Kurt and Kati live in Denver, and until recently they owned a car, like 88% of households in the city. What's remarkable is that last month they decided to go car-free, and so far they're loving the experience. Kurt has written a great piece about his experience, and I found it inspiring enough to want to share it with you.
Like most families that have grown dependent on a car, the challenge was figuring out how to meet all transportation needs with other things. After some planning and experimentation, they conclude: "Turned out B-cycle [bike sharing], RTD [bus and rail], Bustang, Lyft, Uber, Car2Go, and ZipCar would suffice."
If you’re thinking of going carless, it’s tempting to fixate on trips that seem the most challenging without an engine — heading to the mountains, for example. Don’t do that. It’s discouraging. Instead, arrange all the trips you take in a year into a pyramid, with the most frequent trips (like your commute) at the bottom. Replace those trips first. Next, work your way up, replacing trips that repeat weekly, like the grocery store. Already you’ve replaced 75 percent of your car trips, which you’ll realize are only to a few different destinations. This discovery builds confidence.
The tip of the pyramid usually consists of trips that require a major haul, like furniture, or trips that take you beyond the reaches of Denver’s transportation network. Car sharing works well for hauling. For long-distance, overnight trips where carpooling isn’t an option, renting a car makes sense. The savings of not owning a car are insane. We can rent one for a weekend every month if we want and still come out ahead. And the cost of a single month of our (former) car insurance coverage buys an entire year of the gold-plated B-cycle membership.
No Car At All
Lyft’s announcement yesterday about a partnership with Didi Kuaidi is a clear signal the global rideshare wars are on. Uber wants to dominate rideshare globally, that’s no secret. But it’s foolish to think they will stop there. The next industry that should prepare for an Uber Armageddon is the automotive industry. In fact, Uber’s market cap already exceeds that of General Motors.
Getting around urban areas has changed dramatically in the last three years, especially in San Francisco, which is ground zero for the mobility service revolution. You no longer need to buy a car; you can purchase services to get around. The best example of this is ridesharing, but there is also carsharing and apps that make it easy to get transportation information like Google Maps, Routesy, and RideScout.
The pace of innovation is intense and moving past traditional ridesharing into instant pooling of rides and deliveries. Smartphones allow us to coordinate rides headed in the same direction like with UberPool, LyftLine and Sidecar Shared Rides. At Sidecar, we’re using our Shared Ride technology to combine people and packages on the same trip as well as to facilitate hyper-efficient multi-mode deliveries where a package might be handed off between a driver and a walker or bicyclists in a single trip. Transportation is becoming smarter through technology. Can traditional car companies keep up? That is the big question.
With all these services, it makes sense that auto sales will decline. If you still think Uber and ridesharing is just about replacing a taxicab you’re dead wrong. This is bigger than taxis — ridesharing is on a path to displace cars. The evidence is clear.
Ninety-five percent of rideshare demand in the San Francisco Bay Area is not displacing taxis, which have remained flat over the last few years. We know 57% of rideshare riders own cars and in surveys they report they are taking more rideshare trips and fewer car, taxi, and transit trips.
Industry experts estimate 30% of San Francisco lease owners will not renew when their lease comes up.
Millennials would rather have a phone than a car. With a spending power hitting trillions of dollars, people aged 18 to 34 are buying cars less often than their parents — 30% less and the number falls almost every year.
How can auto companies compete in the smartphone-era and avoid being Uber’s next road kill?
Adapt or Die. Recognize that ridesharing and other mobility services are a major platform shift that represent a new way to monetize what you do really well — engineer, design and market cars — but are also a major threat to your current model because fewer cars are required. Today you monetize a car by selling it through a dealer sales channel. In the future you can do that and gain additional margin through mobility services. Platform shifts can be company killers or company makers. Early in my career I was AOL’s first product manager for Internet (yes, for the entire Internet — it was small then). The Internet could have killed AOL, but instead the Internet made AOL. Auto companies face a similar threat and opportunity.
Play to your strengths. Auto companies have incredible brand recognition that could easily extend to mobility services. They have a huge base of potential drivers and a way to make it easy to start ridesharing and making the purchase of a car more affordable. Every car can have a rideshare-based lease payment and have a driver app built into the navigation system. There is also a unique opportunity to build a rider base. For the foreseeable future, most rideshare riders are also car owners, making it possible to onboard riders through car sales in addition to more usual customer acquisition leveraging the automobile brand.
Move now. Being the first to leverage dealer channels, lease arrangements, and navigation systems will build momentum and awareness that a #2 or #3 won’t be able to match. In Asia, companies like Didi Kuaidi have been able to effectively compete with Uber by being early to market. Ridesharing networks will also be the obvious way to deploy autonomous cars.
So listen up auto industry. Uber’s coming for you. You have the size, brand recognition and dollars to challenge them. But you better get moving.