Lifeselfmastery's podcast I Startups I Venture Capital
00:06:42 · S2, S3
[00:06:42] S2: Yeah. Absolutely. And would it be right to say, you know, Moscow and Saint Petersburg were the two biggest cities for for risk function? [00:06:51] S3: Yeah. Definitely. Moscow was the biggest city for us, but Uber was operating, I think, in 17 or 18 cities across Russia, and it was quite a strong presence there as well. [00:07:03] S2: Right. Right. And, yeah, you know, before the call, you also mentioned about, you know, it was later acquired by Yandex. So what... Was Yandex also competing with Uber during that time? Like like, how Lyft was doing that in in The US and Ola was doing that in Southeast Asia with them?
00:07:03 · S2, S3
[00:07:03] S2: Right. Right. And, yeah, you know, before the call, you also mentioned about, you know, it was later acquired by Yandex. So what... Was Yandex also competing with Uber during that time? Like like, how Lyft was doing that in in The US and Ola was doing that in Southeast Asia with them? [00:07:22] S3: Yes. Yandex was our main competitor, and the team was super strong and quite amazing there. I think they had two main advantages compared to us. That's why kind of competing with them was a very difficult job. But we, anyway, ended up merging the businesses with 40% going to Uber and 60% going to Yandex, which was a far better play than in China where Uber get less than 20%. But I think two main advantages of Yandex in our competition were, first, they had a local product and engineering team. So they were developing a product dedicated to our market. And our market compared to US was a fleet market instead of a peer to peer where individual drivers were partnered directly with Uber. In Russia, it was a fleet market where you partner with large taxi companies, large kind of taxi fleets. And the second second key advantage of Yandex was that they have the whole kind of product ecosystem already. It's a kind of Russian Google, in fact. They have maps. They have navigation system, etcetera, etcetera, etcetera. So there there is a lot to leverage, basically. But, anyway, it was a a good fight. And then we joined forces and, yeah, build a great company going forward.
00:08:45 · S2
[00:08:45] S2: Yeah. No, absolutely. I think, you know, since I'm Indian, we hired a company called Ola, which was competing with Uber. So, you don't want to be in a situation where there's only one player in the market. You need, you know, different players who can compete. So, that's always a good thing. I just wanted to touch base a bit about what's the expansion playbook that Uber uses for new cities. Because I work with OU rooms as well as with another marketer called Hyber. And it's always question on which new cities to expand into, but what was your experience like over there?
00:09:22 · S3, S2
[00:09:22] S3: Yeah. Just just just to make kind of a caveat here, I was involved in launching cities within the same market. And definitely, the playbook for launching new international markets is a bit different because you need to develop the legal framework. You need to understand how to convert currencies and all that kind of... Sometimes you need to ensure your government relations are in a good order when launching difficult markets. But when launching a market like a new city within the same kind of country, we were prioritizing by the market size, pretty obvious. We were looking at the competition, which was kind of one of the most important areas to look at, especially when fiercely competing with Yandex. So you you need to understand how to position yourself. You need to understand pricing. You need to understand who they are working with in terms of supply. So you need to develop kind of a supply strategy. You need to understand how to market services because, back those days, we were significantly relying on marketing partnerships with different organizations, brands, etcetera, etcetera. And a lot of these are quite local kind of brands and organizations, so you need to understand that. And, yeah, that's pretty much it. [00:10:38] S2: Got it. And how much did the role of, you know, promotions and discounting play when it comes to the growth strategy at Uber?
00:10:38 · S2, S3
[00:10:38] S2: Got it. And how much did the role of, you know, promotions and discounting play when it comes to the growth strategy at Uber? [00:10:46] S3: It's a it's a... It's an amazing question. Sometimes I hear that as a kind of concern whether Uber growth was sustainable during those days, And these concerns are partially valid, but in reality, the pricing discounts are necessary, let's call it, kind of necessary investment into the market. Because any marketplace, and especially ride hailing marketplace, reaches its top performing state where your, you know, ETA is minimal, where the idle time for the driver is minimal, just at a certain scale. And before you reach that, you can be easily kicked off from the market. So your goal is to reach that state as soon as possible. And the fastest way to grow to a certain market share is through discounts, through promotions. But they should not be too radical because you always need to keep in mind that you don't want to find yourself in a position when you compete with the public transportation instead of other ride hailing apps. We have these learnings as well, being too aggressive. [00:11:57] S2: And and did Yandex also involved in this price wars? [00:12:01] S3: Yeah. Definitely. It was it was fierce competition. I think it was one of the fiercest competition next to China potentially. [00:12:11] S2: Oh, interesting. Very interesting. And and you went on to build a leading company. So was it a conscious choice to move away from a marketplace to get into into prop tech space?
00:12:11 · S2, S3
[00:12:11] S2: Oh, interesting. Very interesting. And and you went on to build a leading company. So was it a conscious choice to move away from a marketplace to get into into prop tech space? [00:12:24] S3: Actually, yes. Because I was looking at the leading space as a industry where marketplace is needed as well. So when I left Uber, I was kind of looking for right industry to apply my marketplace knowledge. And with my cofounders, we created a long list of potential kind of applications of our marketplace expertise and letting space by the high level look of it. We felt that it's it's an amazing fit for a marketplace model because supply is fragmented. Demand is fragmented. There is no kind of single middleman. There is no no marketplace pretty much already in the industry. And the main limitation was and still is the transaction frequency. In the ride hailing, you can kind of book in a taxi pretty much kind of several times a day. In the letting space, especially in the long term lettings, the average tendency is couple years. It makes kind of your life a bit more difficult, but all other fundamentals are perfect for launching a vertical operating marketplace. [00:13:35] S2: Got it. And and did you sell the the company and and that's when you moved on to UK, or was... Is it... Are you still part of the company? [00:13:45] S3: We founded that company in 2018, and we sold that business in 2021 completely. So there is no connection to that business at all. And, yeah, we sold that three years ago.