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Get the supply and demand follows
Supply first, not demand
Expedia worked the other way around. It was a demand-first company, focused on getting consumers to the website and then building hotel and flight inventory in response to demand. At Uber, everything is upside down.
Sparse markets
One big growth opportunity is in sparse markets: the suburbs and smaller cities, the next 50 and the next 200 cities in a country beyond the top 10. The first thing Uber does in those places is go out and recruit drivers, merchants, restaurants, grocers, and couriers. It is not that easy, but the demand shows up.
Securing every supply
The biggest opportunity and challenge is securing every single supply: every car that will take someone from point A to B, every restaurant, every retailer, and every grocer. With enough of it, demand takes care of itself. The same view drives the company's approach to autonomous vehicles, where access to supply is why it has partnered with basically every AV provider.
Why do marketplaces struggle to get started?
Marketplaces face a chicken-and-egg problem: buyers come only if sellers are present, and sellers join only if buyers are present. Economists Jean-Charles Rochet and Jean Tirole formalized the economics of such two-sided markets in a 2003 paper in the Journal of the European Economic Association. Their work showed that platforms often set prices to favor the side that is harder to attract.
Why do small cities make ride-hailing harder?
Waiting times depend on how many drivers happen to be nearby, so dense areas match riders faster than sparse ones. Economist Alvin Roth uses the term market thickness for having enough participants on both sides to make good matches. Roth shared the 2012 Nobel Prize in Economics with Lloyd Shapley for work on market design.
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