Why I'll be taking the subway on New Year's Eve instead of Uber

Here are two good buzzwords: sharing economy and on-demand economy. Uber happens to sit comfortably within both. Like all buzzwords, the sharing economy and the on-demand economy deserve some good thunking, exploration, and prodding from all angles to fully understand the concept. I'm probably shin-deep which means I have more homework to do (and would love to see any other material you have on the topic!) but right next to "ball drop" and "disappointment" in the list of New Year's Eve associations is none other than Uber. So I'm jumping the gun with this post for the sake of timeliness.

Proven by the hilarious Uber for X poem that's been breezing across news feeds, there's a large number of tech based startups promising a marketplace that matches people willing to pay for convenience with people seeking flexible work. In the world of Uber that means pairing people willing to pay for drivers with people willing to drive. With dressing, this sounds like something called the sharing economy. 

Without dressing, this sounds more like wealth inequality. 

How is this wealth inequality exploited? Three main ways, if I'm reading the takeaways in the latest coverage from Quartz and The Dish.

1) The market needs to be big enough to scale.
Here are some great examples: food, laundry, taxi rides. According to Quartz: "Without that, it's just a concierge service for the rich rather than a disruptive paradigm shift, as a venture capitalist might say.

2) The labor class needs to be willing to work at low wages.
Also from Quartz: "There needs to be a large enough labor class willing to work at wages that customers consider affordable and that the middlemen consider worthwhile for their profit margins."

Which of course begs the questions, what are Uber's margins, what are their main costs, and what share of profits do they take from drivers? 

3) The company responsible for the marketplace needs to contract laborers to forego a percentage of profits and cover a percentage of costs.
As reported by The Dish, Uber takes 20% of all profits from each drive and car maintenance, gas, and insurance costs are covered by the driver. So the answer to the aforementioned begged question: very high. Uber's margins are very high. 

I liked Leo Mirani's summary best:

There is no denying the seductive nature of convenience—or the cold logic of businesses that create new jobs, whatever quality they may be. But the notion that brilliant young programmers are forging a newfangled “instant gratification” economy is a falsehood. Instead, it is a rerun of the oldest sort of business: middlemen insinuating themselves between buyers and sellers. All that modern technology has done is make it easier, through omnipresent smartphones, to amass a fleet of increasingly desperate jobseekers eager to take whatever work they can get.

An argument for growing your emotional IQ

Tyler Cowen, of Marginal Revolution popularity, hypothesizes in the New York Times Opinionator who will prosper in the forthcoming New World.   

By New World, he means the one world that replaces truck drivers with automated self-driving cars, the Big Data and hyper-tracking obsessed fitness tech adopters, and in one example he provides, the tech savvy lovers who respond without hesitation to the vibrating smartphone in their pocket as a signal to kiss the girl on the first date. 

At a high-level what I noticed is the rising popularity (dare I say competitive advantage) of a person's ability to harness a strong emotional IQ. 

1) In a growing but crowded technical skills jobs marketplace, Marketers who can speak to consumers will be highly valued. 

There will be a lot more wealth in this brave new world, but it won’t be very evenly distributed because a lot of human labor won’t seem like a special or scarce resource. Capturing the attention of customers with just the right human touch will command an increasing premium. Don’t forget that Mark Zuckerberg was a psychology major in addition to being a tech genius. Sheer technical skill can be done by the machines, but integrating the tech side with an attention-grabbing innovation is a lot harder.

2) Motivators will have an increased responsibility to use their skills to push adoption for online resources. This includes  courses across every level of traditional education.

Within five years we will are likely to have the world’s best education, or close to it, online and free. But not everyone will sit down and go through the material without a professor pushing them to do the work.

Those who are motivated to use online resources will do much, much better in the generations to come. It’s already the case that the best students from India are at the top in many Coursera classes, putting America’s arguably less motivated bright young people to shame. “Free” doesn’t really help you if you don’t make an effort. 

3) The popularity of self-improvement activities (i.e. meditation and yoga courses, ) will continue to proliferate. We'll listen to people who can speak to those trends convincingly.

A lot of jobs will consist of making people feel either very good or very bad about themselves. Coaches, mentors and disciplinarians will spread to many areas of life, at least for those of us who can stand to listen to them. These people will cajole us, flatter us and shame us into improving our lives, our work habits and our consumption. That’s why so many people go to yoga class instead of relying on the podcast. Managers who are motivators of first-rate talent will see their earnings continue to rise.