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Arthur T Knackerbracket has found the following story:
A lot has been written on Uber's disastrous failure in Japan. Most authors point to the fact that taxies in Japan are abundant, clean, safe and affordable. While that's all true, it misses a more important truth.
The success of any market entry depends only partially on things like product-market-fit, sufficient capitalization and local competition. Sometimes the secret to success lies simply in not doing what Uber did
You see, Uber represents a new kind of startup. The very thing that makes them so successful in America dooms them to failure in Japan, and watching how this has played out illustrates an important difference in how disruption takes place in America and in Japan.
For any of this to make sense, we will need to put aside the feel-good fluff of the absurdly named "sharing economy" and understand that both Uber's business model, and Airbnb's as well, revolves around a kind of legal arbitrage. Their significant price advantage comes from the fact that they choose to ignore a great many laws and regulations that their competition must follow.
Airbnb hosts routinely ignore zoning laws, hotel taxes, safety regulations and insurance requirements. Most Uber drivers do not have taxi or chauffeur licenses, obtain commercial insurance, pass safely inspections or comply with ADA regulations.
The exceptionally clever part of the model is that the bulk of the rule breaking is not done by the companies, but by the drivers and the hosts. These people are not employees, so Uber and Airbnb can't be held responsible for their actions. Legally speaking, Uber and Airbnb are just platforms, and the hosts and drivers are operating independently and of their own volition.
Obviously, that's nonsense, but this legal fiction provides both businesses with a powerful legal shield.
[Continues...]
Authorities were initially reluctant to aggressively target the companies because they were not actually breaking the law, and targeting individual drivers is politically difficult. Back in 2012, officials in Washington D.C.arrested an Uber driver, and the Uber-sponsored backlash was swift and punitive. Uber was seen as an innovator being held back by anti-progress bureaucrats picking on hard-working Americans just trying to make ends meet.
And here, the model becomes very American.
Uber now employs hundreds of lobbyists and spend tens of millions of dollars recruiting friendly legislators to rewrite these laws. They simultaneously run aggressive publicity campaigns painting non-cooperative legislators as corrupt and in collusion with the taxi and hotel industries.
They have managed to woo legislators to their side, but they are simultaneously fighting a scorched-earth campaign against the regulators in courtrooms across America. Those bureaucrats may be slow, but they get to you eventually.
[...]
Mistrust of government is pretty much universal, and that's a good thing. Outside of the United States, however, people trust corporations even less.
Americans seem uniquely credulous of corporate claims of being the true champions of the consumer and of regulations existing primarily to benefit politicians and their cronies.
In the rest of the world, however, when Uber drives into town claiming to be a white knight who will fight the government regulators in order to provide good jobs and affordable services, people simply don't believe them. Nor should they. It's a laughable claim.
The U.S. playbook assumes that consumers will come down on the side of the disruptor, but that doesn't automatically happen in Japan.
In most of the world, when a company claims that labor protections, environmental laws, tax laws, insurance regulations, and licensing requirements all need to be changed so that they can do business, that company is viewed with extreme suspicion.
Uber grossly over-estimated the amount of grass roots support they would receive when they entered the Japanese market. They've since regrouped and are now taking a more patient and conciliatory approach to winning over Japan's consumers.
However, it's too late because ...
More accurately stated, it's not OK to break the law by yourself in Japan. If you've attended a movie in Japan or seen baked sweet-potato vendors driving around Tokyo with an exposed fire in the back of their trucks, you understand that many laws can be broken as long as everyone breaks them together.
America jails or fines individuals who break the law, but corporate non-compliance is different. In fact, there is a school of thought in the West that when the fines are cheaper than the cost of compliance, it is not only OK to break that law, but that the CEO has a fiduciary duty to break the law.
Fines are simply a cost of doing business. No executive is going to be fired over a few thousand dollars in fines caused by an action that saved the company millions.
Things don't work that way in Japan. People don't make a strong distinction between the actions you take as a CEO and the actions you take as an individual. You are either an honest, trustworthy person or you are not.
[Ed Note: I found this article to be extremely interesting, albeit long. A read of the entire article is a good idea, as it highlights cultural differences as well as legal ones.]
(Score: 4, Insightful) by mth on Sunday August 28 2016, @12:09PM
The exceptionally clever part of the model is that the bulk of the rule breaking is not done by the companies, but by the drivers and the hosts. These people are not employees, so Uber and Airbnb can’t be held responsible for their actions. Legally speaking, Uber and Airbnb are just platforms, and the hosts and drivers are operating independently and of their own volition.
Obviously, that’s nonsense, but this legal fiction provides both businesses with a powerful legal shield.
There's no "obvious" about this "nonsense".
I'd say it's non-obvious nonsense. Uber can't operate without its drivers and the drivers can't operate without Uber, so they form an organization regardless of the legal construct used. But it's not obvious enough to be prone to immediate shutdown.
And that brings to me to what I think the point of this article was. It wasn't to inform us about a newsworthy failing of this particular company or business model to penetrate another market. That's just the hook. But instead to spread FUD about Uber and its approach (and maybe some bashing of other targets of opportunity that the author doesn't like like libertarians and corporations). And with such a blatant slant, just maybe the author is exaggerating the difficulties facing Uber as well.
I think you're missing the point. US tech companies like Uber use a disruption plan of initially ignoring laws and stalling with legal tactics while they try to grow as fast as possible. Later, when it's time to write the new laws, they'll be influential enough to get the laws they want. That plan won't work in countries where regulators have more teeth, operate quicker and corporations have less sympathy from government and the public.
That doesn't mean that disruption of markets is impossible in those countries, but a successful strategy would be based on dialogue and negotiating instead of defying regulators. There are many markets that could use some disruption and I think it's inevitable that they will modernize sooner or later. But the US approach doesn't apply everywhere.
(Score: 1) by khallow on Sunday August 28 2016, @12:23PM
I'd say it's non-obvious nonsense. Uber can't operate without its drivers and the drivers can't operate without Uber, so they form an organization regardless of the legal construct used. But it's not obvious enough to be prone to immediate shutdown.
Somehow I doubt you're trying to claim that organizations are against any sort of regulation. Merely being organized is not enough for a lot of these regulations to be relevant, particularly, any having to do with employment.
I think you're missing the point. US tech companies like Uber use a disruption plan of initially ignoring laws and stalling with legal tactics while they try to grow as fast as possible. Later, when it's time to write the new laws, they'll be influential enough to get the laws they want. That plan won't work in countries where regulators have more teeth, operate quicker and corporations have less sympathy from government and the public.
Which is fine as far as it goes. But the article goes through some interesting meme dynamics and shows biased hostility towards Uber which is what I was writing about.
That doesn't mean that disruption of markets is impossible in those countries, but a successful strategy would be based on dialogue and negotiating instead of defying regulators. There are many markets that could use some disruption and I think it's inevitable that they will modernize sooner or later. But the US approach doesn't apply everywhere.
It is interesting that Uber tried a one-size-fits-all strategy here. It'll be interesting to see if they can recover from that.