For some reason I have always liked talking to taxi drivers about their business. Maybe it’s because my dad was a NYC taxi driver back in the 70s, or maybe it’s because driving a taxi is such a classic immigrant path to building a life here. And it’s certainly because of the amount of tech and business model innovation in the transportation space.
Last night I took an Uber home from the airport, and was talking to the driver about his experience with it. He loves Uber — in the past 2 years, he switched from being a Boston city cab driver to being an Uber driver — and in the process traded $4000 / month in cab lease fees (what you pay a garage as a base rate to drive the cab — regardless of how much you earn) for a $700 / month car payment and $400 / month in insurance. And he gets to have a vastly improved quality of work (managing his own business & time, driving in a nicer car, etc).
Of course there are tradeoffs — if the Uber business slows down, he’s still on the hook for that car payment. And it’s possible that the number of Uber drivers will continue to increase (unconstrained by medallion restrictions, which in NYC cap taxis at 13,000), increasing competition and bringing down his margins.
But overall, he said that Uber changed his life (for the better). Not everyone feels this way, but it’s one story.
Anyway, the most interesting thing he said was not about the business, but the impact on neighborhoods. He said that Uber has radically increased the taxi / car service business in the city’s tough neighborhoods. This comes across as sounding counter-intuitive since most tech-driven transportation platforms (like Uber, Lyft and Sidecar — but especially Uber) are derided as “For Yuppies By Yuppies”. But the reason makes perfect sense: with Uber, you know your passenger.
So whereas a traditional taxi would hesitate to pick up fares in tough parts of town, because you never know who’s going to get in, Uber drivers can do this with much more confidence, since there is personal identity (and therefore accountability) built into the system.
This is a perfect example of Regulation 2.0 — using real-time / mobile accessible data to build trust and safety into a networked system. And it points out the limitations of “1.0” regulation schemes (in this case taxi licensing), that don’t have access to such data and can hence only solve for part of the problem (in this case, protecting passengers from bad drivers). And it’s a really great example of some of the unexpected benefits of allowing new, networked models to emerge.
For the past few weeks, I’ve been enjoying starting to use my new Chromecast. For those who don’t know, Chromecast is Google’s new internet-video-to-tv device — plug it in, then stream web content from any device to your TV.
The Chromecast experience has been eye opening, and it perfectly illustrates the opportunity and challenges we’re facing in terms of broadband and content policy.
First: the experience — we’ve been watching Netflix and Google Play videos over Chromecast and the experience has been great. It has been a breath of fresh air to be able to push web content from any of my devices (phone, ipad, nexus7, computer) to the TV. Especially with small kids, portable video content is super important. And nothing drives me more nuts than buying a video (say, Wreck-it-Ralph) on one platform (Verizon FIOS at home) and then buying it again on another (Google Play). So being able to collect content online and push it to the TV wherever I am has been so so so nice.
For some reason I have always liked talking to taxi drivers about their business. Maybe it’s because my dad was a NYC taxi driver back in the 70s, or maybe it’s because driving a taxi is such a classic immigrant path to building a life here. And it’s certainly because of the amount of tech and business model innovation in the transportation space.
Last night I took an Uber home from the airport, and was talking to the driver about his experience with it. He loves Uber — in the past 2 years, he switched from being a Boston city cab driver to being an Uber driver — and in the process traded $4000 / month in cab lease fees (what you pay a garage as a base rate to drive the cab — regardless of how much you earn) for a $700 / month car payment and $400 / month in insurance. And he gets to have a vastly improved quality of work (managing his own business & time, driving in a nicer car, etc).
Of course there are tradeoffs — if the Uber business slows down, he’s still on the hook for that car payment. And it’s possible that the number of Uber drivers will continue to increase (unconstrained by medallion restrictions, which in NYC cap taxis at 13,000), increasing competition and bringing down his margins.
But overall, he said that Uber changed his life (for the better). Not everyone feels this way, but it’s one story.
Anyway, the most interesting thing he said was not about the business, but the impact on neighborhoods. He said that Uber has radically increased the taxi / car service business in the city’s tough neighborhoods. This comes across as sounding counter-intuitive since most tech-driven transportation platforms (like Uber, Lyft and Sidecar — but especially Uber) are derided as “For Yuppies By Yuppies”. But the reason makes perfect sense: with Uber, you know your passenger.
So whereas a traditional taxi would hesitate to pick up fares in tough parts of town, because you never know who’s going to get in, Uber drivers can do this with much more confidence, since there is personal identity (and therefore accountability) built into the system.
This is a perfect example of Regulation 2.0 — using real-time / mobile accessible data to build trust and safety into a networked system. And it points out the limitations of “1.0” regulation schemes (in this case taxi licensing), that don’t have access to such data and can hence only solve for part of the problem (in this case, protecting passengers from bad drivers). And it’s a really great example of some of the unexpected benefits of allowing new, networked models to emerge.
For the past few weeks, I’ve been enjoying starting to use my new Chromecast. For those who don’t know, Chromecast is Google’s new internet-video-to-tv device — plug it in, then stream web content from any device to your TV.
The Chromecast experience has been eye opening, and it perfectly illustrates the opportunity and challenges we’re facing in terms of broadband and content policy.
First: the experience — we’ve been watching Netflix and Google Play videos over Chromecast and the experience has been great. It has been a breath of fresh air to be able to push web content from any of my devices (phone, ipad, nexus7, computer) to the TV. Especially with small kids, portable video content is super important. And nothing drives me more nuts than buying a video (say, Wreck-it-Ralph) on one platform (Verizon FIOS at home) and then buying it again on another (Google Play). So being able to collect content online and push it to the TV wherever I am has been so so so nice.
Investing @ USV. Student of cities and the internet.
The Slow Hunch by Nick Grossman
Investing @ USV. Student of cities and the internet.
It also really helps that Chromecasts are priced at $35. That way, I can buy as many as I need, and put them wherever I want — like at my in-laws’ house, which I plan to do.
For me, this is perhaps the first experience that’s really proven the model of “over-the-top” video on TV. Even with Boxee and Roku, I never got into a steady pattern of using them. The fact that the Chromecast devices are cheap, and controlling them happens from any mobile device or computer really broadens the surface area of the experience.
So, this raises the question of competition. Of course, Chromecast is a (welcome!) direct threat to video services offered by cable providers. Already this is bearing true — I’m way less likely to buy an on-demand video from Verizon now. So it’s perfect test case to think about Net Neutrality, which has been in the news this week, as Verizon and the FCC battle it out in court.
In a nutshell, the argument for net neutrality is that ISPs (like Verizon and Comcast), which currently have near monopoly positions in broadband service, are in a position to favor their own services in the face of this competitive threat. So, for example, instituting data caps that apply to Netflix but not to video-on-demand; or by throttling web video. To avoid this, providers like Netflix and Youtube could strike a special deal with the ISPs for “fast lane” service. The net result of this would be a big blow to small innovators (“the next netflix|youtube”), who naturally wouldn’t be able to afford such fees.
The argument against net neutrality is that broadband providers have never been classified as “common carriers” (the classification that allowed similar rules to be placed on phone-based ISPs in the dial-up era), and aren’t subject to such rules. Further, net neutrality assumes a monopoly environment that doesn’t exist (with the growth of mobile internet, mesh networks, etc.). Instead, we should stay hands-off and let marketplace competition do the trick here.
Freedom is such a slippery issue. One way of looking at the argument around net neutrality is about the freedom of ISPs to manage their services as they please, vs. the freedom to watch & participate (as consumers of media) and the freedom to publish (as producers of media). Thinking about it through that lens, and taking the history of the internet thus far into account, my position is to favor creators and consumers. The best thing about the internet is that everyone can become a creator — the smallest blog can become a news powerhouse, and the smallest side project can become the world’s biggest personal video platform. This potential to start from nothing and reach millions of people is the heart of what makes the internet great and empowering.
With this issue heating up again, we’re starting to see more public discourse around it. If you haven’t seen it yet, here’s a pro-net-neutrality video, The Internet Must Go, that just launched last week:
Back to Chromecast for a sec: on top of all this, Chromecast introduces a new layer: for now at least, Chromecast appears to only work with “approved content partners” (so far, Netflix, Pandora), and Chromecast may be actively blocking some apps. So this puts Google in a new type of gatekeeper position, though a less defensible one, since anyone can connect anything to their TV. This is particularly interesting given how Google has begun to close up the Android ecosystem, but that’s a subject for another post.
I spent the day yesterday at the Consumer Financial Protection Bureau in DC, at an event discussing mobile payments and related innovations and regulatory issues. Naturally, this is a big issue, with the huge rush to mobile everything, the continued expansion of software-powered web businesses, and the emergence of new payment technologies (from far-out tech like bitcoin to new practical applications of existing tech like paying for a cab with your phone). The session that most grabbed my attention was one on “Opportunities for the Underserved Community” — how payments tech and mobile payments might or might not help those will less financial and societal resources. Dan Schulman from American Express evoked James Baldwin’s famous line:
“anyone who has ever struggled with poverty knows how extremely expensive it is to be poor”.
The gist being that the closer your balances are to zero, the more difficult and more expensive everything gets. As per normal, Louis CK explains it best:
“you ever get so broke that the banks start charging you money… for not having enough money?” “So they charged me; they charged me $15. That’s how much it costs to only have $20.”
And it’s not just “the poor” as you might imagine it: a recent FINRA study suggests that 41% of americans spend all of or more than their monthly income. That means that 41% of Americans are managing their cash flow in a hard core way, and are living at, close to, or beyond zero on a regular basis. This is shitty (and I know from personal experience). So what does that mean for mobile payments, banking and the internet? Well, it helps to look at the business model of traditional deposit banking, which looks something like this:
This is an oversimplification, but essentially consumer banks make money on deposit accounts in two ways: by investing the money of wealthy customers, and by charging fees to folks hovering around zero. You’ll notice the big dip in the middle — the low-balance accounts that neither earn fees nor have investable balances. Schulman noted that these accounts are unprofitable for banks, and make up nearly 40% of all deposit accounts. What this says to me is that the banking business model is misaligned with lower and middle income consumers. If the banks’ cost structure means that 40% of consumers are unprofitable, and we make up the difference by levying fees on the poorest customers, we have a problem. What’s interesting is that not only is this bad for society, but it’s also a big business opportunity. Part of the reason banks can’t serve these customers profitably, and have to resort to fees on low-end customers, is that their overhead and transaction costs are so high. That made sense in a brick-and mortar era, with layers upon layers of analog financial middlemen, but it doesn’t make sense in the age of software and the internet. Just consider what USV portfolio company Dwolla’s mission is: “Allow anyone [or anything] connected to the internet to move money quickly, safely & at the lowest cost possible.” Or, put another way: to enable the system to actually work the way most people assume it does (i “transfer” money to you and — poof! — you have it). The internet and software-based businesses bring distribution and transaction costs down, practically to zero. They also tend to put a high premium on design and user experience. If you put those two things together, you have the ingredients for building a better banking and payments system — one that helps people when they need it (e.g., when making financial choices and transactions), has a business model that’s aligned with users and not opposed to them, and that scales to the size of the population at extremely low cost. So, when I think about what the opportunity is for new regulators like CFPB (not to mention startups in the space), it’s to imagine a future where radically new opportunities are opened up for all consumers, building on the potential of ultra low transaction costs, great user experience, and high transparency (and to think about how to allow for the experimentation and barrier-to-entry breaking it’s going to take to help us get there). These are the fundamental principles behind every web and mobile application, and I think they have the potential to solve some of the thorniest and most deeply embedded problems facing our society.
It also really helps that Chromecasts are priced at $35. That way, I can buy as many as I need, and put them wherever I want — like at my in-laws’ house, which I plan to do.
For me, this is perhaps the first experience that’s really proven the model of “over-the-top” video on TV. Even with Boxee and Roku, I never got into a steady pattern of using them. The fact that the Chromecast devices are cheap, and controlling them happens from any mobile device or computer really broadens the surface area of the experience.
So, this raises the question of competition. Of course, Chromecast is a (welcome!) direct threat to video services offered by cable providers. Already this is bearing true — I’m way less likely to buy an on-demand video from Verizon now. So it’s perfect test case to think about Net Neutrality, which has been in the news this week, as Verizon and the FCC battle it out in court.
In a nutshell, the argument for net neutrality is that ISPs (like Verizon and Comcast), which currently have near monopoly positions in broadband service, are in a position to favor their own services in the face of this competitive threat. So, for example, instituting data caps that apply to Netflix but not to video-on-demand; or by throttling web video. To avoid this, providers like Netflix and Youtube could strike a special deal with the ISPs for “fast lane” service. The net result of this would be a big blow to small innovators (“the next netflix|youtube”), who naturally wouldn’t be able to afford such fees.
The argument against net neutrality is that broadband providers have never been classified as “common carriers” (the classification that allowed similar rules to be placed on phone-based ISPs in the dial-up era), and aren’t subject to such rules. Further, net neutrality assumes a monopoly environment that doesn’t exist (with the growth of mobile internet, mesh networks, etc.). Instead, we should stay hands-off and let marketplace competition do the trick here.
Freedom is such a slippery issue. One way of looking at the argument around net neutrality is about the freedom of ISPs to manage their services as they please, vs. the freedom to watch & participate (as consumers of media) and the freedom to publish (as producers of media). Thinking about it through that lens, and taking the history of the internet thus far into account, my position is to favor creators and consumers. The best thing about the internet is that everyone can become a creator — the smallest blog can become a news powerhouse, and the smallest side project can become the world’s biggest personal video platform. This potential to start from nothing and reach millions of people is the heart of what makes the internet great and empowering.
With this issue heating up again, we’re starting to see more public discourse around it. If you haven’t seen it yet, here’s a pro-net-neutrality video, The Internet Must Go, that just launched last week:
Back to Chromecast for a sec: on top of all this, Chromecast introduces a new layer: for now at least, Chromecast appears to only work with “approved content partners” (so far, Netflix, Pandora), and Chromecast may be actively blocking some apps. So this puts Google in a new type of gatekeeper position, though a less defensible one, since anyone can connect anything to their TV. This is particularly interesting given how Google has begun to close up the Android ecosystem, but that’s a subject for another post.
I spent the day yesterday at the Consumer Financial Protection Bureau in DC, at an event discussing mobile payments and related innovations and regulatory issues. Naturally, this is a big issue, with the huge rush to mobile everything, the continued expansion of software-powered web businesses, and the emergence of new payment technologies (from far-out tech like bitcoin to new practical applications of existing tech like paying for a cab with your phone). The session that most grabbed my attention was one on “Opportunities for the Underserved Community” — how payments tech and mobile payments might or might not help those will less financial and societal resources. Dan Schulman from American Express evoked James Baldwin’s famous line:
“anyone who has ever struggled with poverty knows how extremely expensive it is to be poor”.
The gist being that the closer your balances are to zero, the more difficult and more expensive everything gets. As per normal, Louis CK explains it best:
“you ever get so broke that the banks start charging you money… for not having enough money?” “So they charged me; they charged me $15. That’s how much it costs to only have $20.”
And it’s not just “the poor” as you might imagine it: a recent FINRA study suggests that 41% of americans spend all of or more than their monthly income. That means that 41% of Americans are managing their cash flow in a hard core way, and are living at, close to, or beyond zero on a regular basis. This is shitty (and I know from personal experience). So what does that mean for mobile payments, banking and the internet? Well, it helps to look at the business model of traditional deposit banking, which looks something like this:
This is an oversimplification, but essentially consumer banks make money on deposit accounts in two ways: by investing the money of wealthy customers, and by charging fees to folks hovering around zero. You’ll notice the big dip in the middle — the low-balance accounts that neither earn fees nor have investable balances. Schulman noted that these accounts are unprofitable for banks, and make up nearly 40% of all deposit accounts. What this says to me is that the banking business model is misaligned with lower and middle income consumers. If the banks’ cost structure means that 40% of consumers are unprofitable, and we make up the difference by levying fees on the poorest customers, we have a problem. What’s interesting is that not only is this bad for society, but it’s also a big business opportunity. Part of the reason banks can’t serve these customers profitably, and have to resort to fees on low-end customers, is that their overhead and transaction costs are so high. That made sense in a brick-and mortar era, with layers upon layers of analog financial middlemen, but it doesn’t make sense in the age of software and the internet. Just consider what USV portfolio company Dwolla’s mission is: “Allow anyone [or anything] connected to the internet to move money quickly, safely & at the lowest cost possible.” Or, put another way: to enable the system to actually work the way most people assume it does (i “transfer” money to you and — poof! — you have it). The internet and software-based businesses bring distribution and transaction costs down, practically to zero. They also tend to put a high premium on design and user experience. If you put those two things together, you have the ingredients for building a better banking and payments system — one that helps people when they need it (e.g., when making financial choices and transactions), has a business model that’s aligned with users and not opposed to them, and that scales to the size of the population at extremely low cost. So, when I think about what the opportunity is for new regulators like CFPB (not to mention startups in the space), it’s to imagine a future where radically new opportunities are opened up for all consumers, building on the potential of ultra low transaction costs, great user experience, and high transparency (and to think about how to allow for the experimentation and barrier-to-entry breaking it’s going to take to help us get there). These are the fundamental principles behind every web and mobile application, and I think they have the potential to solve some of the thorniest and most deeply embedded problems facing our society.
