Uber vs. Le Taxi: The Disrupter and the Disrupted



Recently I just felt compelled to write a post about French Minister Montebourg and his ridiculous contortions to explain barriers put on innovation under what I termed “Slow Innovation”.  Adjacent to this story was a very public row around Travis Kalanick’s Uber service and concerted efforts to slow down its spread in France. The story of Uber vs Le Taxi Francais is emblematic of a societal debate that is growing in importance and I believe will come to define the coming decade.

Ayn Rand against the world
On the one hand, I give you a literal Ayn Rand fan (see Paul Carr / PandoDaily's "Cult Of Disruption") who believes his service should be allowed to take over the world at speed and will lash out at anyone who suggests otherwise. A Rayndian and Schumpeterian hero of the Silicon Valley who symbolizes disruptive innovation (see also Elad Gil guest starring on Techcrunch re "Uber and Disruption").

ayn rand

On the other hand I give you French taxi drivers who, due to an antiquated and ill advised regulatory regime, have been forced to spend hundreds of thousands of Euro’s buying taxi licenses that they will spend 15 or more years of hard work to pay back and who are anxious about the extent of the Uber disruption.

In the middle I give you patriarchal and overbearing government that thinks it can and should legislate on every aspect of life, and has trained every one of ifs citizens to believe (rightly) that whoever shouts loud enough and has the most nuisance power will influence the political agenda, gain regulatory reprieve and grab the (public) money.

Faced with the ire of the taxi drivers, the government could think of nothing smarter to do than to impose a 15 minutes waiting time on any Uber customer, a measure justly criticized by the competition authority.  Talk about random: let’s degrade the user experience so we can avoid talking about the overall framework of regulation. “We need to protect the producer as well as the consumer” shouts the self-righteous Minister.  Whichever producer is organized enough that they can take to the street and be a headache for the government, presumably.

It’s a perfect example of the fight between the old and the new, in this brave new world where, to quote Marc Anddreessen (and salute his genius for snackable quotes): “software is eating the world”.

What the innovation zealots miss is that, just as when the European coal mines were being shut, there is a whole generation of people who are getting left out and have no idea what’s happening to them, or how to react to this particular technological disruption. In TechLand, we tend to lack the political and moral interest (or clout) to talk cogently about shifts in society, and what passes for intelligent discourse is generally grandiose talk of supra-nationalism, ever less government or offshore Randian utopias. How self centered.


Quotas, quotas everywhere
A modicum of empathy is required of anyone before shouting loudly about “Innovation Uber Alles” (pun intended) from the rooftops. You have to feel for the taxi drivers who are literally getting screwed here and seeing their life savings and livelihood under threat.

The taxi market in France has been regulated for a long time. Drivers have to buy a medallion which gives them the right to drive. This medallion is worth hundreds of thousands of dollars and can be traded when drivers retire. The idea is of course that drivers needed to be registered, trained and monitored, all in the best interest of the consumer.

The industry then of course shot itself in the long-term foot by working very hard to to protect their earnings, successfully ensuring there aren’t ever enough taxis on the road to satisfy demand. Try finding a taxi at 10PM in Paris on a Friday. No one likes the French taxi industry and as a result no one will give it much sympathy today (unlike, say, black cabs in London who are at the apex of good service).


A multi-pronged disruption
When innovation came to mobile and location enabled apps, it swiftly did away with every single reason of why you would want a regulated taxi industry:

- Security: every driver is known and every car is tracked with an app like Uber. Hard to see what could go wrong.
- Routing: add Waze to your smartphone and you’ll be close to optimal timing every time. Google Maps / Places to find any hotel, restaurant or attraction. Anyone can be a driver now.
- Reputation; give a driver a 3 star rating on Uber and their customer service call message to understand what happened. It’s a real time meritocracy.
- Certainty: every Uber or Hailo driver can track their car in real time. It creates a commitment on both sides that the ride is real and let’s you know when your car will stop by the front door. Peace of mind for both parties.
- Civility: it takes no more than a name to recreate a relationship with a driver. “Hi Mohammed, I’m going to the Eiffel Tower”. “No problem Fred”. This is where Uber & co. transcend the functional to truly change the experience.

uber app

When you wrap all this together, you can see that we have a fundamentally better customer experience on a variety of levels and that it is foolish to think that anyone can hope, whatever motivation they may have, to stop this.  A mobile native experience that rewards you for being nice to your driver !


Guerilla Action
Like seemingly everyone with a grudge in France, taxis took to the street. The country is truly in the grip of special interests. Whichever minority can take its message to the street with enough brute force will make the government yield. One week it’s farmers, the next it’s truckers, the next it’s train drivers, the next air traffic controllers and so on. Not to mention public servants, teachers and whoever can make your life a misery.

Uber attaque taxi pneu

That does not of course include the Uber drivers who are taximen of a different generation and generally hard working young men (yet to meet a woman) who are embracing new technology to build their business. Why anyone would consider it acceptable to stone a fellow driver’s car because he happens to not have fallen prey to the old way is quite beyond me.

There is no other way to describe this: the majority is being held hostage by a collection of minority groups which high nuisance power. You don’t often hear of scientists taking to the streets when their funding gets cut, do you ?

How we you deregulate a market that is being disrupted at speed?
If you put yourself in the shoes of the regulator for a second, they do have to come up with transition solutions that help the market evolve smoothly. In this case the long-term objective may be to shift the regulatory burden to the providers (Uber would be responsible for travelers safety and quality of service) and open up the taxi market.

This is not an easy problem to address. One solution I suppose would be to impose a reasonable low fee on the new entrants which would fund the gradual retirement of the medallions, with the government shouldering part of the burden. I have not looked at the maths to see whether this is workable. Taxis could retain certain privileges such as the use of taxi ranks and priority at strategic locations like airports or train stations.

You can’t fight gravity
In any event randomly degrading the user experience is not good policy. When the government says it is its job to protect the “Producer”, that is disingenuous at best. What it means is to protect the status quo for a certain subset of those producers until the next election comes about. Not exactly the kind of thought leadership we need to get us on the innovation path as a society is it?

And pity the French startups who are trying to build their own business, such as Yves Weisselberger with Snapcar.  For them, it's not just the Americans they have to beat, but their government too.

Ultimately what we really need to disrupt is politics so we do away with so-called leaders who put their heads in the sand and win only in the field of rethorical debate.

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  • http://sotirov.com/ Emil Sotirov

    Here is Albert Wenger with a nice snackable phrase of his own – “Are We the Horse?”:

  • Olivia Dufour

    Very good post Fred. I can not believe that there was a meeting in which they decided to impose a 15 minutes wait, they must have had way too much wine, and drugs. Haven’t they learned from the French Revolution? How much dream and ambition starvation can these people take? Hopefully this very sad and ridiculous context results in great investment opportunities here and a definitive lesson for this government to support its people and not repress them.

  • Damien Lane

    Or, to quote Jeff Bezos, “complaining is not a strategy”

  • TyDanco

    “Don’t sugarcoat it kid. Tell her straight.”–Butch Cassidy. Seriously, Fred, tell us how you really feel…

  • Arturo

    Fred!

    Again some French bashing! Yes, it’s true, and yes, you’re using the situation in France or Paris to illustrate points that are well made, but the tone is negative and it’s your second post that sounds partly biased (in its bashing) and forgets about all the good people in a place that are not as you describe or that are not in agreement with some policies.

    Also, to illustrate the same point, you could have picked the moves by other cities, governments, countries to prevent fast disruption: NYC vs AirBnB, SF vs Uber, Chicago vs Uber, Dallas vs Uber, Denver vs Uber, the FTC vs so many innovators, the US institutions and industrial lobbies vs health and health startups (eg http://www.ted.com/talks/deborah_rhodes.html)!

    After your last post re France I almost reacted when the day after I saw that French doctors had transplanted the first artificial heart, or good reports on French startups that are very 2014 such as Parrot or Withings, or a report on CNN re comparative innovation, R&D, FDI, startup creation and investment statistics in the UK, France and Germany for example, but decided to not write – but after this second article where you pick France I feel compelled to just say: write more positive posts please, or target everyone who’s concerned, not just one place or group of people! That will help the people fight the bad regulations you criticise.

    This is in the spirit of this book and how to convince people or help them move in the right direction: http://www.amazon.com/How-Win-Friends-Influence-People/dp/0671027034

    :-)

    • http://www.freddestin.com Fred Destin

      I realize I never responded to this. I am bashing the French government and not France. I love France and have backed multiple companies there. Let’s not confuse the two. I don’t cover news about heart transplants :-)

  • gjkopserjr

    This is a very well written piece that takes into account many sides of the discussion. I think it is important to remember the traditional taxi cab drivers and how quickly their world is changing. I commend to anyone following this to read the 1971 case study of the 1914 Jitney experience in the US. The way government handled it is eerily similar to today’s discussion. It was written by Erlich and Hilton. You can find it on JSTOR.

  • Sebastien Latapie

    Great post and great points. Couldn’t agree more with what you’ve said in the post above. The challenge goes far beyond changing the political environment, it comes down to changing cultural behaviors. Having lived in France for over a decade, this attitude of entitlement and protecting the way things are is truly stifling many aspects of innovation. On the bright side, I know that France is going through quite a few changes and people are finally starting to challenge the status quo. Maybe France will turn around and embrace these new markets as growth opportunities rather then doing everything to shut them down.

  • Mathieu Gosselin

    I completely agree.
    It’s a difficult case. But i think People who take those decisions, aren’t seeing the big picture of what’s happening. In fact they’re kind of lost (on a lot of subjects btw).
    For me a government that doesn’t understand new technologies is retarded. And i don’t mean in an offensive way, but they’re lagging behind the reality of the present. French government is totally ill-adapted to the new world we’re living in.
    They also aren’t really thinking about all the travelers who prefer to use Uber because Taxis in Paris suck big time, and therefore give their vote by using the new model. Those clients, travelers, party goers, busy people, regular blokes aren’t shouting, but they probably outnumber those taxi drivers 20 to 1. Of course it’s not their jobs that are on the line and I can understand the distress of taxi drivers. But as you said government is slave to minorities and try to expedite a duck-taped decision that will just soothe the angry ones and generally seek to buy a short term peace asap. That’s a coward type of behavior.

    I also think slowly reimbursing the price of the license or allowing Uber to include taxis would have been a much better option. Or allowing taxis to use similar service. But it seems odd to me that the government haven’t really paid the same amount of attention to preserve the interest of the majority who prefer using those new better services.