The New Innovation Battlegrounds Are City Hall And The State House
forbes.com
forbes.com
Imagine a new online service, which allows people to rent out their existing accounts at various other SAAS services to tenants, in exchange for a cut (specifically eg. you can share your seomoz account with 2 other people, tossing the $99 + cut inbetween them, each tenant taking one of the slots).
Consumers benefit from radically lowered prices, enabled by "more fine grained transaction in property".
Would you accomodate this sort of usage on your own sites? If not, what specific principle would you suggest, which still allows for AirBNB?
If you own the condo or house that's being AirBNB'd, then we're ok (modulo pissing off the neighbors).
If you're renting, then we're getting into the same territory as "unlimited bandwidth" subscriptions for ISPs or cellphones. Landlords -- reasonable, non-legalistic ones -- might then want to specify the maximum number of "person nights", etc., since all of a sudden "having a few friends spend the night" (taking the # of occupants over the lease maximum) becomes a permanent thing.
It's a little like a tenant who takes a dozen showers a day, every day for a year. Leases don't generally specify the maximum number of showers permitted, but they might begin to do so.
So, it could be workable, if the various contractual arrangements could be adjusted.
Disclaimer: I'm a (small-time) landlord.
Isn't that analogous to a sublet arrangement at an apartment? You take a, let's say, 3 bedroom apartment and sublet two of the bedrooms to room-mates. Many landlords allows and welcome subletting, as it allows them to more quickly find tenants for their larger units. At the same time, other landlords don't see the hassle and potential drama of subletting as worth the cost and prohibit the practice.
In the same way, I can see SAAS providers going two ways on this. Some might welcome your "sublet as a service" and explicitly take advantage of it as a way to broaden the market that they serve. Others might view it as a way to exploit their service and explicitly write anti-subletting terms into their terms of use.
I think it has been pretty consistently shown peak productivity gains are reaped when best-shared resources are made readily available with no barriers to utilization, but you need a pool of supporters to keep the infrastructure constantly expanding to meet demand. Throwing new servers in / paying the electric bill, building a new parking lot / maintaining the one that gets heavily treaded by saturation, or expanding / paving roads.
The most technologically functional way is to just announce traffic utilization, expansion costs, and play the wikipedia model - crowdfund your operating costs because the resources are not easily discretized into optimally-used per-consumer chunks. In public space, this is through taxes, but I don't think they have to be in the modern instant global information communication era. Or bill / meter for time used, rather than a constant subscription (which is, strangely, what mobile ISPs are doing now. The problem with that service is they use their metering to artificially depress demand so they don't need to invest in expanding their infrastructure).
You know, that is an interesting thought experiment - how would society organize if people were paying a bill for miles driven to cover road maintenance / expansion costs? (in some places this is already a partial funding source through petrol taxes, but since taxed funds usually end up in a giant pot that various organizations pull from the correlation of tax revenue from travel expenses to available funds to maintain / expand roads isn't a direct one). If we transitioned to more electric vehicles that might be harder, though.
1. Matlab and other expensive per-seat licenses are indeed shared, and there are license managers available
2. Other SAAS services are priced cheaply enough that it's not worth sharing vs. having it private
3. SAAS services are often customized enough to the individual that the utility of sharing them isn't that high
4. People already do share logins all the time within businesses and there are now services (like Meldium) that are set up to productize this
So actually it's an interesting thought experiment, but perhaps cuts in the opposite direction.
Look at the federal level, where the average age of a Rep is 59 and Sen is 63. These are folks who not only don't empathize with modern technology, they've got established connections to big industries that are threatened by innovation.
I'm not meaning to come off like a ideologue, it's just economics and incentives. Until younger folks get more involved, it likely won't improve much. (like SOPA/PIPA, but more consistent in advocacy and running for office).
Clinton ran for congress in his 20's, lost, but was elected Governor in his early 30's. Joe Biden was a U.S. Senator at the age of 30. People in their late 20's and early 30's just aren't positioned to run for office in our generation. Debt, schooling, careers, etc prevent many from being able to do it, even if they wanted to.
Sadly, even if "veterans" like Dorsey, Page, Brin were to run for federal office, they would be amongst the youngest to serve.
Even if you arbitrarily want to restrict your scope to Googlers: Peter Norvig, Rob Pike, and Ken Thompson are decent examples of veteran technologists who've seen a few changes of both technical and business environments, and have some basis for comparison. Brin, Zuckerberg, and Page don't really have that kind of experience.
I was more or less trying to draw the distinction that in some fields, sports, entertainment, and at least some technology enterprises youth wins out. Recently it was determined that by industry, technology is one of the "youngest" industries with an average ago of 30. That puts tech close to retail and food service.
I think it was Forbes, I can't find the link though.
Perhaps a better line to draw is between lawyers and other kinds of professionals, lawyers being overrepresented in Congress. But the track record of nonlawyers (doctors, for instance) in Congress isn't all that great either.
[Citation needed.]
http://readwrite.com/2011/08/02/older_people_not_using_smart...
Take a look at the average age of...
Republican congressmen in 1949: 54.9
Republican congressmen in 2011: 54.9
Democratic congressmen in 1949: 50.4
Democratic congressmen in 2011: 60.2
The democrats have gotten older, but not by much more than the general population. The senate has gotten older, but not dramatically so.
http://online.wsj.com/public/resources/documents/info-CONGRE...
Also, your numbers are for House Representatives, not congressmen.
drives home meaning of "conservatism" :)
I think one of the "problems" is that innovation is actually picking up speed dramatically. So even if the politicians aren't older, they are more likely to be removed from relevant business and innovation cycles and also more beholden to entrenched businesses.
Average term length has continued to rise as well. (see http://www.fas.org/sgp/crs/misc/R41545.pdf page 6)
In 1949, a Senator on average served just 1 term (6 years), and a Representative served 3 terms (6 years).
Now, in 2013, a Senator serves nearly two terms (12 years), and a Representative serves nearly 5 terms (10 years).
A world where it's possible for people to ambiguously decide whether or not it's okay to simply organize taxi rides, or share a room you own and operate, because some government-sanctioned oligopoly doesn't like it… How did we get here?
I'd love it if people would venture to refute me on this rather than simply downvoting my posts.
If you lease, you've signed a contract with your landlord.
Your landlords should not be encouraged to peek into my apartment.
In the AirBnB case, I don't think of it as much different. Homeowner's associations are the way you'd arrange land-use regulations for a large area through contract law, and are becoming the more common way of doing it in places like Texas. In other areas it's done by municipal governments, the more traditional method. But the impact on freedom is more or less than same: by buying property in the jurisdiction of one of these entities, you agree to use the property in accordance with [long list of rules], plus any future rules that may be made in accordance with [procedure]. And the way to avoid it if you don't like the rules, is to buy property not within the homeowner's association or municipality whose land-use regulations you don't like. This happens through both private-sector and public-sector mechanisms pretty similarly, just the private-sector ones are developing more recently.
There are other important differences between homeowners' associations and municipalities, such as general police power. But this particular one, whether you can turn your home into a hotel in a particular area, is one where municipal governments are basically equivalent to a standardized bundle of contract law, as evidenced by the fact that in some areas the same regulations are literally being implemented as a standardized bundle of contract law.
If your road maintenance company doesn't care, and you own the land, what's to stop you other than a voluntarily win-win association?
Automobiles (hyper regulated). Car dealerships (hyper regulated). Telecom (hyper regulated). Car rentals (incumbent protected; try competing with Enterprise and setting up shop in 400 airports). Taxis (hyper regulated and incumbent protected). Textbooks (protected cartel; shielded both by the establishment and politics of education). Lending and fundraising (nothing is more regulated than finance and banking). Restaurants (in every major city you'll have to bribe government officials to stay open or to set-up). Major event and city parking (try not to get whacked by the mafia while you're setting up competition, and then pray you can bribe your way into approvals to get started while the incumbents try to keep you out with denied permits). Condos / apartments / etc. (that's an easy one, it's a nightmare being a landlord in places like NYC due to the burden of government regulations and committees that can dictate every nuance for housing).
And the government demonstrably does not do a better job of vetting than private individuals. Some examples: has lower quality employees, it makes it impossible to "discriminate" on many different dimensions, and it certainly does not have a Canada-styled skilled immigration policy.
Yes, hotel owners and taxi drivers are not exactly pleased about the disruption. And, yes, they have lobbyists to further their causes. But don't think for one second that these people wanted the regulation to begin with. Absolutely not. The regulators wanted to protect the public and put in zoning, licensing, etc. The initial regulation had very little, if anything, to do with turn-of-the-century lobbyists.
For the most part it seems these new companies are facing not some nuanced part of the law, but like basic, prehistoric regulation that is practically universal in the Western world, designed to protect people from surpassingly likely horrible practices--like getting kidnapped by an unlicensed driver. Something not that unimaginable -- at least according to London public service posters everywhere. Some laws have very murky reasoning, I'll give you that. But zoning and licensing in these cases do not. So to say that Cities are stifling innovation by enforcing some of the most basic laws of the modern state, then it's a bit glib.
Incumbents are mad because they are following the rules and some of these new firms are clearly not. But the incumbents aren't the biggest problem, which the article more or less hints as the culprit. No, the problem for 'innovation' is convincing people why they should let the other half of their duplex run a youth hostel without a license. And no, saying your K-nearest neighbor algorithm's got it covered is not going to be enough.
Some might compare this to copyright. And this is where they'd be right. It's not very obvious who copyright protects. No one has ever had a GB of songs cause them to wonder whether their neighborhood is safe anymore. You might even make the same case for fin services. Why regulate those? Well, I'd grant you there too. How many people died from the fin crisis again? Perhaps we are pushing it. Either way, in the land of the physical universe, the universe where Uber and Airbnb are so clearly inhabiting, the reasoning behind the laws is remarkably obvious.
This is sheer assertion. What do you think is better? Uber - where you can see your driver's name and photo, know that he has a five star rating with 47/50 positive recommendations, and know that a third party is tracking your GPS location at all times...or the city government's antiquated taxi medallion service? Ditto for Airbnb.
> designed to protect people
Let's be real here, city government regulations "protect people" in the same way the TSA "protects people". Which is to say they don't and pretend that they do. You're responsible for protecting yourself. The police can't protect you from wandering into a bad neighborhood or even stop you from getting mugged; they can only clean up the mess after the fact. And no cab driver license will replace exercising your judgment before you enter a cab. Moreover, to be "kidnapped by a cabby" is a rare event. It's like soiling our pants over the threat from terrorists, which we've done quite a lot of over the last decade. Enough already.
But do you see how the conversation we are having is now about simply the regulations and whether they are really protecting people and not about how there are some incumbents trying to protect their turf?
The two concepts are mixed, often, and should not be.
One narrative says that it's murky industrial cooperatives lobbying to stay incumbent that keeps these new startups down. And the resulting laws are/were formed from not-so-good-intentions and are needlessly complicated or antiquated because of that.
But it's worse than that. Some laws are purposely complicated because of special interest pressure, sure, but the big ones--the Goliath ones--are well-intentioned laws passed by regulators concerned mainly how to protect the people. And not only are these on the books, but they've become embedded in common sense. I mean, look at my earlier response, I said it was "obvious" that these laws do in fact protect. The battle is convincing the public that, no, this stuff is antiquated, and that we really do have methods that make this and that regulation obsolete.
But focusing the attention on bad-intentioned industrial groups is the wrong approach and will never win against the regulatory momentum of the democratic state.
In many areas AirBnB isn't a problem, mainly when it's being used as a way for regular people to rent out spare rooms or their apartment. But in NYC and London, people are starting to run larger-scale traditional hotel operations, only without following any of the regulations for traditional hotels. There, AirBnB's failure to implement any kind of replacement for municipal regulation is most noticeable, especially in its impact on other people's property.
You do? Section 8 ring a bell? Many more landlords and governments agencies have turned apartments into ghetto hotels than individual Airbnb hosts. And the result has been a spike in the murder rate:
http://www.theatlantic.com/magazine/archive/2008/07/american...
So USG is using tax dollars to move in murderers next door, and landlords are taking those dollars. Yet one trusts USG to "protect" you from a ghetto hotel?
I imagine that these regulators already have "the focus on customers". And if they don't, it is not because they don't know they should have. Give the "benefit of the doubt" to innovation? Why? "Keep an open mind"? "Use the service"? I don't see any of these arguments as particularly relevant to anyone in power to regulate these markets.
I think we (those who stand with innovation) should pay more attention and think harder on our arguments in order to win those battelgrounds.
Sharing is something different. Sharing involves concurrent use of resources mediated by tort-like systems, rather than property-like systems. A real "sharing economy" in cars might be what you end up when cars become self-driving. You won't own a car, but will use whichever car is nearby, and the law will punish various relevant anti-social behaviors instead of violations of property rights.
This distinction is very relevant to things like Uber or AirBnB, because the regulatory challenges there are various issues attached to property rights (e.g. zoning restrictions attached to houses, monopoly privileges attached to taxi medallions).
I agree with Genachowski that state and local governments are a battleground for innovation, but he makes it seem simpler than it is. It's not just a matter of preventing local governments from enacting laws that restrict innovation. It's more basic: renegotiating various privileges that have been negotiated into and priced into property rights. E.g. for better or worse, those who own cab medallions bargained for the monopoly they have, and gave up certain things in the process. Municipalities bargained to create telephone monopolies to serve rural areas instead of building infrastructure themselves. People who bought houses in residential neighborhoods did so pricing in the fact that those neighborhoods would not host hotels. Everyone thought these were reasonable policies at the time. Upsetting those settled expectations in property rights is going to be a very complicated process.
E.g. my personal regulatory interest is in spectrum sharing technology (http://en.wikipedia.org/wiki/Open_spectrum). Technology is getting close to the point where real "sharing" should be possible in radio spectrum. Not just fine-grained subdivision of property rights, but concurrent use mediated by tort-like mechanisms of enforcing "sociable" behavior. I think that technology needs to be rolled out all over the TV bands and the cellular bands. But it's not just a simple matter of flipping a switch. Verizon and AT&T paid billions for their spectrum, under the assumption that there would be nobody else playing in it. You have to kind of see their point of view in opposition to measures to enable sharing on their property. Same for all of the TV companies. They didn't pay for their spectrum, but they made tremendous investments based on certain assumptions, and they've got a right to question changes to those settled expectations.
Incidentally, this is not a new problem. The whole point of property rights is to settle expectations. When the situation changes dramatically, either because of technological or sociological changes, it is a political challenge to accommodate that change without trampling over those settled expectations.
but they didn't price in the risk of technological innovation like AirBNB.
the corner stone in your logic (and in modern economy) is property rights. With my background (USSR), i'm used to think of property rights not of as something God given, instead as of something that was invented at some point and has been very useful so far in the development of our civilization. The property rights itself has evolved, from slavery societies to the modern day, from people as a property to ideas and RF spectrum being considered as property. The property rights will continue to evolve, and probably, God forbid - my townhouse is well over-water now, real estate rights disappear, while rights for DNA or human soul(mental footprint, dreams, etc..), something like this will come, or one day property rights, as exclusive license on something, will just stop being useful for human civilization at all.
Actually that's what they did, since residential usage like AirBNB is generally against zoning in these areas.
And you're focused on the selfish aspects of property rights without considering the benefits towards the commons they can confer, like keeping quiet residential areas quiet residential areas rather than high-traffic transient areas just because someone threw up a website.
you're missing my point that property rights and laws(zoning) change with (in response, forced by) technological development and innovation.
>And you're focused on the selfish aspects of property rights without considering the benefits towards the commons they can confer
again, my point was that specific property rights have their time when they are actually helping advancing the civilization, yet they are meaningless before their time and delay progress after.
As AirBNB helps more fully utilize buildings, it seems it is a plus for civilization and the laws/zoning preventing effective use of resources start to become obstacles in the way of progress.
What if property rights were "packet switched" instead of "circuit switched"? (1)
We're still at the stage where our modems whistle at each other when it comes to "property". The future is going to be positively sci-fi.
(1) http://en.wikipedia.org/wiki/Circuit_switching#Compared_to_d...
That seems to be the preventing mechanism of "packet switched", unless people have liquid capital to be able to buy and sell large properties.
For example, NYC regs which are harmful to AirBnB exist to protect other tenants from the insecurities that stem from a revolving door of transients in their buildings. Simliarly, taxi cab medallions restrict supply in order to prevent a tragedy of the commons whereby too many cabs fight for fares in congested city cores, taking up all available road space.
In this respect, these startups are not innovative--just stupid enough to operate extra-legally. Just because something can be done more easily with technology does not mean it should be done.
Which sounds more like the last gasping death throes of innovation. None of these businesses involve any kind of technological breakthrough that could really disrupt anything, they're basically my business model is better than your business model. Which leads to the obvious question - better for who?
In general though, NYC especially appears to leading an ultimately bankrupt, economically-ignorant policy of pandering to monopolies. Killing innovation hurts the economy and makes cities like NY less desirable. Disruption is competition, and these monopolies better adapt or die.