When dis­rup­tion goes wrong

Uber is a les­son in the dam­ag­ing power of dis­rup­tion and glob­al­i­sa­tion, and it should be stopped

Campaign UK - - PROMOTION - ANDY PEM­BER­TON Di­rec­tor, Furthr @andypem­ber­ton

Right now, some­body is some­where try­ing to dis­rupt fi­nan­cial ser­vices.” This was the ti­tle of a slide shown at a re­cent con­fer­ence I at­tended. Be­neath this head­line were images of Sil­i­con Val­ley’s most heroic dis­rup­tors: Google’s Sergey Brin, Ama­zon’s Jeff Be­zos, Paypal and Tesla’s Elon Musk and Uber’s Travis Kalan­ick.

Leav­ing aside the race and gen­der is­sues this slide en­cap­su­lated (sig­nif­i­cant as they are), I was struck by an­other thought: Kalan­ick? Re­ally?

Kalan­ick is no hero of dig­i­tal dis­rup­tion. I am glad he has been forced to re­sign. In fact, I think Uber, the com­pany he led un­til re­cently, should be shut down too. Uber is ev­ery­thing that is wrong with dis­rup­tion and glob­al­i­sa­tion.

Sil­i­con Val­ley is still hum­ming with the news that, fol­low­ing rev­e­la­tions of sex­u­ally ha­rassed staff, mis­treated driv­ers and dodged reg­u­la­tors, Kalan­ick was forced to re­sign as chief ex­ec­u­tive of Uber last month.

In­deed, there were so many scan­dals at Uber that there is even a web­site com­mit­ted to the sub­ject – uber­scan­dals.org.

Kalan­ick was clearly re­spon­si­ble for the com­pany’s de­ci­sions and prac­tices. But now he is gone, Uber can in­stall a more eth­i­cal chief ex­ec­u­tive and things can go back to nor­mal. Hey, maybe it can even ap­point a woman this time and then things would be much bet­ter, right? Wrong.

The com­pany’s cul­tural dys­func­tion isn’t a bug, it’s a fea­ture: it is baked into the busi­ness model.

Uber’s busi­ness model is pred­i­cated not on tech­no­log­i­cal dis­rup­tion but on break­ing rules. And, hav­ing grown through skirt­ing reg­u­la­tion, it doesn’t mat­ter who you put in charge now – Uber ain’t gonna change.

When Uber ar­rived in the UK in 2012, just be­fore the Lon­don Olympics, it had al­ready achieved some smart stuff. It had recog­nised that ex­pen­sive taxi medal­lions were un­nec­es­sary for pre-booked trips, it had used smart­phone apps to let pas­sen­gers re­quest ve­hi­cles and it had found cost sav­ings in equip­ping driv­ers with stan­dard phones rather than spe­cialised hard­ware.

But, as oth­ers have noted, those in­no­va­tions could eas­ily be copied – and were cer­tainly not enough to f loat a global busi­ness.

Uber’s big ad­van­tage was us­ing pri­vate cars.

That way, it could avoid com­mer­cial in­sur­ance, com­mer­cial reg­is­tra­tion, com­mer­cial plates, spe­cial driver’s li­cences, back­ground checks, rig­or­ous com­mer­cial ve­hi­cle in­spec­tions and count­less other ex­penses. As a re­sult, Uber could sub­stan­tially un­der­cut other cab­bies. Bingo, a global “dig­i­tally dis­rup­tive” busi­ness was born!

Next, Uber de­vel­oped a se­ries of ad­di­tional in­no­va­tions de­signed to but­tress the rule-break­ing on which its busi­ness was built.

Staff pro­ce­dures and soft­ware were all de­vel­oped to mo­bilise pas­sen­gers and driv­ers to lobby reg­u­la­tors and leg­is­la­tors – cre­at­ing po­lit­i­cal pres­sure for any­one who dared to ques­tion Uber’s ap­proach.

(You may re­call that Boris John­son, as mayor of Lon­don, con­sid­ered clamp­ing down on Uber in 2015 by im­pos­ing a min­i­mum wait­ing time of five min­utes on rid­ers. Some 200,000 Lon­don­ers signed a pe­ti­tion in protest – maybe you were one of them – and he was told to back off.)

At the same time, Uber’s le­gal team ap­proved the Grey­ball soft­ware. Uber de­scribes Grey­ball as a pro­gram that “de­nies ride re­quests to users who are vi­o­lat­ing our terms of ser­vice”, in­clud­ing “op­po­nents who col­lude with of­fi­cials on se­cret ‘stings’ meant to en­trap driv­ers”.

The whole ed­i­fice was built on rule-break­ing. Who­ever leads the com­pany now will make no dif­fer­ence. Scan­dal will fol­low scan­dal un­til the whole sorry mess of Uber is shut down. The sooner the bet­ter, I say.

Be­fore you call me a Lud­dite, know that of course I agree GPS tech­nol­ogy has clearly out­stripped the need for cab driv­ers to learn The Knowl­edge and so some level of dis­rup­tion to the taxi busi­ness is in­evitable and right. Why pay top dol­lar for knowl­edge that you can ac­cess for “free” on your smart­phone?

But a busi­ness that side­steps rules that oth­ers must fol­low isn’t fair com­pe­ti­tion. And, frankly, we’ve been here be­fore.

Older read­ers will re­call Nap­ster, an in­no­va­tive file-shar­ing plat­form that brought ev­ery song imag­in­able to a lis­tener’s ears – all for no charge. Nap­ster’s ap­proach was grounded in il­le­gal­ity. The com­pany’s bril­liant in­no­va­tions could never undo the in­tel­lec­tual prop­erty theft at the core of its busi­ness. The ser­vice was forced to close, but now we have itunes, Pan­dora and Spo­tify – busi­nesses that keep what was great about Nap­ster while op­er­at­ing within copy­right law.

And be­fore you say “who cares?”, know that this isn’t just about your Spo­tify playlist or cab ride home.

The New York Times has called the bat­tle be­tween Uber and Lon­don cab­bies “less about the dis­rup­tive power of an app, or a new busi­ness model, than about the dis­rup­tion of Bri­tain”.

Uber and Nap­ster pro­vide a les­son in dig­i­tal dis­rup­tion. They show how the rule-break­ing al­lowed by tech­nol­ogy can­not be a li­cence to de­stroy the liveli­hoods of those who ad­here to the rules.

If we in­tend to cush­ion the forces of dis­rup­tion and glob­al­i­sa­tion – and com­mon sense sug­gests that might be a smart idea – then we have to bal­ance in­no­va­tion and reg­u­la­tion, and do it now.

If we don’t, it won’t just be Lon­don cab­bies protest­ing in the streets. So, yeah, close Uber to­day.

“A busi­ness that side­steps rules that oth­ers must fol­low isn’t fair com­pe­ti­tion. And, frankly, we’ve been here be­fore. Older read­ers will re­call Nap­ster”

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