MOBILITY CHARMED BY A FAIRY TALE
Automotive social justice warriors need healthy dose of reality, says David Booth.
Montreal’s Teo 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: Teo Taxi should never have been in business in the first place. For those who have never heard of Teo 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 Teo 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, Teo Taxi’s parent, received $9.5 million in government grants. And the Philippe 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 depot et placement du Quebec, the province’s public pension fund, and Investissement Quebec, a provincial business development fund, also injected cash. All told, according to a CBC report, Teo 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 Teo is yet another example of what Forbes calls the “new calculus in corporate boardrooms.” Author Jon Markman cited Amazon — whose founder is now the richest man in the world “despite posting just a handful of profitable quarters in the company’s two-decade history — as proof that “profits are so yesterday.
“Now,” said 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 mere toy a couple of years ago is now being heralded as the cure 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. Indeed, like Uber — which has, counter to the adamant projections of futurists, actually increased traffic congestion — these scooter rentals may not ease congestion. Most scooter users, after all, are the young and carless who would otherwise be using public transportation. Nonetheless, if the hype is to be believed, the same scooters any selfrespecting nine-year-old dumps as soon as he gets a decent bicycle now deserve billions upon billions in investment because they are the solution to 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 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 being the rah-rah boosterism that lets Tesla burn through billions while Lime and Bird scatter scooters around sidewalks like so much trash during a Teamsters strike. To question any business model is to be against modernity. To point out flaws in new technology is to be labelled a climatechange 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.