Why Uber and AirBnb Are Slow Motion Wrecks

I love Uber. I use every time I can. I’ve never used AirBnb but friends tell me it is great.

But I think they are very flawed as businesses. Here’s why.

Take Uber for example. They call it ride sharing. But it’s not. You pay to sit in that car. That’s called a taxi.

When you pay to sit in a car with a stranger, that’s called a taxi. All the semantic run arounds doesn’t deny that fact.

Uber is a taxi with a great app. I love the app.

But they exist because regulators and competitors were caught off guard.

Uber largely exploded in size because they built a business model that doesn’t have all the costs of a regular taxi.

Where are the costs of:
1. Insurance. What happens when you are in a wreck in an Uber car?
2. Regulation. People like to say regulation makes things better. Even assuming that is true, which I doubt, it costs money. Uber is not regulated so no costs.

And so on.

So the savings you get using Uber are simply the cost savings from those items.

Some cities have enforce these costs on Uber and, guess what, no bargain anymore!
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AirBnb is similar. I’m sorry but when you pay someone to stay in their house, it is a hotel, bread and breakfast or something. It is not house sharing unless you get it for free.

Once again, I’m thrilled with having alternatives such as AirBnb!

But the regulators and entrenched interests are fighting back. They are enforcing hotel regulations and taxes on people they catch. So the economics of the company disappear.

You can look for regulators to simply go to AirBnb and search for the listings and send out enforcers to collect taxes and fines as a way to make money. Easy! Your listing on AirBnb is effectively an admission of guilt! Busted!

More and more cities will do this.

Both companies will pivot as the heat gets hotter.

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