Seattle Vote Stings “Sharing Economy”

I figured it was a matter of time before Uber, Lyft and other ride-sharing services started feeling the heat from the taxi industry. TechCrunch reported last week on the Seattle City Council’s vote to support the traditional cab industry and limit the popular ride sharing services to no more than 150 drivers each, a number apparently low enough to make them a negligible competitive threat to taxi industry. On the one hand, this is not really surprising since Seattle was also the city that the Local Search Association took to the mat when the city sought to implement a opt-in model for print Yellow Pages. On the other hand, for a city as progressive as Seattle in a progressive state, you have to shake your head in wonder.

Uber and similar services emerged to offer a way around a common problem — the scarcity of cabs at peak hours because there were hard limits on the number of regulated cab “medallions.” Despite some well publicized glitches, consumers generally preferred the ride sharing experience. Inevitably, the regulated cabs and black cars, often politically influential in big cities, felt the threat and fought back.

There will be more Seattles for Uber, Lyft and others. Airbnb, which does the same thing in the lodging industry, can’t do business in some big markets like New York City because of regulatory resistance. But ultimately when consumers embrace a model, it tends to find a way into the mainstream, despite the inevitable resistance of vested interests. We expect to see more innovation, and more start ups in the “collaborative consumption” space. Just look at Airbnb, which just raised new capital, making its founders billionaires (via a $10 billion valuation). Nothing attracts imitation like success.

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