South By South West and the City of Austin TX, a case study in innovation

imgresWith SXSW only a few days away there have been a few news items detailing the event, mostly about what celebrity will be attending and which company will be throwing the greatest party (I vote Spotify). One particular TechCrunch post about Sidecar caught my attention. Sidecar is a startup company with an app that allows you to share a ride. It’s somewhat like Uber (I have a post about what Uber is here) but the drivers are anyone with a car and a Sidecar account. It’s an interesting mashup of technology and shared resources. There have been a few of these ideas in the past couple of years, most of which have been mildly successful. The reaction of the incumbent businesses they threaten is the reason for their mild success. In the case of Sidecar, they are promoting free rides to  and from SXSW parties. It’s easy to see why this is a good idea. It will get them noticed by the SXSW illuminati and it will also get them noticed in a new community where they’re launching, in this case Austin Texas. The outcome however, was not as expected. In response to the promotion, the Austin government has issued a statement declaring that any non-licensed driver picking up passengers for a fee will have their car impounded. I can see their position, they don’t want a bunch of regular people driving around their city, wait a minute… that’s exactly what everyone is doing anyway… What is the real issue, could it be lost revenue on taxi licenses? Or perhaps pressure from the incumbent taxi cab companies? Or is it a public safety concern? I’m sure it’s a mix of all of these. My guess is that disruptive ideas such as Sidecar will always be met with this sort of resistance.

In a few cases, the incumbent companies recognize the new technology and try to emulate it, like in the case of Zipcar. Zipcar is an on-demand car rental service, with no central location. You use an app to locate a car on a city street and the app unlocks the car and allows you to drive it. When you are done, you park it where you are (within a certain area) and you’re finished. This type of disruptive concept at first was dismissed by the incumbent rental companies. That is, until it started making a dent in their bottom line. Instead of lobbying for regulation or pressuring local governments into levying fines, they began to offer a similar service. Hertz has launched Hertz On-Demand, to offer this type of convenient car rental to their large customer base. I’m not sure how this scenario will play out, will Hertz have the ability to compete with an agile startup? Will Zipcar have the ability to outlast a market leader in their field? Either way, I like that way both companies have chosen to compete. This could be a good lesson for the city of Austin, especially when they are host to a conference devoted to innovation and technology. Perhaps next time, instead of imposing fines and legal threats, the Austin government can find a way to embrace new ideas and work together with innovative companies to provide mutually beneficial solutions…Or does that only happen in the movies?