Why Uber and WeWork “work”

…and what we at Bright can learn from it

Summary: companies that provide convenience at the cost of quality find it hard to get traction. To be successful, I argue these companies should first enable quality with focus on standardization, careful supplier vetting, and accountability. And then tackle convenience and cost right after.

FIRST PRINCIPALS

Whether it’s cleaning, plumbing, transportation, or office space, customers want high quality. Especially with early adopters (the segment you need in order to develop momentum), this is more important than convenience or even cost. And cost will also likely come down naturally over time as economies of scale are achieved. To achieve quality, start with product standardization, careful service-provider vetting, accountability, and making sure to go after a market with enough scale to justify investing heavily in these areas. Convenience can then be built in after quality is achieved (over time you can add more and more features to take friction out of the process). And cost effectiveness will likely come with scale.

LETS TAKE A LOOK AT SOME ANALOGIES

Thumbtack and Magic: convenience without quality due to lack of customer focus. cost parity.

• High convenience: these companies got initial traction because they provided convenience (services whenever and wherever).
• Poor quality: However, lack of focus (they provide tons of service providers across hundreds of possible disciplines), makes it very difficult for these companies to control quality.
• Summary: Because they provide convenience at the cost of quality, they’re only able to tap into the market of folks that care about convenience over quality (a much smaller market than those that care about vice versa).

Homejoy: convenience without quality even given singular customer focus. cost parity.

• High convenience: home and office cleaners whenever and wherever and booked via an app.
• Poor quality: their focus on just cleaning theoretically could be hugely beneficial from a quality perspective. Investments in standardization and accountability should be able to deliver a higher quality product. However, their cleaners’ quality was not materially better than the existing options I believe because they could only attract lower quality labor (high quality labor already had enough work).
• Summary: Just like Thumbtack and Magic, Homejoy only resonated with folks that cared more about convenience than quality. And so the company had a hard time taking off.

WeWork: convenience with quality at higher cost

• High convenience: WeWork provides high convenience by offering a flexible product — month to month contracts, lots of different types of spaces, etc.
• High quality: Wework started with just ONE service (providing flexible office space) — and this focus was super valuable because they’re were able to control quality as a result. They standardized the product, glass walls and doors in high rise buildings that they leased, and only used carefully vetted and trained service providers. PLUS, because the market opportunity was huge, they got to scale quickly, achieving cost efficiency that then allowed them to strengthen quality even more (offer free amenities like coffee, snacks, etc.).
• Summary: WeWork took off because they were able to tap into the mass market that cares about convenience and quality. Currently, the only category they’re missing out on are the cost conscious customers. But that can still come in the future as WeWork continues to get greater cost advantages through scale.

Uber: convenience with quality AND lower cost

• high convenience: cars whenever and wherever booked via an app
• high quality: ONE service to start — getting you from point A to point B with a driver that gets rated and is incentivized to provide awesome service.
• Summary: Uber took off because they were able to tap into the mass market given they were better on all three categories (quality, convenience and cost). As a result, Uber has basically become a de-facto utility and part of everyone’s daily life.

BRIGHT

So what lessons do we take away this analysis for Bright? First and foremost, that a focus on quality even at the cost of convenience for now is likely a great investment. We’ve done a bunch already with standardization (only using Enphase inverters and GCL panels), as well as careful supplier vetting (construction crews, cargo consolidators, and distributors). The next area we likely need to enable is developing accountability. Our customers care about quick installations and interconnections with a responsive team and we use third party service providers today largely to do this. To provide greater quality service through them, accountability can be reinforced between customers and both our sales team and our installation teams. And we don’t need to reinvent the wheel here to do so. By developing tools to help customers rate the sales rep as well as the installer (a simple five start system with a box for comments for instance), we can continue to improve the customer experience. And going a step further, to help installers and sales rep solve customer issues, they need to know about the issues as soon as a customer has them. So communication tools between customer and the Bright ecosystem will be paramount as well.

Excited to tackle both these opportunities in Q2 this year. To la Revolucion Solar.