Insights and Opinions

Why UBER Matters, A LOT

“Underlying most arguments against the free market is a lack of belief in freedom itself.” - Milton Friedman

I was recently at the Le Web conference in Paris where Travis Kalanick, the Cofounder and CEO of Uber was one of the speakers. It is ironic that the idea for Uber was conceived in Paris, France, where free markets and capitalism are under tremendous pressure.

What makes Uber is an extraordinarily important company? In one word, freedom. Disintermediation is Internet’s biggest gift. Uber is one of the best examples of how disintermediation can transform industries in which unions, lobbyists, regulation, and bureaucracy have created obstacles to progress, openness, and competitiveness. Which is why wherever Uber operates, unions, lobbyist, regulators, and bureaucrat make every effort possible to block them, make them illegal, or otherwise stop them from operating. The same applies to other companies that are disintermediation other inefficient industries.

As I travel a lot, I have the opportunity to speak to Uber drivers in different countries. They believe Uber has changes their lives, even the ones that used to own taxis before. What is more is that they are now genuinely concerned about their ratings and quality of service. When was the last time a cab driver in New York, whose medallion costs one million dollars, showed any concern about his cost, quality of service, or your satisfaction?

Free markets are not about job security, regulations, collective bargaining, or keeping others out. They are about expanding demand and the universe of services and products, and growing the ecosystem. It is about creating a bigger pie. It is about execution, and providing equal opportunity.

Disintermediation is the key to free markets and equal opportunity. Equal opportunity, however, does not mean equal outcome.

Which is why it is interesting to think about what will happen when “Uberization” is applied to other industries, as it inevitably will!!

This model offers on-demand products and services, choice, quality, value, and of course, accountability. It is highly portable across geographies and industries. It is efficient, scalable, and offers transparency, flexibility, a feedback loop, and competitive, market adjusted pricing. Such competitive pressures also push out the poor performers and bring down prices.

Clearly this is not an easy task. Uber has demonstrated world-class execution, and has thus made it look easy.

So imagine what if we applied these principals to the industries that need it most? Like health care, education, or government services? Imagine being able to choose your doctor the same way you chose your ride. I know this may be too simplistic, but if indeed this happened, the changes would have incredible ramifications.

Your appropriate medical data would be portable and available to the doctor of your choice on demand upon your selecting of that doctor and the service. You will know how much most of your visits and procedures would cost before you select your doctor. The doctor would have to take into transparency, accountability, customer satisfaction, and costs.

As disintermediation causes relationships to become more one-to-one, there will be significant reduction in costs, bureaucracy, and administration layers, which of course is why those whose interest are aligned with the current system will fight this change. But as Harry Browne said, “Voluntary association produces the free market - where each person can choose among a multitude of possibilities.” So as we cheer Uber on, we wait with anticipation for others to come along and Uberize our other dysfunctional industries, and maybe even government agencies.

Ivan Nikkhoo is an experienced entrepreneur, investment banker and VC focused on the life cycle of tech companies. He is a Managing Director at Siemer & Associates, and an advisor to Siemer Ventures.