> Every company doesn't need to innovate, sometimes just running the business well is the best strategy. Warren Buffett's entire massive track record is based on companies that do little innovation. And it's a strategy Uber desperately needs.
Uber absolutely does need to innovate. Its business model up to this point has been operating at below cost to suck the life out of the competition so that they can reap the massive network effects when they have driverless cars they can reap the profits.
They can't run their business like a mature low-growth software business where the name of the game is to milk profits and license revenue, because they have no profits and license revenue to milk. Their current business model of subsidizing fares with VC cash is not a sustainable one, so they need a visionary CEO who can get them to driverless cars.
Once they have driverless cars, then they'll be the kind of mature, milk the revenue stream business that Buffett tends to invest in (and then, they'll need the 'keep the business ticking over' CEO too). But Uber is not Geico yet.
Betting the house on perfecting driverless cars before they run out of money has always been a fools errand. If Uber is lucky Immelt will find another path to profitability.
Become the quality brand they started as. Charge more than Lyfy and Taxis because they have higher standard. Immelt can make that happen with process and measurement. Uber's tech will allow them to monetize data, and show customers their value is better. Better response times, better service, shorter faster trips, etc. That's how they can win. Trying to be cheaper than Lyft will fail miserably.
Right after he's announced, he should find a buyer for 3/4 of Benchmark's shares to get them out of the conflict, and immediately appoint Travis Kalanick as Chief Vision Office, and hire Holder or someone with perceived panache as Chief of HR and put them on the board. That'd be a good deal to make with Travis - Kill Benchmark's influence by paying them to go away, trade a TK board seat for a neutral party. Win/win/win/win.
Is being a super-lux Taxi service (or even a Lux taxi service) going to get Uber the kind of valuation that's now being touted?
I don't doubt that there are some people who will go for it, and I'm sure Immelt would run that business very well, but it doesn't strike me as a multiple billion dollar offer...
We kind of are hitting on Uber's core problem here though. "Profitability" would seem to involve either involve removing the drivers from the equation or hiking the price.
Removing the drivers is really hard. Hiking the price is easy but massively cuts Uber's appeal and cedes the low end to Lyft/Gett.
Uber absolutely does need to innovate. Its business model up to this point has been operating at below cost to suck the life out of the competition so that they can reap the massive network effects when they have driverless cars they can reap the profits.
They can't run their business like a mature low-growth software business where the name of the game is to milk profits and license revenue, because they have no profits and license revenue to milk. Their current business model of subsidizing fares with VC cash is not a sustainable one, so they need a visionary CEO who can get them to driverless cars.
Once they have driverless cars, then they'll be the kind of mature, milk the revenue stream business that Buffett tends to invest in (and then, they'll need the 'keep the business ticking over' CEO too). But Uber is not Geico yet.