Sidecar was a US-based ride-sharing company founded in 2011 by three entrepreneurs, that later pivoted to providing mostly delivery services. Although they were early-movers and pioneers in introducing new features, their competitors beat them in the race for the ride-sharing market.
In the ride-sharing market they were always far behind Uber and Lyft, even though they were first to build and introduce new ride-hailing features that we now see as the main features. Unfortunately, their competitors adopted those features and implemented them more effectively at a larger scale.
One of those features was drivers picking up passengers in their own cars - something that we now see as a primary service of the ride-sharing companies. They were also first to do driver destination, a feature that allows drivers to control the rides they receive by the destination point they set. Another feature was back-to-back rides, which would let drivers accept a new trip before dropping off their current passenger. Shared rides was also their idea, a feature that lets passengers going in the same direction split the cost of the ride.
Despite the many innovative features they rolled out, there are two reasons why Sidecar was pushed out. Certainly the main one was that they were outfunded. Sidecar raised only 35 million US dollars compared to Uber's or Lyft's several billion dollar funding. This allowed their rivals to offer discounts and fare cuts in order to increase market share.
The other reason was the network effect, which is described in economics and business as the effect “that an additional user of goods or services has on the value of that product to others. When a network effect is present, the value of a product or service increases according to the number of others using it.” Uber realized this early on, and backed with good funding, they were relentless in getting the market share and could survive the millions of dollars in losses getting there. They also had a head start with their existing black car business, while Lyft was attracting users with their pink mustache cars.
In December 2015 Sidecar shut down, and shortly after General Motors acquired Sidecar's assets and intellectual property. This transaction included a licence to Sidecar patents, with Sidecar retaining ownership.
Sidecar's CEO Sunil Paul explains why they were forced to shut down. “We were unable to compete against Uber, a company that raised more capital than any other in history and is infamous for its anti-competitive behavior. The legacy of Sidecar is that we out-innovated Uber but still failed to win the market. We failed — for the most part — because Uber is willing to win at any cost and they have practically limitless capital to do it.”
Aside from the funding, their story is almost similar to the story of Friendstar’s fall, where Facebook was focused on the right things at the right point, while Friendstar was dealing with technical features. While Sidecar was building more features, Uber and Lyft were focusing on the features that would give the user most value - lower estimated pickup time, lower prices and more drivers.
The innovation part in the company was not missing. Maybe what was missing was leadership and a viable business model.
Not everyone in the same market can be a winner. It would be utopia. That is why we say May the fastest learner win!, because in Playing Lean there is also one who wins the market!Sydecar is one of the company cards in our Ride Sharing scenario, which can be used to extend your Playing Lean 2 game.