Tech start-ups come with prior advantage


Tech start-ups come with prior advantage


The Airbnb website. In 2016 Airbnb was officially sanctioned by the Dubai Tourism authority with Ras Al Khaimah following suit in January and signing an agreement with the US start-up.
Image Credit: Ahmed Ramzan/ Gulf News

Startups and tech companies such as Uber, Airbnb, Gojek, Bird and Compass operate in many cities and often multiple countries, and they typically have a repeatable playbook for each time they arrive in a new place.

What Gojek, the food delivery and rides start-up in Southeast Asia, learns about optimal pay for couriers in Jakarta can translate, at least in part, to Ho Chi Minh City.

Airbnb’s experience in navigating local bureaucracies has been honed from its experience in hundreds of cities around the world.

That’s not necessarily true for the people, industries and policymakers with whom these companies work.

The Gojek courier in Ho Chi Minh City doesn’t necessarily know how to avoid the pitfalls his counterparts in Jakarta already encountered.

A city planner in New York may not have the luxury of learning from a counterpart in Paris what taxes or guardrails were effective for Airbnb rentals in that city.

Fragmented

The companies are armed with centralised knowledge and act consistently based on those experiences.

On the other side, there is often highly fragmented knowledge and action by the contract drivers, homeowners, mom-and-pop restaurants, local real estate agents, trucking companies and governments that deal with start-ups trying to shake up how the real world functions.

This imbalance is what I think about when I read articles like about hotel operators, delivery couriers and others who feel they got the short end of the stick from start-ups backed by SoftBank Group Corp. or its Vision Fund.

There are exceptions

Chain restaurants that deal with delivery start-ups have the advantage of identifying patterns in their dealings with the tech disrupters, as do multi-city adversaries such as hotel industry trade groups. US cities that were caught off guard by on-demand ride services a few years ago learnt to move more quickly when scooter-rental companies came to town.

It helped that cities could force companies to comply by impounding scooters, said Brooks Rainwater, director of the Centre for City Solutions at the National League of Cities.

Policing isn’t easy

Coordinated knowledge and action isn’t easy, though. In recently published research on regulating ride-hail services, the New York University Rudin Centre for Transportation found that local policymakers were so overwhelmed that it was difficult for cities to learn best practices from one another.

Rainwater said that some cities were coordinating a few years ago on effective policies for on-demand ride companies.

Then the companies and some lawmakers pushed to take action out of city planners’ hands in favour of statewide rules.

Meera Joshi, an NYU visiting scholar and one of the authors of the Rudin Centre’s report, said some cities are coordinating directly or have been inspired by others. Mexico City is taking steps that may lead to sliding, per-kilometre fees for on-demand rides similar to those of Sao Paulo, which imposed the surcharges to mitigate traffic congestion.

New York and Chicago, she said, gained confidence from talking to each other about compelling ride companies to provide data that can help cities with transportation planning and other goals.

The superior knowledge and power of sprawling companies isn’t unique to on-demand start-ups, of course.

When General Motors builds a factory, Walmart opens a distribution centre and Amazon pushes for a local tax break, the lawmakers, workers and business partners with whom they’re dealing probably don’t have the same experience as a company that has gone through this process many times before.

The scale of the start-ups, however, is on a whole other level. Uber had 3.9 million contract drivers and couriers working on its system at the end of 2018, and it operates in more than 700 cities.

There are more than 100,000 cities with Airbnb listings and more than 7 million listings globally. There are not 100,000 cities with a Walmart.

The bigger the start-ups get, the more the parties they deal with will become fragmented. That is a lot of people potentially learning from scratch how to work a system the companies have mastered.


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