Why Uber and friends should keep you up at night
The drumbeat of a new "sharing economy" continues with excitement I haven't seen since 1999. For those with day jobs who seem unable to keep up with this stuff, the sharing economy (or crowdsourced economy) is based on the insight that much of today's commercial activity—especially in logistics and transportation—essentially duplicates functions that ordinary people do in their ordinary lives. Example: everytime I drive 1.5 hours to the Atlanta airport with three empty seats in my car, dozens of people are paying $40 for a shuttle to exactly the same place at about the same time. Why? Because until now there has been no coordinating mechanism to avoid the duplication.
Recent news that Uber, a crowdsourced transportation service with big ambitions, was valued at $18 billion should make executives in the logsitics industry quiver more than just a little. What happens to the logistics industry when millions of automobiles on our nation's highways become miniature freight transportation providers? "Anyone driving from Atlanta to Louisville this morning? Got room for 4 medium sized cartons?" Can you say, "Nationwide Transportation Company with Near-Zero Capital Investment?" I thought you could.
Again, the only obstacle to this business model has been coordination, but Uber and other companies are now exploiting the mobile computing revolution to provide both the necessary coordination and a low-cost means of paying all these new drivers. Whether or not a sufficient number of folks sign on to make this a threat to the current people transportation industry is an open question, and there is another leap to make it work for time-definite freight delivery. Nevertheless, I believe new crowdsourcing models will play a significant role in both industries in the near future.
That gets me excited enough to lose sleep tonight. How about you?
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