Commentary
When It Comes To Startups, NYC Is More Like Gotham
- by Joseph Jaffe , June 6, 2013
On the one hand, the city of New York, led by a mayor with a proven track record of entrepreneurial success, pushes the startup agenda with a bold agenda of building on its #2 status in the U.S. and possibly overtaking Silicon Valley as the hot bed of startup success.
Last month, John Battelle and Brian Monahan’s OpenCo. Initiative rolled out in the city, with Robert K. Steel, Deputy Mayor for Economic Development, espousing NYC’s startup surge and Rachel Sterne Hoat, the City’s Chief Digital Officer, doing likewise.
However as the one hand giveth, the other taketh away, with a judge ruling two weeks ago that airbnb violates NYC’s “hotel law.” This ruling is the third in quick succession, joining the likes of RelayRides and Sidecar on the sharing “sidelines.” These rulings continue to throw obstacles in the path of startups whose time has come. Treating hosts as common criminals and scaring off potential visitors is not exactly the best way to say, "I Heart NY," is it?
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There’s a hashtag to voice disapproval with @mikebloomberg to stand up and #defendsharing.
So what is going on here?
Let’s start with the “micro” part of the discussion. New York might be the greatest city in the world, but it is also grounded in so many legacy and incumbent processes, many of which are broken; ingrained and traditional unions and associations; and archaic systems that cannot be serviced by the tenured organizations that watch over them.
All this dysfunction effectively translates into fear of the unknown, of the new and exciting startups that are turning traditional business models on their head, disrupting the status quo and rewriting the rules as they go along. That’s beyond scary to the establishment, but it shouldn’t mean pushing back and delaying the inevitable.
And it certainly doesn’t mean fining Airbnb hosts $2,400 and making them feel like common criminals -- or at the very minimum, Napster users.
Or take Uber, the incredible connection engine between commuters, car services and cabs, which is undergoing similar pushback from the city. A month ago, no doubt influenced by -- surprise, surprise -- the Taxi & Limousine Commission, a judge blocked an order that would have allowed Uber, temporarily suspended, to once again do business in the city. In other words, you're back at square one when you can’t find a yellow taxi when you need one!
Make up your mind, NYC. If startups are welcome in the Big Apple, then you have to be prepared to support their ability to do business -- otherwise, what’s the point?
The very nature of the startup is to challenge an inefficient business model, solve a problem or address an unmet need. Oftentimes, the solution might sting a little. The truth hurts, but as we’ve learnt the hard way too many times now with businesses and business models crumbling due to lack of innovation, progress and evolution, it’s better to deal with it now, compared to denying it altogether, hoping it goes away or delaying the inevitable.
The second implication is that startups may look elsewhere for their “home” if the city does not support them beyond tax breaks, shared workspaces and less red tape. Charity begins at home. IF the city extends a hand, but then slaps us across the face with it, our welcome seems short-lived and far from authentic.
On the macro level, this is bigger than New York City. There’s a story about the sharing economy and the natural level of discomfort that it brings to the table. It is extremely unique and highly disruptive. And of course the common thread of the old guard pushing back until eventually the sea of change becomes a crushing tidal wave.
None of this needs to happen. To use one more popular saying, “If you can’t beat ‘em, join ‘em.” I for one welcome the day where I can actually catch a cab at 4 p.m., avoid paying $800 for a matchbox at the W Hotel, or get from A to B without worrying about alternate-side-of-the-street parking!
The current meme that tech startups are the panacea for Americas urban problems and that city governments should accommodate any disruptive business plan they hatch is both arrogant and ignorant. San Francisco is the startup epicenter and it’s the most unequal place in America. It’s becoming a Tale of Two Cities. Private-school attendance has surged as public schools crumble. In the past year rents have doubled in some areas and homelessness has risen 20%. Tech workers have opted out of public transportation in favor of their private fleets of shuttle busses. If this trend line continues it’s not a good sign for America’s future. I have no issue with tech companies ( I run one) but I’m wise enough to realize that in the end they are just companies out for their own self interest .
Phillip - thank you for the thoughtful comments and diverse perspective. Definitely presents another side to the story.
I don't think startups are being opaquely altruistic...they're in it for the money, but from a consumer standpoint, a startup like airbnb benefits both host and customer.
My perspective is that trying to quash an idea whose time has come inevitably ends with only one outcome.
Sorry, but I would be really be upset if my neighbors start to rent their spare rooms or sofas to strangers. This is not about start-ups. Plus, there are township regulations about how many people are allowed to reside within a certain square footage. This doesn't mean you can't have a known visitor(s) for a few days, but to permanently have too many people living within a certain space brings down the value of the real estate. You can add in insurance limitations and coverage. Accident and your Uber passenger gets hurt and you don't have insurance as a taxi service and you can lose everything you own.
Paula - you bring up good points, but surely the goal is to resolve these "growing pains"? In the early days of any disruptive technology or idea, there are always missteps and growing pains. These get self-regulated over time. Take Kickstarter for example, they have a set of very regimented rules/terms and conditions that are designed to prevent abuse, standardize the process and manage expectations. Why not solve for this instead of trying to quash it in the process?
People tend to forget why ‘archaic systems’ like hotel and taxi regulation exist. They exist to protect consumers from getting ripped off or hurt by unscrupulous Taxi and hotel operators. Who are you going to go to when an airbnb experience turns bad -http://allthingsd.com/20110729/airbnbs-rental-nightmare-ends-in-arrest-and-one-still-very-unlucky-renter/ - or your Lyft driver gets into a serious accident http://sfist.com/2013/02/07/an_argument_against_ride_sharing.php ? Oh, I know, write a scatting Yelp review that will fix it.
Great article Joseph! Disruption is hard for incumbents unless they make efforts to disrupt themselves. The overwhelming response to really great services seems like it has the power to turn the tides. I mean, Uber will eventually prevail because even the taxi commission members hate their lives on a rainy day in NYC...
Well, what I'd like to do is create a multistory factory sewing shirtwaists, and I feel that requiring me to have fire escapes, fire extinguishers, fire hoses, an evacuation plan, good ventilation and minimum wage hampers my "entrepreneurial spirit." Better still, I'd like to use a building not designed or built to support the weight of the workers and machines. This is just government interference with MY creativity! (Amen, Brother Phil!)
Like I said Joseph, it is not about start-ups. This is about having a bunch of strangers in and out of your non rental building in a non rental house. Another example of absolutely not: Those unregulated strangers with their unregulated friends are using building services (like water and garbage disposal) that other people are paying for and may have to pay more for more usage. Those strangers do not know all the rules of that living space. They throw paper towels in the toilet, they walk away and who is stuck with the bills and insurance issues ? And I will not be picking up hitch hiker strangers whether they pay or not. Nothing is worth one ounce of potential grief, let alone pounds. You may want to converse with some PI attorneys before you mistake supporting start-ups for increasing dangerous situations for many in exchange for a few bucks for the few.
I appreciate all your comments and I agree with the ability to regulate an emerging "raw" practice, but I also believe in a balance as it relates to "self regulation". That said, my point is squarely about shutting down a disruptive emerging platform out of fear from the incumbents that stand the most to lose from the innovation. That is all. Cases in point: music industry with respect to Napster or even iTunes. Online gaming on one extreme, but platforms like Priceline on the other.