Blockchain's Threat to Uber
It's always fascinating to watch a tech platform evolve into a
true disrupter. Uber was one, but now the disruptor stands to be disrupted.
BY HOWARD
TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH
INVESTORS@TULLMAN
As WeCrashed, this season's most cartoonish
financial porn offering, makes abundantly clear, WeWork had about as much to do
with actual technology as Olive Garden does with authentic Italian food. WW was
a pathetic series of desperate lurches, a fantastical story and a mouthful of
buzzwords foisted upon millions of millennials by an egomaniac aided and
abetted by a fawning press and a gaggle of greed heads from
Benchmark, Chase and elsewhere. The WW carcass as well as other
co-working spaces, which were never novel to begin with, survive in a
much-reduced form -- validated and sustained in some unexpected respects by the
pandemic -- while the entrepreneur and his spouse are out of the picture,
having been both booted and bolstered by billions in severance payments.
Super Pumped, on the
other hand, attempts to demonstrate in an equally superficial and overamped
fashion how Uber created and deployed a truly exceptional and revolutionary
technology -- albeit in often illegal, anticompetitive, and fraudulent ways.
But Uber's tech actually did change the daily behaviors of tens of
millions of consumers while it simultaneously destroyed the lives and livelihoods of thousands of taxi
drivers worldwide. Uber's founding CEO was also abruptly ousted
and similarly showered with billions by his board to induce him to quietly
drive off into the sunset.
But in the residue of Uber's rancid corporate culture there
remains a very large and powerful component that continues to dominate several
industries through the implementation and extensions of its innovative
technology. Uber, and to a lesser extent Lyft, continues to be a forceful
demonstration of the power of platforms and the "winner take all" nature of big tech. At
the same time, thousands of other eager entrepreneurs who tried to replicate
Uber's model in different industries and verticals and almost
universally failed.
Yet there may actually be a serious challenge to Uber itself on
the near horizon and-- as buzzwordy as it may be --blockchain could be the next
big disruptor, an enabling technology for a revolt by the oppressed masses. I
won't try to explain blockchain technology here. Suffice it to say that
blockchain's success and staying power so far suggests the strong likelihood
that it can be the basis for a relatively simple, decentralized, and low-cost
information sharing and payment system-- one that's both secure and stable and
universally accessible. Such an information system would enable a scenario
calculated to supplant and undermine the big guys in the ridesharing business.
It might be called the FAIR system, pun intended.
(1) A passenger in a ridesharing vehicle could directly
and instantly transfer payment to the driver through a simple mobile-to-mobile
transaction fully enabled and documented by the blockchain without any
requirement that the payment move through either Uber, Lyft, Curb or any other
central taxing and/or gatekeeping hub, platform or parent company. And without
any of those entities extracting the typical current fees of 30% to 50% of the
fares.
(2) The passenger and the driver could negotiate the fare
(or it could be stipulated by specified travel zones similar to those in D.C.
and elsewhere) and no portion of the payment would be retained by any parent
company or other intermediary apart from any modest fees associated with the
payment system itself. However, a portion of each fare (perhaps 10%) would be
set aside to create an ongoing pool, which would be shared by all drivers and
all passengers and allocated in real time dynamically based on their individual
activity within the system as compared to all the activity in the system.
Participants on both sides of each transaction would be owners
in common of the enterprise as well as active participants in it. The more they
drove or used the system, the greater the value of their ultimate ownership in
the overall enterprise would be over time. In blockchain terms, they would be
"miners" building their own net worth through their own actions,
which create tokens or other forms of convertible and transferable currency.
And to be clear, the fares being paid by the passengers and the payments being
received by the drivers would still be more attractive and more equitable than
the current schemes, where the prime beneficiaries are the parent companies.
(3) While over time the enterprise could be externally
funded and the collective owners could vote to develop some or all of the
systems that now make up the ridesharing universe, this isn't initially
required or even a financially prudent step at the outset. The new FAIR payment
and sharing system would simply piggyback on all the work already done by Uber,
Lyft and others and the initial pools of drivers and passengers would
presumably be Uber and Lyft drivers (many of whom already operate under both
companies' brand umbrellas) and rideshare customers - all of whom would now be
effectively working for themselves and actually being fairly paid for their
services in addition to accruing long term value for their nest egg and/or
retirement.
(4) The ironic charm of such an approach would be that,
initially, drivers could be summoned by prospective riders using all the
functionality of the current Uber or Lyft applications but requested rides
would be quickly canceled once the driver and rider had connected in real life
and the alternate FAIR payment system would be used instead. There's nothing
more satisfying or smarter for an entrepreneur than building your business on someone else's rails. And
- given Uber's grievous history - this would be the sweetest form of
comeuppance possible.
This is merely a simple example of the coming waves of
innovation and disruption that we can all expect as the vertical pressure for
decentralization combines with a new, highly mobile and highly motivated workforce
looking for more control over their own lives. This workforce is far more
interested in transacting in peer-to-peer and horizontal environments rather
than the top-down hierarchies of old. Big tech and big business beware -
nothing is the future forever.
APR 26, 2022
The
opinions expressed here by Inc.com columnists are their own, not those of
Inc.com.