A few weeks ago, I met with a potential client who was looking for my company to build him an APP. We sat down to discuss the details over lunch. The individual told me he was looking for an Uber-like APP for his transportation business. As I typically do, I asked for more details. He told me he wanted to compete with Uber directly and wanted an Uber APP clone.
Service-based companies like mine rely on word-of-mouth for future clients. We can advertise and take in a few clients, but in the end, our work product must speak for itself. That is why there are times we must let a client know that we can’t build what he wants. That was the case with this client, and as we discussed the reason, we both learned something new.
For my potential client, it was the realization that cloning an Uber service entails more than copying the business model. It would be simple for my business to build the APP, but when the client realizes that what he paid for the APP will not be paid for by the APP we build him, how will he respond? Will it be, I tried and failed, or more likely, they built me an APP that doesn’t work. In other words, the business model the APP is supposed to drive would not be sufficient to pay for the cost to make it, and my company would suffer the brunt of a client’s dissatisfaction, even if it wasn’t our fault. People rarely admit they made a mistake.
But, why won’t the APP work?
It comes down to “being there and done that.”
My potential client thought that he could simply have the APP built and he would launch his own mini-Uber service. I asked him, as we explored his request, what his gimmick was. Gimmick, he asked, yes, I told him, what will make you different from Uber. Why would customers want to use you, instead of Uber? He didn’t have an answer.
I told him that to be successful he needed to differentiate himself from Uber. Maybe cater to a specific ethnicity or social-economic demographic, or possibly a specific service, like on-demand carpooling for kids’ scheduled team practices.
My client wasn’t sure about those ideas because he had assumed that he would just get the APP built and the clients would follow. I believed he learned that it wasn’t as easy as that.
But I also learned something from him, as well.
I love disruptive technologies, like Uber, Amazon, Pandora and all the other ones that have changed the way we consume services. Disruptive technologies drives my business. But there is a downside to disruptive technologies that I hadn’t contemplated before and my client showed it to me.
My client immigrated many years ago with the dream of building his taxi business to build a future for his children and help his village. Like many immigrants, he gravitated to taxis. In the case of my client, he dreamt of acquiring a taxi medallion in New York and use it for his future.
As my client explained it to me, a taxi medallion is a license to drive a taxi, or taxis in New York. The city has made a finite number available, and as with any finite resource, its price appreciates as buyers are willing to pay more for it.
I do not know the full details of the taxi industry, but I do know they are highly regulated. My potential client told me that, after working for years and saving their money, he and a group of other immigrant taxi drivers pooled their resources to acquire a medallion. He told me that medallions were selling for a million dollars or more and they were hoping to use the medallion to provide for their families and even “help my village.”
But, it didn’t work out that way because of Uber, he told me, obviously disheartened about the evaporation of his dream. He told me that they were lucky to get out of the medallion with enough to start over again. The client told me that medallions are now going for $100,000 or less, a massive depreciation from the million they were going for before.
Now that Uber is providing transportation services in New York, the taxi medallions are losing their value.
I understand how companies like Amazon are challenging to cities and industries they compete in. For example, Amazon bypasses many of the municipality taxes that city’s have relied on to shore up their budgets. Taxes, like sales taxes and property taxes. The consumers benefit from lower prices, some of it because of the bypassing of taxes, and from faster and more efficient service.
Amazon has many employees, actually contractors which reduces the payroll taxes on Amazon. Uber is the same way. Where a taxi company must pay for cars, insurance and payroll taxes, Uber pays none of those, relying instead on independent contractors to bypass those fees.
How to deal with disruptive technologies is the question I often get, and my client was no different. Should they be made to play in an equal field or should disruptive technologies be allowed to make services better?
I subscribe to the notion that the universe and humanity is in a state of evolutionary flux. We must embrace the evolution because it makes us better. Like, the tax medallion owners, Uber will soon meet its own disruptive technology that will challenge it. Autonomous driving cars, for example, or the car sharing services that are popping up all over the country.
So that do I tell my child about how to prepare for the future?
Evolution is the rule – what makes you money today will not be what makes money in the future. To be successful, you cannot remain stagnant. You must always make yourself better by continuously learning, learning new concepts and new techniques.
I started selling computers and now I make APPS. It is the only way to be successful.
I’d like to see the disruptive technology that will break the Facebook, Google, Twitter, Amazon monopolies. How about Teddy Roosevelt style anti-trust action?