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Podcast: Exponent Episode 029 – Drones

On the newest episode of Exponent, the podcast I co-host with James Allworth:

We discuss the problems with drones, how they could be used for terrorism, and how you balance upside and downside.

Links

  • Felix Salmon: Whiter Nanopublishing? – Medium
  • James Allworth: Thinking Twice About Drones – Stratechery (Members-only)
  • FBI: Man plotted to fly drone-like toy planes with bombs into school – CBS News
  • Warthox with Warpquad the fastest Quadrocopter in the Universe – YouTube
  • Mark Manson: Five Lessons from Five Years of Traveling the World – MarkManson.net

Listen to the episode here

Podcast Information: Feed | iTunes | SoundCloud | Twitter | Feedback

The State of Consumer Technology at the End of 2014

While the modern computing era in many respects began with the IBM System/360 mainframe and further expanded with the minicomputer, normal consumers didn’t start encountering computers until the personal computer. And, while mainframes are technically still around (while minicomputers are decidedly not), what is unique about the PC is that it is very much still a part of modern life.

In fact, one of the defining characteristics of the three major epochs of consumer computing – PC, Internet, and mobile – is that they have been largely complementary: we didn’t so much replace one form of computing for another insomuch as we added forms on top of each other.1 That is why, as I argued in Peak Google, many of the major tech companies of the last thirty years haven’t so much been disrupted as they have been eclipsed by new companies built during new epochs. All of the attention and relevance in tech especially is focused on emerging and growing companies, even as mature giants reap massive profits.

Every epoch has had four distinct arenas of competition that emerge in order:

  • The core technology
  • The operating system (i.e. the means by which the core technology is harnessed)
  • The killer use case for:
    • Work/Productivity
    • Communication

Certainly computers can be used for more than work/productivity or communication, but those two use cases are universal and lead to the biggest winners and most important companies.

Epoch One: The PC

The PC epoch began on August 12, 1981. That is the day the IBM Personal Computer was released with an Intel 8088 processor running Microsoft DOS 1.0. This open design was the core technology; the only proprietary IBM chip inside was the BIOS, which was soon reverse-engineered by Compaq who released the first “PC compatible” computer 17 months later.

The operating system for the PC has been owned by Microsoft from the beginning; the Mac has garnered a profitable share at times (including today), but Windows versus Mac wasn’t really a contest, because with DOS Microsoft had already won the game.

The killer application for work/productivity on the PC was the spreadsheet specifically, and front-office general-purpose apps broadly, including the word processor and presentation software. While it took much longer, Microsoft eventually came to dominate this space as well with the Office suite.

The killer communication application on the PC ended up being open as well: email. Still, even here the most dominant player, at least in the corporate space (which is what mattered), was Microsoft once again, with Exchange on Windows Server. For all you young folks that can’t understand why us old people looked at Microsoft for so long with a mix of reverence and fear, well, now you know: the company in the end owned nearly every component of the PC epoch, and for all their struggles to remain relevant, Microsoft has never struggled to be profitable.

Epoch Two: The Internet

The Internet epoch began 14 years after the PC epoch, nearly to the day, with the Netscape IPO on August 9, 1995. The core pieces of the Internet had been around for years, and the World Wide Web was developed by Tim Berners-Lee and formally announced in August 1991 (clearly August is an auspicious month), but it was the “Netscape Moment” that woke everyone up to the possibilities of the Internet.

Here the battle for the OS – also known as the browser – was much more fraught. Netscape jumped out to a huge lead, holding over 90 percent usage share, but Microsoft fought back by bundling Internet Explorer for free with Windows, and, truthfully, from Internet Explorer 3 on, by having a better product. Eventually it was Internet Explorer that had over 90 percent market share, and Microsoft felt they had won the Internet.

However, it ultimately turned out that the browser wasn’t what mattered. Instead, the Internet made information, which for so long had been a scarce resource, abundant. So abundant, in fact, that it seemed impossible to make sense of it all, at least until Google came along. Search was the killer work/productivity application on the Internet: now you could instantly find the answer to just about anything on Google, and the company rightly dominated the category.

The killer communications app took even longer to appear, but it solved a problem not dissimilar to Google: Facebook didn’t just let you communicate with people you knew, it came to understand how nearly every single person online was connected. And, as the number of people online continued to grow, so did Facebook. For all the misguided talk of Facebook being under threat, the reality is that its position as the default interconnect between every person on earth is as secure as ever.

Epoch Three: Mobile

I would like to choose Google’s acquisition of Android as the beginning of the mobile epoch, just because it happened in August (2005, in this case), but the date that matters is January 9, 2007, when Steve Jobs announced Apple’s iPhone. The core technology was the smartphone; while Nokia, Palm and Blackberry had been building precursors, it was the iPhone with its multitouch screen, unfettered Internet access, and (eventual) App Store that defined the category.

Unlike the previous two eras, there has not been a single winner when it comes to the OS. In contrast to the PC, Apple was first-to-market. More importantly, smartphone buyers and smartphone users are usually always the same person, which allows Apple to differentiate itself according to the user experience and thus retain the top slice of the market. Android, meanwhile, was not only the first credible alternative to iOS, but also free, making it the operating system of choice for desperate phone OEM’s everywhere, and over time, allowing the OS to gobble up the vast expanses of the market driven primarily by price.

Right now the operating system war is roughly at equilibrium; with the iPhone 6 it seems likely that Apple is stealing some share back from Android, particularly at the high end, but Android is simultaneously pushing down and out into the developed world, expanding both its share of the market and the market as a whole. What is more interesting is looking at who will emerge in the communications and work/productivity space.

The Mobile Work/Productivity Space

If the PC epoch was about being omnipotent – computers can do everything, better! – and the Internet epoch about being omniscient – with Google, you can know everything – mobile is about being omnipresent. By virtue of being, well, mobile, smartphones extend computing to every aspect of our daily lives. That is why the killer applications and dominant companies in the mobile work/productivity space will be defined by how they bridge the online and offline worlds.

Chief among these companies, at least in my opinion, is Uber: the long-term potential of the company is about being the physical network that connects everything. Their success, though, is by no means assured. Moreover, there are other interconnects, like Airbnb or Postmates or Instacart, which are targeting verticals instead of everything everywhere. These examples are all built on the “sharing” economy, the sheer logistics of which are only possible because of smartphones.

Other work/productivity applications may continue to emerge – cameras are very interesting here – but I suspect the dominant companies have already been started.

The Mobile Communications Space

I’ve already made my case for the winning communications application back in February (the day before Facebook acquired WhatsApp) in an article called Messaging: Mobile’s Killer App:

Still, it’s only recently that the killer app for this era, when the nodes of communication are smartphones, has become apparent, and it is messaging. While the home telephone enabled real-time communication, and the web passive communication, messaging enables constant communication. Conversations are never ending, and friends come and go at a pace dictated not by physicality, but rather by attention. And, given that we are all humans and crave human interaction and affection, we are more than happy to give massive amounts of attention to messaging, to those who matter most to us, and who are always there in our pockets and purses.

As I note in that article, messaging is compelling not just because it enables a new kind of communication, but also because it is a platform in and of itself. Already LINE and WeChat are leveraging that platform to push applications, particularly games, and making money on the back end. In the future, I expect both to be major channels for direct marketing between companies and consumers, and in fact WeChat has pushed even further in China, offering e-commerce, taxi services, and more all through their messaging app.

It seems likely that the messaging battle will result in multiple winners: LINE already owns Japan, Taiwan, and Thailand, and is competitive in Indonesia and (they claim) in Spain, while WeChat is dominant in China. WhatsApp has the largest share worldwide, but that product is the furthest from being a real platform and a real business.2 Messenger is clearly seeking to mimic LINE and WeChat, and is the likely winner in most Western countries.3

threeepochs

What’s Next

While the introduction of the iPhone seems like it was just yesterday (at least it does to me!), we are quickly approaching seven years – about the midway point of this epoch, if the PC and Internet are any indication.4 I sense, though, that we may be moving a bit more quickly: the work/productivity and communications applications have really come into focus this year, and while the battle to see what companies ride those applications to dominance will be interesting, it’s highly likely that the foundation is being laid for the core technology of the next epoch:

  • Wearables is a possibility, and it certainly seems that Apple is trying to accelerate the category with their ambitious Apple Watch rollout. However, no matter how good the Apple Watch is, I’m not sure it’s an epoch definer, especially if it cannot truly stand alone

  • Bitcoin is a definite possibility, particularly if there ends up being a “tick-tock” to epochs: device (PC), then protocol (Internet), device (smartphone), then protocol (Bitcoin). Blockstream, an attempt to create sidechains for non-monetary applications that run on top of Bitcoin, is particularly interesting in this regard5

  • Both of the mobile applications that I identified could be core technology for the next epoch: were Uber to become ubiquitous, could businesses be built on top of it? What would such an operating system look like? An out-there idea to be sure, but in the realm of possibility.

    More likely is that the messaging services become so dominant that they render the underlying mobile platform unimportant. This too would be similar to the effect of the Internet on the PC: the biggest reason the Mac was able to make a comeback from near death was because the Internet – and web apps – ran everywhere. It didn’t matter what browser6 or OS was on your actual PC. Similarly, if all essential apps and servers are routed through your messaging service, then the underlying OS – whether iOS or Android – is increasingly irrelevant. In fact, I strongly believe this is the future in China in particular, one more reason why Apple is investing so strongly in non-tangible qualities like fashion.

What seems clearer is that today’s giants will continue owning their various categories in the context of their various epochs, even as they fade to – or continue in – irrelevance.

  • Microsoft still sells a lot of Windows licenses, and businesses especially still rely on Office. Still, it’s striking how unimportant Microsoft’s defensive move into browsers ended up being, especially when you think about…

  • Google seems strong, but as I’ve written previously, there is a lot about the company that feels like Microsoft: just as Microsoft jumped into the next epoch at the OS level for defensive reasons, Google too jumped ahead, also at the OS level, and also for defensive reasons. “Free” figured prominently in both strategies, and in the long run, it’s worth considering the possibility that Google’s Android dominance will have as much long term value to the company as Microsoft’s dominance of browsers – i.e., not very much at all. Ultimately, I expect an increasing amount of Google’s energy to go towards taking away what Microsoft has left: Chromebooks versus Windows, and Google Apps versus Office

  • Facebook is in a unique position: while they were started as an Internet company, they were an exceptionally young one, and have clearly made a successful jump to mobile. Their position in mobile, though, while secure, is by no means dominant, and it’s interesting that they are in fact following the Microsoft/Google playbook: both the WhatsApp and Oculus acquisitions were about securing a stake in the OS for the next epoch

  • Apple, as always, is following the beat of their own vertically-aligned drummer. They have (usually) good-enough services that work only on their exceptional hardware, and an OS advantage that matters to some number of people. More important in mobile is their ecosystem advantage: Apple has the best customers, devices, and OS, and thus gets the best apps, even though Apple isn’t exactly a benevolent ecosystem manager (members-only). I expect the company’s mobile position to be secure – they’re not going anywhere – and if wearables is the next epoch they are the best positioned: personal is what Apple is best at, and that’s exactly what wearables are

  • Amazon’s most important role in these epochs is AWS, where they are locked in increasingly fierce competition with Microsoft and to a lesser extent Google for cloud dominance. It’s worth noting that Amazon is attacking this space from a very different direction: AWS is another low-margin product in a company built on low-margins, while Microsoft and Google have tons of cash from their high margin core but little experience competing on price

Do note, there are a lot of fascinating products and companies – Pinterest, Twitter, Instagram, even Xbox – that I have not covered: it’s not that they aren’t important, but they aren’t epochal (there’s a decent chance this is where Apple Watch ends up). And, of course, there is the whole enterprise world, itself undergoing real disruption (members-only) from software as a service and the explosion of mobile. What an industry!

I have previously written Strengths-Weaknesses-Opportunities-Threats analyses for these five companies for Daily Update subscribers.

If you would like to read these analyses and receive similar notes every day in your inbox, why not treat yourself to an early Christmas present and sign up for Stratechery Daily Updates? And have a very Merry Christmas!

  1. There is much confusion about this, largely because mobile is taking an ever greater percentage of time. However, most of that is additive. PC usage has in fact remained mostly static
  2. Thanks to Facebook, of course, Jan Koum and company don’t need to worry about actually making money and can continue taunting competitors. Needless to say, I’m less impressed than Koum
  3. iMessage is a good product and a great differentiator, but the fact it’s (rightly) not cross-platform means it’s not a player here
  4. By the way, it’s worth noting that the midpoint of the previous two epochs – 1987 and 2000 – saw major crashes. Cross your fingers
  5. I am still very concerned (members-only) about 51% attacks, and yes, I know all of the (ultimately trust-based) arguments against it
  6. Mostly

Podcast: Exponent Episode 028 – Squirrel!

On the newest episode of Exponent, the podcast I co-host with James Allworth:

We discuss the recent App Store controversy and how a person – or company’s – greatest strength is also their greatest weakness. Plus a special 2nd recording about the Harvard business school professor and the Chinese restaurant.

Links

  • Cabel Sasser: Transmit iOS 1.1.1 [Updated] – Panic blog
  • Greg Gardner: Launcher Followup and Thoughts on the App Store Review System – Cromulent Labs
  • Ben Thompson: App Store Anguish, Old Apple’s Last Stand, Time for a Change? – Stratechery (members-only)
  • Ben Thompson: Why Doesn’t Apple Enable Sustainable Businesses on the App Store? – Stratechery
  • Ben Thompson: The Diminished iPad – Stratechery
  • Ben Thompson: Pleco: Building a Business, Not an App – Stratechery
  • Ben Thompson: Uber and Portland, Uber and India – Stratechery (members-only)
  • Ben Thompson: Best – Stratechery
  • Ben Thompson: What Steve Jobs Wouldn’t Have Done – Stratechery
  • Ben Edelman: Google’s Advertising Labeling in 2014 – BenEdelman.org
  • Ben Edelman: Facebook Leaks Usernames, User IDs, and Personal Details to Advertisers – BenEdelman.org
  • Who is Ben Edelman, Sheriff of the (Chinese Food) Internet? – Boston.com
  • Making Delicious Cocktails with America’s Best Bartender – GQ

Listen to the episode here

Podcast Information: Feed | iTunes | SoundCloud | Twitter | Feedback

Docker and the Integrated Open Source Company

It’s been a long time since an open source project has gotten as much buzz and attention as Docker. The easiest way to explain the concept is, well, to look at the logo of the eponymous1 company that created and manages the project:

docker

The reference in the logo is to shipping containers, one of the most important inventions of the 20th century. Actually, the word “invention” is not quite right: the idea of putting bulk goods into consistently-sized boxes goes back at least a few hundred years.2 What changed the world was the standardization of containers by a trucking magnate named Malcom McLean and Keith Tantlinger, his head engineer. Tantlinger developed much of the technology undergirding the intermodal container, especially its corner casting and Twistlock mechanism that allowed the containers to be stacked on ships, transported by trucks, and moved by crane. More importantly, Tantlinger convinced McLean to release the patented design for anyone to copy without license, knowing that the technology would only be valuable if it were deployed in every port and on every transport ship in the world. Tantlinger, to put it in software terms, open-sourced the design.

Shipping containers really are a perfect metaphor for what Docker is building: standardized containers for applications.

  • Just as the idea of a container wasn’t invented by Tantlinger, Docker is building on a concept that has been around for quite a while. Companies like Oracle, HP, and IBM have used containers for many years, and Google especially has a very similar implementation to Docker that they use for internal projects. Docker, though, by being open source and community-centric, offers the promise of standardization
  • It doesn’t matter what is inside of a shipping container; the container itself will fit on any ship, truck, or crane in the world. Similarly, it doesn’t matter what app (and associated files, frameworks, dependencies, etc.) is inside of a docker container; the container will run on any Linux distribution and, more importantly, just about every cloud provider including AWS, Azure, Google Cloud Platform, Rackspace, etc.
  • When you move abroad, you can literally have a container brought to your house, stick in your belongings, and then have the entire thing moved to a truck to a crane to a ship to your new country. Similarly, containers allow developers to build and test an application on their local machine and have confidence that the application will behave the exact same way when it is pushed out to a server. Because everything is self-contained, the developer does not need to worry about there being different frameworks, versions, and other dependencies in the various places the application might be run

The implications of this are far-reaching: not only do containers make it easier to manage the lifecycle of an application, they also (theoretically) commoditize cloud services through the age-old hope of “write once run anywhere.” More importantly, at least for now, docker containers offer the potential of being far more efficient than virtual machines. Relative to a container, using virtual machines is like using a car transport ship to move cargo: each unique entity on the ship is self-powered, which means a lot of wasted resources (those car engines aren’t very useful while crossing the ocean). Similarly, each virtual machine has to deal with the overhead of its own OS; containers, on the other hand, all share the same OS resulting in huge efficiency gains.3

In short, Docker is a really big deal from a technical perspective. What excites me, though, is that the company is also innovating when it comes to their business model.


The problem with monetizing open source is self-evident: if the software is freely available, what exactly is worth paying for? And, unlike media, you can’t exactly stick an advertisement next to some code!

For many years the default answer has been to “be like Red Hat.” Red Hat is the creator and maintainer of the Red Hat Enterprise Linux (RHEL) distribution, which, like all Linux distributions, is freely available.4 Red Hat, however, makes money by offering support, training, a certification program, etc. for enterprises looking to use their software. It is very much a traditional enterprise model – make money on support! – just minus the up-front license fees.

This sort of business is certainly still viable; Hortonworks is set to IPO with a similar model based on Hadoop, albeit at a much lower valuation than it received during its last VC round. That doesn’t surprise me: I don’t think this is a particularly great model from a business perspective.

To understand why it’s useful to think about there being three distinct parts of any company that is based on open source: the open source project itself, any value-added software built on top of that project, and the actual means of making money:

There are three parts of an open source business: the project itself, the value-added software on top of that project, and the means of monetization

There are three parts of an open source business: the project itself, the value-added software on top of that project, and the means of monetization

The problem with the “Red Hat” model is the complete separation of all three of these parts: Red Hat doesn’t control the core project (Linux), and their value-added software (RHEL) is free, leaving their money-making support program to stand alone. To the company’s credit they have pulled this model off, but I think a big reason is because utilizing Linux was so much more of a challenge back in the 90s.5 I highly doubt Red Hat could successfully build a similar business from scratch today.

The three parts of Red Hat's business are separate and more difficult for the company to control and monetize

The three parts of Red Hat’s business are separate and more difficult for the company to control and monetize

GitHub, the repository hosting service, is exploring what is to my mind a more compelling model. GitHub’s value-added software is a hosting service based on Git, an open-source project designed by Linux creator Linus Torvalds. Crucially, GitHub is seeking to monetize that hosting service directly, both through a SaaS model and through an on-premise enterprise offering6. This means that, in comparison to Red Hat, there is one less place to disintermediate GitHub: you can’t get their value-added software (for private projects – public is free) unless you’re willing to pay.

While GitHub does not control Git, their value-added software and means of monetization are unified, making the latter much easier and more sustainable

While GitHub does not control Git, their value-added software and means of monetization are unified, making the latter much easier and more sustainable

Docker takes the GitHub model a step further: the company controls everything from the open source project itself to the value-added software (DockerHub) built on top of that, and, just last week, announced a monetization model that is very similar to GitHub’s enterprise offering. Presuming Docker continues its present momentum and finds success with this enterprise offering, they have the potential to be a fully integrated open source software company: project, value-added software, and monetization all rolled into one.

Docker controls all the parts of their business: they are a fully integrated open source company.

Docker controls all the parts of their business: they are a fully integrated open source company.

This is exciting, and, to be honest, a little scary. What is exciting is that very few movements have had such a profound effect as open source software, and not just on the tech industry. Open source products are responsible for end user products like this blog; more importantly, open source technologies have enabled exponentially more startups to get off the ground with minimal investment, vastly accelerating the rate of innovation and iteration in tech.7 The ongoing challenge for any open source project, though, is funding, and Docker’s business model is a potentially sustainable solution not just for Docker but for future open source technologies.

That said, if Docker is successful, over the long run commercial incentives will steer the Docker open source project in a way that benefits Docker the company, which may not be what is best for the community broadly. That is what is scary about this: might open source in the long run be subtly corrupted by this business model? The makers of CoreOS, a stripped-down Linux distribution that is a perfect complement for Docker, argued that was the case last week:

We thought Docker would become a simple unit that we can all agree on. Unfortunately, a simple re-usable component is not how things are playing out. Docker now is building tools for launching cloud servers, systems for clustering, and a wide range of functions: building images, running images, uploading, downloading, and eventually even overlay networking, all compiled into one monolithic binary running primarily as root on your server. The standard container manifesto was removed. We should stop talking about Docker containers, and start talking about the Docker Platform. It is not becoming the simple composable building block we had envisioned.

This, I suppose, is the beauty of open source: if you disagree, fork, which is essentially what CoreOS did, launching their own “Rocket” container.8 It also shows that Docker’s business model – and any business model that contains open source – will never be completely defensible: there will always be a disintermediation point. I suspect, though, that Rocket will fail and Docker’s momentum will continue: the logic of there being one true container is inexorable, and Docker has already built up quite a bit of infrastructure and – just maybe – a business model to make it sustainable.

  1. For the grammar nerds, I subscribe to the notion that eponymous can be used in either direction
  2. According to Wikipedia
  3. Security is one of the biggest questions facing Docker: is it possible to guarantee that apps cannot interact or interfere with each other? Currently the conventional wisdom is that containers shouldn’t be used for multi-tenant applications, but that security is good enough for multiple applications from a single tenant
  4. Technically, the source code is available, but any derivatives must strip-out all Red Hat trademarks
  5. Fun fact: Red Hat was the first version of Linux I ever installed. It did not go well
  6. BitBucket from Atlassian is similar; from a business model perspective the primary difference is that GitHub prices per repository while Atlassian prices per user
  7. In fact, one could argue that open source is the number one argument against there being a bubble: there are so many startups not because there is an inordinate amount of money available, but because it is so damn cheap to get off the ground. Moreover, the standards for gaining meaningful funding are now way higher: because it is so much cheaper to build, test, and iterate on an idea, a startup needs traction before investors will write a check
  8. It’s not precisely a fork; Rocket is new from the ground up but designed to do what Docker does and nothing more

Podcasts: Exponent 027 – Regulation, Stagnation, and Culture, The Jay and Farhad Show

On the newest episode of Exponent, the podcast I co-host with James Allworth:

We follow up on last week’s Uber discussion, talk about the problem with regulation, and worry about stagnation and the different cultures of Europe, America, and Asia.

Links

  • Nicole Campbell: What Was Said at the Uber Dinner – Huffington Post
  • Lane Wood: Here Ego Again – Medium
  • Chase Madar: Why It’s Impossible to Indict a Cop – Nation
  • Peter Sterne: Jack Schafer on Losing his Job and the State of Things – Capital New York
  • Ben Thompson: Why Uber Fights – Stratechery
  • Zenefits Faces Shutdown In Utah For Giving Its Cloud-Based HR Software Away For Free – Techcrunch
  • So You Think You Can Be a Hair Braider – New York Times
  • Note: A federal judge eventually gave the right for the Utah hair-braider to work. In addition, the Utah governor has pledged to look into the law affecting Zenefits, but no concrete changes have been implemented.
  • James Allworth: How Corruption is Strangling U.S. Innovation – Harvard Business Review
  • StartupLJackson: “Dammit Utah, it’s shit like this that drives people into the arms of Ayn Rand.” – Twitter
  • Blake Ross: Uber.gov – Medium Jenna Wortham: Ubering While Black – Medium

Listen to the episode here

Podcast Information: Feed | iTunes | SoundCloud | Twitter | Feedback


The Jay and Farhad Show – Tim Cook’s $100 Billion ‘Mistake’ (Not)

Earlier this week I was also a guest on the Jay and Farhad show, where I debated Jay Yarow and Eric Jackson about Best, the article I wrote earlier this week in response to Jackson. You can check it out here.

Best

One of the challenges of writing on the Internet – of writing in general, in fact – is the understandable propensity of readers to draw but one conclusion from what you intend to be a nuanced piece. I was reminded of this the past few weeks as Philip Elmer-DeWitt wrote Apple and the Crisis of Disruption and Jean-Louis Gassée Clayton Christensen Becomes His Own Devil’s Advocate. Both cited my piece from last year What Clayton Christensen Got Wrong as a primary piece of evidence that the theory of disruption was fundamentally flawed.

That, though, is the nuance. I do think the theory is flawed, but not fundamentally. It’s simply incomplete.


As I’ve noted, I fully subscribe to the theory of new market disruption: the idea that new entrants can meet the needs of previously unaddressed customers with a seemingly inferior and cheaper solution. And, over time, that solution improves to the point where it meets the needs of the incumbent’s customers as well. A wonderful example of this is how cloud companies have eviscerated IBM (members-only) with solutions that IBM originally dismissed out of hand as being wildly impractical for their customers.

It’s the other branch of disruption theory that I took – take – issue with, namely, low-end disruption (for long-time readers, forgive this brief digression). Briefly, the idea is that an integrated solution, where a single company makes all of the major components, will win in the market when a market is new. This is because, to put it bluntly, all of the solutions suck, but the integrated solution sucks less by virtue of being integrated and working better as a unit. However, over time, products improve in quality more quickly than customers add needs – or jobs-to-be-done, to use the preferred parlance. This means that the integrated solution soon becomes too good: it adds too many features, which means increased complexity and higher prices, while modular solutions, optimized at each layer through competition, deliver at first a “good-enough” cheaper product, and eventually, as they gain share, a superior one, still at lower prices. And thus, the integrated incumbent is doomed.

In fact, I too find low-end disruption powerfully illuminating. The power of integration is why companies like BuzzFeed and Vox are remaking journalism (members-only), and the power of modularity is why Intel and Samsung are under so much pressure. My only beef is with that last sentence – the idea that integrated incumbents are inevitably doomed.1

The primary flaw in this conclusion, as I detailed last year, is that the Christensen evaluation of “good enough” only considers technical capabilities. Christensen did later add the idea of emotional jobs-to-be-done – this covers things like luxury bags, for example, which confer status – but that doesn’t fully explain Apple in particular. Instead, my position is there is a third component of product capability: the user experience. Moreover, the user experience is unique in that, like emotional jobs-to-be-done, a product can never be “too good,” and, like technical jobs-to-be-done, it is always possible to improve – or to fall behind.

Moreover, integrated solutions will just about always be superior when it comes to the user experience: if you make the whole thing, you can ensure everything works well together, avoiding the inevitable rough spots and lack of optimization that comes with standards and interconnects. The key, though, is that this integration and experience be valued by the user. That is why – and this was the crux of my criticism of Christensen’s development of the theory – the user experience angle only matters when the buyer of a product is also the user. Users care about the user experience (surprise), but an isolated buyer – as is the case for most business-to-business products, and all of Christensen’s examples – does not. I believe this was the root of Christensen’s blind spot about Apple, which persists. From an interview with Henry Blodget a month ago:

You can predict with perfect certainty that if Apple is having that extraordinary experience, the people with modularity are striving. You can predict that they are motivated to figure out how to emulate what they are offering, but with modularity. And so ultimately, unless there is no ceiling, at some point Apple hits the ceiling. So their options are hopefully they can come up with another product category or something that is proprietary because they really are good at developing products that are proprietary. Most companies have that insight into closed operating systems once, they hit the ceiling, and then they crash.

That’s the thing though: the quality of a user experience has no ceiling. As nearly every other consumer industry has shown, as long as there is a clear delineation between the top-of-the-line and everything else, some segment of the user base will pay a premium for the best. That’s the key to Apple’s future: they don’t need completely new products every other year (or half-decade); they just need to keep creating the best stuff in their categories. Easy, right?


Last week Eric Jackson wrote a piece entitled, Apple’s $100 Billion Waste: Tim Cook’s Single Biggest Mistake As CEO.

I believe the capital return program has been a total waste of Apple’s hard-earned $100 billion. I believe – although this is impossible to prove – that Apple’s stock price would be just as high as it is today (or more likely higher) had they spent that $100 billion on a combination of smart M&A and smart R&D that would have continued to extend Apple’s lead over other Android phone makers.

Jackson’s shopping list includes Tesla, Twitter, Pinterest, battery R&D, and a cool $10 billion to make iCloud work.

Altogether, this M&A and R&D spree would cost Apple $119 billion. Their cash levels would be $136 billion today instead of $155 billion. They wouldn’t have much revenue to show for that $119 billion but how much higher would Apple’s market cap be than the $700 billion it is today? If Apple owned Tesla, Twitter and Pinterest? That would be worth at least another $50 – 100 billion in stock value.

Full disclosure: while we have not met in person, I like Jackson, and interact with him regularly on Twitter. He also did this nice interview with me back when I was just getting started, which I really appreciated. That said, this argument isn’t just wrong-headed, it’s wrong-headed on multiple levels, and would, in the long run, be the doom of Apple.

The most basic mistake Jackson makes is the assumption that more R&D money would result in better batteries and better iCloud. While Apple’s percentage spend on R&D isn’t extraordinary, that’s a function of their extraordinary revenue: on an absolute basis Apple spends an incredible amount, and there are numerous examples of their willingness to spend ridiculous amounts of money to gain the slightest of improvements in their products. Were money the gating factor for battery technology, I’m fully confident Apple would already be spending it. As for iCloud, Jackson’s prescription sounds an awful lot like The Mythical Man Month; in fact, the issue there is a cultural and organizational one (more on this in a moment).

At a deeper level, it’s not clear what on earth Apple would do with Twitter or Pinterest. You can certainly argue that Twitter especially isn’t reaching its potential, and can absolutely ascribe that to its current management, but it does not follow that Tim Cook and company would do a better job. In fact, Jackson is making the exact same mistake that most of Wall Street made when Steve Jobs died: too many assumed that Apple’s success was due solely to their charismatic founder, ergo, Apple’s success today must be because Cook is just as good a CEO as Jobs. And, given that he’s such a superhero, surely he can fix Twitter! It’s silly. Cook may be a good CEO, but he’s not a magician able to transmogrify a company different from Apple in nearly every respect.

Most problematic of all, though, and the reason why Jackson’s advice would ultimately doom Apple, is something Jackson takes special pains to mock: focus. Jackson compares Apple’s refusal to make major acquisitions to an inability to walk and chew gum at the same time; leaving aside the absurdity of comparing the difficulty of integrating multiple companies with fundamentally different business models (as would be the case with any web services company), if you actually wanted to be the best gum chewer in the world, wouldn’t you actually be well advised to stand still and focus on chewing gum?

This is the precise point that Jackson and so many others miss: the overriding value for Apple, and the fundamental reason the company has thrived even with Jobs’ untimely death, is the total commitment to building the best possible personal computers (all of the iOS devices, including the Watch, fit here). Being competent at wildly disparate businesses just because you have the financial wherewithal to do so is in direct opposition to this ethos. It is a perfect example of trying to kill the goose laying golden eggs.

Because here’s the thing: the reason I started with disruption is because I think Christensen is 95% right. Low end disruption is real, and it is a threat, and Apple’s only defense is to be the best. And being the best at anything requires total dedication and yes, focus.


What makes Jackson’s article intriguing and worth more than your average Apple clickbait is that he makes some very fair points: Apple spends time on iAds, so why not a real ad-based business?2 Apple stinks at cloud services, so why not buy a cloud company? And while stock buybacks increase a stock’s earnings-per-share one could make the argument that the stock price would be just as high had Apple not done a thing.

My response, though, is to in fact argue that Apple should do the precise opposite of what Jackson suggests: they should do less. I still believe that, on balance, Apple offers superior products in their core product categories, and that their lead is still fairly substantial. Moreover, Apple benefits from the fact their main competitors – particularly Google – have horizontal business models that dictate they offer best-of-breed services on Apple’s own platform. That said, it’s hard to make the “best” argument when it comes to Apple’s web services and the quality of both Apple’s recent operating systems releases and their first-party software.

  • Apple’s web services suffer from Apple’s organizational dedication to building great products. Aligning teams and schedules around the big unveil makes sense for hardware, but it’s a disaster for web services (The Information recently confirmed many of the points I made in iCloud and Apple’s Founding Myth, specifically, cloud teams are siloed and constantly built everything from scratch on an outdated stack)
  • Similarly, iOS releases are tied to the device’s yearly update schedule, quality concerns be damned. And OS X releases are tied to iOS releases. Both iOS 8 and Yosemite have shown what happens when the controlling constraint for software is a ship date
  • First party software like the iWork and iLife suites is completely understaffed because of the number of folks needed to get the aforementioned OS releases out the door. Moreover, both teams have been forced to readjust their priorities from superior PC software to tablet-compatible software, to the original product’s detriment

The answer is to do less:

  • Apple’s web services should be built on shared infrastructure that is primarily standards-based and conventional. The only “innovation” that should happen is in areas where it actually makes a difference that Apple owns the device as well. Fortunately, it seems that Apple is moving in this direction: CloudKit is a lot more “normal” than iCloud Core Data and similar services ever were, while many of the neatest Continuity features use the cloud in a way that only Apple can. Moreover, there are strong hints (members only) that Apple is building a centralized cloud team in a new Seattle office (as an aside, I love the fact that this team – if it exists – won’t be in Cupertino; a new location is one way to counteract the tremendous cultural issues working against Apple’s cloud teams)3
  • iOS releases – and thus OS X releases – should be decoupled from hardware releases, marketing be damned. Every crash, every failed rotation, every single bug chips away at that hard-to-measure-until-it’s-gone user experience that protects Apple from disruption, and we’re going on three years of disappointing software releases
  • Apple should disband the first party software teams, or spin them out into a different company. Both iLife and iWork – and the pro apps – served very important functions for Apple: they gave a reason to buy a Mac at a time when the lack of 3rd party software was the primary reason not to. Today, though, Apple has the best developer ecosystem in the world, and Apple is actually hurting themselves by competing with it. Not only are any resources spent on apps better spent on the OS, but also the presence of free Apple apps depresses the segments in which they compete. Instead Apple should look for ways to improve developer monetization and sustainability; to put it another way, Apple should focus on building a better platform, not on building on top of it

As for the money, well, I think this advice would result in even more in the long run. And it’s not like Apple isn’t making smart purchases: TouchID, arguably Apple’s most important innovation in years and something that has put the company years ahead of Android was the result of an acquisition, as was Siri. Beyond that, well, sure, give it back to the shareholders: it ultimately is theirs. If I sound blasé, it’s only because I’m trying to channel the sentiment that Jony Ive in particular has articulated again and again:

Our goal isn’t to make money. Our goal absolutely at Apple is not to make money. This may sound a little flippant, but it’s the truth…Our goal and what gets us excited is to try to make great products. We trust that if we are successful people will like them, and if we are operationally competent we will make revenue, but we are very clear about our goal.

Here’s an idea for Jackson, and everyone else who thinks they know what Apple should do instead: what if you took Ive at his word? What if you realized that Apple, for its entire 38 year existence, has been focused on building the best possible personal computers?4 Sure, those computers have become ever more personal, but the drive to be the best is a constant. Would you really advocate something different?

If so, then, I guess, and despite my reputation, you are a far greater skeptic of disruption than I.

  1. To be specific, Christensen wrote, “When that happens, the disruptors are on a path that will ultimately crush the incumbents.”
  2. I actually don’t get to iAds, but I think Apple should dump it (members-only)
  3. This is another area I agree with Jackson: Apple should have bought Dropbox. The fact that Jobs wasn’t willing to pay up (all companies can be had if the price is high enough) for a team that combined Apple’s consumer ethos with real cloud capabilities was the result of undervaluing what the cloud and the skills it takes to succeed there
  4. This, more than anything, is why I think the Tesla argument is absurd. I suppose there are surface similarities – batteries, operational competence, software – but it’s a completely different industry

Why Uber Fights

In his, to my mind, fair defense of Uber, Mark Suster made a very important observation about the reality of business:

Let’s put this into perspective. As somebody who has to rub shoulders with big tech companies often I can tell you that there is much blood spilled in the competitive trenches of Apple, Twitter, Facebook, Google and so on. Changes to algorithms. Clamping down on app ecosystems. Changing how third-parties monetize. Kicking ecosystem partners in the nuts.

Be real.

It’s a brutally competitive world out there because there are extreme amounts of money at stake. I’ve been on the sharp end of it and it doesn’t feel nice. And I pick myself back up, dust off and think to myself that I need to think through the realpolitik of power and money and competition and no matter how unpleasant it is – it’s a Hobbesian world out there. It ain’t pretty – but it’s all around us.

This is particularly relevant to Uber: the company is looking to raise another $1 billion at a valuation of over $30 billion, and, as I wrote when the company raised its last billion, they are likely worth far more than that. Still, though, skeptics about both the size of the potential market and the prospects of Uber in particular are widespread, so consider this post my stake in the ground1 for why Uber – and their market – is worthy of so many sharp elbows. I expect to link to it often!


There are three perspectives with which to examine the competitive dynamics of ride-sharing:

  1. Ride-sharing in a single city
  2. Ride-sharing in multiple cities
  3. Tipping points

I will build up the model that I believe governs this market in this order; ultimately, though, they all interact extensively. In addition, for these models I am going to act as if there are only two players: Uber and Lyft. However, the same principles apply no matter how many competitors are in a given market.

Ride Sharing in a Single City

Consider a single market: Riderville. Uber and Lyft are competing for two markets: drivers and riders.

uber

There are a few immediate takeaways here:

  • The number of riders is far greater than the number of drivers (far greater, in fact, than the percentage difference depicted by this not-to-scale sketch)
  • On the flip side, drivers engage with Uber and Lyft far more frequently than do riders
  • Ride-sharing is a two-sided market, which means there are two places for Uber and Lyft to compete – and two potential opportunities for winner-take-all dynamics to emerge

It’s important to note that drivers in-and-of-themselves do not have network dynamics, nor do riders: Metcalfe’s Law, which states that the value of a network is proportional to the square of the number of connected users, does not apply. In other words, Uber having more drivers does not increase the value of Uber to other drivers, nor does Lyft having more riders increase the value of Lyft to other riders, at least not directly.

However, the driver and rider markets do interact, and it’s that interaction that creates a winner-take-all dynamic. Consider the case in which one of the two services – let’s say Uber – gains a majority share of riders (we’ll talk about how that might occur in the next section):

  • Uber has a majority of riders (i.e. more demand)
  • Drivers will increasingly serve Uber customers (i.e. more supply)
  • More drivers means that Uber’s service level (i.e. car liquidity) will improve
  • Higher liquidity means that Uber has a better service, which will gain them more riders

In this scenario Lyft by necessity moves in the opposite direction:

  • Lyft has fewer riders (i.e. less demand)
  • Drivers will face increasing costs to serve Lyft riders:
    • If there are fewer Lyft riders, than the average distance to pick up a Lyft rider will be greater than the average distance to pick up an Uber driver; drivers may be better off ignoring Lyft pickups and waiting for closer Uber pickups
    • Every time a driver picks up a rider on one service, they need to sign out on the other; if the vast majority of rides are with one service, this, combined with the previous point, may make the costs associated with working for multiple services too high2
  • Drivers will increasingly be occupied serving Uber customers and be unavailable to serve Lyft customers (i.e. less supply)
  • Fewer drivers means that Lyft’s service level (i.e. car liquidity) will decrease
  • Lower liquidity means that Lyft has an inferior service, which will cause them to lose more riders

The end result of this cycle, repeated over months, looks something like this:

uber2

There are three additional points to make:

  • It doesn’t matter that drivers may work for both Uber and Lyft. If the majority of the ride requests are coming from Uber, they are going to be taking a significantly greater percentage of driver time, and every minute a driver spends on a rider job is a minute that driver is unavailable to the other service. Moreover, this monopolization of driver time accelerates as one platform becomes ever more popular with riders. Unless there is a massive supply of drivers, it is very difficult for the 2nd-place car service to ever get its liquidity to the same level as the market leader (much less the 3rd or 4th entrants in a market)

  • The unshaded portion of the “Riders” pool are people who regularly use both Uber and Lyft. The key takeaway is that that number is small: most people will only use one or the other, because ride-sharing services are relatively undifferentiated. This may seem counterintuitive, but in fact in markets where:

    • Purchases are habitual
    • Prices are similar
    • Products are not highly differentiated

    …Customers tend to build allegiance to a brand and persist with that brand unless they are given a good reason to change; it’s simply not worth the time and effort to constantly compare services at the moment of purchase3 (in fact, the entire consumer packaged goods industry is based on this principle).

    In the case of Uber and Lyft, ride-sharing is (theoretically) habitual, both companies will ensure the prices are similar, and the primary means of differentiation is car liquidity, which works in the favor of the larger service. Over time it is reasonable to assume that the majority player will become dominant

  • I briefly mentioned price: clearly this is the easiest way to differentiate a service, particularly for a new entrant with relatively low liquidity (or the 2nd place player, for that matter). However, the larger service is heavily incentivized to at least price match. Moreover, given that the larger service is operating at greater scale, it almost certainly has more latitude to lower prices and keep them low for a longer period of time than the new entrant. Or, as is the case with ride-sharing, a company like Uber has as much investor cash as they need to compete at unsustainably low prices

In summary, these are the key takeaways when it comes to competition for a single-city:

  • There is a strong “rich get richer” dynamic as drivers follow riders which increases liquidity which attracts riders. This is the network effect that matters, and is in many ways similar to app ecosystem dynamics (developers follow users which which increases the number and quality of apps which attracts users)

  • It doesn’t matter if drivers work for both services, because what matters is availability, and availability will be increasingly monopolized by the dominant service

  • Riders do not have the time and patience to regularly compare services; most will choose one and stick with it unless the alternative is clearly superior. And, because of the prior two points, it is almost certainly the larger player that will offer superior service

Ride Sharing in a Multiple Cities

It is absolutely true that all of the market dynamics I described in the previous section don’t have a direct impact on geographically disperse cities, which is another common objection to Uber’s potential. What good is a network effect between drivers and riders if it doesn’t travel?

There is, however, a relationship between geographically disperse cities, and it occurs in the rider market, which, as I noted in the previous section, is the market where the divergence between the dominant and secondary services takes root. Specifically:

  • Pre-existing services launch with an already established brand and significant mindshare among potential riders. Uber is an excellent example here: the company is constantly in the news, and their launch in a new city makes news, creating a pool of riders whose preference from the get-go is for Uber

  • Travelers, particularly frequent business travelers, are very high volume users of ride-sharing services. These travelers don’t leave their preferences at home – when they arrive at an airport they will almost always first try their preferred service, just as if they were at home, increasing demand for that service, which will increase supply, etc. In this way preference acts as a type of contagion that travels between cities with travelers as the host organism

Most important of all, though, is the first-mover effect. In any commodity-type market where it is difficult to change consumer preference there is a big advantage to being first. This means that when your competitor arrives, they are already in a minority position and working against all of the “rich get richer” effects I detailed above.

uber3

This explains Uber and Lyft’s crazy amounts of fundraising and aggressive roll-out schedules, even though such a strategy is incredibly expensive and results in a huge number of markets that are years away from profitability (Uber, for example, is in well over 100 cities but makes almost all its money from its top five). Starting out second is the surest route to finishing second, and, given the dynamics I’ve described above, that’s as good as finishing last.

Tipping Points

What I’ve described up to this point explain what has happened between Uber and Lyft to-date. Still, while I’ve addressed many common objections to Uber’s valuation in particular, there remains the question of just how much this market is worth in aggregate. After all, as Aswath Damodaran, the NYU Stern professor of finance and valuations expert detailed, the taxi market is worth at most $100 billion which calls into question Uber’s rumored $30 billion valuation.

However, as Uber investor Bill Gurley and others have noted, Damodaran’s fundamental mistake in determining Uber’s valuation is to look at the world as it is, not as it might be.4 Moreover, this world that could be is intimately tied to the dynamics described above. I like to think of what might happen next as a series of potential tipping points (for this part of the discussion I am going to talk about Uber exclusively, as I believe they are – by far – the most likely company to reach these tipping points):

  • Tipping Point #1: Liquidity is consistently less than 5 minutes and surge pricing is rare – Once Uber becomes something you can count on both from a time and money perspective, rider behavior could begin to change in fundamental ways. Now, Uber is not just for a business meeting or a night out; instead, Uber becomes the default choice for all transportation. This would result in dramatically increased rider demand, resulting in complete Uber domination of driver availability. This would have several knock-on effects:

    • Driver utilization would increase significantly, increasing driver wages to a much more sustainable level
    • Competitor liquidity would decrease precipitously, leading to rider desertion and an Uber monopoly; this would allow Uber to raise rates to a level that is more sustainable for drivers, further increasing supply and liquidity

    By all accounts Uber is already close to this level in San Francisco, and there are lots of anecdotes of people all but giving up cars.5 The effect of this change in rider behavior cannot be overstated, especially when it comes to Uber’s potential valuation: taxis have a tiny share of the world’s transportation market, which means to base the company’s valuation on the taxis is to miss the vast majority of Uber’s future market opportunity

  • Tipping Point #2: Uber transports not just people – Uber has already done all kinds of experiments with delivering things other than people, including Christmas trees, lunch, a courier service, even drugstore items. However, any real delivery service would need to have some sort of service-level agreement when it comes to things like speed and price. Both of those rely on driver liquidity, which is why an Uber logistics service is ultimately waiting for the taxi business to tip as described above.

    However, once such a delivery service is launched, its effect would be far-reaching. First, driver utilization would increase even further, particularly when it comes to serving non centrally located areas. This would further accentuate Uber’s advantage vis-à-vis potential competitors: Uber service would be nearly instant, and drivers – again, even if they nominally work for multiple services – would be constantly utilized.

    Moreover, there is a very good chance that Uber could come to dominate same-day e-commerce and errands like grocery shopping: most entrants in this space have had a top-down approach where they set up a retail operation and then figure out how to get it delivered; the problem, though, is that delivery is the bottleneck. Uber, meanwhile, is busy building up the most flexible and far-reaching delivery-system, making it far easier to move up the stack if they so choose. More likely, Uber will become the delivery network of choice for an ecosystem of same-day delivery retailers. Needless to say, that will be a lucrative position to be in, and it will only do good things for Uber’s liquidity.

Why Uber Fights

The implications of this analysis cannot be underestimated: there is an absolutely massive worldwide market many times the size of the taxi market that has winner-take-all characteristics. Moreover, that winner is very unlikely to be challenged by a new entrant which will have far worse liquidity and an inferior cash position: Uber (presuming they are the winner) will simply lower prices and bleed the new entrant dry until they go out of business.

To put it another way, I think that today’s environment where multiple services, especially Lyft, are competing head-on with Uber is a transitional one. Currently that competition is resulting in low prices and suppressed driver wages, but I expect Uber to have significant pricing power in the long run and to be more generous with drivers than they are now, not for altruistic reasons, but for the sake of increasing liquidity and consistent pricing.

In short, Uber is fighting all out for an absolutely massive prize, and, as Suster noted, such fights are much more akin to Realpolitik. As Wikipedia defines it:

Realpolitik is politics or diplomacy based primarily on power and on practical and material factors and considerations, rather than explicit ideological notions or moral or ethical premises

It’s ethics – or, to be more precise, Uber’s alleged lack of them – that has been dominating the news most recently, and is what inspired Suster’s post. And, to be very clear, I can understand and share much of the outrage: in my Daily Update I have compared Uber to Wall Street and said that Emil Michael should be fired (both links members-only) for his comments suggesting Uber might investigate journalists – Sarah Lacy in particular – who disparage the company.6

However – and one of the reasons I’m writing this article – I am also very aware of just how much is at stake in this battle. Lyft has raised $332.5 million from some very influential investors, and I don’t for a minute believe that they don’t want to win just as badly as Uber does. It’s perfectly plausible, if not probable, that Lyft and its backers, overmatched in a head-on battle with Uber, are conducting a guerrilla campaign with the aim of inspiring so much disgust in riders that Uber’s liquidity advantages start to slip (and to be clear, such a campaign – if it exists – is only possible because Uber’s management speaks and acts poorly frequently).7

To be perfectly clear, I don’t know anything further about this situation – or other recent Uber PR fiascos, like this Verge piece about stealing Lyft drivers – beyond the size of the potential prize, as detailed here, and the reality of human beings and their incentives in the presence of such outsized rewards. In my experience the truth ends up being far more gray than the press – which really hates threats to journalists – has characterized this most recent episode.

In fact, in some ways I’m actually far more concerned about Uber’s perceived lack of ethics than most, because if I’m right, then Uber is well on its way to having monopoly power over not just taxi services but a core piece of worldwide infrastructure, and nothing about this crisis gives me confidence in the company’s ability to manage that gracefully.8 I get that Uber’s willingness to fight unjust laws is what got them to this point, but as James Allworth and I discussed on the most recent episode of Exponent, there is a deeper moral code that ought to govern Uber’s actions. Moreover, Uber needs rider goodwill to prevail in the many markets where it is facing significant regulatory resistance: it is local citizens who determine whether or not local laws and regulations will be changed to accommodate Uber, and Uber is making it very difficult to rationalize advocating for them, or, if my Twitter account is any indication, to even ride with them.

Ultimately, this blog generally seeks to analyze business, not render moral judgment or tell anyone what products or services they should or should not use. I myself am mixed: I plan on spending some time in the white part of that graph above, at a minimum. I hope, though, that you now appreciate exactly what is at stake and why so many elbows are being thrown.

  1. I’ve attempted to articulate Uber’s potential multiple times in the Daily Update – it’s one of my most frequent topics. This is my attempt to tie everything together that I have written there
  2. Originally, this bullet stated “Drivers will increasingly be occupied serving Uber customers and be unavailable to serve Lyft customers (i.e. less supply).” However, this was incorrect because drivers utilized on any service are unavailable to every service, incurring no advantage
  3. Lots of people have suggested to me that Uber will be doomed as soon as someone creates an app that serves as a front-end to all of the services allowing you to book the one with the lowest price and/or fastest availability; however, such an app would realistically need the cooperation of the largest player (which would not be forthcoming, and there is no public API) plus need to gain meaningful traction in a given market while competition still exists. It’s not happening
  4. To Damodaran’s immense credit, he was very gracious in his response to Gurley’s post (which, to be clear, was respectful of Daodaran as well)
  5. The broader effects of Uber on adjacent industries will have to wait for another post
  6. That said, no reporting has suggested a threat to Lacy or her family as many seem to believe; that came from Lacy herself
  7. I am not making any allegations, and it should be noted that Pando Daily shares investors with both Uber and Lyft
  8. First off, Michael’s comments, whether in jest or not, were incredibly stupid. Secondly, Kalanick’s tweetstorm was a terrible idea. You can’t admit that Michael’s “remarks showed a lack of leadership, a lack of humanity, and a departure from our values and ideals” and not fire him. Either stand your ground and insist Michael was misrepresented or let him go