The death of Silicon’s Valley blitzscale approach in other countries

Silicon Valley companies strategy in Brazil

In November 2019, partners and investors at the “San Pedro Valley” decided to invest in an early stage start-up, VOOR, an app aiming to sell online tickets while eliminating scalping overall, the startup was a finalist at an MIT-Brazil challenge, it seemed to be the right move.

After postponed its launch due to the worldwide pandemic, they had time to overthink its strategy.

The urban mobility game

“How about we integrate our customers with private drivers”… agreed the strategy team betting on a strong market resurgence. The initial idea was to pose as Uber drivers, C-levels included, all “UberX” requests would be provided by an “Uber-Black” car, followed by a script explaining why the startup was giving away such a “prize”. 

The campaign was a clear success, but things began to change when the research exposed some dark truth about the “urban” mobility game.

After a few weeks the C-level partners posing as drivers had accounted for hundreds of requests not only from Uber, they had the “99” (owned by companies like Didi and Softbank), Indriver and other apps running at the same time!  The data being gathered was so impressive that they decided to extend the research for another six months.

“Urban mobility is a major entertainment indicator, when you analyze the data properly, we can see patterns according to what sort of cultural agenda the city is going through. Cities have a very interesting behavior, every day they are born, grow and sleep, some don’t ! ”, I said to our team.  

To map the city’s hot spots and time them properly they had to work 7 days a week at different working hours, a 3rd shift had to be in as well!

As weeks go by we noticed a fierce downward spiral from Uber and 99’s requests followed by a sudden increase from inDriver. We kept changing cars from electric to very basic models available, the results were staggering.

But before we get into it, here are some of the research’s rules:

  • Pay all expenses from real gains (car expenses, rental costs, meals, maintenance, etc.)
  • Brazilians usually get paid on a monthly basis, thus, depending on the week day the 5th business day is presented, overnight work was required e.g : if on a Friday, would Saturday’s night-life at clubs’ “hotspots” be different from other regular paydays?
  • To “interview” other drivers at the airport’s waiting area.
  • Change working hours each month.
  • Explore suburban areas up to their limits, reaching out to semi-rural areas.
  • To set a financial goal and try to profit from it.
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Bad or mad drivers?

They’ve found a general dissatisfaction from customers referring to UberX’s drivers. According to over 94% of the responses, riders complained about how the vast majority of all cars can be found under unbearable conditions, a very different scenario from when Uber and other apps initially started in Brazil. 

“It isn’t uncommon to see a driver work for almost 24 hours”, according to a particular customer… Even knowing Uber has a 12-hour limit, “shift” drivers are forced to work among other apps to keep up with the expenses, since you can’t make a living out of one single app anymore, according to the research results. 

This poses a dangerous threat to riders’ safety, and the problem doesn’t end here.

If you ask ChatGPT open AI’s platform to write an article about Uber’s profit decline in underdeveloped countries, it will, unfortunately, tell you the far-from- the-truth version.

Uber’s usage decline seems to be much more related to poor’s customer service among its drivers/ partners, close to 900 drivers were interviewed, and the feeling is unanimous, they don’t have a sense of belonging and are feeling exploited, maybe it isn’t a coincidence, Uber hadn’t reported profits for a very long time, when it does, someone else’s cookie jar wakes with crumbs.

“The algorithm was probably tested at US or another country with a very different landscape” complains Rogerio Drumont, an Uber driver at the airport waiting line,“ we have to be here for over 2 to 3 hours waiting a single ride request, and when we see that Uber is taking as much as we do for each request and limits our gains to a very similar amount each hour myself and all my friends just feel very discouraged”.

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Uber-like urban mobilities apps don’t account for streets’ inclination, at Belo Horizonte for instance, some counties are replete with streets “climbing” over 60 degrees, this alone will bring any vehicle’s autonomy to its knees, and if you have over 1 passenger things get weird, some riders reported being at accidents from cars’ losing acceleration and simply “falling” downhill hitting a public lighting pole or at anything else on its way.

What’s really strange about it is that why wouldn’t a giant like Uber use a driver’s phone MEMS (Micro-Electro-Mechanical Systems)/gyroscopes to compute the challenge and pay them accordingly? Prevent accidents?

Blitzscaling & blitszcaping

In Brazil, Uber-like apps are facing a very strong labor law, lawsuits are piling up, and they are losing them all, with a very few exceptions

As I’m typing, Uber has just released a new user’s agreement, an attempt to exempt the urban mobility giant from being identified as a transportation & delivery company. I wonder how Uber riders’ and drivers’ “umbrella” insurance will be dealt with from this point forward, more episodes to be seen I guess. We know users won’t read it, I believe most of us agree to such agreement’s updates, so we may move forward with the request. 

Could this “miscommunication” malpractice and the lack of reliable communication channel topped with willingness to reach out unhappy user’s be signs to a death of Silicon’s Valley blitzscaling approach?

LadyDriver, the “female-only” app, took a stepforward, during its sign up, will have drivers assume they are an independent company and go through an online “warm-up” course before all the ladies can start offering rides.  

Hide & beeeep!

Suddenly, and now on a weekly basis, drivers are being  surprised with tedious surveys from all top tiers service providers. One thing in common, to point out services they believe to be more reliable… At the competition. 

Something caught my attention though, to name new players in the game seems to be the “new black”…

I’d probably need  another article to expose how the game is rapidly changing around Brazil, Uber is known to focus at major metropolitan areas, but wait, Minas Gerais, a State from the South East region, has 856 municipalities, companies offering white-label apps are popping up everywhere, I guess we know where this “train” is coming from and where the next stop is.

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In some cities major apps can take over an hour to respond ride requests, and new players are running the show, I could name a handful, as an example Urbano Norte, the closer you get to Betim, the well known industrial town home of the formal FIAT auto manufacturer, now Stellantis, (you may consider searching for Ferrari’s formal group owner), the harder it gets to find an Uber or 99 Driver, the two predominant players to date, but if you search at your favorite app store with emphasis to the city you’re at, you’re good to go!

New players are offering cash bonuses for the most active riders, thus, competition is coming from many angles, there are hundreds of cities getting familiar with the app offering local customer service and technical support. 

Belo Horizonte with its over two and a half million inhabitants (over 6 million if you consider the greater metropolitan region) has only one single physical Uber office to attend special drivers’ concerns and requests. The research also shows unhappiness when bringing this subject to a test.

Stop, look, listen & think …

Now, you may ask why this behavior from this South American country could be so important and a key indicator for some western tech companies? Brazil is one of the most hyper-connected countries in the world, ranking 4th place (down from 3rd) at Facebook’s users volume by country.  

Notwithstanding the country, I’m most familiar with, Uber got acquired by Grab in Asia Pacific, although they will become a stakeholder this could mean they’re losing grip and local competition is winning in the long run, these facts could easily impact quarterly reports shareholders’ valuation perception or worse, real growth reliability. 

For now, all we can expect, are mad drivers and a growing numbers of unhappy customers around the clock, but don’t get me wrong, everyone is hooked already, we can’t go back to plain-old-fashioned

Taxis, once companies start to compensate drivers accordingly, such as updating rides value as gas price chances in real time and overall additional expenses we may see a brighter future in this “game of honks”.