What Uber did Right

(Updated for 2019.)

??? On Tuesday 8 May 2019, UBER-drivers and LYFT-drivers in Chicago and other cities in the USA and England went on strike. We would ALL benefit from supporting ALL sides of the success equation. Drivers are key to that equation. Drivers are key to the human experience for UBER and LYFT and for us riders who depend on their good service. And are we not champions of “user-centric” design in the Design Industry and the industries and communities of users we support? Support Chicago drivers. ???

But in order to lend support we should understand why and how every side achieves success. The following is my account of what made UBER successful.

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It’s still the real problem for fintech. Notice I use the word “for” instead of “with” in the title of this post. This is about the real problem for, not with, FinTech. And I use Daniel McAuley’s excellent definition of FinTech (read it, it is useful and informative) as not a technology but an industry. FinTech being, to quote: “an economic industry composed of companies that use technology to make financial systems more efficient.”

And it’s in that reference to “efficiency” that the real problem for, not with, FinTech, is to be found.

I still believe that UBER made the most amazing fintech innovation in recent memory.

Now, UBER is in the transportation business. But UBER used technology to solve a user experience problem caused by an extremely inefficient application of a financial system within a transportation system. UBER did several interesting things. But let’s concentrate on just this one. UBER integrated PAYPAL fintech not to make the payment part of the taxi experience better, nicer or more efficient: it used it to eradicate payment altogether from the experience. And this was brilliant.

Of course, you do pay. But payment is not part of the UBER transportation experience. It is pre-arranged. Amazingly: it is not anywhere in the experience but is also not ephemeral, since if you want to refer to the payment you can later do so with full confidence of where to do so.

A rare example of ‘have your cake and eat it, too.’

It’s so brilliant and simple a move that talking or writing about it cannot be done as efficiently and simply. It was that smart an innovation.

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When we take a taxi all we want is to be transported from point A to point B.

And when we arrive at point B, it is the worst possible time and place to have to change modes from transportation to finance: or payment. Imagine if you had to pay for your airplane ticket when you arrived at your destination, before or while deplaning. Of course it sounds like a joke, or a nightmare. (And it’s not just because of the number of passengers.)

But back to ground transportation, when you arrive at the airport, for example, you really just want to get out of your taxi and proceed to your gate, &c. Not stop and see how the “financial system infrastructure” will work out for you and your taxi driver that day. (Usually slowly and annoyingly, if at all.) The best answer, the one UBER carefully constructed, was not to make payment more efficient, but to make payment invisible while at the same time more carefully recorded. UBER did not bother adding a nicely designed Point of Payment (PoP) inside the car, as others have done in NYC, for example. UBER completely removed the payment experience from the transportation experience.

Both you —the direct transportation user— and the UBER driver —the direct transportation provider— had to do some fintech work beforehand. But done in a place and time more amenable to financial tasks. Also, UBER+PAYPAL had really done their due diligence about that portion. (It is more than those two firms, yes, but you get my meaning, right? The supply chain and operations part of the experience is completely systematized and systematized in the right new way, NOT the wrong old way of ye Old Banks and ye Old Financial System.)

It is also worth noting how none of the parts of the experience are extraordinary; none would by themselves be blogosphere fodder today or at the time. So UBER’s notable and noticeable innovation was very much in service design, not technology.

Simply: the layering of one knock-out piece of obvious, explicit Value within many layers of subtle but delicious Hospitality cues.

Of course, the technological maturity of the seemingly ho-hum components was essential to the success of the layer cake. (Apple is another company often accused of, or given credit for, elegantly pulling off this trick.)

Before UBER, all the inefficiency of the fintech segment of the taxi transportation experience was made even more patently annoying by the ephemeral nature of all your wasted time and frustration. The half-done receipts or lost ones, the anonymity of the financial entities in the ludicrous “statements” provided by our banks and credit card companies “that have been around forever but never solved these issues,” &c&c&c. Why, you wonder, did they not care to do the obvious?

“Because they already had got our money—so they did not care.”

What made UBER so amazing in San Francisco was that real layer cake of felicitous efficiencies that made it a deserved topic of conversation. In San Francisco, due to complex historical and political conditions, hailing a cab was often close to an impossible task. Always frustrating. Often unsuccessful. Demand far out-stripped supply. So just solving that one inefficiency was word-of-mouth-worthy. But UBER added other efficiencies… It really added up. Added up to conveniences that turned into value.

Demand far out-stripped supply.

Convenience that turns into value. Efficiency that feels miraculous. A “like” that for a time resembles a “love.” UBER somehow managed that. (What has happened at and with UBER since we shall leave for another post.)

So the real problem for —not with— FinTech is where to find or create similarly felicitous applications of great experience design to plain systemic efficiency. Otherwise FinTech may remain a business-to-business play, regularly and confusingly expressing itself through business-to-consumer platitudes. How do we bring the right people together? OR. Who can bring the right people together?

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Every day we all have a set of goals to accomplish. So we move through space in what I have called “The Daily Landscape?” since my days at IDEO. Our Daily Landscape Trek? (no relation to Star Trek? intended) takes us through a number of places. The inside of a bus, train, aeroplane, horse, wagon or car, even the saddle of a bicycle, motorcycle, or the board of a skateboard or scooter, or the wheels of rollerskates, I count as “places.” (Or “environments” in industry parlance—all architectural in a particular way, just like a house, boat, church or hotel room.) They are all different modes of transportation. You may think it’s odd to consider a snowboard or skis “a place” but if you think about it, it will suddenly make perfect sense. Think of the phrase “getting into my shoes” or “on those high heels,” &c, and you will begin to understand.

As we move through those places in our daily Daily Landscape Trek we interact with stories, actions and tools to pursue our goals. (As well as other people and other living beings, consciously or not.)

If we take the fitness-scape of the overall environment into account as significantly affecting our ability to pursue our goals, we can see how we need to match our goals and values to the multitudinous goals and values of that fitness-scape.

Brands such as UBER or LYFT or Didi Chuxing (滴滴出行) have goals. Different user populations may have coordinated or antagonistic goals. Do they match our own? As businesspeople? As planners? As drivers? As riders? As __________?

When we use the phrase “user-centric” we often forget that there is rarely a single intimate end-user in that center. Almost always there will several of what I call “User Populations” (even if often momentarily a set of 1, as in the set of 1 uber-driver and the set of 1-to-5 uber-riders. I’ve never seen more than that but I imagine UBER has larger vehicles.)

The reality is that in the Broken Taxi System story which UBER tackled, there were at least 8 direct ultimate end-users, perhaps more. Some of those “users” are the same person performing different roles. Taxi drivers often had to compete with riders to be the Route Masters inside the car. The taxi driver had to become a cashier and IT expert at the end of your ride. (Just when it would hurt the most.)

What is the true difference between “taking an uber” and “taking a taxi?” There is a big difference and it’s vital to our understanding of the experience, business and operations models that UBER and its ilk around the world have created. (Not all equally.) UBER created a service experience that truly made the words “taxi” and “uber” diametrical opposites, both as nouns and as verbs.

It was —and is— a new way of talking about this type of personal transportation...

UBER focused the experience of hailing and riding.

In UBER’s service experience efficiency, efficaciousness, usefulness and usability aligned perfectly to create delight. Their business model implementation through their operation model used supply and demand to create value communicated through their experience model.

(IMPORTANT! Value for whom and in what quantities and manner? There is, let us not forget, the issue of what UBER does and refuses to do for its employees, the drivers. If you do not think uber-drivers are employees of UBER, ask yourself this question: Who makes the lion’s share of the money in this business model? UBER does. NOT the uber-drivers. Therefore, you understand what the CAPITAL+LABOR equation is here. It does not matter how strongly UBER denies this. Follow the numbers. I believe so not because I am a “socialist” or any other moniker you may care to label me with, but because —disclosure, disclosure— I AM A CAPITALIST. Follow the money, the truth is almost always at its receiving end.)

But the above is separate from the things that UBER actually achieved. And for which it still deserves the credit. And we should learn from what made that successful. And apply them better —and more justly— than UBER does.

Regulators and planners should also heed these lessons. They rarely have in the past. They still rarely do in the present. Maybe they will do so in the coming months?

The City of San Francisco allowed its Taxi Industry to operate far outside the pale of public service for over 30 years without doing a thing for drivers or riders in our city. They, our belovéd city, still do not get it.

But. Let’s try saying it:

“UBER used fintech to remove the FinTech part of their experience.”

And that was only the beginning.

— by Hector Moll-Carrillo / copyright ? 2016, 2019

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An update responding to some great direct direct comments…

ONE. UBER was able to provide comparative value. A taxi ride within a reasonable amount of time versus none. I am not endorsing their model, just commenting on it.

TWO. UBER eliminated a financial transaction bottleneck from what needed to be a pure transportation service experience. Period. But it was an elegant application of fintech that allowed it.

THREE. UBER made a business-to-business fintech deal (UBER+PAYPAL) that cleared up (purified) its business-to-consumer offering: rider+UBER+uber-driver = point A to point B transportation service.

(There is, let us not forget, the issue of what UBER does and refuses to do for its employees, the drivers. If you do not think uber-drivers are employees of UBER, ask yourself this question: Who makes the lion’s share of the money in this business model? UBER does. NOT the uber-drivers. Therefore, you understand what the CAPITAL+LABOR equation is here. It does not matter how strongly UBER denies this. Follow the numbers. I believe so not because I am a “socialist” or any other moniker you may care to grant me but because —disclosure— I AM A CAPITALIST. Follow the money, the truth is almost always at its receiving end.)

FOUR. Next time you are paying at Whole Foods or Safeway, consider this. The relationship at that point is between you and the cashier, whose main job is to tally your bill and accept payment. Why is bagging your groceries considered an accessory? (Perhaps this needs to be upended!) It’s because you are transitioning from a shopping experience to an inventory control experience. You have been handed from Whole Foods’ marketing and merchandising departments over to its inventory control and accounting departments. Those departments have very different concerns regarding you. Sounds like the end of most taxi rides before UBER…?

FIVE. What would happen to our grocery buying experience if someone used fintech to remove FinTech from it?

SIX. Perhaps the person helping you bag your groceries should become the real relationship pivot, instead of the cashier.

SEVEN. And what about self-checkout? Safeway does have “self-checkout” already in some locations. But notice that UBER did not implement “self-checkout.” It focused the people in the experience on what the experience was really about. And that was not payment.

EIGHT. Most “self-checkout” experiences merely force shopping-customers into acting as unpaid inventory-control employees. UNPAID. (What a way to send you off, dear customer.) So your “grocery-shopping experience” is still being turned into an “inventory control” experience. (Right at the end. Where and when there is every chance to erase the satisfaction and good-feeling previously created by your employees, dear Safeway.) When I ask people why they are in the “self-checkout line” the answers are always in the “lesser of two evils” territory.

NINE. So, Safeway feels compelled to add staff to “help” customers with “self-checkout.” (There go somebody’s gains in efficiency.) But what staff does to help (through no fault of their own) is attempt to train customers in using its inventory control system. Does that make any sense? “Efficiency” at the service of...

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