Cycle of Civic Innovation

1*lGHFflHc2sAQXQVlNaK68g.pngIf cities are to thrive, they cannot — and must not — hold back the rising tide of innovation, but when you consider that cities are also tasked with protecting their citizens from harm, finding the balance between protection and innovation is not easily achieved.

For Airbnb and Uber, their respective disruptions of the status quo were widely embraced by the public — just as their problems have been widely criticized. Both companies are part of the Sharing Economy, which came on the scene around the turn of the century and encompasses a wide variety of companies based on peer-to-peer sharing of access to goods and services.

By embracing the unique approach of the Sharing Economy, both companies enjoyed a meteoric rise to global adoption, but both companies have also been plagued with lawsuits and resistance from governments concerned over the lack of protection for citizens and the inability to regulate or collect conventional taxes from these innovative startups which often operate outside of current regulatory structures.

Airbnb

When Brian Chesky and Joe Gebbia came up with the crazy idea of using a few air mattresses on the floor of their apartment to sell sleeping spaces to attendees of a sold-out tradeshow, both were unemployed and just looking to make a few bucks to pay their rent. Their impromptu “Air Bed and Breakfast”, complete with un-toasted Pop-Tarts, landed three paying guests — and the short-term rental platform, Airbnb, was born.

Despite early skepticism that people would not want to spend the night with complete strangers, Airbnb grew in popularity by building an online platform which, among other things, removed the barriers so that anyone with an extra room could easily earn extra income. In addition, the platform focused on delivering a unique experience by enabling travelers to live like locals and enjoy the conveniences of home at a fraction of the cost of staying in a hotel.

While a majority of visitors have had positive experiences using the platform’s services, an increase in reported mishaps, injuries and crimeshave lawmakers concerned. In fact, many cities are not making it easy to operate an Airbnb rental, including global tourist destinations like Paris, Amsterdam, London, San Francisco and New York City.

Taking it a step further, some city and state governments are pursuing legal action, with one New York City apartment owner now facing a $300,000 lawsuitfiled by the owners of her building in response to a city administrative law judge fining the landlord for their tenant’s “bad acts”.

And, of course, the short-lived Airbnb listing for a $200/night igloo which was hastily constructed after a blizzard in New York City, while humorous, highlights the inability of the company to fully control the quality or honesty of the listings on its platform.

Airbnb is making some effort to address mounting concerns by offering a compromise of sorts at the U.S. Conference of Mayors, promising the mayors in attendance that in exchange for their support, Airbnb would begin collecting upwards of $200 Million in new taxes within 50 of the largest cities in the U.S.

In addition, the company’s pledge of transparency and release of New York City data was lauded by many as a step in the right direction. But others, like Mark Headd, a longtime advocate for open data and government, pointed out that the release of data is only one small step in the right direction, especially since the data was never published in a digital format. In fact, anyone wanting to view the highly redacted data had to do so in person at Airbnb’s New York office.

Uber: Destined to Repeat the Past?

In 2013, four people filed a lawsuit against Uber claiming the company should classify drivers as employees instead of contractors and asking for reimbursement of such expenses as gas, insurance and car maintenance.

Today, that lawsuit has attained class-action status and mushroomed to encompass 160,000 individuals worldwide. It is but one of many lawsuits and complaints lodged against ride-hailing startups which are disrupting the taxi industry.

Eric Posner points out in his 2015 essay that something quite similar happened to the taxi industry in the 1920’s with the introduction of the mass-produced automobile. In New York City, riders hoping to avoid the higher cab fares would hail part-time drivers who were using their own personal vehicles.

As more independent drivers took advantage of this opportunity, the glut of unregulated drivers negatively impacted taxis to the extent that the government stepped in and began issuing medallions to registered taxis in an attempt to stabilize the industry and protect consumers.

Today’s taxi drivers often spend years paying off loans to afford their medallion, which until recently cost over $1 Million — and it is the cost of those medallions which many attribute as the catalyst for the success of today’s new ride-sharing companies like Uber.

And just to bring things full circle, in late 2015 cab drivers filed a lawsuit against New York City, claiming that the city misled cab drivers about the value of the required medallions and that the city has allowed companies like Uber to usurp the property rights of cab drivers through disparate regulation.

Disrupting the Cycle of Civic Innovation

It would be easy to blame the dysfunction within the cycle of civic innovation on the failure of lawmakers and regulations to keep pace with innovation, but, in a chicken-and-egg sort of quandary, the more difficult question is whether it is this perceived dysfunction, this lack of regulation, that makes it possible for innovation to even happen.

Neither Uber nor Airbnb were overnight successes; it took years of testing and pivots to achieve market adoption. By innovating outside of the system, the companies were able to disrupt established industries and deliver new options to consumers. And while the hour of reckoning with heavier government regulation appears to be nigh, innovation resulted from freedom of inventing outside of those regulations.

In today’s rapid pace of technology changes, cities have discovered they cannot innovate fast enough to keep pace with the constantly changing smart city and civic tech inventions which are already beginning to deliver more efficiency and easier access to city services and information.

Many government agencies are partnering with this new breed of tech startups despite the barriers of outdated 20th Century regulations by implementing new procedures to experiment or implement pilot programs. As more cities disrupt their own established procurement processes, the question is whether cities will become tomorrow’s disruptive innovators.

If cities can collaborate with private enterprise to keep pace with new technologies while simultaneously addressing needed changes to regulations — we might be witnessing the best disruptive innovation yet.

this article first appeared on inc.com

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Inaction is Tacit Approval: Why I Deleted My Uber Account

I cancelled my Uber account – not just by deleting their app from my phone but also going through the painful, hard to find process of requesting that they remove my account completely (more about that in a moment).

Just to be clear, I didn’t cancel because I disliked their ride service. I loved using Uber. I talked my friends into trying it out. I celebrated their scrappy disruption of the archaic taxi industry. I was whole-heartedly rooting for the success of their company.

I have made the decision to not use Uber because I am holding myself accountable to no longer support companies that, through inaction, show their tacit approval for badly behaving executives – on or off the record.

This morning’s post by Fred Wilson inspired me to finally articulate exactly what was bothering me most about the entire Uber debacle: Somewhere along the line, we – as a culture – started glorifying the cut-throat, winner takes all behavior in entrepreneurs that make investors wealthy – and then have the audacity to be shocked when that same mindset seeps out in these wunderkind entrepreneurs’ personal lives. If we don’t want jerk tech, bro-culture, or bullying as a culture in startups, we need to decide that we won’t glorify or support those who are clawing their way to the top in a brutal anything-goes melee. We have to believe that no amount of talent, skill, vision, brilliance or drive is worth overlooking this kind of behavior.

As a woman entrepreneur, I definitely have my own share of exposure to bro-culture and sexist comments. Some of it I dismiss as unfiltered ignorance by well-meaning folks who are basically good but still holding on to some exclusionary mindsets. Some I ignore because it isn’t always my battle to fight, and tilting at windmills isn’t nearly as effective or productive as it may feel in the moment. But sometimes something is so over the top or happens often enough that it cannot be ignored.

For me, Uber hit that point over the weekend. It’s not like Uber didn’t already have a reputation for embracing underhanded, mean-spirited tactics against their competitors which crossed far over the line of being forgiven as guerrilla marketing tactics. Even though I hated to see what I perceived as a social good company stoop to bad behavior, I was willing to look the other way. It was simple and easy to use and made getting around in Los Angeles or New York City so much more fun than the uncomfortable back seat of a cab. Somehow when I watched for my Uber driver to arrive, I felt like I was part of an underground system (Is that you? Pssst? Do you have the password?) It was kind of fun sneaking around and breaking the rules of what the system said I had to do to get a ride in a city. It felt cool, kind of hip. I liked it, so I forgave the team this naughty way of gaining marketshare from their competitors.

Uber skimmed the headlines briefly from time to time with other stories of bad behavior or underhanded business practices, and even when news broke about  violating their users’ privacy as a very creepy party trick, I only shook my head in disgust. Oh, grow up, I thought. Stop acting like a bunch of middle school boys spying on the girls from behind the fence. It seemed immature and reckless but not something that I thought they couldn’t get beyond once their team matured into more thoughtful leaders.

But yesterday all of that changed for me. When the second most powerful individual in a company with a valuation nearing $4 billion lays out a ratherdetailed plan of how the company should spend $1 Million of their capital investigating the lives of any journalist – and their families – who have the audacity to actually write a negative piece about the company, I think it’s a pretty good indicator that Uber’s executive team has lost a bit of that hunger that gave them the early edge and landed firmly in the land of arrogance. When they can joke about blowing that much investment – other people’s money – on something so predatory, that’s just disgusting.

Now Uber wants us to forgive it all as a mistake since, poor guy, he had no idea he was on the record. Here’s a news flash for any entrepreneur who maintains close friendships with journalists: true news hounds will almost always be a journalist first and buddy second. Don’t ever assume you’re off the record when you’re sitting at the table with journalists – no matter how many bottles of wine or cases of beer have been consumed in the name of camaraderie. If you start laying out a road map for your own planned creepy behavior – whether its in theory or with true ill intent, don’t be surprised when it’s in the news the next day.

If Uber’s CEO had immediately stepped into the public eye and addressed the issue, it might have helped. Had he said – at a news conference or press release instead of his eventual tweet storm of half apologies, half justifications – that he was appalled, offended, or whatever emotional word he chose to use, it might have helped. He could have even had his colleague’s back. None of us want to CEO willing to hang one of their own out to dry without investigating fully what actually happened, so even if he had asked us to be patient while he got to the bottom of the issue, it might have been enough. But when there was silence, it was more than easy to fill in the gaps – with all of the news stories that had been building on each other over the past few months.

And so, despite how much I enjoyed using their service, I have cancelled my account. By the way, if you decide you want to do so as well, don’t spend any time hunting around in the app for the magic button that gives you the power to remove yourself from their system. It doesn’t exist. And don’t search through pages on their website, either. Uber doesn’t let you remove your own account. Then again, they’ve already proven to be poor stewards of data privacy, so we shouldn’t be all that shocked. What I had to do was send in a request for help. It went like this:

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Just like many of the ‘bad boys’ who are the darlings of the entertainment world because of their redeeming qualities, Uber was able to get a pass from me for far longer than they should have. But I’ve realized that when I give my money to companies that not only ignore the negative effects of unchecked bro-culture but actively embrace dirty tactics to get the advantage, I have become part of the problem that I am working to eradicate. Even if it’s inconvenient, and even if I don’t get to feel like I’m part of an exciting, hip movement disrupting a stodgy old industry the next time I need a ride in a different city, I’m okay with that. I really, really am ok with that.