Uber’s Battle for Kenya

Fresh trends and breakthrough thinking in politics, science, technology, business and culture. It’s futurism at its best.

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Because Uber has gone from zero to $41 billion in a matter of a few years.

OZY was very first to this story, putting you ahead of the curve. View More OZY Originals

By Jacob Kushner

The Daily Dose MAR twelve 2015

One night last month I ordered an Uber rail. It was late. On my iPhone I observed the little car icon zoom right past my street, U-turn and park a quarter-mile down the road. Perhaps the driver was lost? I waited and waited and waited for him to call, and eventually gave up after ten minutes and called him myself. “Zero points for initiative,” my housemate muttered.

This is Uber. In Nairobi.

In January, the taxi-app juggernaut set up shop on the crowded byways of Kenya’s capital city. It’s just the latest maneuver in Uber’s little-noticed emerging markets strategy, which has already seen the company plant flags in Cape Town, Lagos and Fresh Delhi. For Uber, as for many corporations, the developing world’s potential upside is clear. With an estimated three billion people living there — almost half the world’s population — the growth chance is off the charts. Even more tantalizing: A predicted 1.Trio billion people will stir into cities inbetween two thousand seven and 2025, half a billion of them in Africa and most of them without cars.

But here’s the thing: Already a bevy of local taxi apps operate in Nairobi, and while Uber has disrupted taxi markets from Fresh York to Hong Kong, there are good reasons to expect roadblocks in the developing world. In Nairobi, rivals’ names are Maramoja (“very fast”), Effortless Taxi (a Brazilian export) and Sasa Cabs (“now cabs”), among others, and each has tailored its service to the local market in one way or another. Banking on the universality of its technology, Uber has not taken local taxi culture into account much, unlike its competitors — it insists on providing users the exact same practice anywhere in the world. But the truth is that Nairobi is not Brooklyn, or San Francisco, or Washington, D.C. From culture to infrastructure to labor force, the challenges are different.

Commence with maps. Many drivers in Nairobi and other developing countries navigate by using landmarks, or just stopping to ask for directions. They don’t use maps, let alone smartphones (which may explain why my driver had a hard time homing in on my location). Speaking of smartphones, only fifteen percent of Kenyans have them — a figure that’s relatively high for developing countries — which earnestly narrows Uber’s market. In that respect, Sasa Cabs has an edge: It permits users to request a pickup via SMS on a feature phone or even a dumb phone. Similarly, only four percent of Kenyans have a credit card, which Uber requires. Indeed, Uber’s decision not to permit alternate payments has drawn criticism in India, where only two percent of people have credit cards.

In Nairobi, most people wouldn’t step into a stranger’s car if you paid them.

But Kenya already has the world’s most successful mobile payments system, M-Pesa, which permits everyone from a smallholder farmer to an iHub exec to transact payments. It’s a yam-sized local-market advantage that Maramoja and Sasa Cabs have integrated into their models. But Uber seems to have overlooked M-Pesa, at least for now. However Alastair Curtis, Uber’s “International Launcher,” says the company needs M-Pesa if it wants to scale in Nairobi, it still hasn’t incorporated the payments system two months in. Nor has Uber adapted its pricing model: As in the United States, it charges not just by distance, but also per minute. The notion is unheard of in traffic-choked Nairobi, where 15-minute rails can lightly balloon to more than an hour.

Trickier than all this is the thickest obstacle Uber faces: trust. In Nairobi, most people wouldn’t step into a stranger’s car if you paid them. The streets can be dangerous at night and the police are notoriously unreliable. Even user ratings, of the sort you’ll see on Uber, have less persuasive power: They’re anonymous.

Uber s Battle for Kenya, Quick Forward, OZY

Uber’s Battle for Kenya

Fresh trends and breakthrough thinking in politics, science, technology, business and culture. It’s futurism at its best.

Copy link to share with friends

Because Uber has gone from zero to $41 billion in a matter of a few years.

OZY was very first to this story, putting you ahead of the curve. View More OZY Originals

By Jacob Kushner

The Daily Dose MAR twelve 2015

One night last month I ordered an Uber rail. It was late. On my iPhone I observed the little car icon zoom right past my street, U-turn and park a quarter-mile down the road. Perhaps the driver was lost? I waited and waited and waited for him to call, and eventually gave up after ten minutes and called him myself. “Zero points for initiative,” my housemate muttered.

This is Uber. In Nairobi.

In January, the taxi-app juggernaut set up shop on the crowded byways of Kenya’s capital city. It’s just the latest maneuver in Uber’s little-noticed emerging markets strategy, which has already seen the company plant flags in Cape Town, Lagos and Fresh Delhi. For Uber, as for many corporations, the developing world’s potential upside is clear. With an estimated three billion people living there — almost half the world’s population — the growth chance is off the charts. Even more tantalizing: A predicted 1.Three billion people will stir into cities inbetween two thousand seven and 2025, half a billion of them in Africa and most of them without cars.

But here’s the thing: Already a bevy of local taxi apps operate in Nairobi, and while Uber has disrupted taxi markets from Fresh York to Hong Kong, there are good reasons to expect roadblocks in the developing world. In Nairobi, rivals’ names are Maramoja (“very fast”), Effortless Taxi (a Brazilian export) and Sasa Cabs (“now cabs”), among others, and each has tailored its service to the local market in one way or another. Banking on the universality of its technology, Uber has not taken local taxi culture into account much, unlike its competitors — it insists on providing users the exact same practice anywhere in the world. But the truth is that Nairobi is not Brooklyn, or San Francisco, or Washington, D.C. From culture to infrastructure to labor force, the challenges are different.

Commence with maps. Many drivers in Nairobi and other developing countries navigate by using landmarks, or just stopping to ask for directions. They don’t use maps, let alone smartphones (which may explain why my driver had a hard time homing in on my location). Speaking of smartphones, only fifteen percent of Kenyans have them — a figure that’s relatively high for developing countries — which earnestly narrows Uber’s market. In that respect, Sasa Cabs has an edge: It permits users to request a pickup via SMS on a feature phone or even a dumb phone. Similarly, only four percent of Kenyans have a credit card, which Uber requires. Indeed, Uber’s decision not to permit alternate payments has drawn criticism in India, where only two percent of people have credit cards.

In Nairobi, most people wouldn’t step into a stranger’s car if you paid them.

But Kenya already has the world’s most successful mobile payments system, M-Pesa, which permits everyone from a smallholder farmer to an iHub exec to transact payments. It’s a yam-sized local-market advantage that Maramoja and Sasa Cabs have integrated into their models. But Uber seems to have overlooked M-Pesa, at least for now. However Alastair Curtis, Uber’s “International Launcher,” says the company needs M-Pesa if it wants to scale in Nairobi, it still hasn’t incorporated the payments system two months in. Nor has Uber adapted its pricing model: As in the United States, it charges not just by distance, but also per minute. The notion is unheard of in traffic-choked Nairobi, where 15-minute rails can lightly balloon to more than an hour.

Trickier than all this is the thickest obstacle Uber faces: trust. In Nairobi, most people wouldn’t step into a stranger’s car if you paid them. The streets can be dangerous at night and the police are notoriously unreliable. Even user ratings, of the sort you’ll see on Uber, have less persuasive power: They’re anonymous.

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