The CBC – Canadian Broadcasting Corporation, for those of you outside of Canada, recently ran a report on Uber on how their disruptive behavior has now shifted to becoming destructive. In their recent article they cited the fact that perhaps lying to everyone, going to war with municipalities and the general way that Uber has gone about doing business is finally starting to upset people. No wonder they said they have dropped in perceived value in the emotional marketplace, even though their valuation remains strong. The biggest and most telling sign of this was the fact that Uber was nowhere to be seen at the recent SXSW festival in Austin and nor was its ride sharing platform active there anymore.
Those that know me know that I am no fan of the Fintech/P2P/Sharing Economy. I’m not dumb, I know that some variation of it will be here to stay and the concept is good, I just have some fundamental issues with it. I’m also a hypocrite (I should hasten to add), like many, I use Uber all the time. However, by my calculation the more I use them, the more I am helping them lose money, so I suspect that is a debate for another day. Here is why I don’t like this new economy and I would welcome to hear your thoughts on it as well.
- If you are going to play in any sandbox, learn to play by the rules. This doesn’t mean you shouldn’t be disruptive, but it doesn’t mean you should be able to a) change the law to benefit you against all others, nor b) should you break the law and then flaunt the fact that you are breaking the law. I have to say, that we needed Uber to come on the scene, absolutely, a driver that can pick you up because you have contacted them via an App. I can’t tell you how often I’ve stood in the rain looking for a taxi, or trying to hail one in a city that says “sorry you have to call dispatch to arrange a taxi, and the next one won’t be for 30 minutes”. Uber absolutely reshaped our world. However, breaking the law as they have done in many states and countries, lying about what a driver can make, going to war with municipalities because you have been breaking the law, doesn’t make a good long term partner.
- There should be one level playing field for everyone whether Fintech or not. I think disrupting the marketplace is great. P2P is a great concept, putting the power in the hands of individuals instead of institutions, great idea. However, preventing those same institutions, or existing companies, from using the same playbook you get to use, just because you are “new” and are Fintech, or are a ride sharing platform and not a taxi. That’s not cool. Give us all the same playbook, the same playing field and let us all compete for the same piece of the pie.
- Make sure everyone is making a decent living. Hey, you want to undercut the competition? You want to remove user fees in banking? Or make your product 1/3 the cost of a taxi. All the power to you, just make sure that your people are making a decent living and that you’re making money as well. To date not ONE of these sharing/Fintech/P2P companies have made a dollar of profit. They haven’t been able to create a model, yet, that allows for them to charge as little as they do and still make a profit for all involved. It’s worrisome. You speak to most Uber drivers about the hours they work and compare it to a taxi driver and the hours they used to work (before Uber came to town). While we may have hated taxis due to the pain points of dealing with the driver, the fact they didn’t take a credit card, and actually finding one in some cities. Cost wasn’t something I really heard people complain about. Uber dropping prices as they have done, has put people in the situation that it’s arguable that they can make a living wage without working all the time. Furthermore, if you look at markets like Toronto – they are consistently raising the rate because they can’t figure out what the model should be. And just so I am not only picking on Uber – another great service I use, Spotify, analysts have recently started questioning not just the valuation but the potential for profit as every time a new user subscribes, the service loses more money. So it’s not left out, even the behemoth Airbnb can’t seem to turn a profit and was recently cited in NYC and London for flaunting renters rules and in both those cities had to max out the number of nights a “room” could be on rent.
So what’s the moral of my story here? This Fintech type economy has a lot to teach us, but I think those of us in bricks and mortar have a lot to teach them. The biggest thing I think we can teach them is that there is a difference between being disruptive and teaching us how to change our ways and being destructive and ruining both industries, and local economies and eventually themselves. Paraphrasing Jim Collins from his book “Good to Great”, the first mover advantage is only advantageous for the next guy.
I’d love to hear an alternative opinion – feel free to reach out and tell me I’m wrong!