Uber isn’t in the taxi business. It’s not really in the dispatch business, or even in the tech business. It’s in the “trust” business. That is, it’s in the business of building trust between strangers. And if it can’t figure out how to do that, it will fail.
The key to Uber’s success is the company’s ability to get strangers to trust each other.
Uber’s “UberX” program hit a horrifying bump back in December of 2014 when one of its drivers in Delhi allegedly raped a female passenger. The incident earned the company a complete ban throughout the Delhi region, and is sent shockwaves through a much broader global community of users and potential users of UberX.
For all its success, Uber has had plenty of troubles. It’s been accused of anti-competitive behaviors. It’s been accused of privacy violations. Some of these problems can be overcome through smarter use of technology — and after all, that’s what Uber is supposed to be good at. But it’s important to see that the key to Uber’s success isn’t its mobile app, which is pretty easy to replicate. The key is the company’s ability to get strangers to trust each other. If Uber wants to keep its recent$40 billion valuation, it’s going to have to figure that out.
This is because commerce — all commerce — relies upon trust. When I hop into a taxi, I’m not just buying a ride to a destination. I’m engaging in an exchange of trust. Think about it: I’m getting into a car with a stranger. And the driver is letting a stranger into his car. But the branding of the cab company, plus the municipal licensing, give me as passenger some assurance that a) I’m going to get where I ask to go; b) I’ll arrive there alive; and c) I’ll be given the correct change even if I fail to count it. We all take this for granted. Uber got big by leveraging that preexisting trust that most of us have in taxis. And what it added was its third-party geographical and financial tracking, which allows us to trust not just branded taxi drivers, but “amateur” UberX drivers too. I can, with a relatively high degree of personal and financial safety, climb into the unmarked car of an amateur driver, and both of us can be assured that the financial end of the transaction will be smooth, all because Uber’s app makes it so.
The key question, then, is whether Uber will be able to sustain that trust. I should add that it’s not just about customers. Trust has to be built and maintained between the company and its drivers, too. I spoke to one Uber driver recently who said that some drivers have left Uber because of how the company has treated them. He suggested such drivers feel that in introducing UberX, the company has effectively turned its back on the professional drivers that helped build the brand. Maybe the company doesn’t care about the professional drivers — maybe its long game lies with UberX. But if informed and experienced professional drivers don’t trust Uber, it’s hard to see how amateurs are going to do so.
So, Uber needs two things in order to build and maintain trust. First, it needs to make smarter use of the technology at its fingertips. Some of that is already in place — simple, trustworthy financial transactions are clearly a key component of the company’s success to date. But it also needs to assure users that, for example, the company can be trusted with the vast amounts of data it gathers on their travel behavior. Finally, the company needs not just the technical infrastructure of trust; it needs to engage in the behavior that will signal to users that the company is here to stay, here to be trusted, here to be a reliable and trustworthy service provider for the long run.
This article is based on a blog post that originally appeared December 10, 2014, on canadianbusiness.com.
Chris MacDonald is with the Ted Rogers School of Management, Ryerson University, Toronto, Canada. Email: email@example.com.