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When I was in San Francisco, I got around using Uber, Lyft, and Sidecar. Uber is a car service that charges by the ride. You use an app on your phone, and a car arrives in about five minutes and off you go. The fee is automatically billed to the credit card you have on file.
Lyft and Sidecar are different from Uber. These services merely accept donations. They take 15 percent of your donation as their share and pass the rest along to the driver. The drivers aren’t professionals. They’re just car owners who choose to sign on with Lyft and Sidecar and make their cars available when the need arises. Many of them are simply using the services to make a little money on the side.
After about 20 rides over two weeks using all three services, I can tell you that the rides are easier, cheaper, faster, and more fun than using a taxi. I’ve had a blast getting to know the drivers and learning more about the city.
Disrupting the Transportation Industry
Uber, Lyft, and Sidecar have all encountered huge barriers to getting into markets across the country. Their models have evolved to keep them (generally) in compliance with local laws and regulations.
Imagine what the taxi drivers think of these new competitors. Nearly every driver I talked to mentioned having been harassed by taxi drivers at some point. Do you think the taxi drivers are as angry as lawyers are at intruders like LegalZoom?
Imagine what’s happening behind the scenes in each city as these competitors enter the market. I’m sure the incumbent taxi companies are paying lobbyists big money to stop the intruders. They’re certainly exploring every legal option to stop the competition.
Consider the arguments likely being made by the taxi lobbyists and lawyers.
- Are they arguing for the protection of the public?
- Are they explaining that they’re not protecting themselves but are acting in the best interest of the consumer?
- Are they giving examples of how these unlicensed upstarts are damaging the consumers of taxi services?
How to Beat the Incumbents
Uber, Lyft, and Sidecar are expanding like crazy, with Uber leading the way. All three companies have more than enough funding coming from the venture capitalists: for example, Uber has $50 million. Uber was in 12 cities a year ago; now it’s in 35. Revenue is growing at 18% per month.
Uber has had to fight for the right to do business in every single market. The service has never been welcomed with open arms. It’s moving forward as it battles government agency after agency. Slowly, but surely, the company is winning, and the taxi companies are losing their tight grip on their market.
How does Uber do it? Uber presents itself to the public as a force for modernization and freedom and against bureaucracy and politically entrenched interests. That argument, advanced through social media, quickly gains the support of the public (apparently, the public doesn’t know enough to want to be protected). Social media campaigns launched by Uber rallying public support have created pressure sufficient to overcome obstacle after obstacle. The public is getting what it wants, and Uber is being permitted to operate. Uber has yet to walk away from any market as a result of government regulation or opposition from the incumbents.
Uber is getting its way with the support of a public that wants the advantages Uber presents over the competition. Uber has a great deal in common with LegalZoom and other intruders into the legal space. LegalZoom, like Uber, is delivering a product desired by the public. LegalZoom, like Uber, is well funded. LegalZoom, like Uber, is competing against an incumbent that isn’t well liked and doesn’t get the benefit of the doubt.
Uber is winning. How likely are the intruders in the legal services space to do the same thing?