By Andy Gordon on May 16, 2014 My son Nick is a cop. He owns his own condo in D.C. and drives a Lexus. Every time I call him, he seems to be at a restaurant or nightclub. Living large, in other words.
How does he do it? I didn't want to ask. And lately, an ugly thought has been creeping into my head. Is my son on the take?
So when he told me a couple of days ago he was going to start driving for Lyft, I felt in equal parts relieved and ashamed. Relieved that my son wasn't a dirty cop. And ashamed that I could even entertain such a notion.
Lyft, if you don't know, is Uber's main competition. Uber is the startup primarily responsible for blowing up the taxi business. Both companies let people call up rides from their smartphones. They're at war right now. Lyft recently added 24 cities to its growing urban coverage and is now in 60 domestic markets. This month, it introduced a premium service, in direct competition with Uber's fleet of luxury black cars. And last month, it raised $250 million to continue to challenge Uber's aggressive growth strategy.
Uber's response?
I first heard about it in a tweet from Tim Ferriss this past Wednesday. Tim is an investor in some 19 startups, including Twitter, Shyp and Posterous. He's also the author of The 4-Hour Workweek, a New York Times best-seller.
Oh, yes, he is an advisor to Uber as well.
He was tweeting Uber's latest announcement introducing the uberXL - "the most affordable SUV option in SF."
But Uber's really astounding announcement came today via Bloomberg. Uber said that it will be doing another round of financing at a valuation of above $10 billion.
Brother, that's impressive. There's only two other pre-IPO companies with as big valuations: the room rental service Airbnb and online file storage locker Dropbox.
Five Key Ingredients to the Secret Sauce
What's the secret to Uber's success? Here are five key ingredients... - Aggressive leadership. You name 'em, and co-founders Garrett Camp and Travis Kalanick have probably pissed them off. Taxi companies, local city governments, insurance companies and competitors have all felt the sting of Uber's often strong-armed tactics. It's helped them grow like wildfire. But Uber has also collected a number of lawsuits along the way.
I suspect it'd claim "unavoidable collateral damage." And it'd be right (for the most part). - A better way. If you're not addressing a specific need, you better give your customers one heck of a better experience. Via a software-based supply chain management solution, Uber does.
- Adding value. In retrospect, we can see how inefficient the taxi industry was. Uber provides higher car utilization, more fares per hour and less waiting.
- An expanding customer base. How to turn latent demand into real demand? Make a service so easy and convenient that people can't resist. Customers are now using Uber as a second car alternative.
- Network as a moat. The more cars and drivers Uber employs, the shorter the pickup times and the greater the efficiency. Snapchat, WhatsApp and Yelp also have great network effects.
First into market is really key here. Uber's headstart alone virtually guarantees an uphill struggle for Lyft and Sidecar to compete.
Coulda, Woulda, Shoulda
Uber listed on AngelList in 2010. It had a valuation of around $10 million. It will soon have a $10 billion valuation.
Should you have invested? Don't even go there. That roughly 1,000 times profit is long gone.
But maybe all is not lost. My team and I are right now looking at another Uber-like company. Its model and traction is the spitting image of Uber just three years ago.
Its name is Zaznu. And it operates in South America.
Can it really be another Uber? We're using the criteria of leadership, better experience, value added, growing customer base, and network effects to evaluate this intriguing startup.
If it passes muster, who knows? It just may become our next Startup Investor recommendation.    
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