7 factors that will make your Uber for X startup a success

Uber for X is attempting to disrupt industry value chains across many verticals. Both enterprises and entrepreneurs involved are vying to create successful platforms. But not all platforms created on the Uber for X model are successful. Here are 7 critical factors which can govern the road to success for your Uber startup.

1. Right Problem Statement

Everything starts with a WHY. The golden rule for any startup is that they should be solving an unmet need for customers.

When we talk about Uber for X startups in particular, they essentially are dealing with multi-sided customer segments with buyers and suppliers being the 2 core segments.  So for these Uber startups, the problem that you are trying to solve should echo with both of the groups.

There have already been some failures in the OnDemand space that I know of having failed for trying to solve a self prescribed problem –

Read Dinnr (On-Demand Ingredient delivery service startup) founder talking about the reasons behind the startup’s failure: Seven lessons I learned from the failure of my first startup, Dinnr

2. Unit Economics

At the end of the day even if you are backed by VC War chests you need to reach a point wherein unit economics start making sense. What VC’s are betting on is the platform attaining the scale/critical mass beyond which the unit economics starts making sense.

Although it’s difficult to accurately predict the unit economics to begin with, but a rough analysis of where the cut from every transaction is going to go before hitting the critical mass and after hitting the critical mass helps to decide the viability of the model.

Read Prim’s story – On-Demand Laundry startup- of Unit Economics gone wrong: Prim: Anatomy of a folded startup

3. Transaction frequency

Uber’s success can be partly attributed to repetitive high margin purchases. According to reports, a large number of Uber users spend more than $100 every month on the service.

There are some services which translate naturally to this metric. There are others which are used sparingly. Beauty of On-Demand platforms is convenience which leads to high retention rates.

Read Cherry’s story – On-Demand Car Wash-  of how low transaction volumes led to difficulty in scaling up and folding: Iterations: Lessons We Can Draw From Cherry

4. Reaching the Critical Mass

As is the case with multi-sided platforms, reaching the critical mass is the first milestone that all entrepreneurs are working towards.

What does critical mass imply for On-Demand startups?

Critical Mass leads to ensuring reliability (customer is not denied the service/product) and efficiency (service providers/delivery personnel are engaged above a certain threshold). Uber is built from the ground up on these principles.

For more details on Maths behind Uber and Uber startups – Read this analysis: 4 Key Elements that will impact your Uber-like Business Model

5. Right Design Choices in the Business Model

Any business model, either Uber for X or some other, needs a unique business model design to make itself different from others. Make sure that you choose the right model while defining your business.

Scheduling vs Instant

Scheduled and Instant both are permissible models and one is more suited viz. a viz. the other depending on the vertical you are operating in, area of operation, funds, etc. Instant puts more pressure on the supply side infrastructure and its easier to start with only scheduled if you are bootstrapping a business.

Aggregated vs Integrated Supply

Freelancers help in scaling the platform fast while the contracted supply helps in keeping the reliability of the supply side high. I have seen many platforms start with contracted supply, set the standards for the initial demand in the evolutionary phase and slowly start adding freelancers. Once you reach the critical mass the reliability automatically increases as you always have a sizable amount of available supply that is not engaged at a certain instant.

For detailed analysis on critical design choices for On Demand startups, go through this free ebook: Business Model Uber for X 101

6. Total Addressable Market size

A significant TAM is essential to make it worth your while. It’s important to differentiate between Total initial target market and TAM. Ideal scenario is starting off with a smaller initial target market and expanding to other use cases.

7. Domain Knowledge

It can be difficult to succeed without any domain knowledge since most of the On-Demand startups demand heavy-lifting on the operations side. Without the right knowledge, it is quite possible that you might not be able to understand your audience and ask the right questions.

It is furthermore important to look into the Cost to develop and app like Uber. Having the right idea and the right resources can surely take you ahead.

Feel free to Get in touch with us for a sound technical advise in regard to your on-demand startup.

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