DiDi — the Chinese equivalent to America’s Uber — was born out of the desire to fix the enormous traffic congestion and transportation problem in Beijing. Prior to the introduction of ride-hailing services in China, passenger brawls over taxis and exorbitant fares charged by illegal taxis were common place in crowded, urban centers. China had a unique problem: a massive population that was already connected through mobile combined with highly congested cities in need of traffic relief.

The word DiDi itself means “honk honk”in Chinese, a nod to the perpetual traffic congestion. While it was founded as a taxi-hailing service, it rapidly transformed to a ride-hailing platform.

DiDi’s dominance is the result of an aggressive strategy of acquisitions. DiDi purchased its two main rivals (Uber China and Kuaidi Dache) and now matches the largest base of connected passengers with the biggest pool of drivers.

1. Identify how you can connect two groups via a platform

DiDi identified the opportunity of improving personal mobility by matching riders and drivers. Originally, DiDi started as a taxi-hailing service, but rapidly expanded to occasional drivers to expand its available cars.

2. Create the value proposition for each group

DiDi attracts passengers with its large pool of drivers, consistent pricing, reduced wait times, and WeChat and Alipay integrations. It attracts drivers with a large pool of passengers, reduced idle time, and discounts (e.g., gas, insurance, etc.).

3. Aggressively acquire both groups

DiDi pursued a very aggressive strategy to grow its passenger and driver pools, in particular, by purchasing its two main rivals (Uber China and Kuaidi Dache). As of January 2019, DiDi had more than 31 million drivers servicing 550 million registered passengers.

4. reap competitive advantage

The sheer size of the two interdependent customer groups has created a competitive advantage for DiDi, which makes it hard for anyone else to compete in the transportation sector in China.