Uber new Grand Blueprint

Absrtact: Uber now handle the taxi more than 1 million times a day, what is the future Uber plan? Recently, benchmark partner, the famous VC Bill Gurley, talked about 2015 years Uber painted the Grand blueprint (BHAG, magnificent, difficult and bold goals). Article

Uber now handle the taxi more than 1 million times a day, the future Uber what plans? Recently, benchmark partner, the famous VC Bill Gurley, talked about 2015 years Uber painted the Grand blueprint (BHAG, magnificent, difficult and bold goals). The article first reviews the history of Uber in recent years, and then takes Wal-Mart and Amazon's experience as an example to show that to lower prices to allow passengers to hit the car faster will become the eternal pursuit of Uber, and UberPool is the basis for achieving this goal.

Uber's entrepreneurial slogan is "Everyone's private driver". Its corporate mission is "everyone can use the same reliable traffic as tap water." Here, everyone is the key, because it means that Uber must find ways to keep the price down in order to popularize everyone. and bringing the highest possible value to customers becomes a key catalyst for UberPool.

Bring more value to customers through lower prices

Uber, a company that won at a low price, is not the first, and Wal-Mart and Amazon are all taking this strategy.

Wal-Mart founder Sham Watton:

...... But that's the essence of the bargain: Lower prices can boost sales, making selling at cheaper retail prices far more expensive than selling at a higher price. Also that is small profits but quick turnover.

Amazon founder Bezos:

We have completed the price elasticity study, the answer is always we have to raise prices. We're not going to do that-because we have to take this as a creed: that the price is very, very low can win the trust of customers in the future, which will actually maximize the cash flow in the long run.

Bezos later explained more bluntly: "There are only two types of companies in the world, one is desperately want to collect more money, one is to try to accept less." We will be the latter. "Like Wal-Mart and Amazon, this is Uber philosophy," he said.

Study the price of UberX

UberPool is actually Uber's second action to try to lower prices. When the company launched Low-cost UberX in 2012, it quickly realised that consumer demand for transport services was highly resilient. Price reduction will bring consumers a better value positioning, but also for Uber significantly increase demand.

With this understanding, Uber began to study how to depress prices further. The secret weapon is the "math Department"--a title courtesy of the founder Travis Kalanick, a team of scientists and mathematicians who study the Uber back-end routing algorithm. Most people think that Uber is just a mobile phone taxi software, but in fact Uber do a lot of work in the back end, demand forecasting, congestion forecasting, supply matching, intelligent scheduling, dynamic pricing, etc. are handled by the back end.

The "math Department" and management realize that if the driver's utilization (the number of drivers per hour) can be increased, it is possible to lower the end user's price while keeping the driver's income level. Increased efficiency, increased traffic, and better algorithms can lead to lower prices and better cash flow. The drop in prices will lead to more demand and even more liquidity and higher utilization, leading to a new round of price declines. Soon UberX surpassed UberBlack to become the largest business on the Uber platform.

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This model Uber in different cities, some places within 2 years have experienced 6 times, and even reduced to the 40–50% rental costs. In January this year, Uber announced similar price cuts in 48 cities and provided income assurance for drivers. How can Uber do that?

Mainly thanks to the huge Uber of different price points of supply and demand relationship curve history database, with this database, Uber can easily predict the market trend. This allows the company to invest proactively in helping these markets achieve lower consumer prices faster. You could call it "putting the stakes on the math department."

What is UberPool?

So UberPool came. In fact, the concept of UberPool is straightforward. See the figure below, the driver is not a passenger, but the same direction of two passengers. A passenger may be off the bus halfway through the flight, and a third passenger may be on the way before. In this case, the passenger is a veritable "share ride". If the driver rides more than 1 passengers on average, it can achieve higher efficiency and bring lower prices to consumers. This is the natural evolution of UberX and UberX price optimization.

The plan is now being implemented in San Francisco, New York and Paris, and Uber has found that many of the passengers actually walk on the same route with UberPool on a daily basis.

But although UberPool's idea looks simple, it is difficult to achieve. If you have research on combinatorial optimization, you will not be familiar with the "Traveling salesman problem (TSP)". TSP needs compute-intensive integer linear programming technology to find solutions. Because there are too many permutations of the problem, it is necessary to develop a complex heuristic approximation method to solve it accurately. The algorithm for UberPool development is more complicated than the simple TSP problem. Because 1 "more than one", 2 destinations are dynamic, 3 constantly have new "traveler" to enter and leave the system, 4 car carrying capacity is limited, 5) constantly new taxi demand inflow. This is not only close to the dynamic TSP problem, it can be categorized into daunting nondeterministic polynomial difficulties, as well as the wider and more frightening problem of vehicle routing (VRP). The math department has a lot of work to do.

So what makes UberPool a strategic move for Uber?

1. It amplifies the positive impact on the city. UberPool can make Uber drastically reduce taxi prices and expand the impact already on the city. Uber can reduce driving, reduce demand for parking, and reduce congestion in cities. And UberPool can further expand these effects, and even reduce pollution, so that larger groups consider the alternative way to buy a car. Be aware that most of the car's idle rate is up to 95%. Does buying a car really have any economic or environmental significance?

2, UberPool has the technical difficulty. Achieving UberPool is a difficult and daring goal (BHAG) that requires the highest level of execution and innovation in the Uber engineering team. In fact Travis Kalanick's vision of "always on the road" is grander and bolder-think about it, the driver will always have a passenger in the car!

3. UberPool took advantage of Uber's leading position. This is crucial. To realize the concept of UberPool, it requires a very large amount of liquid assets-a large number of vehicles and driver support. Otherwise, there will not be enough people to run in the same direction at the same time. Uber, as industry leader, has this condition-already millions of users have downloaded its apps and recently received billions of dollars in funding. The company has pointed out that a large portion of the proceeds will be used to ensure uberpool success. And with the UberX price, the company uses its material capital resources to continue to invest in UberPool, improve the likelihood of success.

4, UberPool is facing the future platform. Many people are guessing whether Uber will eventually do logistics. The technology and algorithm behind UberPool can lay the foundation for solving the logistics problem, and will increase the Uber of the future. In addition to reducing taxi prices and improving efficiency, UberPool will also become an enabling technology for Uber Foundation.

To get to the car at a lower price, no passengers don't like it. UberPool is the natural evolution of Uber's journey, as Amazon's Bezos did:

People often ask me this question: "What will happen in the next 10 years?" "It's an interesting question. Very common. But I have hardly been asked this question: "What is the same in the next 10 years?" "I can tell you that the second question is actually more important-because you can make a business strategy around things that are stable ... In the retail industry, we know that customers want low prices, and I know that from now on the next 10 this will not change. They want to deliver faster deliveries and they want to have a lot of options. 10 years from now, if the client comes to you and says, "Jeff, I like Amazon, but can you get a little higher," or "I love Amazon, but can you slow delivery?" "Impossible, such a future is unimaginable." So we know that today we will be rewarded for our customers ' efforts and improvements over the past 10 years. Once you know that doing something is right, even in the long run, you can devote a lot of energy to it.