Uber might be crashing back to Earth

Last Friday Uber decided to start operating in Portland. I know, it’s a little surprising that Uber or any of the other rideshare Taxi apps aren’t already in the city. Portland had told Uber they could not operate in the city, but Uber decided to thumb their nose at that similarly to what they have done in other cities. Even though Uber was recently valued at $40 Billion they have had some serious issues lately, like rape of a woman in Delhi while illegally operating in the city. Furthermore, as I mentioned in my last article, they have smeared women journalists with the data Uber collects.

Portland has decided to sue Uber over their illegal operation within the city. The city is following Nevada in suing the company rather than trying to fine their drivers. Uber has since ceased operations in the state due to an injunction against the company operating in the state. This appears to be the only route that will work effectively as Uber is still operating in Delhi despite the citywide ban of the service. Uber has also been banned in Spain, Thailand, and parts of the Netherlands. I think the biggest blow, however, is the fact that both San Francisco and LA are suing the company for false advertising related to their fees and background check.

These responses should not come as much of a surprise to anyone that has been watching the company over the past few years. The company is part of the Silicon Valley culture of going fast and trying to break things. The problem is that, incumbents are incumbents for a reason and they do have the ear of government. It’s not to say that they should be incumbents or that it makes them something worthy of respect, but you need to understand the cards are stacked against you. In cases where you want to go in and intentionally ruffle feathers, you must have strong safe guards in place to protect your customers and be public about how you protect them. Uber should welcome background check audits, privacy audits, and driver safety audits whenever they go into a new market. These should all be huge features that they brag about and let people under the hood to actually see.

I think it’s time that companies like Uber start treating our data as if it’s Personal Health Information, which is protected by Health Information Portability and Accountability Act (aka that HIPAA agreement you sign at the doctors’ office). The default is to not share personal information about a patient, that if someone is caught looking at the data without just cause, it typically results in a firing and a fine for the organization. Similar action must be taken at Uber to show they are a steward of our data. Now the government won’t be taking that money, but instead they should be donating the funds to a good cause at a similar rate to a HIPAA violation.

In some respect Uber is exhibiting the effects of a company that is growing too large too fast without designing processes to enable their business activities properly. For Uber to be a successful long term company they need to figure out how to both appease city governments through over protecting their users and breaking existing rules. If the company can be trusted then governments will be more willing to accept pushing boundaries.

New economy vs. old economy

With the rise of the so-called “Sharing Culture” there’s been a recent upswing in the types of business that focus on connecting people point to point with others that can provide services that people need without a lot of the fuss of other intermediaries. There are, of course, a few pioneers in this type of activity, Napster, Kazaa, but also more “Legitimate” companies, such as eBay, PayPal, and Craigslist. These caused disruption, but not on a seriously massive level. eBay expanded the amount of people that could or would auction off their goods. It more likely impacted the amount of garage sales or donations to Goodwill. Craigslist did have a negative impact on newspaper’s income – however newspapers were having other issues because people just weren’t buying them, so it was somewhat moot. Now, however, there are companies springing up that are impacting much larger less “fringe” portions of our economy.

I first heard of companies like this while in the Netherlands where some of my friends were using Couchsurfing. Which connected people that were passing through an area for a night to two to crash on someone’s couch. I don’t think any money was exchanging hands. I believe that this site was a natural precursor for AirBnB, which has gotten in a lot of hot water lately. This site, for those unaware, allows people to rent out rooms of their house or their entire house for short periods of time. The idea is that the renters can use the stuff in the house and have a cheaper place to stay compared to a hotel. While the owners are able to rent out unused space. For instance, I could rent out my third bedroom if I wanted too.

A lot of people aren’t happy with this notion. For one, it does violate a lot of zoning laws and people are pissed about their neighbors renting out rooms to god knows who. Secondly, it does violate those laws and New York City has decided to do something about that. They’ve asked for information on 15k users in the city. This will likely be a large blow to membership there. If users feel that they are likely to be hit by a law suit or forced to pay licenses to rent out the rooms, renting the rooms will be much less appealing. This of course will thrill hotels as they can continue to enjoy a higher cost.

Part of this stems from the fact that this is new and scary. People don’t understand the change. Part of it comes from the fact that the city doesn’t want people to do this instead of normal rental agreements which “protect” both parties in different ways. An AirBnB arrangement is very different and likely has a lower level of protection (mostly social norm based rather than legal based). Part of it probably has to do with money. The city likely earns less taxes from people renting rooms this way than from Hotels.

These types of differences are going to be occurring on a more frequent basis. We need to help steer the conversation as internet savvy folks and look into how we can create accommodations for both sides. I’m not saying for the hotels, I’m talking about for your neighbors and community. Work with them to help them explain what’s happening, why it’s happening, and what they can do to help develop the social norms for websites like AirBnB rather than destroying it before it has a chance to be successful.

I’m hoping there will be a lot more experimentation in these types of sites even if I never use them. I firmly believe that it’s your house you should be able to use it as you see fit as long as it doesn’t cause harm to other people. Having a two way conversation and educating the different stakeholders involved is crucial to ensuring the survival and continued experimentation in these spaces.