As we reported earlier [7], today Europe woke up more congested than usual, with traffic snarled up beyond recognition for one simple reason: from London, to Madrid, to Berlin some 12,000 taxi drivers took to the streets... and parked there, in protest of the $18.2 billion-valued startup Uber, which has grown so fast it i) has threatened the livelihood of cab drivers from San Francisco to Stockholm, and ii) is about to launch a myriad of copycat services in this no barriers to entry model where distributed participation is merely a question of where the driver earns the most money, and thus, which company is willing to generate the lowest profits (or most negative cash flow) in order to thrive - think Amazon.
[8]
Valuation questions aside, it appears that the European taxi driver protest has led to the one outcome which not only none of the protest participants anticipated, but had desperately hoped to avoid: a sharp surge in Uber popularity and further cannibalization of the legacy taxi customer base which disgusted by the taxi protest looked for, and found, alternative means of transportation. According to the Independent [9], "Uber said it experienced an 850 per cent increase new users today as London's black cabs staged a protest that brought gridlock to the city centre."
How did this latest attempt to stop progress and customer choice backfire so dramatically? Simple:
Drivers’ unions said that the rise of Uber is leading people to contact unlicensed drivers without any checks on whether they are legitimate.
But Uber's UK and Ireland general manager Jo Bertram said: “Londoners are voting with their fingers, tapping the app in support of new and innovative services as we see our biggest day of sign-ups in London today since launch two years ago.
"In fact, today we're seeing an 850 per cent increase in sign-ups compared to last Wednesday. The results are clear: London wants Uber in a big way.”
Uber described the union representing black cab drivers, the Licensed Taxi Drivers Association (LTDA), as “stuck in the dark ages”, and accused it of “holding London to ransom” with an economic impact of £125 million.
Of course, there is no way to actually check if Uber is merely making up this uber surge in sign ups: certainly start ups desperate for even more buzz (and venture capital spending) have been known to fib now and then at important milestones in their lifecycles, but even if the number is one uber lie, the reality remains: as long as local governments try to extract their pound of flesh by regulating the cab business, be it in the US, or Europe, alternative providers such as Uber will prosper unhindered by encroaching bureaucracy, at least until said (very much broke) governments decide it is time to regulate the Ubers of the world too.
This may be the legacy taxi drivers' last hope:
The RMT's Ian Beetlestone said he hoped the demonstration would send a message that Uber is “operating in a grey area”.
He said: “We are not objecting to competition. We have had competition for years from minicabs but we haven't caused gridlock over it.
“We have to jump through hoops to be regulated and we don't feel people involved in these new apps are being subjected to the same regulations.”
Similar taxi driver protests took place today in Madrid, Milan, Berlin and Paris. Uber now operates in more than 100 cities in 30 countries and last week was valued at $18.2 billion, a fivefold increase in the space of a year. If the valuation is to be believed, an app launched five years ago is now worth more than the global car hire firm Hertz, which was founded in 1918.
Well, for all taxi drivers stuck in the middle ages, we have good news: in this day and age, in which every government is seeking to tax, and otherwise extract pounds, and tons if possible, of flesh from anything that generates any cash flows, it is only a matter of time before Uber too succumbs to one then another, then a third corrupt official working for that multi-headed hydra which merely takes and never gives: the local government.
It also means that in a few years, anyone who extrapolated Uber's growth rate in perpetuity, and assigned a valuation to match, will be very much regretting they day when they valued the company higher [10]than Chipotle, Autozone, Dollar General, Loews, Seagate and so on. Because the days of free enterprise in a "fairness doctrine" world are numbered.
For now, however, enjoy the almost free ride, and watch and learn as the government destroys yet another business model.
