Larry Downes and Paul Nunes, authors of the seminal book
Big Bang Disruption, which details how to strategically navigate our digital world, wrote that every industry is ripe for disruption, even an industry that is currently disrupting another industry. For example: ridesharing.
Ridesharing has caught fire in the U.S. Want to catch a ride in an open seat in someone's private vehicle? It's as simple as tapping your smartphone app.
Competition is alive and well in the rideshare industry. In alphabetical order, the three dominant players in the game are Lyft, Sidecar and UberX. Each differentiates itself in its own unique way. I frequently use all three services.
As software continues to eat the world, Sidecar announced last week that it is looking to take a big bite out of its competitors by launching the first true peer-to-peer marketplace in the rideshare industry. Co-founder and CEO Sunil Paul says Sidecar's new marketplace "will give riders the power to choose price, ETA, vehicle, and [will give] drivers control to set prices and build their own network of riders." Other services simply dispatch drivers at internally derived price points much like a taxi. I used the service earlier this week and felt like a kid in a candy store. I could choose between the Leaf that was 2 minutes away for $8 and the BMW that was 5 minutes away.
This has the potential to be a big move -- not just for Sidecar, but for the rideshare industry as a whole. By abandoning the traditional taxi dispatch model (rider calls driver, driver asks rider's destination and driver must go wherever rider desires), Sidecar is now in a position to force both drivers and rideshare competitors to up the ante, lest they get left behind.
So what's behind Sidecar's move? Like any young company in a nascent industry, Sidecar is looking to separate itself from the pack while fully embracing the bedrock principles of the sharing economy. And as it turns out, there are sound business reasons to embrace the community marketplace. Beta tests of the new feature conducted in Los Angeles and Chicago resulted in the number of rides tripling. It's not shocking that Sidecar's Paul decided to flip the switch and unleash this platform nationwide.
Paul told me that this is the biggest win-win for the industry since rideshare services were launched:
"We think drivers will have more flexible income and control over their lives. They will get rewarded for their efforts. We also think it will enable people to give rides on their way to work, running errands, and other trips. It opens up the opportunity for anyone with a car to offset its cost by giving rides."
Sidecar's beta tests taught the company that drivers want to control the areas in which they drive, perhaps limiting their geographical scope to the route they commute to and from the office everyday. At the same time, riders like the freedom to choose amongst a litany of options.
For drivers it means being able to tailor their time behind the wheel to suit their needs. For customers, it means the comfort of being able to use regular drivers -- friendly faces who travel along their same route, at a set price. In other words, no nasty surprises like surge pricing or taking the scenic route to increase the cost of the ride.
Regardless of what happens in the future, Sidecar has already proven a willingness to disrupt even its own business with new innovations. They've also shown that an industry often in regulatory crosshairs can indeed regulate itself. That good old free market competition still drives innovation and benefits consumers without the need for intervention from local or state policymakers.
Despite the self-regulation taking place in the industry, Paul remains focused on the regulatory hurdles facing his company and the industry, though the marketplace shows he's taking steps to alleviate concerns regulators may have in rideshare battleground cities like Seattle and Minneapolis.
"We continue to work with regulators while maintaining our background checks and $1M insurance policy. The new Sidecar makes it even easier for drivers to do casual trips and carpool, which helps with congestion and emissions, so public policymakers should see it as a positive development."
According to Paul, the company aims to become the "largest transportation network created for and powered by everyday people." That's a tall order, but the company has a new round of financing at its disposal, having raised a Series B round of $10 million from four prominent firms who believe in the new direction. Union Square Ventures, Correlation Ventures, Avalon Ventures and SoftBank Capital participated in the round, which is a major vote of confidence for Sidecar.
The rideshare industry has already shown that no business model is impervious to change -- just ask the traditional taxi companies. Now Sidecar is showing that even the disruptors can be disrupted. Whether the company's new business model will inspire innovation by its competitors remains to be seen. But no matter how it all shakes out, it's going to be exciting to watch and even better to ride.
