The public battle going on between City Hall and Uber will probably be resolved and out of the news soon. However, beneath the headline stories is a larger issue. It’s getting less attention but it has a bigger effect on local economies.
I call it the shifting economy. Money is being shifted from local economies to Silicon Valley companies. For every local transaction processed on an Uber-like app, Silicon Valley sharing economy companies charge 20 percent in fees that otherwise would have stayed in our local economy.
It’s no wonder billions of dollars of venture capital has been invested in companies trying to wedge software and fees between a consumer of local services and a provider of local services. At least other large local corporations that have a physical presence in Boise bring value through land development, real estate taxes, rental income, sales taxes, and hiring employees. Sharing economy companies don’t have real estate, don’t pay taxes and they don’t employ their drivers or laborers. What they do bring to our state are lobbyists who want to lower safety regulations to make their business model work.
The Silicon Valley startup mantra is to be “disruptive.” Well, these sharing economy apps are economic disrupters, in addition to business disrupters. It’s a zero sum game where one wins, one loses. They don’t add value in the local services sector or contribute to economic development. We don’t hire more local services just because we can pay within an app. Why is this good for Boise or any other local economy?
This reminds me of the classic Wendy’s ad “Where’s the Beef?” Three little old ladies are in the “Home of the Big Bun” hamburger restaurant admiring the size and fluffiness of the bun. Inside the bun is a tiny slab of meat, a slice of cheese and a heart-shaped pickle looking like a pea on a plate. Then the granny yells out the classic line: “Where’s the beef?” We’re being marketed great packaging, brilliant PR campaigns and shiny apps, but where’s the value to our local economy, the high paying jobs and growth?
Memories are short, but it was only 15 years ago that the Silicon Valley sold grandmothers and widows overvalued stock in worthless companies like etoys, which at one time was valued higher than the whole toy industry. Silicon Valley and Wall Street have some of the smartest entrepreneurs in the world. They know company valuations and how to exploit financial market opportunities. This time around there’s no public bubble, but the transfer of wealth from locals to a select few Silicon Valley and Wall Street investors is happening again.
So what do we do?
We roll up our sleeves and look within our community for leadership. We help each other out and become customers of our local startup businesses. Like the farm-to-fork movement, we need to start a code-to-customer movement. This makes sense today more than ever.
Creating great innovative technology has never been easier and less expensive. Boise and most cities have enough skilled computer engineers and entrepreneurs with dreams of launching a startup. We don’t have Silicon Valley’s capital but we do have customers: you, me, local government and public services and all businesses and citizens of Boise. Let’s start being our own customers and helping our local startups survive and thrive. We need to take back our customers and keep our dollars local. We don’t need Silicon Valley money, we just need to think locally. Instead of using the popular non-local Eventbrite software for local event registration, why not use Boise’s NetCamps? If NetCamps doesn’t have the feature you need, help them build it. You buy coffee from locally owned coffee-shops. Why not use software that was created in the Treasure Valley?
Silicon Valley is not remotely related to Boise. Most venture-backed companies fail, and many that survive do so only because of financial engineering, not profits. Here in Boise we are businesses first, tech companies second. If we don’t generate positive cash flow, it’s over.
Boiseans need to think differently if we want to grow businesses and retain our talent. We should be finding the niches, creating real businesses with real profits and getting our community behind Boise’s software industry. Let’s be our first and best customers and let’s stop all the fuss over the Ubers of the world.
Doug Joseph is the owner of Locate Express, Boise’s on-demand search engine for local services. www.LocateExpress.com