Is ‘Bubble or Bust’ the Only Future For the Tech Industry?

(Photo by Richard Heathcote/Getty Images)

Richard Heathcote/Getty Images

Creative and innovative tech startups often seem promising. With hopes that these businesses will under-promise and over-deliver — just like many tech companies did back in the dot-com glory days — some investors jump on the opportunity to get a piece of the action.

But things are different now, and while many of these startups are great ideas, a great idea doesn’t guarantee long-term success. Technological advances have fostered an environment where competitors can easily enter and insert themselves right into the middle of the game board. Even if you have the king in check, the game isn’t even close to over.

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Uber vs. Lyft

In case you haven’t heard, Uber and Lyft are both services that provide users with transportation. If you need a ride from point A to point B, you can simply go onto the app and buy it. Like a taxi, the cost of the trip is determined by the distance travelled and time taken. Quick, convenient, and creative, the business had an estimated 79,000 new signups per week as of late last year.

Uber generated roughly $20 million in revenues each week around that time period, according to Business Insider estimates. These days, CNN reports the company is worth around $18.2 billion — more than Campbell’s, Mattel, or Hertz. Uber even entered into a partnership with MasterCard. On the surface, things seem to be looking up for the rapidly growing ride provider.

There are a few problems with Uber, though. Costs for drivers, insurance, and marketing are relatively high for an online business. The business continuously has the challenging task of meeting customer demand — it has to have enough drivers to provide all of these rides. Legal challenges face the ride company, as State legislatures may view it as a taxi company instead of a tech company — two types of businesses that operate under different rules. Of course, another problem Uber faces is competition from similar services — particularly Lyft.

According to one estimate by Tech Crunch, there was a time in 2013 when Lyft’s revenues were growing at a rate of 6 percent per week. Lyft provides virtually the same service as Uber. Sure, the two companies have some distinguishing features, but all in all, one could serve as a substitute for the other. In the Uber vs. Lyft business battle, news reports portray Uber as a dirty player — you know, that guy that will continue to foul you in a ball game because he’s afraid to lose?

According to CNN, the multi-billion dollar company’s employees have been playing taxi ding dong ditch with Lyft employees, calling for rides they don’t really need to create a rift in daily operations. “Uber employees have ordered and canceled more than 5,000 rides from rival Lyft since last October, according to new data provided by Lyft,” reports CNN, who says the company has since apologized.