Plenty of analysts, market-watchers, and thought leaders are excited about Uber, Airbnb, and the advent of the so-called "sharing economy."
Here's the thing: The sharing economy isn't for everybody.
Why not? Because, as we learned in the sandbox, not everyone wants to share.
I'm not talking about the people who want to share what belongs to others. Such as to ride in someone's car, rent a room in an apartment, or share a meal at a stranger's table. They are actually more akin to borrowers, or purchasers, in a traditional sense.
Although they are certainly part of the equation, the question is whether the real sharers and their financial backers are willing to back the notion of a vast array of industries whose regulatory landscape is just taking shape…
Entrenched Industries Are On the Offensive
Interestingly, those who are not necessarily fond of sharing are driving this segment of the economy. They're what I'll call the "what's mine is yours… for a fee" sharers. Translated to business terms, it's those companies who control access to sharing who will primarily decide its success.
Let's take an obvious example.
Uber, the $50 billion valuation ride-sharing service (for a fee), is at the forefront in disrupting the taxi industry, one with roots extending well past the century mark.
From the perspective of users of the service, Uber is genius. I use it and I love it. Uber cars are better and bigger than most taxi cabs. They're cleaner. The drivers are nicer; they're being rated by their passengers, which makes a difference. They get you to your location quickly. They're cheaper than regular cabs. There's no money exchanged, although I always give drivers a cash tip, which isn't required.
What's playing out in the courtrooms concerning Uber is decidedly less comfortable.
Most of the San Francisco-based company's drivers consider themselves akin to freelance contractors, and Uber gladly considers them the same.
That simple relationship is about to change. Barbara Ann Berwick, a contractor for Uber in its home state, sued the company for expenses. After paying her own expenses and calculating how many hours she worked and what she got paid, Berwick determined she was clearing less than minimum wage.
For the minimum wage to come into play, Berwick sued Uber, claiming she was an employee. Under California law, as an employee, Berwick would be entitled to reimbursement of the $4,152 in expenses she laid out.
She won. The California Labor Commissioner's Office effectively labeled Uber an employer. There are other cases pending against Uber in California, including a case seeking class-action status. Uber is being sued in many other states.
Wired's Julia Greenberg stated in her March 2015 article, There Are Good Reasons People Love to Sue Uber, that, "Earlier this month, a Memphis transportation company sued Uber and Lyft for operating without proper licensing and insurance. Similar suits have been filed in Miami, Philadelphia, Atlanta, and Houston." The number has since grown.
About the Author
Shah Gilani is the Event Trading Specialist for Money Map Press. In Zenith Trading Circle Shah reveals the worst companies in the markets - right from his coveted Bankruptcy Almanac - and how readers can trade them over and over again for huge gains. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.