Uber can’t be an $18 billion company with marketing this dorky: Bruce Philp

To justify its $18 billion valuation, Uber needs to think beyond the nerdy tribe that spawned it

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Smartphone with Uber app on busy street corner

(David Ramos/Getty)

Maybe 1999 wasn’t so stupid after all. Although the new economy was about to teach us all an expensive lesson, at least those guys with the sock puppets recognized you can’t sell something original to people without first introducing yourself. We all laugh at the Super Bowl advertising excess of the ’90s tech boom, but there was a kernel of sense in the awareness craze: If your dot-com is being valued at eleventy-zillion times revenue, it seems inevitable that parabolic growth is in the cards. Somebody, someday, is going to want their money back, and then some.

So maybe smartphone-powered taxi service Uber was unconsciously channelling this when they got involved with the NFL last year. Except that instead of shelling out to enlighten millions of us with an ad or two on game day, they figured they would just pick up the tab for millionaire football players who needed a ride home when it was over. The stunt would promote “a safer environment for players and their communities,” which is almost like advertising, I guess. Think of the talk value, I’m sure they told themselves. Who wants drunk football players taking the bus, right? We’ll do this Good Thing in the name of public safety, and the Uber faithful will talk us up until the cows come home.

But how you start a business is rarely how you grow it. There comes a point in the life of a startup when the very thing that spawned it becomes a strategic liability. That thing, for Uber (as for so many startups), is its blind, bottomless faith in early adopters. Now, with the company’s latest financing round valuing it at US$18 billion—the highest of any pre-IPO tech startup alive—it’s surely clear that it’s going to take a lot more than just the cool kids to make any economic sense of Uber. For that, they’ll need the rest of us, and the rest of us usually need a little more than buzz to open our wallets.

In my experience, three things can unerringly predict the failure of a startup: being undercapitalized; not committing to a positioning; and failing to provide for marketing in the business plan, as the day will inevitably come when investors want to see sustainable growth. Uber has neatly dodged the first two bullets: They seem pretty well funded, and their laser focus on a value proposition is exemplary. But they appear to think they’re exempt from that third one. They seem to believe, in that wide-eyed Silicon Valley way, that their customers will do their marketing for them.

Meanwhile, Uber’s legacy competitors, taxi companies, are successfully casting the firm as a marauding horde of unregulated gypsy cabs. Uber’s media profile is a pageant of placard-waving angry cab drivers, indignant municipal governments and crusading lawyers. News outlets report on pan-European protests against Uber with an enthusiasm not seen since the Greek default. The company comes across like some kind of techno-parasite, picking the pockets of hard-working 99-percenters for the convenience of a few entitled millennial digi-brats.

Which is mostly nonsense: Venture capitalists aren’t idiots. Uber may be risky, but it has also fixed some glaring frustrations with the traditional taxi business by smoothing the ordering process and eliminating cash.

But that won’t matter if $18 billion worth of customers don’t know it—and their awareness doesn’t appear to be in danger of changing soon. One of Uber’s recent promotions offered people in three cities a chance to get picked up by Optimus Prime, the robotic star of Michael Bay’s Transformers movies, when they summon a car. Along with promotional partnerships with Call of Duty and Red Bull, it reveals a brand that still can’t quite see past the nerdy tribe that launched it.

In June, flush with US$1.2 billion in new capital, Uber co-founder Travis Kalanick was asked directly by Businessweek what Uber planned to do with the money. Besides taking advantage of the “massive” opportunity in front of them, Kalanick seemed to deflect the question. The answer was marketing, Travis. When you’re promising growth to investors, it almost always is.

Bruce Philp is a brand strategy consultant and author of Consumer Republic, winner of the 2012 National Business Book Award


Classic Pets.com ads of the dotcom era


5 comments on “Uber can’t be an $18 billion company with marketing this dorky: Bruce Philp

  1. This is a terrible article. Should be titled: “The opinion of a man who does not understand marketing”.

    How much research did you actually do to decide Uber doesn’t market effectively. You see Uber EVERYWHERE. Isn’t that the whole point? How do you think that happens? Magic? You used two small scale promos they did as your examples: Optimus Prime and Call of Duty. You conveniently forgot Uber Ice Cream which was done in 140 cities all on the same day from the articles I’ve seen. Is that not effective marketing? How about the constant stream on social media of people using their own referral codes. I see those all the time as well. Word-of-mouth is the best marketing, in case you didn’t learn in Marketing 101.

    “Taxi companies are successfully casting the firm as a marauding horde of unregulated gypsy cabs.” Who says they’re successfully doing that? You? In my eyes it looks like the exact opposite. Uber makes taxi companies look like the dinosaurs they are, that need to – and probably are – going extinct.

    Use more facts instead of opinion when publishing articles. It’ll get you farther in life, kid.

    Reply

    • Rant much?

      Reply

    • First off, thanks for calling me ‘kid’. Made my day.

      Marketing 101 was a long time ago for me, but here’s what three decades of experience – incuding with startups, and including in Silicon Valley – have taught me about word of mouth: First, it’s almost always collateral to outbound marketing. And second, where it occurs in isolation of outbound marketing, it doesn’t scale. All virality tends to occur parabolically. In other words, it builds, peaks and ends. You can’t afford that if you want to be as big as Uber’s valuation implies they are. You need to be able to scale forever, just like real marketers do, the kind that last a long time, the kind whose stock people buy and hold on to, the kind that build economies.

      With respect, you may see Uber ‘everwhere’ YOU go, but their actual market penetration tells a different story. Real marketers can see past the end of their own noses. That skill will get you pretty far in life, too.

      Reply

  2. A company is only worth what someone is willing to buy it for. Who will buy Uber for 18Bn? The answer is nobody. This is why Square pulled their IPO. No one in their right minds would buy a company trading at 1000x earnings. Uber is at 2000x

    Reply

  3. no comment

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