Simply Brilliant: Episode #20 “What Can You Do to Add Value?”
On this episode, you’ll hear Richard’s thoughts on the ground transportation industry and how companies should always be searching for their place in the market where they add the most value.
Today I’m coming to you from the top of The New York Athletic Club, a private facility here at New York City that has the most unbelievable views. In fact, this is like $100 million view. I want to lift this thing up and show you around all of the top buildings that are being built in New York City right now are all right here on Central Park South. That’s the Time Warner Center. Here on the rooftop, it’s great place to come and film and tell our little stories, but also to recreate and have some drinks and food with friends and family.
Although the weather isn’t particularly nice today, it’s overcast and so on, such is life. I mean this is it. So we’re here, we are going to talk a little bit today about the speed of innovation and some of the things that my team and I talk about when it comes to our space. I want to be really clear. This is not anything to do with complaining or saying things aren’t unfair or making any excuses for any performance or anything like that. This is really just an academic discussion of innovation, the rate of innovation, and what entrepreneurs and small businesses and teams of people should be thinking about how to react in the face of that.
So, today we’re going to talk about on-demand networks of ground transportation. You all know things such as Uber and Lyft, and here in New York city we have a few others such as Gett and Via. What people may or may not realize is the speed from introduction, to what I would call 100% mass adoption. Here in New York City and in most metropolitan areas in many parts of the world, these on-demand networks are prevalent, they’re used by millions of people on a daily basis, and the valuations that they have raised money at, sort of tell you that, Uber, I think, raised money most recently in the mid $60 billion range, which puts it at the private company, if that was an actual public valuation.
It puts it above GM, Ford, Time Warner, Netflix, eBay, on and on. It’s a massive valuation for a private company, and more importantly is the speed. I started building transportation in 2010 about six years ago, and Travis, to his credit, launched Uber at about that time, too. Back then it was met with a bunch of naysayers and people saying, “It will never work. Who’s going to ride with unknowns?” Blah blah blah. All these reasons why it wouldn’t work, and a lot of people went to their legislators and tried to block them and follow legal reasons why it couldn’t work and largely futile.
When you unlock something that has global mass demand and it solves a real need, again, you provide liquidity into the marketplace, generally speaking that wins. We see some of the things with Airbnb as another example, and both of these are asset-free businesses. As a result of that they can really scale. What they’re doing is they’re providing liquidity to the marketplace. People that have assets, owners of assets, owners of cars, owners of apartments, are able to monetize that by taking the slack out of the system, and with one website or one app or whatever, find people that have that demand. “I need a car right now. I need an apartment with two bedrooms.” Whatever it may be.
The overwhelming adoption and the speed of it has been mind boggling. So by way of example, what we talked about was a couple of other things that were very disruptive and took much longer until they were mainstream, and still may not have even died. One example is computers and the shift from the desktop to the cloud. That’s been going on for 10-plus years. In fact there’s still many corporations and so on that haven’t adopted the cloud. They’re worried about security and other things. But the cloud is here, it’s very real, it’s huge, it’s massive. There’s companies that are worth tens of billions of dollars, like SalesForce, that have made their entire business on the cloud. But that’s 10-plus years.
Similarly, you’ve got Netflix. In 2000, Reed Hastings, the CEO of Netflix, had a meeting with Blockbuster, interested in partnering, collaborating with them, so that Blockbuster would distribute online content via Netflix, and he was laughed out of the room. We all know how that ended. Blockbuster went bankrupt, and 10 years later, Netflix is worth about $30 billion, and it’s continued to grow, and again is worth more than that now. But that from physical DVD in a store with late fees to, “I’ll stream everything and get it on the internet,” took about 10 years.
What we’re seeing, the massive disruption with Uber and the other on-demand networks is in five years. It has gone from zero valuation to 60-plus billion in about five years, and it’s gone from something that certain people would use to mainstream adoption. By way of an example, we had my daughter’s 14th birthday not too long ago, and a year earlier had 13th birthday. All the parents would come by at whatever pickup time was, let’s say it’s 10:00 o’clock at night and everybody would get taken home. One year later, first forward, the rate of adoption, out of the 15 or so girls, young ladies that were attending this birthday party, every single one of them had the app on their phone and took Uber home.
If you think about what I just said, this generation, my children, they don’t know a world without Uber or on-demand networks. This is like their reality. This is the way they get around. This as real to them as Subways were a generation or two behind. The Uber’s or Lyft’s solution is everything. “I’m going to this play date. I’m going to a swim practice. I’m going here. How are you getting home? We’re taking Uber.” So it’s become very much a term like Google, “How are we going to figure this out?” “I’m going to Google it.” “How are you getting home?” “I’m going to Uber it.”
I think it’s really important that we in the transportation business really get our arms around how massive and how quick and how big this disruption is. For those people that are fighting it or working with legislature or saying it’s going to go away, I implore you to really open your eyes and take a long hard look at your business and how you can be working with them or working with your clients and adding more value. My team and I, we’re absolutely thinking about the future and the rate of innovation. If you think about what’s happening in ground transportation, it’s been massive tidal wave in five short years.
Everything as we knew it was done. All these regulation and tax in limousine commission and licensing and all of that, all of these standards, while they’re adhered to, they’ve been adopted by Uber and others, and it’s just overrun everything. So super exciting times we live in, filled with risk, filled with opportunity, filled with excitement, filled with innovation, and I think that the challenge that small businesses and entrepreneurs like us have is to figure out where do we play and how do we fit, and how do we add value, and how do we not get swept out with the tidal wave? What can we do to add a lot of value? That’s what we think about here, brilliant all the time.
If you have any questions I would encourage you to please hit me up on Snapchat or Twitter, but we’re really big into Snapchat. Snapchat is our first choice, Twitter is our second. Go ahead and subscribe here and push these tiny bunny that you know that might find this interesting, leave comments, give us feedback, and ask questions. We really enjoy this show, we know you guys do too, and we really thank you for your time watching it.
Look at that. So, you got $100 million in your pocket and I’m showing you the view, you can save the hundred million bucks. That’s the west side of Manhattan. You can see new sky rises going up right there. That’s going to be super expensive. There’s the Time Warner Center. Again all the iconic central park west buildings. Then as we zoom over this way, this is the east side, and the upper east side. So, hope you found this interesting. Thanks for joining. Until next time. See you soon. Thanks so very much. Bye bye.
Richard Fertig is an Entrepreneur’s entrepreneur (with a prior life including a Wharton MBA, and a most successful career in the Hedge Fund world). Filled with vision, a risk-loving appetite, and a burning desire to disrupt the mundane, Richard is intensely focused on partnering with the most influential Companies and Planners globally to eliminate their greatest frustration and Make Travel Great®. More importantly, Richard is happily married for 20+ years and is the proud father of three amazing daughters. He is a fitness enthusiast — a spinning machine, a swim-lover and an avid alpine and Nordic skier. Catch him if you can.