Outstanding In The Field — will Uber be like Netflix?

Did you hear about the farmer who was out standing in his field?

At the www.outstandinginthefield.com gathering last night at a secret sea cove near Santa Cruz, I had dinner with the indefatigable Reed Hastings, CEO of Netflix.

I vividly remember the Netflix series A pitch, because I made the huge mistake of turning them down. Reed was an awesome CEO and entrepreneur that we wanted to back, but I thought that it was unlikely for Netflix to shift successfully from its initial business, DVDs-in-the-mail, to broadband video, the inevitable future. Down the road, I thought that an online-native new entrant would run with the prize more nimbly than Netflix would transition. I was wrong. From the first pitch, Reed argued that the consumer facing interface would be sticky (data on personalization, ease of use, simplicity to stay) and he could feather in broadband as it became available region by region.

This sounds very similar to the situation today for the urban mobility service providers (Didi, Uber, Lyft) facing a transition to the inevitable autonomous vehicle future. They have many of the same customer-stickiness assets that Netflix had, and so it got me wondering what it will take to avoid repeating the Netflix experience. I think the autonomous driving experience is the closest thing to magic we have in the consumer landscape; I find myself betting on product differentiation, where quality and reliability are essential. Video is closer to a commodity, and while streaming quality is important, it is an experienced good (for many consumers seeing is believing when it comes to bandwidth quality claims). So new and late entrants have a harder time dislodging Netflix, and the battlefield shifted from commodity delivery to proprietary content.

When thinking about threats to his business, Reed suggested it would be something very different, like a pill to induce hallucinatory entertainment. Not a digital competitor. He drew an analogy to Kodak. Kodak missed the transition to digital from film… but even that was the wrong transition to focus on. The digital camera market is not big or interesting today. The next wave “competitor” was social media. It wasn’t the camera at all.

Thinking of automotive again, the analogy would seem to be: traditional auto OEMs are like Kodak at the dawn of the industry shift. Bolting-on ADAS is like Kodak building digital cameras (I had a Kodak digital camera… it was a beast). The analogy to social media would be a mobility service being the real threat to the “pre-digital” OEMs. Not a better car, but a better service.