Friction is something that I talk and write about a lot. Its abundance in payments and commerce is what inspires innovators to challenge a friction-filled status quo and create something new. But friction can also be what sidelines those who set out to eliminate one friction, only to create newer, more onerous ones in the process.
I’m sure all of you have your favorite examples of those — and I’ve written about many of them.
Part of the complexity is that what bugs one person or business may not necessarily bother anyone else.
For an innovation to successfully solve the “friction problem” and scale a business, it must first identify problems that are big enough — and that seriously bug enough people — for consumers or businesses to ditch what they do today and move without turning back to that friction-free alternative.
That can be complex — just ask consumers.
The Experience Project did last year. It asked its 67 million members to submit a list of 100 things that really bugged them. This once-free social networking site, over the course of the 11 years it existed, assembled millions of people who freely shared their experiences with each other and the entirety of the web. The list of 100 things in life that drove them crazy was one of them.
Some of the things on those lists seemed awfully personal (“My ex-boyfriend” or “When you are forced to eat disgusting food”), while others seemed a little petty (“People who bore me”). One made me pause (“People who tell long, boring stories and can’t tell you are bored”). You’d tell me if I bored you, wouldn’t you?
Other things like “[getting] stuck behind someone walking slowly in a narrow area” or “That woman who always parks her van so that it blocks the driveway to my kid’s school pick up area” or a favorite for all of us payments fans “[going] to the grocery store, load[ing] your cart with groceries, scan[ing] all of your stuff and realize[ing] you forgot your debit card,” are annoying but don’t rise to the level of the mega friction-filled experiences that might motivate a would-be innovator to quit her day job and give up her life to solve for it.
Two that didn’t make anyone’s list last year surely are — and were.
Trying to get a taxi in any big city around 4:00pm in enough time to make your flight home.
Calling the taxi dispatcher at very-early-o’clock in the morning, and well in advance of needing a pickup for that trip to the airport, only to have the taxi never show up.
Those things probably didn’t make anyone’s list because that’s a friction that Uber’s founders identified in 2009 and solved when they launched the Uber carsharing app.
B.U. (Before Uber), those two things created enormous friction for anyone needing a ride to a meeting or to the airport or anywhere else — and who needed to get to their final destination on time. And for those whose only options were taxis (cheap but totally unreliable) or black cars (expensive and required scheduling well in advance) or driving (time-consuming, inconvenient and pricey in a city that was not the passenger’s home town), most people were forced to trade one miserable set of frictions for another.
Before Uber in Boston, where I live, trying to get a taxi reliably wasn’t only friction-filled, it was infuriating much of the time — something that a study conducted by the city of Boston in 2013 on the taxi industry bore out. The study was published one year after Uber set its drivers loose on the road in Boston and taxi drivers collectively stomped their feet over the fact that Uber was cutting into their business. The report’s objective was to create a fact-based analysis of the state of the taxi industry, and to highlight areas for improvement.
The citizens of Boston didn’t need a government report to tell them what was wrong, because taxi service in Boston was pretty pathetic.
The report pointed out that for anyone with the hope of getting a cab in 20 minutes or less between 4:00am and 2:00pm in Boston, had a 10 percent to 30 percent chance of being out of luck. That was on a day without bad weather, something Boston never has. Haha. For those leaving the office at 6:00pm or a restaurant after dinner at 8, 9 or 10:00pm and who had hoped to grab a cab in 20 minutes or less, half the time you could, and half the time you couldn’t.
In other words, it was a total crapshoot that required stepping into the street and raising one of your hands to hail a taxi while crossing all of your fingers on the other.
For those who wanted to improve the odds and call ahead, well, that didn’t make much of a difference. The report concluded that 78 percent of those would-be passengers were connected with a taxi — and only 87 percent of that 78 percent could count on a pickup within 20 minutes of the call.
About those dispatchers.
The odds that a driver would even get one of those calls increased significantly if that driver wanted to come to your neighborhood or it was a long trip (and the fare high enough) or the driver had paid the dispatcher to move him to the head of the line when those calls came in. While the report said that greasing the palms of dispatchers didn’t happen *that frequently* they said it was enough of a problem that it needed to be further examined.
Let’s say that you were lucky enough to get a taxi after all of that. When it came time to pay, somehow those credit card terminals in the back of the cab never seemed to work. Drivers made it clear that they preferred cash and even offered to drive riders to an ATM to get it. Passengers experienced an uncomfortable couple of minutes in the back of the taxi trying to pay — adding even more time to what had already been sunk into the trip.
Customers who didn’t like the way they were treated were given lots of very good information about how to complain — websites, plaques inside of taxis with numbers to call — and the promise that all complaints would get a response. In about ten days. Customers, said the report, typically waited three times longer to get a resolution, mostly because the process was set up to slow-roll things: ten days to respond after that an offer to talk about a resolution during a two-hour window set aside on a specific day of the week.
I mean, what’s not to love about that customer service, right?
Boston taxis certainly excelled in one thing though: creating uncertainty for its passengers.
Uncertainty about how long it would take to get a taxi — or if they would at all.
Uncertainty about whether the taxi they were climbing into smelled like the driver’s last meal or had been cleaned and vacuumed in the last three years.
Uncertainty about whether the driver was paying more attention to the road they were driving than the cell phone conversation they were having while driving.
Uncertainty about whether there’d be a hassle at the end of the ride over payment and “broken” credit card terminals that “worked the last time — I am not sure why it’s not working now.”
And even the uncertainty whether complaints made would ever be resolved — and to the satisfaction of the consumer.
So, in drives Uber with a ridesharing solution that solved for the one friction that bothers people more than any other and motivates them to make a permanent change: uncertainty.
With Uber, passengers had certainty about when their car would arrive since they were given a pickup time, could visually track their car’s progress and communicate with the driver as they were making their way to the pickup.
With Uber, passengers had certainty about the quality and cleanliness of the car into which they were getting.
With Uber, passengers had certainty that at the end of the ride they could hop out of the car without the payment mumbo jumbo that just about every merchant ever since has aspired to replicate.
Not surprisingly, the people of Boston took to Uber like tourists take to the Cheers Bar when they come to town. And not surprisingly, it didn’t take long for Uber to put a dent into the taxi business here.
In 2015, three years into the Boston Uber experience, a TechCrunch study reported that taxi ridership had declined 22 percent in the first part of the year, and revenue by 25 percent. In March of this year, The Boston Globe wrote a story about the union stepping up its pressure on Mayor Marty Walsh to “do something” about the plummeting value of a taxi medallion. A taxi medallion in Boston in the B.U. days fetched $700,000; today, it’s worth roughly $100,000.
Now, it’s the “do something about it” hue and cry that surrounds Uber at just about every turn — and puts the Uber Experience at risk — for consumers, for drivers and for the company itself.
“Do something” that, if the taxi owners have their way, would reintroduce frictions that would make Uber look more like the dysfunctional taxi industry than making the dysfunctional taxi industry look more like the option that people all over the world would rather use, if given the choice.
Regulators are being pressured by taxi owners who’ve seen the economic impact of having a competitor with a better service that consumers liked better enter their space. The archaic medallion business model that once all but guaranteed an unlimited financial upside by limiting supply is failing everywhere in the world. Taxi owners who thought they had the supply side part of their business locked up never considered the demand side of the equation — and what would happen if a new carsharing supplier entered the market that gave them a better experience. Once Uber did — and did — their economic model began to unravel as demand and supply shifted the other way.
The latest regulatory shoe to drop for Uber is the recent European Court of Justice (ECJ) preliminary ruling on Uber’s legal right to operate in the EU. The Advocate General — a judge who tees up a decision for the rest of the judges and whose views are usually accepted — made news when he decided that Uber is more like a transportation company than just a digital ridesharing app.
Because of that decision, the European Commission has to leave it to each country to decide the future of Uber (which, in most of those countries, is the UberX equivalent) based on their own transportation regulations and labor standards. The first country in line will be France, which has long claimed that Uber is illegal, and in 2015 accused Uber of engaging in “economic terrorism” by providing a service that consumers apparently liked and used enough to cause a 30 to 40 percent drop in taxi revenues. If the ECJ adopts his decision or something close to it, each EU country can decide to ban Uber altogether, or, you guessed it, make sure Uber suffers all the same frictions as those good old taxis.
Meanwhile Uber’s drivers are complaining.
They want to make more money and be relieved of some of Uber’s rules. In an effort to respond to the barrage of recent PR problems facing Uber, interim management has moved ahead with a number of things that are intended to address driver’s concerns — being paid when rides are cancelled and for waiting longer than five minutes for their passengers to hop in the car.
And adding in-app tipping — the one thing that may have the potential to do more damage to Uber by destroying the Uber Experience that its passengers have grown to love than any regulator anywhere in the world.
People don’t like tipping in any circumstance, which is a decidedly American thing. People don’t like it because it creates uncertainty — uncertainty about how much to tip, when to tip and what happens when you don’t. When Uber launched, one of its selling points to passengers was that the fare was all inclusive — tipping was an option. Passengers just hopped out of the car once they reached their final destination. That didn’t stop many passengers from slipping cash to a driver when it seemed appropriate though and many, including me, did.
But last year, tipping as an option started to feel a little less optional and more like the elephant in the car that no one knew how to address. Uber drivers began putting signs in their cars suggesting tips were appreciated. That began to create uncertainty for passengers since they didn’t know what to do — tip or not tip — and what would happen if they didn’t. Blog posts circulated about drivers rating down passengers who didn’t tip. Consumers, particularly Uber Black customers, who were already paying more for the service and did slip a $5 or $10 spot at the end of ride now wondered if that was now an added expense to the trip. Tipping just made the end of the ride a little more awkward because the passenger wasn’t sure whether hopping out of the car without any fuss or muss or hassle — the Uber Experience — was still the right thing to do.
And where there’s uncertainty, there’s friction.
Uber says that it’s designing the tipping feature so that passengers can still hop out of the vehicle without having to tip and that they have 30 days to add one. They also say that it will have no reflection on individual ratings since drivers won’t know who tipped and who didn’t — only that they got a tip.
As a passenger, for some reason it sure doesn’t feel that way.
For an innovator who showed the world what it was like to create a truly delightful, friction-free experience — one that was worth paying more for — it seems like passengers are all of a sudden taking it on the chin — and from all sides.
Regulators would like to see Uber to behave more like the taxis they happily ditched for Uber. If they are successful then passengers are stuck with the worst of all worlds — the same lousy taxis and Ubers that are forced to operate like they do. Let’s hope they’re not.
And now, Uber wants to shift some of the cost of dealing with its latest PR issues to the passengers who’ve helped them build their business – in 300 cities worldwide – and stuck by them thru it all because they truly love the service that Uber provides.
Viva la friction!
And damn the consumer, I guess.