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Blocking UberCab Shows Incumbent Industries Need To Work With Disruptors

24 October 2010 Ken Yeung One Comment

ThwartedThis afternoon, TechCrunch reported that San Francisco startup UberCab was issued a cease and desist order by San Francisco’s Metro Transit Authority and the Public Utilities Commission which should result in effectively shuttering the startups ability to even function.

I first heard about UberCab while at the SF App Showcase in San Francisco where the founder gave an overview about what this application could do. Essentially it’s leveraging your smartphone to summon a cab to your location and transport you from one place to another – in style. You see, UberCab’s biggest plus is that they’ll pick you up using a towncar instead of a regular taxi so you know that you’ll always arrive in luxury and style. Sure, the costs are a bit more expensive than you might encounter in a regular cab, but the model that UberCab has set forth is one that was sure to disrupt the way the conventional cab business was being managed. Instead of actual cash being exchanged after the ride, the rider pays via a credit card already on file with the UberCab account. Moreover, to help manage reputations and to give people an idea about how the riders and drivers treat each other, UberCab also has a feedback program (a la Yelp) that keeps people honest. There’s more to the program and you can read my review about UberCab here on Network Solutions, but let’s get down to the point about why I’m writing this post.

UberCabPer the TechCrunch post, we’re not really sure what is going on with the cease and desist order – maybe it has to do with the fact that it’s with the emphasis on “cab” and that the towncar drivers are unlicensed by the state to execute duties as a paid transporter? If so, then shouldn’t the cab industries be more prone to embracing this technology? Shouldn’t the fact that UberCab be entering the market as “disruptors” signal that the industry has become complacent and hasn’t leveraged the fact that new technologies are emerging on a constant basis in the Silicon Valley and that they should utilize it to their advantage? Sure, you have Cabulous and Taxi Magic and a slew of other mobile applications that help you locate cab and summon them to you at your beck and call, but what UberCab brings to the table is the most extreme of scenarios and uproots the existing paradigm and shifts it to one where feedback, trust, transparency and a true cashless society really exists.  Maybe taxi cabs in San Francisco should learn how to take advantage of these tools instead of boycotting them and shutting them down. In an interesting quote in one of the TechCrunch articles calling out the cease and desist order, one of the UberCab founders, Travis Kalanick, is quoted as saying:

We’ve seen this before. New technology comes in and appears threatening to incumbent industries at first. At the end of the day, those industries see the benefit of that technology and ultimately find ways of using it in a productive manner, and embracing innovation.

Of course new technologies are emerging and entering in your industry…but does that mean that we need to shy away from them and do whatever we can to prevent it from affecting our business? Granted, not all technology will be good, but whatever emerges from the darkness, shouldn’t we be more responsible to find a way to turn it into good and profitable technologies. The music and movie industry encountered this very same thing with downloadable songs and movies – it all started with IRC and then Napster. Soon after that, the RIAA began to sue people, but that soon faded away and now the business model has come in to allow people to buy straight from iTunes or other music services for a cheaper cost than simply buying the whole album. These disruptors are out there and even if the PUC and the Metro Transit Authority’s beef is with the fact that UberCab is using its services like “Cab”, the fact remains that the technology behind UberCab should be adopted and leveraged to helping to support the economy and getting people from point A to point B easily, efficiently and without any problems.

In short, I think that UberCab’s efforts may have been temporarily thwarted, but in the Silicon Valley, shutting down a technology company that has promising value to the community and to the industry while effectively being played as a disruptor is something that will probably get overturned quickly. TechCrunch’s MG Sielger puts it best in his follow-up post:

…this cease & desist is a huge validation of what UberCab is trying to do. The city of San Francisco (aka San Francisco Metro Transit Authority & the Public Utilities Commission of California) would simply not care if the company wasn’t on to something. Or worse, they probably wouldn’t even know about it if the service was lame.

But that’s not the case. There’s clearly a demand for a service of this nature, and that’s why the city cares.

So when will the incumbent industries learn? Who knows, but as the world becomes more dependent and used to technology emanating from their phones, iPads or other portable devices to help them become more productive, you can expect a bunch more industry companies to start working against the community to maintain the status quo. What works for them is something they’d want to keep working, but unfortunately they’re not thinking about us and innovation. Hope that there’s a way to move things forward.

Photo Credit: horizontal.integration / Flickr

Ken Yeung is a interactive strategist, project manager, and tech journalist. He's currently a Strategy and Research Content Lead at Orange Silicon Valley. Previously, he was the Bay Area Reporter for The Next Web, the Editor-in-Chief of Bub.blicio.us and a correspondent for Network Solutions' small business blog. These words are his own and not of his employer.