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|Friday, February 14, 2014|
BY MIKE GREEN | OB BLOGGER
New technologies fuel industry innovations and create marketplace disruptions. Such is the nature of the entrepreneurial process catalyzed by the tech sector. But disruptions in the market can have disproportionate impacts upon communities reliant upon basic services such as transportation.
The startup Uber has discovered that introducing a mobile app to summon black car services in real time can be a lucrative business. But Uber is also controversial, as its core business model disrupts the heavily regulated 20th century taxi industry. A Google search using the terms “Uber controversy” reveals a litany of challenges to the Uber model in cities across America and even in other countries — although Portland is unique in its concerns over the disproportionate impact of the Uber model and its practice of “surge pricing,” on underserved communities.
In the aftermath of the debate over Uber’s failed attempt to enter the Portland market, I spoke with Patrick Quinton, executive director of the Portland Development Commission about economic inclusion, community impact and equity connected to the technology sector.
Here are a few highlights from that conversation:
OB: Why did Uber fail in its attempt to come to Portland?
Quinton: When Uber tried to enter the Portland market its business model didn’t fit with current regulations in place in Portland, which require non-regulated taxis to wait an hour before picking up fares. That was the main regulatory barrier. Taxis are allowed to pick up fares in real time, and then anything else, including black cars, you call ahead, make a reservation and they pick you up at a certain time. That’s how they separate out the two industries.
I don’t think there was an immediate reaction in a positive way from Portland city leadership to unwind those rules simply to allow Uber in the market. But it is my understanding they are taking a look at those rules and might at a future date change them. The outcry for Uber, while there’s a pretty vocal contingent, doesn’t appear to be as big of an issue as it is in cities like Washington (DC) and Seattle.
The model has potential to be disruptive in a positive way, expanding services and potentially lowering costs for people looking for different transportation options. But I don’t know that that’s really how it’s played out in practice, yet. And so I think we should rightfully be cautious as we unwind the regulations that serve the taxi industry to accommodate Uber or even UberX until we have some sense for how much the model will actually serve the marketplace.
Will it, in fact, improve the level of service for a broad part of the marketplace and not simply the upper end, that either has the most money to spend on transportation or is the most tech-savvy? Uber has shown itself to be very effective at serving that market and seems to have very high ratings from that segment. I’m just not sure that we hear many stories about how it’s serving the broader population, in particular how it’s serving those who either don’t have great access to transportation options and therefore may depend upon cabs, or have lower incomes.
OB: The Uber discussion is the tip of the iceberg when it comes to fast-paced tech disruptions around the country that have real social impact. What’s your perspective regarding the impact of technology sectors on social equity?
Quinton: The growth in technology industries has been driving a lot of the growth and wealth creation in the economy and certainly driven a lot of innovation that is benefiting society. But I also think you can point to growing income and wealth disparities within the U.S. and elsewhere around the world. You can attribute some of that to the influence of technology. The pace of technology and innovation is making certain jobs obsolete. And so we’re still in this disruptive phase where people are losing their economic well-being as a result of technological innovation.
Were the industry by nature inclusive and actually bringing along a lot of diverse peoples with skill sets, then you could say this is an agent for positive change across the board and we should be behind it and help make it more inclusive. But we do have troubling signs that it’s not that inclusive.
So, if it is a force for change and creating disparities, we need to think about how we influence the growth of this industry and make it more inclusive and help it serve others, and not exacerbate the dynamic by engaging in different kinds of behavior that isolate the people who work in this industry from the rest of society.
OB: What proactive steps are Portland and PDC taking to improve economic equity in the innovation sector?
Quinton: Portland starts with a more collaborative feel in addressing these challenges. The individuals, entrepreneurs and companies that are based here and thrive here do so in a collaborative way. There’s less of a dog-eat-dog mentality. A lot of the entrepreneurs here are cognizant of how important this city is [and them having a place in the city is][P1] to the success of their company and attracting talent. People do care. But, I don’t think it’s enough to say we care. We need to take more proactive steps to make this sector more inclusive, but also make the general prosperity that’s occurring more inclusive.
PDC has been engaged for a couple of years now in thinking about how to create a more diverse, not just tech sector, but a more diverse entrepreneurial ecosystem. We have a long history of working in our neighborhoods around small business development. And much of that work has been directed toward minority entrepreneurs and women-owned businesses. We’d like to have the same impact on helping entrepreneurs of color access our growth sectors.
Startup PDX Challenge was an initiative we ran for the first time last year highlighting Portland as a place for startups. We picked a small handful of promising startups and gave them working capital and free space in order to help them along in their growth. Once we saw how the model worked and its potential for generating interest, not just in Portland, but around the country, we thought it was a logical model to highlight our work in Portland around inclusive entrepreneurship.
So, we’re now launching our second Startup PDX Challenge and this one will be focused on entrepreneurs of color and women entrepreneurs. And we have dual objectives: 1) Promote Portland as a place where people of color and women who want to start businesses come and feel welcome and supported and 2) Create a group of successful companies that can serve as a springboard for future companies. The real goal is to have successful companies … that happen to be run by people of color and women.
What we’re seeing drive the economy here is a lot of really interesting startup companies trying to address market opportunities that have a significant growth potential. Most of these companies are not minority-owned or women-owned companies. So we’d like there to be direct connections, and a few years out be able to look at the composition of this class of companies and say, ‘Look, it’s actually quite diverse; there’s more than ample representation from the African American community, the Latino community and women-owned businesses.’ That would give us a sense that, as these companies go through the life cycle, we’re going to see more wealth of opportunities created and probably a more diverse workforce that grows within these sectors.
None of this is going to happen overnight. It's about growing the pipeline.
Mike Green blogs on technology, innovation and equity for Oregon Business.
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