The Taxi Strike, we are missing the big picture

Spanish taxis late on Wednesday called off their days-long strike against online ride-hailing services like Uber after Madrid agreed to let regional governments regulate the sector. The strike began in Barcelona on Wednesday last week and spread to Madrid at the weekend as drivers demanded action against what they believed was poor enforcement of regulations on VTCs (tourism vehicles with chauffeur).

The average taxi driver has to face several operational costs such as the taxi license ownership required to operate (average is €140,000 and can raise up to €200,000) + the cost of a taxi car (between €15,000 - €25,000) + the corporation fee (avg. €275 / month). Add to this the increasing cost of gasoline required to execute their service (in Spain, a gallon costs 6.90% of the daily wage, one of the highest in the EU & first world). Add to this taxi drivers compete in a very controlled market where tariffs & discounts are already set and equal for everyone in the business, meaning a poor taxi driver service costs the same as an exceptional one. A taxi driver, as an entrepreneur, has little control neither room for operational efficiencies leading to risky profitability. On the other hand, ride-hailing companies have an average cost of €5,000 per VTC license (up to €50,000 in the second-trade market) and a market which is much more liberal providing tools for entrepreneurs to hack business profitability (usually by downgrading cost of labour & optimizing routes).

This unbalanced situation creates tension between 2 very similar transportation / mobility services (taxis vs ride-hailing), but with disparity in business outcomes potential leading to mass confrontation and industry violence, hurting - as always - the user ("the customer").

Taxi Drivers unions are asking for more regulation on the VTC, long story short: 1) limitation of VTC license appointment to just 1 out of 30 per taxi licenses and; 2) move from a centralized (Spain) regulation framework to a local one (Regions).

However, consumers have evolved and refined their needs. They demand & expect from mobility companies to provide: 1) to go from A to B; 2) 24/7 availability; 3) price forecasting; 4) lowest unitary cost; 5) easy-to-book, mobile first and; 6) cancel any time, no attachment included. Because of the mastering of customer centric approach, ride hailing companies are ranking #1 in consumer stickiness and satisfaction. Add to that the more liberal market, and you probably understand why Uber is valued at +$70B.

Technology has always played the same role: enabler. Uber, Cabify, Lift, and other companies such as Ecooltra are using technology to fuel their business, they excel in: 1) customer centric approach; 2) mobile-first mindset and; 3) technology driven. Technology is helping business to reduce operational cost of running service, mobile first mindset is flourishing new & innovative business models attractive to consumers, and a customer centric approach is helping these companies grow their user base securing a streamlined P&L.

But the next technology revolution is yet to come. In 5 to 10 years from now, self-driving cars would populate our streets and with that, new alternative transportation options, business models and consumer service will arise. Uber for instance is investing in self-driving technology and, scooters + helicopters. Waymo (Google) car fleet has reached more than 7 million miles of self-driving testing. Apple is also working on a secretive self-driving car project. Tesla is one of the advocates of a direct consumer to consumer self-driving car pool (of Teslas, of course) to raise unitary economics of a car. Lift is also investing in self-driving tech; and the big manufacturers such as Nissan, Renault, Volkswagen, GM are already launching and planning self-driving cars before 2020.

Technology will always play the same role. However, this is changing. Faster than ever. Technology disruption and evolution have accelerated more in the last 5 years than in the last 40, mostly thanks to Artificial Intelligence and higher computing power. Legislation, on the other hand, takes an average of 5 to 10 years to level up.

Human progress has always been achieved thanks to technology (i.e.: fire, wheel, electricity, engine, chips, smartphones, AI), and regulation has always followed back with the same 5 to 10 years delay. However, this is not sustainable anymore. Human progress is moving faster than any generation before us, consumer adoption S curves are being killed because individuals have refined our needs and customer expectations are higher than ever thanks to the 4.0 industrial revolution we are living in.

IMHO: the Taxi Driver strikes gets me thinking we as a society are missing the BIG picture.