropped off

The value proposition is different but partly

overlapping (on short distance, short term usage)
Zipcar

Zipcar avoids having to check the car after each ride and
pushes some other costs onto the user (avoiding
operational costs that a classic car rental incurs)
 But Uber pushes all operational, maintenance,
depreciation & capital costs to the driver

Uber Zipcar

Keeping clean +
Driver User
fuelling up

Fuel costs Driver Zipcar

Parking
Driver Zipcar
(at car’s home base)

Maintenance costs Driver Zipcar

Depreciation Driver Zipcar

Purchase costs + cost

Driver Zipcar
of capital
Core transaction costs
Uber Zipcar
(server, app)

Don't miss the forrest for the trees:

Uber’s massive growth would never be possible without this
 Distribution model

Zipcars located in Lower Uber cars near my pick-

Manhattan where I have to pick up location (w/ real-time
them up myself updates) come to me
 Safety, insurance, liability

Uber

Ensure safety

Provide appropriate
insurance
 Use technology to
further improve safety

Uber
https://newsroom.uber.com/feedback-is-a-2-way-street/

P2P platforms: manage

Real-time feedback about drivers means Uber can correct
for issues big and small – while ensuring that only the best “human interaction risks”
drivers stay on the road. We take this feedback seriously –
depending on the circumstances, rider feedback may
lead to deactivating a partner from the system or serve as
validation that the driver is providing great service.

An Uber trip should be a good experience for drivers too –

drivers shouldn’t have to deal with aggressive, violent, or
disrespectful riders. If a rider exhibits disrespectful,
threatening, or unsafe behavior, they, too, may no longer
be able to use the service.

Have partner drivers been deactivated for consistently poor

ratings? You bet. Have riders been given a temporary
cooling off period or barred from using the app for
inappropriate or unsafe behavior? Yes. The system works to
make sure the most respectful riders and drivers are using
Uber. For example, in San Francisco only 1% of trips have a
low rating of 1 or 2 given to a rider or a driver.

Also check out:

https://www.uber.com/en-AU/legal/community-guidelines/us-en/
 Uber

Uber strives to add value to the community

(possibly to improve their image)
 Build and buy trust

http://www.nielsen.com/au/en/insights/reports/2015/global-trust-in-advertising-2015.html

People trust brands they know

Sharing economy companies can use their capex and revenues to
build a brand and acquire customers at turbo pace
Zipcar

Transaction cost = $0
(well, not quite but much leaner than classic car rental)
Uber

Offer convenience

Remove barriers:
register to first ride ~10 mins
Zipcar
 Measure customer experience
and improve

Uber Puts traditional taxis

experience-wise on the backseat
Sharing economy ideals do not
really align with hyper-growth
and profit-seeking.

As sharing economy business,

understand your impacts on:
- Incumbent firms & workforces
- Environment
- Community
- Public opinion
- Laws

Source: Bloomberg
 Important elements of
sharing economy based business models
1. Economic benefits
2. Asset ownership model
3. Demand-vs-supply management (e.g. surge pricing, market place)
4. Intermediated audiences (peer-to-peer, business-to-business,
business-to-crowd)
5. Self-regulating elements (driver/rider rating)
6. Predominantly mission or profit driven (alignment with user benefits)
7. Governance model (corporate or a collaboratively governed)
8. Asset management model (operational, maintenance costs)
9. Product/service distribution model
10. Transaction costs
11. Customer experience & quality management approach
12. Localisation
13. Footprint/impact on existing businesses, workforces, environmental
impacts, legal risks 
14. Growth, funding and critical mass
 Sharing economy based
On-demand business model
business model

Majority of capital to be invested Investment in fleet = $0

(except some self-driving test vehicles)
in fleet acquisition

Opex goes into operating & Much lower operational costs

maintaining fleet, depreciation, …
More capital available to invest
in turbo growth

Zipcar has a fleet of Uber commands a fleet of

12,000 cars 1,500,000 cars
(despite being around a good 10
years longer than Uber)

Underpins the potential of sharing economy

based business models, but …
Conclusion
• Many of the early sharing economy based businesses
(2009-) have failed for various reasons …

• They didn't get some part of the business model right,

e.g. sufficient benefits for the user, trust, value
proposition, customer experience, the platform …

• or it was not good enough without smartphones and

dedicated apps to get to a critical mass …

• Like the dot-com boom-bust cycle, many of first wave

sharing economy based businesses have failed, but there
are massive opportunities waiting for those to get it right