Uberification of the US Service Economy
Since I joined RRE Ventures last fall, I’ve spent time researching mobile on-demand services that we are able to access with a push of a button. “On-demand mobile services” (ODMS) is a broad category so I believe it’s important to start with a definition. My friend Semil Shah defines ODMS as “apps which aggregate consumer demand on mobile devices, but fulfill that demand through offline services.” I’ll take it one step further: ODMS deliver a “closed loop” experience by collapsing the value chain including discovery, order, payment, fulfillment (offline but within owned network) and confirmation. In the pre-mobile era we had to search yellow pages (or google), find a provider, call or email that provider, wait to connect with someone, schedule a convenient time, hope the provider arrives on time, and then pay with a credit card or cash. Thankfully, a new array of mobile services removes all of that friction we were used to experiencing. Welcome to the uberification of our service economy:
- Transportation: black cars, taxis, rideshares, scooters, buses, parking, private jets, bikes and rental cars
- Home Services: veterinarians, cleaners, baby sitters, handymen, movers, auto mechanics, locksmiths, laundry, iPhone repair, flowers, errands, dog walkers, and dog sitters
- Delivery & Logistics: package delivery, messengers, and local + long distance shipping
- Hospitality: hotel rooms, bed and breakfasts, and quiet spaces
- Food & Beverage: groceries, healthy food, fast food, and booze
- Dining & Drinks: reservations, deals, dating, and payments
- Entertainment: ticketing
- Health & Beauty: spa appointments, massages, fitness classes, and beauty services
Despite being three to four years into the ODMS trend, I’m super bullish on the road that lies ahead and I believe there are still plenty of untapped opportunities. For example, apps are emerging in categories like elderly care, medicine, real estate, and security. Additionally, there are a variety of B2B services emerging such as office cleaning, supply replenishment, tech support, and fleet management. Finally, a sub-trend I’m observing is startups that create “infrastructure” to power a variety of ODMS. One company that comes to mind is YC-backed Rickshaw which solves delivery and logistics for a number of the services in the above market map.
There are common challenges when building an ODMS such as offline logistical complexity, low barriers to entry, customer acquisition at scale, and aggregation of regional / local supply (see Exec and Cherry for case studies). But the entrepreneurs and companies that overcome these challenges await numerous multi-billion dollar market opportunities. The U.S. economy is largely driven by the service sector so it’s only a matter of time until all of our services are accessible via our mobile devices. The implications are huge for large companies like Google and Craigslist as well as thousands of regional and local service providers. Hundreds of billions of dollars of enterprise value are up for grabs. At RRE, we have been spending a lot of time thinking about ODMS and would to hear how you think the space will evolve over the next 12 to 24 months.
