Monday, June 19, 2017

An alternate model for the rideshare business

One of the problems with hype-driven businesses and next-big-thingism is that it tends to drive investments and strategies in questionable directions. The best model for an industry might not be sufficiently hype-friendly or it might entail lots of small and medium players rather than one for to behemoth that investors can get excited about. (See the previously mentioned Ponzi threshold).

This got me thinking about the ridesharing industry. We have all largely accepted the Uber/Lyft  models as the only way to make the industry work: a huge number of employees (or subcontractors if you prefer) working for a big company that takes care of everything except for the car and the driving.

Instead, what if we thought in terms of something more like a franchise model? You have a national company that handles the branding, dispatching, routing, and billing while a middleman handles the inspection, driver recruitment, and dealing with local authorities.

This would insulate the national corporation from many of the labor issues currently besetting the industry. It could very well significantly reduce cost. It could even go a long way toward letting market forces determine where to grow. Rather than letting some corporate bureaucracy determine which region was suitable, the decision would be based on local entrepreneurs willing to put in the work and put up the money.

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