One of the fastest growing businesses in the world today is a company called Uber. For those who do not know what Uber is; it is essentially a Mobile App (a computer program, using a cell phone), which makes it possible for you to call a “taxi”. Uber does not own any taxis or cars of its own. The App sends a message (similar to an SMS), to the nearest registered but independent Uber driver, within your vicinity. The car will usually arrive at your location, within 5 minutes.
Whilst using one of these services, the owner of the car, proudly told me that he was making a lot of money, as the service brings him customers. Uber take a commission, and also do the billing. All he has to do is turn up. Then the driver, added this:
“Uber has no assets, just some computer servers.”
Seeing that he was a smart entrepreneur, I then engaged him in a wider conversation, about business:
I asked him so many questions, that he finally asked me, “are you planning to set up a similar business, in Africa?”
“Not really…. I’m just “BUSINESS MINDED”; I make it my business, to see the business side of any business.”
I then surprised him by telling him what I already knew about Uber. For instance I told him, that Uber, is now valued at more than $40bn.
They are more valuable than Anglo American, which is one of the largest mining companies in the world. Imagine, a taxi hailing service, is more valuable than Anglo which has been around for more than 100 years, employs tens of thousands of people, and controls some of the largest deposits of diamonds, platinum, iron ore, and coal; in the whole world.
“Do you think that is fair?” The Uber driver asked. “How can a company with no assets, be worth more than a mining company that owns De Beers Diamonds, or Anglo Platinum?!”
Uber has no assets. They do not even own the cell phone network, on which their services operate.
“Who would have imagined that someone can come along, and change a service as simple as getting a taxi?”
As we neared the end of my journey, I suddenly asked my driver, who incidentally was an African from Ethiopian:
“How does Facebook and Twitter make money?”
“Through advertising”, he shot back.
“What does that mean?” I asked laughing.
“Not really sure, sir.”
I laughed some more, and as I got out of his car, I was still laughing.
He looked bewildered, by my response. Sadly I did not have a chance, to explain to him, why I was laughing. He rushed to his next Uber client, I went my way… Still laughing.
To be continued…