San Francisco, Calif.-based transportation startup Uber tentatively dipped its toes into one of the biggest markets in Asia with the announcement that Bangalore is the newest addition to the list of cities where Uber’s luxury car rentals arrive to pick up customers at the tap of a smart phone app.Uber shared the news through a blog post which details the smooth and seamless experience that is a hallmark of Uber’s service and operating philosophy. The inaugural honors fell to happy music maker Raghu Dixit, who tapped on his app and was picked up a few minutes later.
Uber luxury privilege for Bangalore elites
The next to give it a whirl was actress-turned-entrepreneur Vasundhara Das, who was picked up curbside by a Mercedes E-Class that arrived instantly. Anywhere else, this might be labeled as a routine launch to gin up some publicity. In India, however, this is… an uber-luxury privilege even for the Bangalore tech city elites.
Uber itself described their launch in Bangalore as a “secret testing mode” over the next few weeks. No doubt they’ll be grappling with the complex cultural mind-block against luxury products in India, as do most foreign companies looking to get a foothold in the Indian sub-continent.
The numbers speak for themselves. Bangalore has more than 50,000 drivers licensed to carry passengers in ordinary air-conditioned cabs, while there are only around 100 licensed drivers with luxury vehicles such as the Merc E-classes, BMWs and Audis that Uber is offering in Bangalore.
It’s not hard to see why, because Uber’s base fare of Rs. 150 ($2.3 as of date) could take a passenger in an ordinary cab in Bangalore from the city center to just about any place else. Meanwhile, Uber charges Rs. 2,000 ($30.30) for an airport transfer from the city, which is more than twice what a passenger taking an ordinary cab would pay.
No interaction with driver required!
There are also technological limitations, because almost all luxury car rentals are still booked by phone in India and paid for with cash by passengers. Uber, on the other hand, requires no interaction with the driver or vehicle owner. Uber has the passenger’s credit card on file and facilitates the transaction in return for a commission.
As far as Uber is concerned, the obstacles don’t seem to matter much because they’re not really going for broke on this one. It’s just a part of their incursion into Asia, with openings in Shanghai, Seoul, Taipei and Singapore preceding successive rollouts in Dubai and Bangalore. No doubt it expands their market, but at the moment they seem more concerned with making sure that Uber users have the service available in every major city in Asia that gets a lot of international visitors.
This might be a good time to take a closer look at how Uber works. It was founded in 2009 by Garrett Camp and Travis Kalanick as a VC-funded startup named UberCab. The startup put out a mobile app in 2010 that connected passengers in need of local transportation in San Francisco with drivers of luxury vehicles.
The passenger would post the request for a ride through a text message or using the smart app, and could then track the location of the vehicle assigned as it made its way to the passenger’s location. Uber quickly became one of the brightest stars in the controversial “sharing economy.” We’ll talk some more about the fascinating growth of the sharing economy, but let’s finish Uber’s story first.
Uber’s success attracted both investors and detractors
Regulatory authorities quickly clamped down on what they saw as an illegal and unlicensed taxi service, with the California Public Utilities Commission slapping Uber (and other car-sharing services) with a $20,000 fine. A civil class-action lawsuit was filed against Uber on behalf of affected San Francisco taxicab drivers.
The good news for Uber was that Silicon Valley was firmly behind Uber in this epic battle of disruptive internet technologies taking on staid old business models and outdated regulations. This support was not just moral, but provided in terms of hard cash – as in a $258 million investment by Google Ventures.
It ensured that Uber’s valuation hit the roof, while allowing the company to focus on growth and ignore pesky hits by detractors. Long story short, Uber has now expanded its presence to 48 cities in 18 countries, and there’s nothing stopping the “Ubers” from invading every major city in the world.
This begs the question – can Uber bring the sharing economy to India the way it did in San Francisco and the rest of the U.S.? It’s a delicious thought, because while India may be a hard nut for luxury providers, the country still has a huge potential base of luxury vehicle owners who would be more than willing to put their vehicles and drivers to good use offering rides to Uber users.
Uber may soon become a well-known name in India, with demand fueled not by passengers looking for a luxury ride, but by people who have or want to buy luxury cars that can be turned into an income stream through Uber. This may seem terribly wrong and upside down, but this is the way entrepreneurship works in India.
Sharing economy is taking the world now
It’s not that far-fetched, because the sharing economy is taking the world by storm now just like Google and Wikipedia destroyed libraries, and Amazon and eBay scared the living daylights out of brick and mortar stores and forced them online.
The division between consumers and providers is increasingly blurred because everyone is sharing what they have in order to get some rental income out of it. AirBnB helps you find a place to stay in someone else’s home or let others stay at your place. You can share rides using Lyft and Sidecar, and share a car using RelayRides. Uber was a startup in 2009, and is now a $3.5 billion company with a global footprint that is on track for an IPO or a high-profile acquisition. Zipcar has already been purchased by Avis for $500 million.
It’s not just about cars or lodging either. You can rent out your driveway using Parking Panda, or turn your love for animals into a temporary doggie day-care through DogVacay. You can get just about anything on SnapGoods or Rentoid, instead of having to buy it just for a one-time need.
The bottomline here is that Uber is now in India, and it’s here to stay. It’ll be a tough slog getting people hooked on luxury car rentals hailed using a mobile phone, and they will eventually have to drop the rates. If and when they do so, Uber may just trigger a sharing economy boom in India that gets people hooked on car-sharing from the supply side.