Don’t Protest the Collaborative Economy –Lead It

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Yesterday, thousands of infuriated taxi drivers across dozens of European cities brought transportation services to a standstill. The taxis launched the “Escargot Protest” intended to stopped traffic in objection to Collaborative Economy startups Uber, Lyft and other similar startups. While they raised global attention, they lost a day’s wages, angered their own customers who were seeking to commute and, ironically, caused an 850% increase in Uber business, making Uber a trending term in UK, resulting in government officials mocking the taxi drivers.

The taxi protest against the Collaborative Economy backfired it made Uber more popular than ever!

Cooler minds prevailed. Neelie Kroes, a VP of the European Commission, wrote a seminal post stating: “In the sharing economy like drivers, accommodation hosts, equipment owners and artisans these people all need to pay their taxes and play by the rules. And it’s the job of national and local authorities to make sure that happens.”

The Collaborative Economy movement is spreading to every industry: There are 9,000 startups in the space and they’re heavily funded, backed by the most powerful technology companies in the world, with a growing desire for faster and cheaper services. In fact, this recently published Honeycomb Framework I published shows the next verticals who will be impacted.

This P2P commerce is the most significant disruption ever seen in business. The people formerly known as a business’ customers  are now competitors.

The CEO of an SF Taxi company says they only have 18 months left. That’s just enough time to adopt the same strategies and technologies as these tech startups (which are financially backed by Google, VCs, and which use powerful technologies from Facebook, Apple, and Samsung).

So what should taxi companies do? They could continue to adopt the on-demand technology from companies like Flywheel (who I’m visiting tomorrow), but they also need to launch their own marketplaces of drivers and trucks using tools from Near-me or Localmotion, or build their own. They need to understand how to promote accountability by enabling customers to rate drivers and experiences. Then they need to retain and reward those who perform well and either retrain or release those who do not.

About a year ago, I published a research report that showed the business models needed to succeed in this market.  Six months ago, I launched Crowd Companies, which connects big brands to leaders, startups, and communities in the Collaborative Economy.

Let’s recap: European Commissioner Neelie Kroes’ final line in her post, which states: “It’s time to face facts: Digital innovations like taxi apps are here to stay. We need to work with them not against them.” I very much agree. If you’re protesting the Collaborative Economy, it is proof you’re late to the party. Change your business model now and lead this movement.

Dear Businesses: Don’t protest the Collaborative Economy adopt it, then lead it.

Related: respected Robin Chase, founder of Zipcar and Buzzcar, writes about Cooperative Capitalism. Also, former executive at an auto company, Scott Monty shares how Taxis are fighting in an unconventional battlefield.

(image used via creative commons by George Pauwels)


16 Replies to “Don’t Protest the Collaborative Economy –Lead It”

  1. The fundamental mistake of framing the current changes in transportation is to characterize it as a technology battle by pretending law-abiding taxi companies are afraid of phone apps. They aren’t.

    Nearly all taxi companies have apps, these days. It’s not about technology.

    What is at the heart of this debate is how a new taxi company entrant claims the moral high ground of “innovator” by belligerently ignoring governments across the globe. They, in fact, operate a taxi service. They solicit riders and charge fares. They operate the dispatch. They even finance vehicles. That their employees are 1099 independent contractors is not germane to their functioning as a taxi cab service and this is reflect in Uber’s own claims of creating jobs.

    Uber essentially forces other taxi companies into the position of ignoring governments. That’s Uber’s primary advantage; it is the single biggest difference.

    Uber’s next biggest advantage is a well-oiled public relations team that is relentlessly effective in making bold claims like 800% increase in sign-ups (without a baseline figure), paying out $90,000 salaries to drivers (using extrapolative theories of peak periods extended over mythical long work periods), and other frequently unchallenged assertions.

    Uber has a place. So does Lyft. If they bring improvements to technology and service, that’s very laudable and we should all welcome their entry into the competition. However, it is irresponsible to constantly disregard public institutions out of a CEO’s personal political bias, promoting a duplicitous definition of what the company is and does, and constantly push media stories will little-to-no evidence which do not often stand scrutiny.

    There shouldn’t be mindless cheerleading for bad behavior.

  2. I saw that discussion earlier. Some interesting back and forth. I hope some of those folks make it to your blog to read this post.

  3. Thanks for these thoughts Sean.

    One thing is certain, this is spreading to many industries and verticals, regardless of how you characterize the features, actions, or behaviors –it’s not going away.

  4. Airbnb has already entered the food industry –expect push back

    Hotel lobbyists have formed up against Airbnb a few weeks ago.

    Maker and 3D printers will challenged by IP law.

  5. … and the cab companies sat on their laurels for too long and failed to deliver Uber-quality dispatch services…

    Look, there are clearly going to be regulatory battles here. But it’s not really clear which way the law should be turning in all of these cases. Much of the regulations here are about trade-offs and we’re going to have to evaluate those trade-offs.

    Prior to Uber, you had two types of people who would pick you up at the airport: friends and professionals. Friends got to pick you up at the gate, professionals had to pay some fees to the airport in exchange for the ability to pickup fares. Uber & Lyft start graying that line.

    At one extent, we could argue that they are “professionals”, except many of them do this as a “side gig”. additionally, it’s not really clear what would “unmake” them a professionals. What if I started a company called Ryde and did the same things as Uber except that I did not directly handle money? Is it just the money thing? What if people also used Ryde as a carpool service on top of using for airport pickups? What if two relative strangers left the airport in the same car and one of them gave the other “gas money”? What if they were friends? What if the “gas money” was provided in terms of a free dinner? What if I had lots of friends, how many of them could I pick up at the airport in a given week?

    As @jowyang:disqus mentions, this is not the only industry changing and these legal questions are going to pop up everywhere. Not because people are trying to be malicious, but because the current regulations are created to handle “things we know” rather than “things we don’t know”.

    AirBnb and Uber/Lyft are honestly just small regulatory potatoes. Much of the laws here are really just around ensuring service quality for consumers. Cities like to have flat cab fares b/c it’s good for tourism etc.

    Drones are already making real regulatory waves. Self-driving car fleets are going to fundamentally change insurance regulations. The fights over 3d printing are going to be crazy and obtuse. Fights over digital goods and crypto-currencies are going to be terrible.

    But in all cases people here will not be trying to “flaunt the law”, they’re trying to build something we’ve never seen before which by definition means that we’re not sure how to regulate it.

  6. Thanks, Gaëtan.

    1. I fully agree regulations need to be reviewed and revised. There’s a number of rules which we probably want to throw out. I’m glad there are catalysts for this much need ongoing process.

    2. Uber should not be allowed to simply disregard the law without consequence. While I wouldn’t advocate throwing Travis in jail, I would find it reasonable to cities to administer significant financial sanctions. Like it or not, you have to have a license to operate a cab. I’d suggest local governments fine Uber the equivalent of the same expensive licensing costs their law-abiding counterparts have had to pay as well as all legal costs related to their willful disregard.

    3. Paying a cab driver isn’t the same as getting a ride from a friend. Period. There is no gray line. Whether a cab driver works a 12 hour shift or a 30 minute shift, they’re a cab driver. End of story.

    4. Absolutely, you’re right that other big changes are already here. And I’d agree with you that even more are on the horizon. I look forward to the advancements. I do hope most actors are not behaving maliciously, as Uber prides itself on having done.

    You’re right. We need governments to act quickly: impose sanctions, revise laws, and enforce the new schema. We need to address the rapid changes coming our way without allowing new players to simply act as though government does not exist.

  7. > Paying a cab driver isn’t the same as getting a ride from a friend. Period. There is no gray line.

    What if the cab driver is my friend and he picks me up in his personal vehicle? He’s still a cab driver right? What if he picks me up in _my_ car because I gave him the keys to do so. Is he still a cab driver even if he’s not in the cab?

    We both seem to agree that this is all a big shift and that governments should really get moving on how to regulate and tax this stuff.

    We we seem to disagree on the size of the “grey area”. To me the grey area is huge because a Collaborative Economy means that you go from a few million US “corporations” to a 100 million “corporations” as people become one or more organizations unto themselves.

    We have historically regulated “individuals” differently from the way we regulate “corporations” and the “Collaborative Economy” necessarily means that we’re blurring those differences.

    It’s not always clear when “person” because “liable corporation”, especially when a Collaborative Economy starts exchanging non-currency goods.

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