Gene Munster illustrates one more time the power of starting from first principles, thinking things through, and doing targeted research to come up with robust insights.
Select quotes:
His use of “first principles”
The reason brand is important is because Uber and Lyft are primarily concerned with earning more of your transportation spend. They do that by creating habitual users, and habitual users are born mostly out of unincentivized brand allegiance.
His use of targeted research
We also asked the reason for their brand preference. Comments that preferred Uber were generally about reliability and price, while comments that preferred Lyft cited friendly service, trust, and the negativity surrounding Uber’s brand. However, this shows how fragile of a competitive advantage brand is in ridesharing. […]
Note that 27% of respondents preferred Lyft’s brand, while only 10% went so far as to make it the only ridesharing app on their phone. […]
Thinking things through
If [brand] were a real consideration [at this stage], more people that preferred Lyft would use that app exclusively. […]
On a somewhat related note, I often hear the comparison with Google, Facebook or Amazon to justify the belief that losses so far are not a problem per se. The rationale is that we are in a landgrab / investment phase, and that profitability will come later. A lot of this is true, to the extent that you are able to build a sustainable competitive advantage over your competition. Investors in these companies should ask themselves what that competitive advantage is, and how valuable it is.
