The Best Investment is to Hire a Team of Lobbyists

Late last year, a leaked screenshot of Uber’s Internal Revenue and Ride Numbers indicated that they were on track to make more than $200M in revenue for 2013.

They started last year serving 14 US cities and ended the year with 25. Given unchecked expansion, it won’t be long before Uber is eating a substantial chunk of the $11B taxi and limo industry.

Ridesharing proponents argue that the taxi industry should take this as a cue to reform their third-world system. If hailing a cab in SF wasn’t such a crappy experience, nobody would need Lyft or Uber.

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Unfortunately, repairing the existing system is a poor investment of resources, from the perspective of industry incumbents.

A far more effective option: Spend a few hundred thousand hiring a team of lobbyists to further your cause. The lobbying team identifies key policymakers, and throws fundraisers to help them raise campaign money. Your team becomes a big donor, the candidate is elected, and industry regulation is at your mercy.

Last week, the Seattle City Council whimsically voted to enforce new legislation that will limit app-based transportation companies to 150 cars on the road at any given time in an artificial suppression of supply.

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If new market entrants are blocked, the hundreds of thousands spent influencing public policy can lead to billions saved in the long run for incumbents. Former lobbyist Jack Abramoff assures that a successful lobbying effort achieves returns that are multiplied hundreds of times over the initial investment. This is even better than the return that Uber’s Series A investors got.

Transportation lobbying is a $230M industry with customers from all the major automotive manufacturers, labor unions, and transit authorities. Disruptive businesses claim that the current transportation system is broken, but when hiring lobbyists represents a better financial choice than trying to fix the transportation industry, maybe something else is broken.

See Also:

Corruption Index Indicator: Cities That Ban Ride Sharing To Protect Taxi Incumbents –techdirt

How Corruption Is Strangling U.S. Innovation –HBR

abramoff

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