I really do not like the use of Uber as an example of a market ‘disrupter’. In fact, if anyone uses the words ‘disruption’ and ‘Uber’ in the same sentence, I leave the room.
If you had sat me down 5-10 years ago and asked me the top 5 things I would like to change about the taxi industry, within about 20 minutes of brainstorming I would have nailed all 5 of the ‘innovations’ that Uber has implemented. I would also have come up with about 50 more, and for a lot less than several billion dollars of shareholder capital. Furthermore, 45 of those things have still not been done by Uber – most importantly – paying drivers fairly.. :(
It’s all the rage to bag Uber right now, and that is not my point. I am bagging the people who think that Uber was innovative, or disruptive. Uber, as a business model, was simply to break the law en masse. Plain and simple.
I put this proposition to a friend who is well-conversed in the innovation space, and he debated with me, saying that Uber was truly innovative because the customer was radically better off.
So let’s say I am in the business of raising capital for other businesses, and I come to you and offer to raise you $1m for 1% of what Macquarie Bank would charge – a massive saving. Would you say that sounds innovative? Maybe. But what if I said that I needed to break every capital raising law, corporate law and fiduciary law to do it? I can save you a lot of costs and deliver the result in a fraction of the time using ‘modern technology’, but I will also skip the bit about getting an Australian Financial Services Licence (AFSL), having sufficient capital backing, doing due diligence, making appropriate disclosures, etc. I will use a new ‘app’ that enables you to give me ‘feedback’ that will ensure that I do the right thing and that no one else will get ripped off in the future…
Would you agree that bankers and corporate advisers have become slow, bloated, ineffective, inefficient and unresponsive to client demand? You bet they have. Just like the taxi industry (but worse). But if I tried to raise money for your new venture efficiently by breaking every law in that space, I would end up in prison – 100% guaranteed. That’s not innovation. That’s just cheating. Gaining an advantage by playing by a different set of rules (no rules) than everyone else in a particular market – and then papering over the ‘outlaw business model’ with a fancy new ‘app’ is NOT innovation. It’s cheating.
People have very short memories. Do you think that the taxi industry, or the hotel industry, or the travel industry, or the capital raising industry (yes, ICOs I’m talking to you) just came into existence with all the associated regulations and licences that we see today? No, of course not. The regulation was put in place after the PUBLIC cried out for it because of being taken advantage of, or put in danger, or left without insurance cover. The regulations were put in place to protect the PUBLIC. Did the Government go too far? Yes, in most instances it did. Did this lead to inefficiencies, vested interests and poor customer outcomes? Certainly. Is the correct approach to this anarchy? Maybe. But let’s call it what it is. It is not disruption or innovation. It is just anarchy. It is just people saying (en masse and via anonymous technology outside of the jurisdiction) that they are not going to follow the rules anymore.
Real innovation is delivering solar energy at 5c per kwH, unsubsidised.
Unfortunately, the USA has put a lot of investment and national pride in companies that are in my view, not innovators – they are cheats and people who are happy to misrepresent what they are offering to their clients.
Let’s have a look at Facebook. A CRM for the general public. Great idea. But it is basically built on a misrepresentation. Right from the start. Plain and simple. A great big ‘white lie’.
No, not an actual lie, because if you looked in the basement of the planning office on Alpha Centauri you would have seen that they planned to use your data to target you with personalised ads and to sell that data to the highest bidder down the road.
Everyone is now up in arms at the concept of someone else owning their life moments and personal interactions – and using this sensitive data to manipulate and exploit them – socially, politically and economically.
But it was obvious from the start. Nothing. Nothing. Nothing is free. We only have ourselves to blame.
If we lived in a truly laissez faire world where ‘buyer beware’ rules, then we have no excuse. But most businesses don’t operate in that world anymore. The rest of us operate in a world where consumer protection throttles us at every turn. Where we need to design products and make disclosures for the most incompetent possible consumer.
Yet Facebook, Amazon, Apple and Google can monitor our conversations and movements, and sell that data to prey on our most intimate weaknesses – and we are powerless other than to switch off. ‘Didn’t you read the 30 pages of terms and conditions…’
It would be like a tobacco company saying that all we have to do is stop smoking. The fact that Facebook, Amazon, Apple and Google are making products that benefit from network effects and are addictive, expensive, and life-threatening is our fault, not theirs.
But with social media, it is even more insidious, because it cuts to the very heart of being human – the need to be a relevant part of a community. Most of us can’t switch off. It is part of who we are.
All I am advocating is an even playing field. Don’t let businesses steal value from people who have invested in the system (i.e. all those people who bought taxi licenses from our government or complied with hotel permit laws). Don’t let big businesses give us stuff for ‘free’ when in fact they are taking from us our political, economic, and social freedoms. Let’s apply the same standard (or lack of standard) to all.
I personally believe the government should stand back a bit and let us consumers look after ourselves to a greater degree – take some responsibility and get some skin in the game. But meanwhile, the people setting the rules should apply them to all of us equally. Our government should be suing Facebook, Amazon, Apple and Google for misleading conduct and legislating for us to be able to take back control of our data – or be adequately compensated for its use.
Remember media cross-ownership laws? Wow, what a quaint little concept. My guess is that no one under 30 knows what the concept means, let alone its social and political purpose. These laws were – until less than 10-15 years ago – seen as the only protection of our social democracy. They did have a social purpose…. Now almost all of the WORLDS media (and data) is in four hands…
Let’s see how long it takes to put this genie back in the bottle.
The information contained in this post is current at the date of editing – 3 October 2023.
