Since Uber launched in 2009, the ride-hailing company quickly spread across the world, growing into a giant business that recently earned a $62.5 billion valuation. Seeing its meteoric rise, other startups quickly tried to apply the Uber model to every type of service under the sun. These days, you can even buy an "Uber for X" script to make an Uber-like app for anything your disrupting heart desires. But this strategy doesn't always work.
"Whenever you have a breakaway successful company, there are immediate replicas across multiple industries and others get overfunded," David Goldberg, VC at Corigin Ventures, whose portfolio includes on demand apps like Zeel and Stylisted, told me over the phone.
With Uber's astronomical success, the tech industry became a Wild West of on-demand services, with startups scrambling to put together hailing apps for just about anything. As The New York Times noted earlier this year, "Other than Uber, the hypersuccessful granddaddy of on-demand apps, many of these companies have come under stress. Across a variety of on-demand apps, prices are rising, service is declining, business models are shifting, and in some cases, companies are closing down."
Aashish Dalal, CEO of ParkWhiz—an app that allows you find and book parking from your phone—is a survivor of the "Uber for X" epidemic. He told me that flashy marketing and free first-time use giveaways lowered the quality and user-retention rates in the service-hailing space.
"When times were great, a lot of companies were focused on growth for the sake of growth, that first customer acquisition without thinking about how they'll retain them," Dalal said. "One of the things we [ParkWhiz] focus on is following up on customers using the product a second time within a month. If they aren't, that's a problem."
According to Dalal, on-demand apps are essentially a traditional business at their core, and if too much focus is placed on the technology and not enough on the service end, it becomes harder to meet expectations from both customers and investors.
"At the end, it takes a lot of discipline and communication to run the business," he said.
Of course, not all "on demand" startups managed to pull through the way ParkWhiz has. Many e-hail companies attempted follow in Uber's trail of success. Some succeeded, others altered their strategy accordingly, but ultimately, many failed. To find out why, I decided to check up on some of notable "Uber for X" apps that you probably forgot even existed.
The home cleaning app had a promising concept, but with major reliance on free codes and sites like Groupon to acquire new customers, there was only so much Homejoy could have done to keep the lights on in the long run. Its downfall began in March 2015 when its workers sued "to be recognized as employees, not mere contractors," a common practice among on-demand apps. Uber just settled a similar suit in New York and recently settled one in the state of California. Since the former company's website currently has a defunct homepage, I tried to contact Homejoy for comment via their still-active Twitter account. No reply.
Push for Pizza
The infectious Brooklyn-based startup, founded by five teenagers in a Park Slope basement, was a viral sensation upon its launch. I caught up with CTO (Chief Tasting Officer) Cyrus Summerlin to check in on how the self proclaimed "Uber for Pizza" app is doing these days.
"This past 4/20 was the busiest day in our history, so we're still riding that wave a little bit," Summerlin told me. Not to mention, Push for Pizza has had a busy year embarking on their college tour, where the Summerlin and co-founder Max Hellerstein drive to college across the country in their rented Lamborghini (dubbed Lamborghizza).
When I asked Summerlin if the "Uber for X" title offended him, he insisted that despite its overuse in the media, "Uber for Pizza" is often a time saver. "On the college tour, it was the easiest way to explain to people what the app does. In terms of marketing, it's kind of the simplest way to describe your business model to new customers."
As far as finances go, Push for Pizza—which now has eight employees—has enjoyed "profit from day one," Summerlin says. "We make on average a 15 percent commision on every order."
As far as tech startup mentality goes though, the 21-year-old Brooklyn native explains: "Is Push for Pizza gonna solve the greatest threat to humanity, which is…climate change? Probably not. But maybe my next idea will, thanks to the funds from this one."
True to his unfiltered personality, Summerlin tends to use self-deprecating humor to keep his business and branding "100." "Push for Pizza: it's stupidly simple," he insists of their (trademarked) tagline.
He also reminded to, as always, "Stay cheesy."
You can call it "Uber for Laundry," I suppose. The Y Combinator-backed laundry service app picked up, washed, and delivered clothes for $25 per bag. Prim lasted all of six month from its launch in mid 2013 until it folded in January 2014. The company's still-existing Twitter page is completely inactive (they never replied to a tweet from me requesting a comment). Even sadder, the Prim Website now redirects to a completely different company: a home renovation business that goes by a similar name. To be fair, there is a currently operating "Uber for Laundry" that has found success, and that's Washio.
The British "Uber for…Uber," if you will, Hailo was expected to be an Uber and Lyft competitor in the U.S. when it first arrived in New York City back in 2013. According to Fortune, about a year later, the $100 million company decided to shut down its American service and laid off 40 employees. The main reason? The huge marketing costs required to compete in the U.S. market.
"For Hailo, our aim is to be the leading e-hailing app in Europe," Hailo CMO Gary Bramall told me. "Our growth and market research data shows that customers place greater importance on trust, quality, speed, reliability and safety than they do on price." However, Bramall insists that Hailo's pricing is "completely transparent," where passengers are not penalized by surge pricing at busy times.
"Licensed drivers face stricter regulation in Europe and are the most trusted form of taxi transportation," Bramell said. "Within the e-hail space, the European market is fragmented and unconsolidated." To this point, he said that there isn't a "current winner" or dominant player in the market, as there are different regulations in every city and countries. "This makes it very complex for outsiders to enter the market."
According to a Medium post by Dinnr founder Michael Bohanes (published upon the company's shutdown), the startup "was an ad-hoc, same day ingredient delivery service." Select a recipe on our website, and we deliver everything you need to cook that recipe at home, all the items pre-measured with printed instructions. All you need at home is oil, salt and pepper and a reasonably equipped kitchen. The post conveys a heart-felt explanation of the blood, sweat, and tears that most startup founders put in during their tenure and beyond.
Bohanes explains that his decision to end the London-based company's journey came "on 12 January 2014, when I decided not to accept a small second round of investment I had secured via crowd-funding platform Seedrs." It turned out the Blue Apron-esque startup couldn't sustain on the small trickle of demand they had in their markets, and as per the number one rule of startups go: "we were not solving anyone's problem," Bohanes wrote.
It's hard not to compare Exec's initial strategy to today's TaskRabbit in that it promised delivering errand services at all times. It was founded in February 2012 by Justin Kan—founder of Justin.tv (now Twitch)—after raising $3.3 million first round with backing from 14 investors, including Y Combinator. After initial hiccups and a costly operation trying to do it all, the company settled on focusing its efforts as a home cleaning service. According to Next Juggernaut, Exec was eventually acquired by HandyBook in January 2014 and is still operating today.
The on-demand styling app provides on-location hair and makeup at salon prices. When it comes to their "Uber for Styling" strategy, the company looked into what their potential customers could truly want from a stylist-hailing service.
"When it comes to beauty, there are significant differences in skill and experience across service providers," Stylisted co-founder and CEO Lauren Katzberg told me. "Some stylists are fresh out of cosmetology school and are hungry to build a portfolio and Rolodex, others have been in the industry for decades and have a book of celebrity clientele."
She also explained that in the case of hair and makeup, as opposed to hailing any old car, "there are also micro-differentiations that the demand side of the market cares about—differences in hair texture, skin tone, personal aesthetic—that the Uber model can't capture."
"When it comes to the beauty and styling industry, hair stylists and makeup artists have invested in their craft," Katzberg explains. This is why Stylisted uses a marketplace model based on user reviews and price range rather than assign contractors to customers. Hair stylists and makeup artists "don't want to be anonymized and dispatched at random, they want to be recognized for their talent," Katzberg says.
As far as the on demand bubble goes, investors don't foresee the trend completely going away until it's overtaken by another model.
Goldberg said that companies use the "on demand" label too liberally to describe their business, and that we'll probably still see new "Uber for X" companies pop up. "There are probably still some unturned stones out there," he said. It's just going to be harder to succeed.
As Dalal puts it, for both investors and customers, these days it's about more than just shiny packaging and branding. Today, customers and investors are already wise to the fact that the "Uber for X" model doesn't work for every type of business.
Uber Earth is Motherboard's exploration of the ways Uber has already changed the world and how it stands to do so in the future. Follow along here.