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Uberpreneurship: the newest form of entrepreneurship

Recent years has showed a significant increase in research done in the fields of entrepreneurship (Hulsink, 2013). It hasn’t been too long since the RSM has set up the Erasmus Centre of Entrepreneurship, which is now an important incubator for Rotterdam’s student entrepreneurs. Also, there is a course in the BA curriculum called ‘Orientatie op ondernemen’ (translation: Orientation on entrepreneurship’), which is a success and therefore will be implemented in the IBA curriculum in 2018 as well (Meijdam, 2015).
Other than the RSM, globally there have been an increasing number of new theories involved with entrepreneurship. Proof for this is that most of these theories aren’t older than ten years (Hulsink, 2013). Being a RSM student and having some great experiences while following ‘Orientatie op ondernemen’, I now feel it is my responsibility to increase insights in some of the newer forms of entrepreneurship.

Uberpreneurship
Combine Uber, the new international transportation company for taxis, private cars and ridesharing with entrepreneurship. Uberpreneurship is exactly what the name suggests. A clear definition would be the following; registered Uber users who use their rides with customers to promote secondary and personal products.

Cases
There are several creative uberpreneurs out there with a variety of businesses. The most famous one must be Gavin Escolar, who claims to earn over $252,000 dollars per year. His business consists of selling jewellery, which he displays all around the car (e.g. dashboard, mirrors etc.) and wears himself. Selling jewellery is how he earns his money next to his normal job as a taxi driver. This is quite a case, as he claims that his earnings per month consist of $3,000 for his normal services as a taxi driver next to $18,000 through selling jewellery.
Second, there have also been many reportings of real estate agents showcasing properties in their cars. Third, there is also a company which you can join as an Uber driver called It Works selling their health and beauty products. This has been a web shop for the majority of its life, but decided that having Uberpreneurs driving around and promoting their products would be a nice additional to their business.

What is Uber’s take on all of this?
The first question that pops in your head right now is if this is allowed by Uber, isn’t it? Clearly, Uber doesn’t profit at all from these side-businesses of their drivers. And what if customers would get annoyed by drivers who happen to turn out to be pushy salesmen?

However, Uber is very much aware of Uberpreneurs and is actually promoting ‘Uberpreneurship’. In a response to the question whether Uber was fine with these side-businesses, Uber spokeswoman Kristin Carvell says: “One of the greatest things about the Uber platform is that it offers economic opportunity for a variety of drivers — full-time, part-time, veterans, teachers, artists, and students — in more than 260 cities around the world. Supporting and fueling the local economy is important to Uber and our driver partners help us to achieve this goal.” Besides, Uber is build around customer reviews. If for any reason the experience would be unpleasant, this will definitely result in a low rating which would negatively impact their business.

Uberpreneurship: theory
Since we now know that Uber is fine with this and there are some successful Uberpreneurs out there, let’s find out what it takes to become one yourself.
Uberpreneurship seems pretty straight-forward. It is basically using your car as a storefront. But what products and services could be successfully promoted in a car?

• Lucrative margin – Product needs to allow you to make a margin which is worth the effort you put in selling your goods.
• Quality – Since Uber has a customer rating system which is the core of the Uber concept, it wouldn’t be wise to sell low quality products as it would affect your rating.
• Easily displayable – A car wouldn’t allow for the selling of oversized products such as home interior products. Products could however be displayed in a catalogue
So these are some of the criteria I thought of. I think Uberpreneurship has great potential as you get to pitch pretty much anything to anyone. Also, the time you get with each customer allows you to truly find out the preferences and interests of each person. I’m interested to see if we can work out more criteria or examples of potential Uber-businesses. To get you started, here are some of the other examples I thought of which could definitely be incorporated in successful Uber businesses.

• Selling concert tickets by listening to music of bands which happen to play in town
• Selling new gadgets
• Selling gifts
• Selling monthly subscriptions (e.g. HelloFresh, Dollar Shave Club, magazines)
• Selling personal services (e.g. massages, beauty treatments)

Meijdam, A. (2015) Minutes 168th Faculty Council Meeting. Rotterdam School of Management, 01 June, 2015.
Hulsink, W. (2013) Lectures Orientatie op Ondernemen. Rotterdam School of Management
It Works (2015) As found on http://healthwealthkit.com/
Youshaei, J. (2015) The Uberpreneur: How An Uber Driver Makes $252,000 A Year. Forbes, February 4, 2015

Facebook’s acquisition of WhatsApp: The true reason for this deal – Synergy

Facebook’s acquisition of WhatsApp is one of the biggest acquisitions in the tech industry. The numbers don’t lie; the price was $4 billion in cash, $12 billion in stock (8.5% of Facebook’s stock) plus $3 billion in restricted shares. This adds up to a staggering $19 billion dollars.

The numbers don’t add up though. WhatsApp was founded in 2009 and already it acquired 450 million users, which is three times more than Facebook had acquired in the same period of time. Now these numbers are impressive, you might think. Note that Facebook paid $19 billion for 450 million users, which is $42.22 dollar per user. That seems quite expensive. The cash flow isn’t too impressive either. This 450 million user and $19 billion company has a revenue of no more than $20 million dollar.

WhatsApp’s co-founder and CEO Jan Koum had been pounded often by investors who wanted a piece of his company. He turned them all down, as he knew that WhatsApp was worth more. And besides, why would a CEO ever leave a company when it is still growing at this pace?
The truth is that no company before had ever bid the amount that Facebook offered. We just did the math, it seems highly overpriced. So what is the reason for Facebook to pay this amount?

Monetising

It won’t be monetising the app further than the yearly dollar subscription fee. Many of WhatsApp’s competitors have monetised their apps through stickers, sponsor channels, ads and in-game purchases. This doesn’t stroke with the believes of Facebook however, who have always wanted a clean appearance for their users. Indeed, Mark Zuckerberg himself told the WhatsApp ‘zero pressure’ to make money. All Mark Zuckerberg was interested in, as history made clear, was user numbers.

User volume

The user volume of WhatsApp is growing faster than Facebook. Also, the engagement number of WhatsApp is the only app which beats Facebook, claimed Mark Zuckerberg.

Fill global gaps

If you consider that Facebook’s growth is holding back, because it is hard for them to enter Asia and Latin America it all starts to make sense. While not in China and Japan, WhatsApp is the clear leader across most of Asia and Latin America. So Facebook was struggling with the shut door they found in these countries. WhatsApp could be the back entrance they need. How will Facebook profit from WhatsApp’s presence through?

Integration

Facebook
Click for enlarged view

Facebook is already trying options to merge WhatsApp in their services and vice versa. Even though Facebook already has Messenger, a merging with WhatsApp seems very logical. Messenger is actually quite a big texting app by itself, even leader in the US and France. This could mean that if they can merge these two massive networks, the impact on network effects would be huge.

User Tracking

Ever noted that Facebook wants your number for security reasons? Guess what other phone number they already have of you in which app? That’s right. Could these be linked together? They sure can.

Every time you are sending messages through WhatsApp, Facebook identifies valuable relationships of you with these persons. This is all input for your Facebook news feed.

So others don’t buy it

Other tech giants such as Microsoft and Apple were luring on WhatsApp too. Facebook saw their growth numbers decline and realised they could make better use of the app than most of these others. Besides, Facebook probably would rather not compete with companies of that size, which have proven to be aggressive players in their own rights.

Conclusion – Synergy

There is no one real reason why WhatsApp was worth this amount of money. There are actually many. All we know is that for Facebook to buy WhatsApp makes more sense than other potential deals. There is actually a natural synergy, as it seems that WhatsApp is able to fill some of the gaps Facebook couldn’t fill themselves. Truth be told, I don’t think that Facebook knows all the potential benefits. Only the future will tell if these companies merge together well and if WhatsApp was worth all this money.


Clark, J & Sataranio, A. (2015) Apple Acquires Startup Developing Advanced AI for Phones, Bloomberg.com, October 8, 2015.

Olson, P. (2014) Inside The Facebook-WhatsApp Megadeal: The Courtship, The Secret Meetings, The $19 Billion Poker Game Forbes, March 24, 2014

Kelly, G. (2014) 5 Key Reasons WhatsApp Is Worth $19 Billion — To Facebook Forbes.com, Feb 20, 2014

Berman, D. K. (2014) I Thought Facebook’s WhatsApp Deal Was Crazy. Then I Did Some Math. Wall Street Journal, February 24, 2014

Watts-Jones, M. (2013) 10 ways that messaging apps monetize – a guide to monetization Linkedin, September 13, 2013

Triggs, R. (2015) Facebook begins testing WhatsApp integration Android Authority, April 6, 2015