Why Uber became an innovation of mass destruction

Uber became a hot word in 2015. In the first half of 2015, the Uber phenomenon received widespread attention. Recently, attention on Uber has risen from a phenomenon to a discussion of its business model.

Uber’s lethality can be illustrated by the unprecedented resistance and defense against it by the traditional taxi industry. Because in the eyes of the outside world, the taxi industry has always been a highly monopolized industry. It is hard to imagine that such a monopolized industry would be so afraid of an Internet ride-hailing company. This shows that Uber has indeed brought a disruptive threat to the taxi industry.

This is because taking a taxi is not only a simple transportation issue, but also involves a credit mechanism issue. When taking a taxi, for the taxi driver, you are dealing with strangers at very close range. And often they go to a very strange place that is beyond their control. Of course the reverse is also true for passengers. What passengers and taxi drivers actually do is a "one-time transaction." In this kind of "one-time transaction", both the driver and the passengers actually lack a sense of security.

In the past, it was said that "cars, boats, shops, feet and teeth should be killed even if they are not guilty." This kind of one-off business is often very bad. German sociologist Luhmann defined trust as: "Trust originates from reunion." Where there is no reunion there is no trust. If it is a one-time transaction, such as a restaurant next to a station, it is often very bad. This is because it is dealing with "one-time customers" and there is no need to consider using excellent service to attract repeat customers.

So the same applies to the taxi industry. This "one-time sale" industry requires strict supervision and a strict credit system. If an individual just owns a car and wants to engage in the taxi industry, he will not be trusted by customers no matter what. Passengers and drivers will feel unsafe when interacting with strangers. This requires a strong organization to regulate the industry. Let the taxi industry, which deals with strangers, stay safe and orderly. As a result, the taxi industry has become an irreplaceable monopoly organization.

The biggest breakthrough and advantage of the Uber model for this industry is that it has become an industry where individuals deal with each other, no longer needing to go through monopoly organizations; and the cost is very low, the fare is only that of a traditional taxi About half.

To answer this question, we need to explain the economic model adopted by Uber. Simply put, Uber's shared economic model is a new economic model in which everyone can share social resources fairly and paidly due to the decentralization of production tools, communication technology, and credit rights.

All of this comes from the sharing economy model.

"Decentralization" of production tools

In the past, only companies as a unit, with the support of a large amount of capital, could purchase expensive production equipment. For individuals, the threshold of capital cost makes it difficult for individuals to enter this industry. Ten years ago, Uber would not have been able to expand so rapidly in China. Because China’s per capita car ownership rate was very low ten years ago. Nowadays, the decentralization of production tools - cars, has made the production tools originally owned only by corporate organizations "decentralized" into the hands of every ordinary person. This is the first prerequisite for the success of Uber's shared economic model.

“Decentralization” of communication tools

In the past, only companies had the lowest-cost and most effective communication means, forming a huge information resource network. There is no way for individuals to compete with companies in the collection and processing of information. Today, the Internet has brought about a leap-forward development in communication means, allowing individuals to have the same communication means as companies, or even better. For example, when WeChat first became popular, some drivers who were sensitive to mobile Internet took the lead in using WeChat to increase their customer base. This later forced taxi companies to change their employment strategies and only recruit young people who can use smartphones. taxi driver. From this example, we can see that the Internet has caused a fundamental reversal of the advantages and disadvantages of individuals and companies in terms of communication methods. Now, individuals may have better and more flexible communication methods than companies.

"Decentralization" of credit rights

In the past, even if the car purchased by an individual was better than the taxi company's car, the communication means used were better than the taxi company's communication means. Convenient, but if credit cannot be guaranteed, individuals still have no way to compete with companies in the taxi industry. Because the company is a formal organization, its commitment to society is guaranteed. Compared with individuals, companies have obvious advantages in credit. So the public is generally more likely to trust companies than individuals.

If people who use QQ are still living in the virtual world of the Internet, then people who use WeChat are living in the "real world" of the Internet. A very important reason for the real success of WeChat is that it is bound to a mobile phone number, making it a real-name communication tool on the Internet.

The real-nameization of the Internet makes personal IDs more and more clear, and also makes personal credit files a kind of automatically accumulated information, which makes it more and more convenient for others to determine your credit rating.

In the real-name online world, personal information is becoming more and more open and transparent and easier to be searched by others, which also improves the credit protection of the entire network.

In the case of Uber, the information between the two parties is completely transparent before the passenger and driver reach a transaction. If a criminal case occurred in the taxi industry in the past, it would be very difficult for the police to find information about passengers. When using Uber, passenger information is very transparent. And not only can you get the information about this transaction, but you can also get all the information records of a passenger taking an Uber ride. Of course, at the same time, Uber driver information is also very transparent. Once the information is transparent and it becomes very convenient to search and track the information, credibility will naturally be guaranteed.

Therefore, the "decentralization" of production tools, communication methods, and credit rights has made the advantages of traditional companies over individuals disappear, and the Uber model has naturally emerged. This is *** The prerequisite for the emergence of the sharing economy model.

What is zero marginal cost? It means that doing something will not significantly increase the cost; at the same time, if you don’t do it, the opportunity cost will be zero, and the cost will not be saved, but an opportunity will be wasted. This means that the cost of the sharing economy is almost zero, but its benefits may be very large.

For example

If I am an Uber driver and I drive to work every day, if there is a person who uses Uber, he finds that his driving time and route are not related to each other. I am coincident, then he can ride in my car. From a cost perspective, my car cost has only increased slightly. But if I don't take him with me, I won't save my car cost; from a profit perspective, the value I create by driving has doubled, from traveling by one person to traveling by two people now. For the passenger, he gets a cheap and affordable service, so it is natural to pay a certain fee to the driver. This is the most important feature of the sharing economy: zero marginal cost.

The asymmetry between costs and benefits releases the potential production capacity that was already owned. In the past, if four people in a community worked in the same building, it would be difficult for each other to obtain this information. But now, with the help of the mobile Internet, both supply and demand information can be easily obtained. These four people, connected through Uber, can enjoy four days of travel convenience for the cost of one day’s driving. This is the secret of UBER’s innovation success.

Release the original redundant production capacity, turn it into actual production capacity, and obtain profits without increasing costs. This is the core secret of the Uber model. Therefore, it has obvious advantages compared with traditional organized production methods.

Another example

The U.S. Department of Defense Advanced Projects Agency conducted a famous "Red Balloon Experiment" in 2009, flying balloons at any nine locations in the United States. A red balloon. Then a message was posted on the Internet: "The person who can find nine red balloons in the shortest time will receive a reward of 40,000 US dollars."

This is a social experiment, trying to test the power of social networks. If this task had been completed in an organized way in the past, the cost would have been very high, and it would have even required the use of the U.S. Army, Navy and Air Force. A special project would need to be established and it would cost even hundreds of millions of dollars to complete. But using the power of social networks, the nine red balloons were found in less than nine hours.

How did you find it? It turns out that the person who found the nine red balloons just posted a message on Twitter: If you see this red balloon, take a photo and send it to him, and then courier the red balloon to him. Each person who delivers a red balloon to him by courier will receive a reward of two thousand dollars.

For the person who delivered the red balloon to him by express delivery, his cost of obtaining the two thousand dollars was almost zero, because he did not look for it at all, but just came across the red balloon by chance. It's a piece of cake. For the person who posted the news, he only paid a cost of $18,000 for the $40,000 bonus, and also received a profit of $22,000. This is an example that particularly illustrates the advantages of the sharing economy in competition with the traditional economy.

Create significant value with little effort. The cost is extremely low and the benefits are significant, which significantly increases the total wealth of the entire society. Obtain obvious wealth gains without increasing investment.

The Uber model is also a "wiki production method". The so-called Wiki production method means that everyone does something with a little effort on Wikipedia. But with the help of the aggregation and amplification effect of social networks, obvious value is created. This is called "plucking a hair and benefiting the world". This was not the case in the past. Because there was no Internet in the past, plucking a dime could not be integrated into the value pool of social networks to exert its value. In the past, without social networks, it was difficult to match efforts with demands. The development of social networks has made it easier and more transparent for supply and demand parties to obtain information. Every zero-margin cost payment can create obviously huge value through the collection of the Internet.

Like the Uber model, Zhihu and Baidu also share the same economic model, which can significantly improve the public wealth of the entire society without increasing costs. The reason lies in the "decentralization" of production tools, communication means, information rights and the huge wealth created by zero marginal cost.

We feel the subversive magic of the Internet every day. The magic of the Internet is not just as simple as making our lives easier. Its real magic lies in creating a new production function and a new wealth equation, discovering and utilizing some resources that are often ignored by traditional industries, and through the magic wealth equation, exponentially amplifying the right side of the equal sign. The number of wealth.

From this perspective, Uber is not only a convenient, fast and low-cost means of travel, but also a new business model that creates huge value for both producers and consumers. More importantly, Uber has created a new social welfare wealth gathering and growth model, which has enabled many resources that have been ignored by traditional perspectives to be utilized, creating huge social wealth value.