Uber: Cold-Start a New City

It is March 2011. You are the Launch Lead for Uber. After a successful but small launch in San Francisco, you are tasked with opening your first expansion city: Seattle. The problem is the "Cold Start." You have zero drivers and zero riders. If a rider opens the app and sees "No Cars Available," they delete the app and never come back. If a driver logs on and gets no rides for an hour, they go back to driving for a traditional limo company. You have a limited budget from Travis Kalanick. You need to create "Liquidity" (the state where a rider can get a car in under 5 minutes) as fast as possible. But Seattle is a different beast than SF. The hills are steeper, the weather is worse, and the taxi lobby is more aggressive. You must decide how to prime the pump. Do you focus your scarce resources on recruiting drivers (Supply) or acquiring riders (Demand)? In the marketplace wars, getting this sequence wrong is the fastest way to burn $10M and fail the expansion test.

The principle: In a two-sided marketplace, liquidity is the only metric that matters.