Chasing the Uber model is killing a lot of on-demand companies
Summary
The next generation of platforms are adapting in order to not just survive but thrive — first by entering new categories; second by evolving their business models; and third by enhancing and influencing a growing support ecosystem. The on-demand economy is built on three foundational building blocks: immediacy of delivery, passivity of consumption (the buyer no longer chooses, rather a supplier is assigned), and fixed cost. On the supply side, Luxe’s decision to hire full-time employees ensured balance: The cost of training supply-side providers and insuring the car owner was hard to justify if the valet pool wasn’t guaranteed to be available when demand spiked. Luxe’s decision to evolve its supply side to an employee base was done not out of fear of regulatory backlash but to secure an operational advantage and better ensure the delivery of on-demand immediacy. Rather, companies in this space need to pay close attention to the factors that impede their ability to fulfill the promise of on-demand service, evolving their models as necessary to insulate themselves from things like disintermediation and churn.