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Uber has arrived to Bali

The next big thing after Airbnb?

Just returning from San Francisco in December, I got off the airport and opened up the Uber app at DPS airport. Surprise surprise! Uber had arrived on my island.  Of course, I had an inkling they'd be here, but not nearly so soon. The big question now is will Uber work in Bali? 
On an island with thousands of new villas being built every year, it wasn't hard to see where the next 1000 user sign-ups were going to come from. 
The state of "transport" in Bali
A short walk around Kuta is all it takes to see that transportation is broken in Bali. It's neither good for drivers or passengers.  
  • Spammy: I can't go 3 meters without being heckled by some 'driver' who offers to take me on a ride in his taxi, limo, horse-cart or motorbike.
  • Honesty: Experience has shown me that drivers are more interested in taking me to kickback shops for a shopping spree than actually providing reliable, honest transportation.
  • Utilization: A common conversation I have with taxi drivers is how few passengers they're able to pick up and how much competition there is in the market.
  • Competition: The competition is fierce as every able bodied male seems to be involved in the transport trade. So I understand the desperation to extract as much financial benefit from a passenger when one does arrive. 
So yes there is room for a BIG global startup to arrive on the shores of paradise and disrupt the Blue Birds and taxi cartels of Indonesia.  
Does Uber solve the problem?
Sure. I could see a very big problem being solved here. Drivers busy picking up fares all day long, getting full utilization for their time and vehicles. Passengers having reliable transport services instead of having to negotiate a fare each time with the driver. 
  • As a visitor, I'm on holiday and am not likely to be paying roaming charges on my phone or buy a SIM card. I'm here in Bali to go off the grid and chill-ax.  Maybe visit a cafe now and then for WiFi.
  • Uber will most likely take longer to dispatch than a traditional form of transport.  It's actually pretty easy to hail a cab in Bali. Blue Bird taxis arrive promptly and drivers are known to be professional and diligent.
  • The state of 3G phone networks is not perfect, GPS is spotty and technical glitches make it frustrating difficult to use the Uber app.
What does the future hold? 
On the other hand, it doesn't take much imagination to foresee Uber taking on a growing role in the transport market. Here are my predictions:
  • Supply: Early adopters of Uber in Bali will make a windfall. A driver who gets regular and steady bookings will have a huge competitive advantage over his competition. If properly executed, the Uber method solves a huge problem of "lead generation" for drivers. The rate of adoption will grow exponentially as network effects come into play. 
  • Infrastructure: Indonesia is quietly and steadily overcoming technological barriers.  Faster and more reliable mobile internet is huge opportunity and there's no shortage of effort from XL and Telkomsel to plug the gaps. 3G will become more stable over time. 
  • Demand: Uber benefits from enormous network effects. Australian, Singaporean, and Hong Kong travelers are likely to have heard of it and would be able to seed the market well. 
  • Liquidity: Getting the right balance of supply and demand is the key challenge in any two-sided market place. To guarantee a reliable supply, I would imagine Uber could subsidize drivers to bring passengers around for the first few months. As Uber has billions in funding and it only costs $50/day to hire a car/driver, they could essentially keep 10 vehicles on the day for what it costs to hire a senior marketing manager in Singapore. The demand side is the more difficult part of the equation. 
  • Government relations:  Uber was kicked out of Jakarta but miraculously when I open up the app and set the location to Jakarta, I will still see cars available. Indonesia politics works in mysterious ways, and it works a lot better when you have deep pockets. 
Motorbike in Bali
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