A recent piece on Quartz claimed that the secret to the "Uber economy" is wealth inequality - but when I look at our industry, I just don't see the cause and effect described.
The article says, "it did not take technology to spur the on-demand economy. It took masses of poor people." This bleak outlook is then connected to research from the Brookings Institution that says San Francisco had the largest increase in inequality between 2007 and 2012.
Sure, inequality can be a factor in any marketplace but it isn't the cause or "secret" behind why we're able to get taxis or 4-course meals to our doorstep in minutes. Marketplaces have been around since the start of recorded history - people have always been buying and selling (or bartering) food and services.
What drives a marketplace is that others have what we want or need, and we seek out a place to find it. The "on-demand" part is where technology comes in - developers building smart applications that creatively speed up the time it takes for something to appear. Just for fun, let's add another phrase to the lexicon, because there aren't enough already... I'll call it the "Genie Economy" where we tap our phones three times and get what we want.
The article seems cynical toward the middleman, the people who "insinuate" themselves between the buyer and seller for profit. But it's not the opportunistic middleman or the wealth gap that's the driver. The reasons for the explosion of these services are really no secret and should come as no surprise...
Sellers Need Stores
You could make the tastiest souvlaki or play the sickest Led Zeppelin riffs, but if no one knows about it you'll never earn money from doing it, right? Sure, people list their services on marketplaces to earn money -- for some that income could mean feeding their family, for others it could mean a spa pedicure. Either way, the growing number of mobile marketplaces give more people a platform to sell products and services both locally and internationally.
Every day here at GigMasters, our members tell us how they are so happy that they get to earn money doing something that they love, and that they rely on the leads that we send them. Some even go so far to say that they wouldn't have the business they have today if it wasn't for our platform that attracts thousands of party planners to their services. Doesn't supply/demand hold true whatever talent or skills you bring to the table - whether that be delivering food, writing a book, managing a company, or photographing a wedding? I don't see the role of income inequality in this conversation, other than that mobile marketplaces enable more connections to be made between buyers and sellers.
The Uber drivers I've met so far say that they're working more and earning more because of Uber - the efficiency of being alerted for rides beats waiting around at taxi stands or driving around aimlessly until someone flags you down. And, undoubtedly, this speed is driven by creativity and technology. Creativity comes in the form of people dreaming up new ways of doing things differently, and technology enables those ideas to become reality.
Buyers Buy Stuff
Buyers of all types exist, at all ends of the income spectrum. Buyers seek out what they need. Buyers find new things to want - and if they want it badly enough (and can afford it) they buy it. It seems that the inequality becomes grossly exaggerated when people use on-demand marketplaces to have a single bottle of coke delivered, as the Quartz reporter says he did when he lived in Mumbai. But really, isn't it just that we are all delighted when we find easier ways to purchase things that we want, whether that be groceries or massages?
Sure, some of these businesses will go away after their VC funding runs out, as Liz Gannes discusses in her Instant Gratification Series, but that's not the "Uber-Economy," or any other "Insert-Buzzword-Economy" at play. That's just the economy as usual, powered by investors.
So, thanks to technology, I am able to connect and write a response to this piece and openly debate the reasons for today's consumer behavior.