Tuesday, November 25, 2014

Uber: What could possibly go wrong

Uber at the core is nothing more than a bunch of guys who came up with a clever app for streamlining the way you call for a car.  Rather than phoning or texting, you tap on the app.  Rather than paying with cash or credit cards, you have an account.  And rather than depending on the reputation of the car company, you depend on the ratings-based reputation of the specific driver. (Another feature, the pre-determined fare, with that fare essentially including all fees including tip, is nothing new for car services). And, by the way, it is readily replicable by any other car services, including those that already have a reputation and experienced drivers.  

So it seems to me that it is only mildly innovative.  How do you build a successful world-wide  company based on this? I don’t think you do. We are already seeing some of what can go wrong.  We can attribute a lot of this to their own doing. But we are only getting started. Here are four other things that come to my mind. 

A meta app. If a number of Uber competitors, existing limo companies, and taxis put out similar apps, (which they are), the next stage will be a meta-app that looks across all of the companies, scans their car locations and prices, and combines this with the user’s preferences to find the best deal. I would bet that Uber will decline to be involved, but if a broad base of other limo companies do, and it ends up being Uber versus the world, I don't think that will turn out well for Uber. 

Uber’s costs are underestimated. To some degree Uber is thriving by creating a regulatory arbitrage.  It is operating without the constraints of existing car services and taxis. That gives it lower costs. But that is not going to last. The arbitrage window will close, and the related cost advantages will disappear.

The first out of the gate usually doesn’t win.  Uber is doing all the heavy lifting in terms of clearing regulatory barriers and local opposition, and getting consumers warmed up to the idea of using an app for calling cars.  It has made life harder for itself by defining its business as being more than an app and fighting its way through this morass.  But as many business school case studies have demonstrated, the company that blazes the trail is often not the one that stakes the biggest claim in the end.  If could be a set of future entrants.  Or it could simply be efficiencies that ultimately are picked up by existing car service without any one winner.  

Self-driving cars.  I’m not kidding -- and neither is Google.  Self-driving cars are, though it is hard for me to believe, predicted to become a consumer reality in five to ten years.  With these cars, the concept that is gaining momentum via Uber will become a reality.  Tap on your app, and a car will quickly appear to take you on your way.  This is not so far in the future, especially in the time scale of a company. The timeframe for profitability extends far into the future; indeed, many companies with high valuations don’t even turn a profit until five or ten years out. By then, the essence of Uber’s model might become irrelevant. 

People are attributing to Uber as a limo company what is really an app, and a new attitude by consumers towards car services that has come with it. If you have discovered a new and liberating method of obtaining transportation services, that is one thing, and you can thank Uber for bringing that to you.  But ultimately you won’t need an Uber driver for using it.  

Wednesday, November 19, 2014

On Death with Dignity

We take the will to live as a positive attribute, and naturally so; it is, of course in our genes.  Whatever subset of our species took a lackadaisical view toward the prospect of death was screened out long ago. We look with admiration on those who battle against terminal illness --  “She’s a real fighter” -- and look down on those who take their own lives. Fighting for your life is the genetic prime directive.   

Thus the recent death of Brittany Maynard spurred a flurry of news articles and posts on the Death with Dignity movement. There will be a lot more to come on this topic, and the movement will gather steam because whatever is in the crosshairs of the baby boomers weighs down on society as a whole. Soon the baby boomers will come to the last stage of their demographic wave, a wave that has progressed and altered society as it has moved through their life cycle, from crowding elementary schools into split session, to overcrowding colleges, to buying houses to retiring. The last area they can affect is the mode of dying, so this will become a topic we will increasingly hear about over the next few decades.  And ultimately some form of Death with Dignity will become standard in the US.  

I have weighed in on another medical issues in one of my past posts, making the controversial suggestion that people be compensated for some of the savings incurred if they select a cheaper but less efficacious course of treatment. Here I am going to barrel ahead with another one: a short vignette where I place the alternative to Death with Dignity in a disturbing but I hope illuminating context, that of a torturer and victim.  The victim is the one struggling with a painful, debilitating terminal illness.  The torturer is in part nature, in part the social norms that insist death proceed along its natural course, and in part the medical community that might be taking the Hippocratic Oath too literally. (And that, unfortunately, has a conflict of interest in keeping a dying patient in their revenue stream):

A particularly invidious development in techniques for torture, more common than many realize -- or are willing to admit -- starts with inducing periods of searing pain while a physician stands at the ready to assure the victim does not succumb to the torture and die prematurely, and indeed that he remains as alert as possible.  I mention dying prematurely because the spectre of death is another standard component of this brand of torture.  At the start, the victim is advised that no matter what transpires, the process will end in death.  Indeed, there is a program for increasing the stages of torture until death occurs. This program is determined before the torture has begun. The victim is given only a rough estimate of when termination will occur; the randomization is added so the victim remains in a state of uncertainty; this to add a psychological element to the torture. 

The torture has been “improved” over time to match the physical pain with other aspects of psychological terror.  Probes are skillfully inserted into the victim’s brain, and slowly but steadily the victim’s motor skills are degraded.  Depending on the approach, this can occur by sequentially inducing paralysis -- first by subtle tremor, then seizures, and eventually ending in full paralysis, starting with the extremities, but then moving to the bowels and finally the lungs.  (This is a more clinically desirable replacement for the old school method of dismembering the extremities one at a time; the effect is functionally the same, but can be controlled to progress in a more psychologically devastating manner). More recently, thanks to better mapping of the brain, the degradation of motor skills has been accompanied by degradation of mental abilities, ranging from memory and speech to broader cognitive function. (Which, of course, cannot be allowed to progress too far too quickly, lest it inhibit the victim's awareness).  

A common practice is to force the victim’s family members to observe the torture at every step, and even to encourage them to try to comfort the victim, but of course this is done with little effect as the torturer progresses the pain and dysfunction toward its inevitable end. Essentially this leads the victim to be tortured a second time at each stage, because he is left to observe his family’s helplessness in seeing what is transpiring, adding another clever wrinkle to this carefully developed strategy. 

There comes a point where the victim and his loved ones plead with the torturer to bring it to its inevitable end, to speed up the clock that is set to bring the drama to its close.  But this falls on deaf ears; that would defeat the whole point.  There is no early exit from the meticulously planned progression. 

And yet another wrinkle is being considered, though still under research and subject to the approval by the ethics board under which the torture establishment operates. In the room, which, despite its clinical appearance and ongoing medical support, we literally can term a torture chamber, is a switch that a loved one can pull to speed up the termination. But this is effectuated at the peril of incarceration. So now the drama is confounded: the victim has to absorb the torture to protect his loved one, the loved one is torn to save the victim while sacrificing herself.