Didi, and the Potential for Ride-hailing

Mark Bergen for Recode, summarising comments made at Recode’s Code Conference by Didi president Jean Liu:

Didi, China’s biggest ride-hailing company - and the recipient of a $1 billion investment from Apple - says it books four times the number of daily rides as the entire U.S. market. And it’s just reaching a tiny slice of Chinese consumers.

That’s from Didi president Jean Liu, who said the company now books 14 million rides a day in China at Day Two of the Code Conference.

That’s absolutely crazy - four times! Goes to show that while their economy might be slowing down, spending is absolutely not. Almost every consumer market is flourishing. “But in China…” is becoming a tired remark when talking about tech nowadays, but it’s that real. While Uber might still be the face of ride-hailing, its market share and overall direction suggests that shouldn’t be the case in the near future. They’re being cornered very quickly… more on that later.

And she said that the company has only penetrated one percent of China’s population. That room for growth in its home market, Liu added, is the rationale for why it continues to raise capital from companies like Apple.

”We have to find the most strategic [valued] partner because this industry is still in its infant stage,” she said. “You need a lot of strategic help.”

That’s what truly impresses me. Even four times the U.S. market isn’t enough when that’s a mere percent of the market you’re operating in.

In another article from Recode, Johana Bhuiyan details an alliance between ride-hailing/-sharing companies announced at the same conference:

The global anti-Uber alliance just lobbed what the four companies hope will be another blow to Uber. At Recode’s third annual Code Conference, Anthony Tan, the CEO of Southeast Asian ride-hailing app Grab, announced the official launch of a feature that allows any Grab loyalists to hail a Lyft using the Grab app when traveling to the U.S., all in their local currency.

According to Tan, Lyft users will also be able to hail a Grab car in Southeast Asia in the next few weeks. The Grab-Lyft cross-booking is just the latest aspect of a global partnership between China’s ride-hail app Didi, India’s Ola, Grab and Lyft.

Once the alliance pans out and we see more cross-booking between these companies, that would create a huge worldwide network of hail-able cars no matter where you are in the world - something Uber foolishly tried doing singlehandedly by brute-forcing their way into any market they wanted.

How the alliance will turn out in the long-term, that’s a different thing altogether. The massive potential is there, even in China alone. My guess is that Didi will eventually absorb their allies - unless they could somehow differentiate - but still somehow “glocalise”, maybe by maintaining their existing brands as they are.

That’s to say I think Didi will turn out the grand winner since the population-success correlation seems to be completely causal.