Apps for positive social impact: From Uber™ to Neighbors™
The rise and fall of Uber illustrates the promise and risks of growing high-tech companies in the so-called gig or shared economy . The lack of balance between business, organization and people's interests can turn job-creating, peer-to-peer platforms into predatory business that distort labor and housing markets, destroying jobs and inflating assets' value into self-destructive overvaluation.
This article analyzes the causes of failure in Uber's and other market-making new ventures are built in their business models and proposes a new approach to assess and manage new App-based asset-sharing ventures. This new framework and tools, based on current research and experiences on incubating high-tech businesses, can help entrepreneurs and investors design App-based partnership by balancing growth and ensuring positive value added to all stakeholders. The App Neighbors™ , developed for turning slums into safe and prosperous neighborhoods is presented as an example of this new approach.
The rise of global platforms such as Facebook, Amazon, Apple, Netfix and Google -the so-called FAANG[1]-takes entrepreneurship to an entire new level. The combination of smart phones, social media and instant, peer-to-peer, business-to-business and business-to-consumers access to global markets lowers dramatically barriers to entry for small, innovative startups. The FAANGs have created large communities of users connected to their smart phones for shopping, working, trading and socializing around the clock and around the world.
In FAANG ecosystems[2], it only takes introducing a new App, search engine or website that provides a better, more efficient customer experience for a small venture to become viral and command million-dollar market valuations.
In this brave new world, ruled by what Thomas Friedman calls "the Great Acceleration of 2007[3]" (after the year Apple launched the first iPhone[4]) new companies like Uber pop into the market at a "FAANG speed" of 1.7 Apps per minute:
These new App-based ventures have enormous potential for either creating or subtracting social and economic value.
They can help the unemployed and underemployed make a living[1] in slow jobs markets by sharing rides, rooms or trading online products, services and assets with a slide on their smart phones[2]. They can also create labor supply bubbles, push down wages, overvalue housing costs, stiff investors, destroy full-time jobs and create an underpaid underclass living precariously from a "gig economy[3]".
If sharing Apps are to be considered true partnerships that create markets for flexible on-demand work arrangements and not simple forms of sidestepping labor laws and creating an underclass of underemployed labor disguised as free agents or contractors is to make them shareholders in the fortunes of the App.
This in turn, creates incentives for providers to establish a long-term partnership and means for reinvesting in their assets -skills development, upgrading and maintenance-. If we consider the case of Uber -with a stock valuation of 70 billion dollars and estimated 1.5 million drivers worldwide[1] (500,000 in US), a 10 percent share in stock would represent adding 4,600 dollars to the net worth of each driver. This represents a 69 percent of the median net worth of Americans under 35 years old, almost 90 percent of the lowest quintile and 20 percent of the second lowest quintile[2].
In a sharing App, we start by involving all stakeholders -in this case slum dwellers, city planners, adjacent neighbors, government departments and related industries -from real estate to construction to tourism, commerce to banking- in identifying gaps in results based on a shared vision of the shared future, based on Roger Kaufman's Minimal Ideal Vision and Vital Signs.
City Doctors is testing the concept in Argentina:
At the center of the diagram is the existing shanty town -named Villa 31, in Buenos Aires downtown- and around are the key gaps prioritized by all its stakeholders:
increasing security for residents and visitors, making the area attractive and safe
knowing "who's who" -inside and adjacent to the Villa 31-;
re-housing (remodeling or rebuilding); and
creating jobs for the residents
Sharing App partnerships like Neighbors™ can be a powerful tool to create sustainable wealth, raise living standards and self-sufficiency easing the transition to new forms of work and integrating the urban poor in developed and emerging countries to the formal economy, promoting and facilitating entrepreneurship under the protection of the rule of law and mutually beneficial contracts.
[1] (Bernardez, Minding the business of business: tools and models to design and measure wealth creation, 2008, Volume 1, Number 1)ires
[2] We use these terms as defined by Roger Kaufman (Kaufman & Guerra-Lopez, Needs Assessment for organizational success, 2013)
[1] (Kaufman, Oakley-Browne, Watkins, & Leigh, 2003) (Kaufman, Defining and applying Organizational Vital Signs for Creating a Better Tomorrow, 2012) (Kaufman & Guerra-Lopez, The Assessment Book: Applied Strategic Thinking and Performance Improvement Through Self-assessment, 2008) (Kaufman & Guerra-Lopez, The Assessment Book: Applied Strategic Thinking and Performance Improvement Through Self-assessment, 2008) (Kaufman, Strategic thinking: a Guide to identifying and solving problems, 1996)
[1] (Dogtyev, 2017)
[2] (Wang, 2017)
[1] (Eberstadt, 2016) (Florida, 2009)
[2] (Gansky, 2010)
[3] (Marx, 2016) (Sundararajan, 2016)
[1] FAANG is the acronym for the top five high performing technology stocks in the market as of 2017 – Facebook, Amazon, Apple, Netflix, and Google (now Alphabet, Inc.). The term was coined by CNBC's Mad Money host Jim Cramer. (Investopedia, 2017) The FAANGs represent 10.6 percent of the S&P 500- (Dom, 2017)
[2] (Bernardez, The power of entrepreneurial ecosystems: extracting boom from bust, 2009) (Bernardez, The Future of Jobs and the Jobs of the Future: A Decade of E-Performance, 2017) (Lashinsky, 2017)
[3] (Friedman, 2016)
[4] (Hiltzik, With Travis Kalanick out, we'll see the real value of Uber - and it won't be pretty, 2017)
