Let’s Jump on the Peer-to-Peer Bandwagon

Vested interests in cities around the country are mobilizing to thwart a new generation of peer-to-peer technologies threatening to disrupt the lodging and transportation industries.

I have documented the difficulties of Uber, the e-hailing service (tap on your smart phone app and an Uber limo comes to pick you up), in Washington, D.C., where it has run afoul of the taxicab cartel. There must be at least a dozen more start-ups coming out of Silicon Valley or Europe — I’ve included YouTube shorts for RelayCars, Airbnb and Flightcar — that allow people to catch rides, share rides, rent someone else’s car or rent someone a room in someone else’s house.

As start-ups, these companies focus their efforts first on major markets like San Francisco, Chicago, New York and Washington. But they often run into regulatory barriers, as described here and here. Not surprisingly, the stakes are really big in those markets and the special interests are really entrenched.

So, here’s the idea. Why don’t second-tier cities (or regions) like Richmond and Hampton Roads make themselves hospitable to the peer-to-peers? Sure, there are local taxi services in each region but they have very small travel-share and they lack the political clout of their big-city counterparts. Why don’t we go out and promise to help work through any regulatory obstacles if these guys commit to establishing a serious presence in our regions.

We could end up with a greater variety of transportation and travel choices, which benefits everyone (except the entrenched competitors). And having more of these Internet-based services active in the region adds a coolness factor that the younger generation might find attractive. Yeah, I know, half or more of these companies will be out of business in two years. So what? The other half might transform their industries. And, as regions, we could send out a signal to the world: We’re open to competition, open to innovation. Check us out.

Another idea from the fertile (some might say febrile) brain of Jim Bacon…

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19 responses to “Let’s Jump on the Peer-to-Peer Bandwagon”

  1. larryg Avatar

    peer-to-peer is not the problem. It’s insurance and liability.

    Imagine renting your car out at the airport while you were away on a trip.

    think about who would rent your car … and what recourse you’d have in they messed it up.

    OTOH – think about you renting someone else’s car that has bald tires or bad brakes or worn-out windshield wipers…

    I know it’s hard to believe but there are scumballs out there that would take advantage of you in a heartbeat if they could.

    I think peer-to-peer can succeed but not without some changes to deal with the potential issues. Perhaps one way would be an event recorder in both rented and cars to be rented – that would help establish who screwed up and head off lawsuits.

    but seriously would you consider renting YOUR car to anyone else that showed up at an airport?

    and what would you think of someone who WOULD RENT their car at an airport?

    just replace airport with any venue… if the airport word troubles you.

    there are people out there with bad finances and bad driving records so why would you make yourself vulnerable to them by engaging in a transaction with them?

    peer-to-peer is one of those ideas on first blush that sounds wonderful – then you start dealing with the realities.

  2. DJRippert Avatar

    Virginia is the most crony capitalist state I can imagine. What happened when Secure Futures tried to build a solar power development array for W&L University? Dominion blocked them by citing a Virginia law that required W&L to buy all electricity from Dominion.

    Jim – you are supporting the party in Virginia that has been caught with its hands in the pockets of well heeled Richmond corporations again and again and again.

    If you really want to break down Virginia’s status quo you’d better start by throwing out the RPV.

  3. larryg Avatar

    Well there is a counterpart or corollary to crony capitalism and that is one businesses seeking policies to advance themselves at the expense of their competitors.

    But when Virginia entered into an agreement with Dominion to be the sole provider of electricity to Va – in exchange for Va regulating their rates – there was a certain quid-pro-quo enshrined transaction that bound both parties to something that on one hand should benefit consumers but on the other hand limit choices also.

    Since virtually every state and electric provider in the country has a similar arrangement – I cannot see this as just a Va problem.

    1. I agree with Larry. I see lots of crony capitalism in Virginia, but not with Dominion enforcing its monopoly.

      In 2007, the General Assembly ended the State’s experiment with retail electric competition — which never developed. The legislation, which was amended by then Governor Tim Kaine and accepted by both houses, restored cost-of-service regulation; a duty to serve; and, with limited exceptions, a retail monopoly for electric power companies within their service territory. The social contract was returned to its previous requirements. The House concurred in Kaine’s amendments 84-16, as did the Senate 36-2-1 (abstention). There was bipartisan agreement on this legislation.

      I don’t see what is wrong with a power company enforcing its right to serve customers in a regulated monopoly environment. It’s simply a matter of fairness to couple a duty to serve all comers with a monopoly. If that is not done, cream-skimming occurs and rates increase for those who remain.

    2. DJRippert Avatar

      Most states don’t let their regulated monopoly electricity provider buy off the state legislature by being the largest contributor to politicians. Most states don’t exempt the state corporation commission from FOIA compliance. Most states limit the “gifts” that crony capitalistic companies can make to the politicians who supposedly regulate it. Most states do what Virginia finally did and demand that their regulated monopoly provider allows for PPA agreements when alternative energy is in the equation. Most states refuse to allow their monopoly electric company to use defunct out-of-state alternate energy credits to justify in-state rate hikes under an alternative energy program.

      Dear Lord – Dominion is clearly “crony”. I guess you could argue that the only thing capitalistic about the company is the compensation it gives to its executives.

      1. So Dominion doesn’t have a right to lobby and make campaign contributions? As I’ve written many times, I’d support a federal constitutional or state constitutional amendment that limited campaign contributions to those from natural human beings. I’d prohibit contributions from corporations, nonprofits, PACs, and all bundling. But unless and until that passes, why shouldn’t everyone be equal? If the Sierra Club can lobby, so can Dominion. So why is alternative energy special? I know a few environmentalists who want to force consumers to buy it and see their bills increase. If that’s an exception to the Dominion monopoly, I don’t want it. And I expect I’m not alone.

        The alternative energy people are as monopolistic as Dominion. They need to push alternative operating costs down so they can be lower-priced than fossil fuel instead of moralistic despots.

        If you want to prohibit Dominion from including its campaign contributions or lobbying expenses in its rates, I’d likely support that.

        I think Virginia’s FOIA law is a joke. It’s riddled with exceptions. One key one is the special exemption for Dulles Rail contractors. Most other government contracts must be available to the public as it, including prices. But Bechtel got a special exception. It should be all or nothing.

        Here’s some power company corruption from Connecticut. http://articles.courant.com/2013-05-04/news/hc-lender-column-esty-contributions-0505-20130503_1_elizabeth-esty-dan-esty-contributions

        1. larryg Avatar

          I don’t have a problem with the lobbying but I have a big problem when it’s coupled to money.

          Money should come ONLY from individuals and it should ONLY go to identified people – not PACs or other entities that effectively hide the donor and/or the recipient.

          I’ve yet to see any politician advocate anything close to that.

  4. Peter Galuszka Avatar
    Peter Galuszka

    I gather Brother Bacon has never lived in New York or overseas. If so, he wouldn’t be pushing off-the-table businesses like gypsy taxicabs, decorating them with videos of well-scrubbed white faces and recasting them as some kind of worthy “B to B” tech bullshit.
    Take New York. Gypsy cabs have been there for years. They are called “car services.” They do not bother to buy the NYC medallion that costs at least six figures. They do not have to comply with safety inspection rules or have appropriate insurance. They do not have to bother with city-monitored meters or rules that cabbies have to take you anywhere in the vast city.
    Car services are not usually run by well-scrubbed Caucasians who are young and Net-savvy. When I lived in Brooklyn I used them all the time. Unlike Manhattan it was hard as hell to find an approved taxi. I used a car service from the Arab-heavy Atlantic Avenue area and the one I used had the reassuring name of “New Battery”and was run by Palestinians. I got to know them over time and could rely on them. Never had a problem.
    I was lucky. Car services vary in quality. This unregulated “B to B” business could extend to China buses which have already had a number of notorious and fatal accidents.
    So Jimbo wants to bring gypsies to Richmond? Great, if you want to take the risk. But don’t believe his videos. Ain’t the truth.

    1. Well-scrubbed white faces?

      Man, you’ve got race on the brain.

  5. larryg Avatar

    yeah, Peter veered erratically on that ….

    but his point about standards is important because what some of the advocates of peer-to-peer believe is that the standards are essentially crony-capitalism and peer-to-peer is a way around them – i.e. a way to accomplish the “taxi” function without the standards for insurance and safety.

    with peer-to-peer – you have no idea who the actual provider is, their background, the status of the vehicle nor the insurance or licensure.

    if peer-to-peer is going to be successful as an innovation – it has to maintain the standards.

    so if they do not do this – here is what is going to happen – customers who want some level of standards are going to flee the businesses and return to the Hertz type providers.

    the people that are left are going to be the types you see selling stuff of questionable value and lineage on CraigsList or similar.

    You want a car that has suspect brakes or no working air conditioner or a cab with a driver who has a criminal record or has lost his license because of reckless driving .. or a Bus with a driver who has not slept in 20 hours…

    and you can save money – go for it. You get hurt and sue? too bad they just fold up and disappear.

    peer-to-peer has great potential as a legitimate disruptive technology – to upset the status-quo apple-cart, and yes, even crony capitalism, but people have to separate out the legitimate things that need to be challenged verses the things that exist because we know what happens when they are not regulated.

    peer-to-peer is not the antidote to legitimate regulation.

    regulation comes about not because some bureaucrat wants to impose his idea of right or wrong on others – it invariably comes about as a response after people have been harmed or abused by others.

    1. Larry, I think the peer-to-peer experiment will provide a very interesting test. Is government regulation truly necessary. Maybe it is. Hopefully, we’ll find out one way or another.

      What the peer-to-peer models do, similar to e-Bay, is allow the users to rate one another. So, if you rent a car and trash it, you’ll get a lousy a review from the guy who rented it to you and others will be very hesitant to rent to you in the future. Likewise, if you misrepresent your car, and it’s dirty and the muffler needs repair, you’ll get a bad review and others will be less likely to rent from you in the future. Online, your reputation matters.

      1. larryg Avatar

        well I agree about the reputation aspect but that also applies to non peer-to-peer services also.

        but the end-run around regulation is what it is and it’s not just a new tactic with p-2-p. it’s an endless game between the regulators and those who want to find a way to evade the regulation.

        They just need to go back and modify the existing regs to include p-2-p service and be done with it.

        let’s have a level playing field. If the regs themselves are outdated, let’s fix them but let’s not create an environment that weakens or eliminate regs for one kind of business at the expense of a similar business.

        When you offer a service to the public – they expect to not be cheated, misled or put at at unreasonable risk or at risk not disclosed.

        I’m opposed to unreasonable regulation, crony capitalism regulation and I cannot for the life of me understand what a taxi medallion should cost 6 figures in some cities so I support “disruptive” innovation to a point – as long as the public is protected from those that would cheat or harm them.

  6. Peter Galuszka Avatar
    Peter Galuszka

    Race on the brain? I’m referring to the videos presented here. You don’t exactly see the gypsy cab reality. Every one of the videos has a cheerful white face in it.

    Once again, you are promoting unregulated gypsies and calling it some fancy other name. It is the same and it’s a common theme on this blog. You push something as old as the hills, give it a new tag and present it as a cutting edge idea.

    BTW good luck in Richmond. I needed a real cab to go from Chesterfield to Richmond southside due to a car problem and I was charged something like $85. It was absurd. Try taking Groome. You’ll pay hundreds. Maybe “B toB” or gypsies or whatever you want to call it will offer lower prices but then will the brakes work?

    I also like it when Bacon creates a straw man tension with phrases like “I have documented the problems of Uber” going up against entrenched taxi interests? What is that exactly? That Uber doesn’t want to be regulated per law? Why try to sell this stuff?

  7. I love it, Peter, you complain about paying $85 to a taxi to take you to Richmond… then defend the taxicab cartel. You lump in the start-ups with “gypsies” and tar them with all manner of imagined ills…. but oppose giving the start-ups a chance to prove themselves.

  8. Peter Galuszka Avatar
    Peter Galuszka

    You know what it is that burns me about the gypsies (not the “B to B” — such a marketable name) is that in many big cities like DC and NYC legitimate taxis have to go through the license, the insurance, the car inspection and the taxes. If someone comes in and just sets up business without going through that process, they are stealing and they are lying. They immediately start out with an unfair and unethical price advantage. No wonder the “cartel” is upset. They did it right. You are making up a pejorative name to call them.

    That’s what pisses me off, Jim, and you are pushing this under the banner of some free market bullshit. You are sanctioning cheating and calling it innovation. In essence, you are lying, too.

    As for chesterfield, the place has so few cabs anyway and is so spread out I can’t see how anyone can handle it.

    1. larryg Avatar

      I find myself smack in the middle here. Innovation has a way of undoing how regulations work.

      in the past it was almost stumbled upon but now days, it is sought out.

      govt, regulation, institutions like Universities, corporations, unions, even school teachers are targets of various groups with various, sometimes overlapping agendas.

      it has to play out IMHO.

      we have to go back and make sure the reason why we have regulations is still a good reason and if it is not, we need to fix it.

      We have people in the Fredericksburg area that are now renting out rooms in their houses like they are motels – seriously.

      you can probably find them in Richmond -even Henrico.

      think about this. would you invite a perfect stranger to use one of your bedrooms even if you did get 50 or 100 bucks? But people are doing this right now.

      they have no permits mind you – just a presence on the “web”.

      I think it is nutty as a fruitcake myself but I cannot deny that people want to do this because they do – and they are not that different than a B&B.

      I see all kind of Judge Judy lawsuits in the future – but what has happened is we have all pretty much lost the rationale for some kinds of regs and we now have people who are directly challenging them – and an automatic knee-jerk defense is not going to be sufficient to satisfy them.

      so… we may have to “re-learn” why we have some regulations – the hard way – much like you tell your son and daughters that doing something a certain way will lead to problems – they don’t believe you – and they have to learn it the hard way.

      I think that is where we are right now in this tea party world.

      we’re going to go back and require a lot of regulation to justify itself all over again… we can hate it… but it’s going to happen.

    2. Peter, you make a great case for legal immigration and cracking down on illegals. People following rules, and others not!

      I do think you have identified a big problem. Instead of reforming rules (such as by adding cabs or increasing labor visas), the U.S. tends to stand firm with the rules, but then allow others to undercut those who are properly licensed. I agree it’s wrong to make some people follow the rules, while closing one’s eyes to others who are competing by cheating.

  9. larryg Avatar

    I will say this. If a convincing case could be made that urban congestion could be affected in a positive way by unrestricted p2p services, I’d certainly want to know more.

    I would be willing to trade less regulation for making serious inroads into urban congestion – smart growth, even.

    that’s how you change people’s minds – like mine on the issue.

  10. Peer to peer works as well as it does now in large part because of the kind of consumer attracted to it. Somewhat adventurous, willing to deal with rough edges, and focused on value. And it’s also the kind of market that I’d generally trust renting my car to, I suppose.

    But as it grows, we start moving towards a market where some of the regulations of the incumbent industry make sense. Me, I’d happily see the DC Taxicab Commission nuked from orbit (on general principle), but if Uber were going to be its only replacement, you can bet I’d support reinstating at least half of the Commission’s former regulations.

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