4 min read

Uber vs The law my Moneys on Uber

Sep 1, 2014

I love Uber, the ridesharing app that connects people who need rides with drivers.

Instead of my normal $35 taxi ride to LAX, an UberX car takes me for about $11.

The service is active in 108 US cities and 45 countries worldwide.

Five years ago, it didn’t exist. Today, it’s valued at over $18 billion.

It truly is an Exponential Organization.

Uber is one of a new generation of dematerializing, demonetizing and democratizing technologies that’s disrupting the status quo.

I talk about these technologies and their implications with my Abundance 360 mastermind group in January (apply here, if interested).

Simply put, Uber is a product adored by passengers and Uber drivers alike.

It uses technology to dramatically improve a broken system. It solves a pain point.

As a result, hordes have left the traditional taxis and rental car options.

Understandably, these incumbents aren’t happy, and where do they turn?


Uber’s Long, Legal Battle

I recently spent a week with Uber CEO Travis Kalanick in Sicily at Google Camp.

I’d heard mention of some of the legislative challenges that Uber was facing globally, but I wasn’t really aware of the scope or scale of what was happening.

Check out this global resistance:

  • Germany: officials just slapped a nationwide ban on Uber because the drivers don’t have correct permits. Drivers will face fines of up to $323,700 per trip if Uber violates this temporary injunction.
  • Spain: Hundreds of taxi drivers went on strike in June, protesting the unregulated private service that was taking their business.
  • India: “According to the Economic Times, three Uber competitors – Meru Cabs, Easy Cab, and Mega Cab – have written to the Reserve Bank of India, complaining that Uber is violating foreign-exchange laws.”
  • Brazil: Uber might face legal problems if the government of Sao Paulo pushes for the suspension of its service. For example, a few weeks ago “three cars were found providing services through Uber in Sao Paulo and the drivers had to pay fines of $900 on average.”
  • Vancouver: The city attorney claims that the service is illegal: “Though the meter UberX uses does not look like a traditional taxi meter that measures time and distance as the ride progresses, it still fits within the definition of (a) taxi meter [under city code].”
  • United States: The taxi lobbies are putting enormous pressure on local governments to block Uber in their cities. In Milwaukee, five taxi groups are “suing the city of Milwaukee, hoping to block an ordinance that provides a path to legalization for mobile ride-booking apps.” In California, New York and DC, Uber has faced numerous cease-and-desist orders.

And yet

Regulation, the Protection of Last Resort

Laws typically favor the incumbent solutions that manifested them in the first place.

But when an industry turns to protectionist regulations to keep a more cost-effective solution out of the market, you know it’s in a death spiral.

Take the horse versus the automobiles, for example.

Many hated cars in the early 1900s because, well, they scared horses.

In fact, amazingly, at the turn of the century, a law in Pennsylvania stated:

“Any motorist who sights a team of horses coming toward him must pull well off the road, cover his car with a blanket or canvas that blends with the countryside, and let the horses pass. If the horses appear skittish, the motorist must take his car apart, piece by piece, and hide it under the nearest bushes.”

In general, the government’s major role is stabilization.

But many times when a product is so much better say 10x or more the incumbent will eventually lose. They must adapt or go extinct. Regulation can only stay the change for a short time.

And during this time of accelerating change, where the only constant is change, we will be seeing a lot of 10x improvements challenging the norm.

Look at Airbnb. Pandora. iTunes, Tesla, Craigslist. The list goes on and on.

Technologies that leverage the 6 D’s will WIN

In my mind, the companies and products that solve problems most effectively (and most cheaply) will win.

Many of these are the products that follow the 6 D’s of exponential change. To demonstrate what this means, for those not part of Abundance 360, let’s look at how Uber fits into this model:

  • Digitized: Uber digitized the taxi-calling experience, the payments process, the taxi-navigating process, the fare splitting process, and more.
  • Deceptive to Disruptive: In my mind, Uber, despite being an $18 billion company, is still in its deceptive growth stage. Just wait until we get into automated vehicles and self-driving cars. Guess who will be perfectly positioned to take over that market?
  • Dematerialized: Uber dematerialized a number of things, including the need for taxi fleets. In some cases, it dematerialized owning a car for many who elect to “Uber” everywhere instead.
  • Demonetized: Uber eliminated the annoying fees and taxes that taxis require, as well as taking “tipping” out of the picture.
  • Democratized: UberX is cheap and available to anyone with a smartphone (and the service in the area). It is democratizing transportation.

Despite their many legal challenges, Uber continues to drive and thrive.

They are growing explosively, and the company is changing the game.

And frankly, knowing Travis’ vision for Uber, we haven’t seen anything yet.

This is an important debate

I acknowledge the debate about technology vs. policy is an important one.

Technology can be a double-edged sword.

I want to talk with you about the implications these technologies have on jobs, on wages, on livelihoods. To have these debates together.

And it seems Uber does too.

They just hired David Plouffe, one of U.S. President Barack Obama’s key election advisers, to take charge of policy and strategy.

If you want to join me in this discussion, and learn where other technologies will become disruptive over the next few years, I’ve put together a mastermind of CEOs, entrepreneurs, and executives called Abundance 360. Apply here.

Each week, I write a blog on exciting emerging technologies and trends. Sign up at PeterDiamandis.com to ensure you don’t miss them.

Peter H. Diamandis

Written by Peter H. Diamandis


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