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UberRush Closes Down – That’s Why Uber Succeeds

It will sound a little strange to some that a company closing down an idea, a line of business, is evidence that the company is succeeding. But that is the right way to look at Uber and its closing down of UberRush. They tried it, it didn’t work, they’re stopping. That is indeed how economic success happens:

Not long ago, on-demand package pickup Shyp closed its doors, saying it had failed to achieve critical mass for its explosive growth strategy and a last-minute pivot to business customers was too little, too late. Now UberRush, Uber’s delivery service for merchants in New York, Chicago, and San Francisco, is following suit and will soon be out of business.

No doubt we’d all prefer never to have a failure but that’s not actually the way the real world works. Most especially it doesn’t work in something as fast moving as the tech business. For to do the study, the planning, the checking, to make sure that something will work is to have to spend too long doing that planning and checking. There’s thus great value in simply trying everything that seems like even a vaguely good idea:

Uber has decided to shut down its on-demand package delivery service called UberRush. The service was launched back in 2014 in Manhattan and it allowed users to get someone to pick up and deliver their package. The service was later expanded to San Francisco and Chicago but UberRush never made it beyond these markets. The company then decided in April last year that restaurants wouldn’t be able to use the service anymore and would need to switch to UberEats instead for delivery. The company has now confirmed in a statement that it has decided to shut down UberRush.

One point being that no business plan ever survives first contact with the market. It’s not just that we don’t know what people want, the people don’t know what they want until they’ve been offered it. Everyone’s doing a large amount of stabbing in the dark therefore. No, more market research doesn’t work either. New Coke was going to be a great success until no one bought the damn stuff. So, try it out. Which is exactly what Uber has done.

In one reading they’ve done their market research by going and doing. Which is the only form that ever really works (vide, New Coke again). But there’s more to it than just this. It’s also necessary to know when to can an experiment. Which is the thing which government never does do – government being mentioned as it’s the usual different method offered to this wasteful capitalism and markets thing. And that’s something which the successful tech companies are very, erm, successful at. In the past and in other places I’ve praised Google for this very thing. Start something up, see how it does, if it fails then can it. Just what Uber is doing here. And just what government never does do. As an example in the UK we’ve got government subsidising first time buyers into housing, that housing being too expensive as a result of the scarcity of planning permission issued by government. If they just stopped rationing the planning permissions then there wouldn’t be the problem requiring the subsidy but do they stop screwing it up? Nope, amazingly, they don’t.

Given that failure is inevitable at times it’s better to have a system which tries many things to see what does work, a system that also closes down those things that don’t work swiftly. Yay! for capitalism and markets in other words.

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6 years ago

The essay has an odd final sentence, as you have made the valid point that capitalism is not the issue: Capitalist entities, co-ops, and perhaps even government could participate in the effort to use the market to figure out what works. Though my bet is on the capitalists, Yay! for markets.

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