Social justice no answer to our mobility problems
Montreal’s Téo Taxi’s demise a case in point
Montreal’s Téo Taxi went out of business at the end of January. Cars have been idled, the taxi industry, already savaged by Uber et al, is once again diminished, and founder Alexandre Taillefer, an e-commerce entrepreneur and “dragon” on Dans l’oeil du dragon (the Quebec version of Dragons’ Den), has lost his entire $4-million investment. More poignantly, 450 drivers have lost their jobs, 450 families are now without a breadwinner and 450 Christmas bills will now be a little harder to pay.
But here’s the really, really sad part: Téo Taxi should never have been in business in the first place.
For those who have never heard of Téo Taxi, it is — or was — like so many new startups, more social experiment than business. In fact, promising “the best and friendliest (taxi) service in town,” Taillefer actually doubled down on the progressive mantra, not only insisting Teo’s entire fleet be electric, but also that his company’s taxi drivers would be paid by the hour rather than the fare.
Now, never mind that emissions reduction and fair compensation are laudable goals. The fact remains that no amount of social justice-warrior pixie dust was going to magically allow a company expending more initial capital (all those expensive EVs) and higher running costs — that would be paying drivers $15 or so an hour even when their Nissan Leafs, Kia Souls and Teslas were idling — to operate in a fixed-fare marketplace. That the traditional taxi industry is unfairly regulated and Uber’s ability to circumvent those regulations is an unhealthy advantage doesn’t change the fact that all these conditions existed in 2015, when Téo first started ferrying passengers around the mean streets of Montreal.
In fact, like so many serial entrepreneurs these days — stand up and take a bow, Elon Musk — one has to wonder if Taillefer ever really meant to make money. In the less than four years of its existence, Taxelco, Téo Taxi’s parent, received $9.5 million in government grants. And the Couillard Liberals — for whom Taillefer worked as campaign manager during the last election — authorized a $4-million loan.
On top of that, the Caisse de dépôt et placement du Québec, the province’s public pension fund, and Investissement Québec, a provincial government business development fund, also injected cash. All told, according to a CBC report, Téo went through some $30 million in grants, loans and investments in a business that, unless regulations changed, could never make money.
But the reason I’m dwelling on the travails of such a tiny e-commerce business — beyond the fact it’s Canadian — is because Téo is yet another example of what Forbes calls the “new calculus in corporate boardrooms.” Author Jon Markman cites Amazon — whose founder is now the richest man in the world “despite posting just a handful of profitable quarters in its two-decade history — as proof that “profits are so yesterday.”
“Now,” says Markman, “it’s all about vision and great storytelling.” Netflix is the most emulated company in the entertainment industry, yet according to CNN, it’s “burning staggering amounts of cash.” Bitcoin bit quite a few true believers. And will Snapchat ever make money? As Markman’s column claims, “No Profits, No Problem” seems to have become Wall Street’s latest mantra.
It’s a fairy tale that’s invaded the mobility industry as well. Tesla recently boasted its first profitable quarter in 16 years and, never mind that RBC has already decried that as a one-shot affair, fans and analysts — unfortunately for objective analysis, now often one and the same — reacted like it was the Second Coming. Uber, despite the havoc it has wrought on actually profitable taxi companies, is still bleeding red ink. Ride-sharing, despite enjoying almost universally positive hype for more than a decade, is actually, as a Cox study recently revealed, less popular today than it was just three years ago.
The most egregious example of this fairy-tale capitalism, however, has to be the incredible reinvention of scooters as the saviour of mobility. What was just a couple of years ago a mere toy is now being heralded as the cure-all for traffic congestion. The fact that pretty much anyone over 40 not named Tony Hawk risks serious injury doesn’t seem to have blunted enthusiasm. Nor has the fact eight of the biggest cities in the U.S. don’t permit scooter firms to operate, mainly because the entire enterprise is unregulated and the scooters, having no home base, literally litter downtown sidewalks in the cities they do work in.
Indeed, like Uber — which has, counter to the adamant projections of futurists, actually increased traffic congestion — these scooter rentals may not ease congestion at all. Most scooter users, after all, are the young and car-less who would otherwise be using public transport. Nonetheless, if the media hype is to be believed, the same scooters any self-respecting nineyear-old dumps as soon as he gets a decent bicycle now deserve billions upon billions of dollars in investment because they are the solution to our inner-city traffic woes.
I get that much of my skepticism will be dismissed as just one more Boomer holding on to a yesteryear that modernity has passed by. And, when I complain about hipsters’ silly facial growths, it is not without remembering my dad’s disparaging my “hippie” hair. Nor can my plaints of Miley Cyrus be taken as other than the inevitable change in fashion and song.
But there’s something different going on here. It’s as if critical analysis has become a sin, the only acceptable alternative the rah-rah boosterism that lets Tesla burn through billions while Lime and Bird scatter scooters around sidewalks like so much trash during a garbage strike. To question any business model is to be against modernity. To point out flaws in new technology is to be labelled a climate-change denier. And to wonder how a high-cost taxi operator — or an EV manufacturer, for that matter — can survive without subsidies is to not understand we live in what Forbes’ Markman labelled “The Amazon Era.”
“We lose money on every sale, but make it up on volume” used to be a joke.
Now it’s a business model.