Startups

I Have Found Product-Market​ Fit, Now What?

This curated column is authored by Léo Wang, Product Management Consultant, TenOneTen Ventures

The recent Uber TV ad Earning/Chilling got me curious about the timing and tactics of Uber’s marketing. I’ve long come to know Uber’s unique event stunts and hashtag campaigns for viral word of mouth, but this TV ad is certainly something new for me. My initial research revealed a much more comprehensive scheme of Uber’s growth strategy at large. I never managed to grow a hobby product with 630,000-ish downloads into anything mainstream, which certainly has product market fit-users like our app. But how do I scale it even more? For this reason, I believe, any marketplace founders who are pondering the next steps after product market fit would benefit from understanding the textbook-like growth strategy whereby Uber scaled its 2-sided user base across 500+ cities worldwide.

1. Solve the Network Effect Puzzle

Most marketplace founders start with the notorious chicken-egg problem where there is only demand if there is supply and vice versa. But if each side only benefits from the prerequisite existence of the other side, how do you get one side on board in the first place?

Uber, like any marketplace, had this issue too. The interplay between the two sides of the chicken-egg puzzle differ in nature marketplace to marketplace. It’s important to understand which of the two sides has higher supply risk and address accordingly. In Uber’s case, the bottleneck is drivers as illustrated in the above Kraljic Matrix, which is why, as you will see, Uber has put so much promotional focus on drivers. Only with this bottleneck solved, will the self-reinforcing flywheel effect kick in where all of a sudden the more drivers there are, the more riders flood to the service which drive up the income of drivers which in turn lure more drivers to come on board. It’s the same reason why Facebook is paying celebrities to live broadcast on its livestream platform, before viewers find this platform useful and sticky. Conversely, cases abound where the demand side is the bottleneck, like Google’s ad-serving business.

2. Fuel the Supply

Having identified which of the two sides is the bigger issue, Uber geared its partnership and marketing efforts to bombard drivers with care and love. Partnership-wise, there’s Fuel Card program, jointly developed with MasterCard and Exxon Mobile, providing deep discounts at the pump, and car maintenance discount too. Health insurance puts drivers at ease on the road, phone plans save on drivers’ monthly bill. And drivers never run out of music to play thanks to Uber’s partnership with Pandora music radio. Uber even makes it easy to drive without a car through Vehicle Solutions in partnership with car leasing and rental companies.

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Marketing-wise, the TV ad earning/chilling is just one example of how Uber touts the ease with which drivers can take control of their financial autonomy by driving part-time while maintaining life/work balance. Uber also leverages radio, outdoor, publishers, display ads and social network, to recruit drivers, i.e. the company’s Facebook video posts and Twitter hashtag campaigns are widely successful at raising awareness among drivers. Uber also taps into social awareness campaigns targeting certain demographic groups, like veterans or the disabled, to make them proud drivers with Uber. The referral program that Uber had in place from Day One has proven crucial at enrolling new drivers too.

3. Leverage Virality and Stunt

Most of the time, Startups lack the financial strength to execute above-the-line marketing. Virality and stunts have proven to be quite value for money. Uber’s rider growth relies heavily on word of mouth and hashtag campaigns on social media. Riders readily share their referral code to friends. And event stunts, like #UberICECREAM or #UberPET, would generate huge publicity on social media. My favorite example happened while I was still in China when some day everyone in the office was chattering about how he or she hailed a BMW or Audi with just 50 RMB(~$7.20). Extensive launch campaigns integrating such stunts in each new city usually hit the headlines of the city, i.e. in Guangzhou, Uber’s “One Button to summon Superhero” event got covered by several local major publishers.

4. Crack the Art and Science of Matchmaking

It’s hard to fine tune the balance while growing users on both ends of supply and demand. Failure to achieve equilibrium through matchmaking would deliver suboptimal outcome for users and the platform. Uber employs two tactics to adjust the balance of the marketplace. Surge pricing helps alleviate momentary demand surge when and where supply is insufficient, while price cuts on the other hand boosts demand in the long run. Through continuous trial and error, Uber is able to determine the price elasticity and pinpoint the price level needed for equilibrium for each city it operates in.

5. Strike partnership to win over the Strategic

Business accounts, like companies, institutions, and universities, carry strategic significance for marketplace startups. But sales process into business accounts can drag for months and even years. Forming partnership with incumbents serving business accounts could dramatically shorten the sales cycle and even transform the nature of the sales. In this regard, Uber Business teamed up with Concur. As a result, Uber Business secures instant access to the client base of the leading business expense and travel management platform, whereas Concur clients can directly create an Uber for Business account for all employees with ease while realizing cost savings and gaining visibility.

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6. Think Big and Become Infrastructure

Startups rarely end up where they set off heading to. It’s common for them to pivot and diversify. One common direction for significant growth that I’ve covered about, involves the concept of infrastructure. As to Uber, it’s never about just passenger cars, though it started as a network of passenger cars. It has turned into a company centered on transportation and moving not just people but almost everything. The timely launch of UberRUSH opens up Uber as an infrastructure for delivery. UberEVENTS, UberEATS, UberHEALTH, etc exemplify how Uber can be tailored to different verticals. Consequently, the forward-looking launch of self-driving Uber and acquisition of Otto, the company behind self-driving trucks, are just the tip of the iceberg of how serious Uber is about transforming our transportation infrastructure.

This is a curated post. The statements, opinions and data contained in these publications are solely those of the individual authors and contributors and not of iamwire or its editor(s). This article was originally published by the author here


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