What’s exciting with digital economy is that every time a revolution happens, we’re looking forward to the next one. More seriously, it’s not because overfunded businesses reached a nearly hegemonic position in a couple of years that we should not question their ability to last.
As a matter of fact, why wouldn’t a new generation of businesses come even faster and stronger than they did.
What we learned over the last years is that if being able to operate at scale matters, size did not protect anyone from anything. We also learned that at the current speed of obsolescence of business models, no business, no matter his age, is immune from being disrupted.
So what can happen to Uber and others ?
1Â°) Rest on their laurels
Startup never rest on their laurels and questioning themselves is a part of their DNA. Most of all in 2015. But we should remind that every business that failed was, one day, a young one saying “we’ll never rest on our laurels”. Either born at the beginning of the 20th century or during the first internet bubble. One day any business can unconsciously slow down, lose sight of the market, stagnate.
2Â°) Miss the step to the adulthood
No business can avoid this stage. Decades ago the young Microsoft made fun of IBM, then Google made fun of the old Microsoft. With time and success a business grows to 1 000 employees, then 10 000, then 100 000 and no matter what some say you don’t manage a 100K employees company like a startup. It’s hard to be manageable, agile, and innovative at the same time. Processes blossom, management layers are added to manageable people then to manage processes, then processes are added to manage managers.
And the unicorn becomes an elephant.
This scenario is less likely to happen to current disrupters that leverage platforms and rely as less as possible on human work (and not as traditional jobs). But who knows. It’s easy to slowly skid and oneÂ usually realizes how careless he was when it’s too late.
And there’s also the risk of ending with lots of employees that were not expected.
3Â°) Being overtaken by law
A Californian court recently authorized a class action against Uber by drivers wanting to be recognized as employees.
It’s easy to imagine that if really happens, the business model of the entire “on-demand economy” will collapse (please stop using sharing or collaborative economy, there’s no sharing or collaboration in these models except for those trying to dress them in good conscience).
4Â°) The rebellion of “digital labor”
When very few people take nearly all the value and most people are paid with peanuts on a task basis, the so-called collaborative or sharing economy becomes capitalism on steroids with all the downsides of the model it replaces and no upside.
And one day a drop of water makes the vase overflow…
5Â°) The death of employee experience
The value proposition of these companies mainly rely on an improved customer experience in comparison with their competition. But there’s no customer experience without employee experience (or even partner experience if you consider that workers are providers). We can read many things about that but even if “uber jobs” helped some to improve their lives it’s obvious that not everybody is happy with this situation and that the live of an employee/provider is not that nice and easy. Enough to kill their experience to such an extent that it will impact the customer experience so customers will leave ?
Why not. What is sure is that after the excitement of the first years I hear more and more customers saying that “it was better before”, “service is not what is used to be”, “I’m not ready to pay a premium for this anymore”.
In the digital economy there’s always room for someone to take a seat between a business and its customers. New players can come an disrupt the disrupters. Old businesses can also strike back and “Unuberize” themselves
Some biters will surely be bit one day.
All this can lead to different conclusions.
1Â°) Finally, the Ubers are not at risk. We can consider that either the above-mentioned events are not likely to happen of that their impact is overestimated. But believing that nothing can hurt these new giants would be a mistake. In a system that works at scale with large network effects, the least problem can scale very fast.
2Â°) There’s nothing new here. I agree but I’d like to make you notice something : none of these risks relates to technology. When digital is everywhere, technology becomes secondary and the success/failure factos become “analog one”s : management, culture, legal. The success of a digital business lies in non-digital factors.