The practice of hiring vehicles for transportation goes back to the 17th century.
Dateline London 1635, the Hackney Carriage Act was the first legislation passed controlling horse-drawn carriages for hire in England.
Dateline Paris 1640, Nicolas Sauvage offers horse-drawn carriages and drivers for hire.
The taximeter was invented by the German inventor, Wilhelm Bruhn in 1891. The taximeter measured the distance or time a vehicle traveled and allowed an accurate fare to be determined.
It is widely believed Gottlieb Daimler built the world's first dedicated taxi in 1897 called the Daimler Victoria. The vehicle came equipped with the newly invented taximeter and was delivered to Friedrich Greiner, a Stuttgart entrepreneur who started the world's first motorized taxi company.
By the end of the 19th century, automobiles began to appear on city streets throughout America. It was not long before a number of these cars were hiring themselves out in competition with horse-drawn carriages.
Soon horsepower was removed from horses, and natural resources would be the horsepower to move vehicles. Gas-powered taxis came first to Germany, Paris, and London, and then to New York in the year 1907.
The Travis Kalanick of his day was Harry Allen.
Allen created The New York Taxicab Company and imported 600 gas-powered taxis from France in 1907, and he borrowed the word "taxicab" from London.
To ensure his vehicles were full and quickly recognized, he painted his taxis yellow.
Flash forward over 100 years later, and we now have Uber.
A company which owns no vehicles.
A company which employs no drivers.
A company with a valuation of $120 billion.
This valuation makes the company one of the most valuable transportation companies operating anywhere on the planet.
Consider Uber's valuation is more than General Motors, Ford Motor Company, and Fiat Chrysler Automobiles combined.
At a $120 billion, Uber's is worth more than double the average of companies in the NASDAQ 100 Index on a price-to-2018 sales basis. It gives the ride-hailing company a multiple of about 12 times, compared with an average of 4.8 times for the index.
Big numbers for sure, but why?
Three reasons:
1. Global scale
2. Reduced friction
3. Reduced anxiety
Uber's global scale is stupendous.
Where Harry Allen was limited to the five boroughs of New York City, current Uber CEO Dara Khosrowshahi can provide transportation in 65 countries and over 600 cities worldwide, plus the company completes 15 million trips each day.
Uber has access to 3 million drivers who can move passengers from airports to city centers, from nightclubs to after-hour parties.
Also, as a consumer of the service, your experience and expectations can be harmonized regardless if you are in Indianapolis, London, or São Paulo.
Uber has dramatically reduced friction.
The premier etiquette organization, The Emily Post Institute, yes there is such an institute, recommends tipping your taxi driver between 15 and 20 percent of the total trip fare. Plus If you've traveled with luggage and your driver has helped you, it's proper etiquette to tip more. Beautiful, no set guidelines.
Also, you'll need to find out ahead of time if your cabbie accepts a credit card. If you don't make sure and you don't have enough cash, you'll have to leave your luggage and gear as collateral as you stumble around Singapore's Changi Airport at o-dark-thirty to find an ATM.
Hop in Uber anywhere, anytime, and you'll never need cash. You'll never need to fumble with credit cards and swiping. You can tip as suggested and even add commentary on the state of the car's interior and the cabbie's choice of music.
Uber has significantly reduced anxiety.
Most places allow a taxi to be hailed or flagged on the side of the street as it is approaching. Another option is a taxi stand. Finally calling a central dispatch office for a taxi ride is an option.
So ringing up a ride isn't new, even if it is via an app. Get an Uber is the same as call a taxi.
Uber didn't create new technology; it deployed consumer behavior tactics. Before 2009 users of taxis had no knowledge when a cab would appear on their street, when a taxi would arrive at your door, or who is behind the wheel.
Now with a comfort inducing screen and the anxiety-reducing Pac-Man-like vehicle avatar displaying your ride shuffling across a map to pick you up, you now have knowledge.
The knowledge that your ride will appear, when it will arrive, and who is behind the rule - plus the most anxiety reducing tactic - you can inform family and friends where you are in your journey and when they can expect you - further reducing their stress.
Lessons here for entrepreneurs and thought leaders:
Few ideas are new. Uber is executing the 17th century idea of taxis and the 19th century idea of telephones.
What is new are the tactics Uber is employing to execute these old ideas.
Having a service or product that allows you to be global from day one.
Having a service or product that allows you to reduce end-users burdens.
Having a service or product that allows you to reduce end-users uncertainties.
-Marc
Marc A. Ross specializes in thought leader communications and global public policy for public affairs professionals working at the intersection of globalization, disruption, and politics.
Does a Coach or CEO matter?
When it comes to management, the answer is an unequivocal no.
Soccernomics, the beautiful book written by Financial Times Columnist Simon Kuper and University of Michigan Professor Stefan Szymanski, makes the convincing case that "it turns out that coaches and managers simply don't make that much difference."
When studying years of soccer matches, the authors conclude that "the vast bulk of managers appear to have almost no impact on their teams' performance and do not last very long in the job. They seem to add so little value that is tempting to think they could be replaced by their secretaries, or the chairman, or by stuffed teddy bears, without the club's league position changing. The importance of managers is vastly overestimated."
How can this be?
As a culture, we laud coaches and CEOs for their superior management skills. Give them deity-worth reverence. Put them on the covers of magazines, see them interviewed on television repeatedly, and even some nations elect them to the top government job.
The Great Man Theory of History happening in real-time.
What really matters are the players and the employees. The market makes this clear.
Johan Cruyff, the famous Dutch international soccer player who went on coach FC Barcelona to four straight La Liga titles and a Champions League title, said simply, "If your players are better than your opponent, 90 percent of the time you will win."
Those that can perform a specific task repeatedly, with few flaws and consistent enthusiasm are treasured and well compensated by the market. Often there is a shortage of the best talent, and there is massive competition to secure their services.
You see, soccer teams have perfect market information on thousands of players. It is clear who on the pitch can play and who can't. Either you can play soccer, or you can't play soccer. Either you can perform the task at hand, or you can't.
Soccer players more or less get the job they deserve.
However, when it comes to coaching this is not the case. The market for managers does not work well. Many of the best managers rarely get proper attention while numerous managers who add no real positive value continue to get promoted to better-paying jobs.
You see this off the pitch as well.
According to a Wall Street Journal analysis of data from MyLogIQ LLC and Institutional Shareholder Services, among S&P 500 CEOs who got raises last year, the 10% who received the most significant pay increases scored—as a group—in the middle of the pack in terms of total shareholder return.
Similarly, the 10% of companies posting the best total returns to shareholders scored in the middle of the pack in terms of CEO pay, the data show.
Quoted in the Wall Street Journal, Herman Aguinis, a professor of management at George Washington University School of Business, reinforces this point, “Stars are often underpaid, while average performers are often overpaid.”
The disparity between CEO compensation and performance appears to persist over more extended periods as well. Professor Aguinis analyzed the earnings of more than 4,000 CEOs over the course of their tenures against several performance metrics and found virtually no overlap between the top 1% of CEOs in terms of performance and the top 1% of highest earners. Among the top 10% of performers, only a fifth were in the top 10% in terms of pay.
On and off the field more coaches and CEOs are more sun god and head of public relations, less visionary executive.
The forte of best-paid coaches and CEOs is often not winning matches or generating more revenue, something frankly they have little control over, but keeping all the various constituencies united behind them. Hence why as a culture we frequently prize charisma over competence.
Chris Tomlinson, a business columnist for the Houston Chronicle, penned recently, "There is also no shortage of CEO candidates and little competition for them. Few companies need CEOs with unique skills, and boards tend to buy charisma rather than skills anyway. The general economy and market forces within an industrial sector are far more accurate predictors of a company’s performance, regardless of how much the CEO earns."
All of that being said, I do think thought leadership and vision matter immensely, regardless of how it pays.
Leadership is different from management, but that's for a separate post.
-Marc A. Ross
Marc A. Ross is the founder of Caracal Global and specializes in global communications, thought leader management, and event production at the intersection of international politics, policy, and profits. Working with senior executives from multinational corporations, trade associations, and disruptive startups, Marc helps business leaders navigate globalization, disruption, and American politics.