Uber knows you more

November 14, 2016 | #ReIgnite

I have always been fascinated by how certain seemingly simple concepts have the capacity to morph into much larger and overtly sustainable ideas, and possibly go on from there to form global multibillion organizations or entities.

Consider Uber. Hailing a cab in New York city in my experience has never been a very difficult task, especially the yellow ones- you put your hands up in New York or whistle, or just shout “Cab”. But it was just as convenient to call a cab service from home and request a pickup to a particular destination and be advised of the charges in advance.

So who needs an app to do that? Many would-be forgiven to have thought it was a useless idea, and I would bet a decent sum that the earliest uptakes were on account of a fad or the next cool thing rather than the absolute need for it. So the story of Uber becoming a multi-billion dollar travels company that owns no vehicle and hires no drivers is an interesting one. Interestingly, that is the story of the times we live in, where some of the largest companies aren’t the ones that explore oil or mine precious metals or manufacture vehicles or aeroplanes, but rather companies that provide a service to a large number of customers who may not initially be aware of the need for such a service, but are nonetheless able and willing to pay for it. More on that in another post.

So Uber started out as a luxury taxi service on a budget but has since morphed into a company that trades in/on data, much like Netflix. The New York taxis and probably taxis the world over gained reputation for all the work they did moving you from point A to B. Oh, and the occasional therapy sessions where you feel encouraged to unburden and come clean. Add to that the fact that they knew where whatever was going down. Uber took all that for a spin by starting out as an app service with a few data points as they needed – a username and password tagged to your name, age and credit card details for payment, a mobile phone number, and physical address.

But with each ride, they were able to capture additional details such as places you frequent and times you travel and over time built a large and valuable data-set about each registered customer. All of that information pretty much captured in real-time forms an amazing “God view” of each customer and helps Uber tailor services more precisely, for the benefit of its customers.

In many ways, Uber is all about data. But who is the customer here?

Considering that Uber does not own the vehicles its provisions, I’d posit that there are 2 classes of customers. These would be, first, Uber’s driver-partners, who own and/or drive the vehicles that Uber provisions to the other class of customers on its platform – and the passengers – who use the platform and services offered on there to address their travel requirements. So Uber is able to serve each class of customers optimally using data that it collects prior to, following and at several different parts of each journey implicitly from the mobile devices and from many other agents such as geo-spatial maps that are used for route planning.   An interesting thought – the Uber app works pretty much like a chip and is able to tell where you are, how fast you’re going, how high above sea level you’re at, and pretty much any other data point Uber might be interested in – there’s enough out there about what excess of permissions the app requests to serve your travel requirements only. That’s an altogether different matter though, something my friends in privacy and security bemoan regularly about Uber and several other apps.

And how does Uber use this data? Some see Uber as more of a service-driven company whose services will always revolve around what you need at the moment rather than what you might need in the future. Uber goes on to enrich its business in a variety of ways using this data. According to Ron Linton, Chairman of the D.C. Taxicab Commission “The greater part of Uber’s business plan is that they’re going to amass the greatest database of consumer habits that the world has ever seen.”

Point is – Uber’s valuation at over $18 billion dollars isn’t based on the revolutionary value of its transport business but on the sheer size of data that it collects and the potentially landslide profit that it can generate from the use and/or commercialization of that data over time, mainly through targeted advertising like Facebook or may other possible uses.

So Uber knows you, probably more than any other service in the travels space. So does Facebook, but I guess you always knew that. And so does Netflix – by capturing what you watch, when you watch, how many pauses to determine your attention and distraction levels, how many shows you resume and many other details that help it determine what shows to invest in. The organizations of this age are focused on collecting, enriching and manipulating this data in order to monetize it by tailoring their services, and also on-selling that value to their customers as Facebook does with targeted advertising.

The age of data is largely accepted as the fourth industrial revolution following the ages of mechanical production, mass production and computers and the internet. Organizations, be they private firms and public agencies everywhere need to clearly understand and optimize their data collection models at various customer touchpoints. They also need to develop models for storing, manipulating and enriching this data for intrinsic commercial or developmental value. I would posit that in the same way the organizations that made glory days from the three previous industrial revolutions dwarfed and drowned those who did not, the same would apply to organizations that arrive late to the data play or completely ignore it. I also believe that the rate of change will happen faster and more significantly than any of the previous.

In this age, data may be the death of us. But nations and organizations will rise and fall on data.

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Jerry Adaji
Jerry Adaji

Interesting read…

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