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Disruption – reasons why Uber is not all Roses.

Disruption is the hottest word in town. Everyone’s talking about how good disruption is. How much better the consumer outcome is and ultimately how competition is going to make service and quality improve, whilst reducing the expense to you and I. That can’t be disputed. The hottest disruption example is Uber. But here are three aspects that not all of us will have front of mind when we celebrate the new entran

1. The Honeymoon period.Let’s consider when Uber rolled into your capital city. The cars were flash, the drivers weren’t jaded cab drivers from a previous life. They were mums, dads, girlfriends and boyfriends. They were knowledgeable locals with the nice clean car and knowledge which made all the difference. Plus there was water, mobile chargers and even a newspaper. And they were good at their job. The experience was poles apart from the standard taxi ride. BUT. And it’s a big but. Feedback from others (and my experience as well) is the shift has begun – the taxi drivers have seen the other side, and are now private Uber drivers. But just because they are working in their own car does not mean they are all – of – a – sudden Uber – stars. Anecdotal feedback is the Uber experience is becoming more like a ‘same same but different’ taxi service.

2. Growth breeds contempt – and greed.The Uber growth rate is beyond comprehension. Uber is now worth more than the Ford Motor Company, and worth more than 406 of the Top 500 US businesses. Yet they don’t own any vehicles.
Their rapid growth has meant a need to recruit drivers. Fast. And when the growth pressures of the business outweigh the available talent to fill driving positions, quality changes.
Recent PR around New Year’s hasn’t helped Uber. Some punters in Sydney were charged up to 9x the usual rate. Taxi’s charge the same irrespective. As an Uber user you know what the ‘Surge’ price is, as a multiple, when you book a ride. However, with a belly full of amber happiness, some may assume that the impact on the purse won’t be too great. But a $500 fare for a 20-minute trip is sure to attract the wrong type of attention. Which it has.

3. Investments gone southAny disrupter is going to shake up an industry and affect business value. In 2012 in Melbourne, a Taxi licence plate cost $472,000. That’s nearly half a mill to put one car on the road. Some families in Melbourne own 3 or 4 plates due to sheer hard work, a sound business plan and a seemingly protected investment – the government limit the number of cabs on the road. Enter Uber. An Uber driver immediately earns 80% of the fare, paid directly into their account. And the cost to become an Uber driver? $0. Nada. Ziltch. Zippo. How’s the value of the Taxi plate going now? Families are watching their investments dive-bomb and there’s nothing they can do. So whilst competition and disruption for consumers is terrific, spare a thought for the families who can’t see a way out.

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