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Here’s one way to think about Uber (and Lyft) and Amazon and… Kozmo.com

Here’s one way to think about Uber (and Lyft) and Amazon and… Kozmo.com

The analogies between Uber and Amazon are not terrible but have some BIG problems.

First of all, what are the basic truths of the ridesharing proposition as we see it today:

Ridesharing should have big cost advantages over incumbent taxis at the unit level for many reasons:

  • no medallion costs,

  • tech leverage on all logistics,

  • scale leverage on insurance, CC-processing, etc.,

  • platform leverage on multiple offerings (like food),

  • fewer restrictive TLC rules on shifts, etc. (for now).

AND if ridesharing options aren’t at least cost-competitive – or better – with taxis and other incumbent options in the dense urban markets that matter most, what are we even doing? Better and more timely aren’t enough.

HOWEVER incumbent taxis have no:

  • sales and marketing fight-to-the-death expense (price wars with Didi and now Lyft),

  • no R&D invent-the-future expense (autonomous), and

  • no legal-and-regulatory World War III expense (both out-of-pocket costs and limitations on profitability).

Maybe this is how tortoise beats hare?

So what are comparables from the last big cycle?

If we are looking for comps on super-big, long-road-to-profitability propositions:

  • Amazon had huge fight-to-the-death marketing costs until consolidating ecommerce dominance, and

  • Amazon continues to have huge invent-the-future costs (which have produced several tent-poles of the future we now live including Kindles, AWS, Echo, Prime),

  • BUT Amazon never really had WWIII costs of global battles with policymakers and regulators at governments of all sizes, and its own suppliers and partners, nor the distraction and risks to its existence that come with them. If Amazon had been saddled with surcharges, regulated pricing and labor, innumerable class-actions, or outright bans in whole cities and countries, would Jeff Bezos be the richest man in the world today with cash left over for the most expensive side-projects imaginable: newspapers, rocket-ships, and divorce?

If we are looking for comps on amazing services that people super-want and are willing to pay for, but were launched – we can see in retrospect – before their time because it turned out they required a colossal go-to-market warchest and probably can only be accomplished by purpose-built vehicles with the no-fooling costing figured out, or a relatively vast incumbent that monetizes elsewhere and can absorb the J-curve to profitability without shareholders crying uncle:

  • Is this Kozmo.com (with Lyft as the me-too UrbanFetch) all over again, but at Softbank-and-Saudi scale?