In its early days, the taxi giant Uber was confronted with a classic startup hurdle: the 'chicken and egg problem'. Riders wouldn't use the app if there weren't enough drivers, and drivers wouldn't participate if there weren't enough drivers. A recent report from an insider sheds light on how Uber overcame this challenge.
According to a former employee, Uber did not wait for an increase in passenger requests. They incentivized drivers by paying them $30 an hour to stay online so riders could always see available cars on the app.
Second, Uber has strategically positioned cars near bars and restaurants with high foot traffic. This made it easier for drivers to reach passengers quickly once a trip was booked.
The post also mentioned a third strategy to increase passenger numbers, but details remain secret.
1/ When we launched a new city, we didn't have hundreds of people requesting rides on day 1.
But we had some.
Because we wanted passengers to see cars on the road 24/7, we paid drivers $30/hour to be online, even when Uber wasn't busy.
— Scott Gorlick (@sgorlick) May 2, 2024
The insider's insights piqued user interest, with many expressing gratitude for learning how Uber transformed into the successful company it is today.
“You have no idea how valuable this information is. Thank you very much for sharing. I'm a solo founder building a real estate marketplace for my country, and like all young marketplaces, it's the chicken and egg problem,” one user commented.
“This is a great post. Takeaway: These are ideas that anyone could come up with. A startup like Uber has no magic that none of us mortals can achieve. This is empowering. Don't limit yourself,” another user wrote.
“This is a reminder that to get the ball rolling, you have to roll yourself. This is where VC support can really help. You need to subsidize one or both parties until things get going,” said a third user .
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