Creating Value and Valuation are not the same
#Uber and #Ola are so busy playing the valuation game. First they offered incentives to the drivers based on no. of trips per day, then it was based on money earned per day. As a result, the impact on driver behaviour was flat refusal to ply long distances in the former case and inclination to book rides that give greater revenue in the latter. Refusals to drive is becoming common place. Why hype and exaggerate earning potential in this profession and play with driver mentalities? Chennai has the dubious distinction of having the most rough Auto drivers in the country. A real hassle for a commuter indeed. Here, I ask, what has technology done to a customer then? As many are migrants from autos to cabs seeking better service, are these cab aggregators solving a real problem from a customer’s perspective?
Burning cash in the name of offering discounts is not sustainable as the customer is going to patronise those offering discounts and cost advantages. Logic tells me that none of these are part of long term strategies. We talk of Start-ups but history suggests that industrialists and entrepreneurs of a previous era had a more inclusive approach of providing sustained benefit to a customer and the society that they were a part of. Agreed there was not much competition back then. Forethought, value of customer and ethics are steadfast friends of business and beat competition at all times. The lines between auto and cab drivers are indeed blurring.
I really don’t know what sustainable business or market share is being aimed at. On one hand, driver mentality is made worse and on the other hand, customer will continue to demand low fares. Eventually, the whole market would have got screwed because a couple of people called start-up entrepreneurs who wanted to make money. Is the start-up era bringing capitalism in a different avatar?
While I have nothing personal against these companies, I wonder as a consumer how and where this is going to lead us all to. Valuation without creating value to customer is never long sustained.