The
NY Times did an interesting depth piece on the battle between London’s
Black Cabs and Uber. Unlike other face-offs where the legal Taxis are a mostly entry
level job for immigrants, London Cabbies
are a true craft profession. In order to qualify, they have to study every route
combination in a very complicated city for about 3 years. After passing a long
series of grueling tests, they are said to have “The Knowledge.” There is even evidence that acquiring this
mapping information expands the brain.
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| Uber vs London's Black Cabs |
Then, along come GPS and Uber and all that “Knowledge”
plus the street hailing monopoly was upended. Moreover, the people who have the
“Knowledge” tend to be white and
local (growing up in the terroire gave them the obvious advantage) while Uber
drivers tend to be foreign-born and brown.
The Times piece is mostly concerned with the xenophobia and
racism of many of the Cabbies vs the
struggle of the Uber immigrants and
it’s relation to Brexit.
While this is certainly an issue, I would like focus on the business story
because it was mostly overlooked and there is clearly a worldwide lesson in
this.
This is much more than a taxi tale……
(Note: in my student days I drove a London radio taxi known
as a minicab - a fascinating experience that arguably gives me a unique
perspective since I am now a Startup maven.)
Like most disruptor stories, there is a precedent but one
that is only really understood in retrospect.
Uber’s
precedent is London’s Minicabs. Beginning in the 50’s,
renegade cabbies used postwar Motorola
radios to skirt hailing laws with a dial-a-cab service. This was controversial and initially, hounded
by the law. Cabbies obviously hated
them but, over time, coexisted. After all, Cabbies
often refuse fares, favoring inner London and short rides over suburban trips since
meter flips make the most money and they fear returning empty. They were even known
to throw passengers out of their cabs for whatever reason they chose.
On the other hand, once established, minicabs, didn’t
evolve much either. Radios got better but they couldn’t
get the impulse or hailing passengers away from black cabs. Instead, individual
drivers became notorious for “blagging”
- illegally hustling for fares outside clubs, bars, bus stops etc. So, other
than running ads with easy-to-remember phone no.’s minicabs never figured
out how to leverage cellphones as a hailing device.
Enter Travis Kallaneck
– a techie and not a cabbie – who stumbled upon a giant opportunity in the
marketplace. Result: worldwide disruption!
But there is clearly more to this than just a clever app. Eventually,
the full story of his rise from organizer of struggling black cabs to the king
of the gig economy will emerge. However, from the simple outlines of its story and
my own experience of the tough world he conquered I can best compare him with a
primitive military genius who developed a new weapon and then adapted in a ruthless
way to confront a world of brutal competition: Shaka Zulu.
Taxis are all about owning territory and they are generally
a monopoly backed by local authorities. There are many places where taxis
engage in open turf warfare and that was before
Uber. It is entirely possible that Kallaneck’s magic app had already
existed in some other form, but whoever had it lacked his militant instincts.
Shaka Zulu was a
renegade warrior who invented a new spear who went on to change the face of African
warfare, creating one of the largest empires on the continent. The key is not
just that he had a better weapon but that he understood how to change tactics, training,
strategy, use a total war concept called uMfekane
and even introduced a fundamentally sexist motivational system based on the
accumulation of brides according to conquest. Despite this, he even had women
war brigades.
What both Kallaneck
and Shaka confronted was an
established way of life and a protected class with entrenched rights. In
London, the Cabbies happen to be the
tribal royalty. In a very class-conscious country these Cockney Kings, unlike
the landed gentry, actually earned their status and they let you know it. For
this reason, minicabbers may have resented them but they also admired them – probably
more so than the ‘toffs.
However, like most entrenched thinking which includes landed
gentry and professionals of all kinds, they rested on their privileges and felt
free to ignore progress. They refused credit cards for the obvious advantages
of earning pure cash and avoided radio or app-hailing devices. They also continued
to pick and choose their fares.
Technology, on the other hand, is inherently attracted to the
upending of these privileges. Just as Shaka
figured out how to disarm his opponents, Kallaneck
developed programs to disarm the authorities and the taxi industry’s
sense of protection. Shaka added a
hook to his new shield, which enabled him whisk away his opponent’s
protection, leaving a wide open target for his shorter stabbing spear.
With Uber, it was
the public that really sank in the spear because they got a much better deal
from Kallaneck.
What the public realized - as they will with most protected
groups – that they exist in opposition to the public’s
actual needs and the law was probably rigged by them for their own
self-interest.
For this reason, protected groups of all kinds should study
this for what it is. It is not just a story about a bunch of Luddite cabbies,
but one of a well-qualified business group hiding behind a legally protected
shield – only to find that, once lifted, however momentarily – it is really not
supported by the public.
The true message here is, this is as likely to happen with
doctors, lawyers, unions – even police – as it is with toll clerks, paper
shufflers, middle managers, truck drivers and entrenched classes of any kind.
Their only protection is to rethink what jobs, knowledge and
professions really are and innovate in line with the public interest.
The sad truth is, when stripped of their shields, most protected
groups are revealed for what they are: a drag on competition and a barrier to
progress. Or as Adam Smith once
noted in The Wealth of Nations: “People
of the same trade seldom meet together, even for merriment and diversion, but
the conversation ends in a conspiracy against the public, or in some
contrivance to raise prices.”
That was fine before globalization but increasingly, an
absurd relic. By blocking progress, like taking credit cards or developing
their own apps and refusing fares, Cabbies
ensured the popular support for Uber
– which now faces its own disruptors like Lyft
and Via. Likewise, unions, doctors,
lawyers and other professionals are increasingly competing on a world market where
claiming a divine right merely forces the public’s search for viable
alternatives – now made easier by the Internet.
There will always be people willing to pay a premium for
better service but forcing the acceptance of non-progress is just a racket
doomed by technology and globalization. Trade groups need to get the message
and swap their protectionism for innovation or they will find themselves
marching along with the taxi drivers.
https://www.nytimes.com/2017/07/04/world/europe/london-uk-brexit-uber-taxi.html?hp=&_r=0
