People, Pizzas and Packages: a delivery network for the 21st century
The gig economy has grown from virtually nothing to global dominance at a remarkable speed. They have leveraged the ubiquity of personal, permanently network-connected mobile devices and exploited the extraordinary fragmentation, over-confidence and profiteering of local monopolies when it comes to delivering people, food and packages.
An example of the cost of over-confidence in the “exclusivity status quo” is the New York City non-corporate Taxi medallion, which conveys the right to operate a cab there. The price peaked in 2013 at over a million dollars before plummeting as ride-hailing apps like Uber and Lyft provided competition. Without having to argue over tips, and no longer forced to hail five cabs before you’d find one prepared to take you to JFK (all the time getting wetter and wetter as the rain relentlessly pours down), it’s hard to argue with the appeal of such services. The medallion price is now around $120,000 to $150,000, a tenth of what it was seven years ago. This has been a catastrophe for many individuals who are now saddled with debts exceeding half a million dollars with no obvious light at the end of the tunnel that isn’t a train coming the other direction.
History is littered with examples of not seeing it coming, even when it was right at the doorstep. Take the iPhone: even after release, the Microsofts and Nokias of this world were — sometimes literally — laughing at Apple for what they were doing. Who’d pay for a phone, for crying out loud? What is this awful thing? The camera sucks, it’s only 2G, it has no keyboard and it’s very expensive. It’ll flop. But the user experience was perfect, it wasn’t overloaded with carrier-based “added value” (by which we mean endless reams of crapware) and it worked. Properly. Out of the box. Since then, it has been endlessly copied by others. It’s a fair observation that companies and individuals often don’t see seismic shifts coming, and those sitting on the table-of-old are often still setting up the condiments for dinner when disruptive new businesses saw through the last leg.
Companies like Uber are essentially economic dating agencies¹. They connect someone who wants with someone who has through a unified user experience. They take all of the worry and pain out of the process for the end-user: no cash? No problem. Tipping? Do it after you’ve left the vehicle. Going to another country? No worries, it’ll almost certainly work for you as you walk out of the airport. Trust, reputation and someone to complain to is provided by them and for this, they take a hefty cut.
Getting to this position, though, is not precisely an exercise in moral highgroundness². They are blitzscaled businesses that have operated at a loss in new territories in order to get a foothold, driving the small local players either into submission or out of business. Where that doesn’t work, they have aggressively acquired the competition. This comes with a cost, and if these engines behind the gig economy do not rapidly achieve a monopolistic utility position it cannot be sustained long-term, locally or overall.
She’s gonna blow, captain
And it’s not goldfish who are now nibbling at their toes, it’s things like regulators coming in and questioning who’s following legislation and who’s either not or is being creative about it. Besides, monopolies, be them local, national or global are hardly invisible.
When the investor-fed company wallet is like a government magic money tree, you can afford to treat fines and legal battles as part of the cost of doing business: you can, for the most part, simply ignore the laws of any land because you are big, have expensive lawyers and are rich enough for them not to apply to you. Monopolies have this advantage. As an example, back in the late 90s and early 2000s, Microsoft were able to ignore web standards where they wished to and invent their own, complete with the unique idiosyncrasies³ that such a path delivers. Others were forced to follow, or suffer the consequences of not rendering right in Internet Explorer (and end-users tended to blame the website, not Microsoft). And there’s a reason why Amazon and eBay tolerate illegal, substandard goods being sold through their marketplaces, such as non-UK electrical appliances shipped with foreign plugs and adaptors to make them work. Such actions are a clear contravention of the Plugs and Sockets Safety Regulations, 1994. Then there’s dodgy smoke and carbon monoxide detectors, and dangerous baby car-seats that you’re safer out of rather than in, and this is now par for the course. Order a UK print of a book? Got a US mass-market edition instead? Indeed. They wait for the weak-handed slap on the wrist, apologise via a pre-prepared statement, remove the goods, wait a week or two and then continue. With less and less effective competition, there is no incentive for them to play above board, so they don’t. The smaller companies are screwed every which way to Sunday as they do have to abide by the rules.
And let’s not forget margins, eroding away like the east coast of the UK. For long-term success, the ride-hailing and other gig-based delivery companies need to transform themselves from a luxury to a utility, and there isn’t much room to manoeuvre. Scaling at speed is expensive, and as an example, Uber has never made a profit, is currently worth about $56 billion and has a good $7 billion in obligations.
Laws, schmaws
Right there, connected with regulation, legislation and margins is employment law. It’s a constant battleground. Are gig economy workers independent contractors or employees? Do they deserve holiday pay, sick pay, healthcare, pension contributions and other rights? Or are they on their own, self-employed, and must handle their own tax, and if they’re ill or need a break then, well, tough cookies. Do they make enough money to be able to effectively fund their own employment benefits? Can companies like Deliveroo and Uber afford to have to treat those that do the movement of people, food and other things from A to B as employees? Good question. And one that’s being asked in different countries across the globe almost every day.
And this is the theatre of conflict that the economy finds itself in. Do we want a small handful of companies controlling our media, transport, goods and the other aspects of our lives, or is the delight of the uniqueness of choice and personalisation that comes from many, smaller organisations something we value, deep down? We vote with our wallets and the undeniable convenience that these massive organisations provide consumers is too much for us to resist and we’ve made our bed, so we shall sleep in it. Or shall we?
Giggity, Giggity, it wouldn’t be here if it wasn’t good
The gig economy is, if you look at it dispassionately, a good idea. There’s a unified user experience for working in a given space and autonomy over when to work, where and how much is with the individual value provider. For these value providers, though, getting it right is the difference between individual empowerment and being trapped in a precarious barely-making-ends-meet existence. The real beneficiaries are the end-users, for whom the gig economy has come in, leveraged today’s digital tools and network, and provided something that is incredibly customer friendly. Instead of needing fifteen apps for different cab companies and restaurants, you can now do everything relating to food in one place, and all your taxi needs in another. Loads of apps becomes two: you can effectively compare the offerings, you only need hand out your payment details once, and the whole thing just works wonderfully. It’s this awesome, getting-useful-things-done user experience that has endeared it so much to the world.
With regulators sniffing around about how the law is applied, and rapidly catching up with technological advances, and margins being eroded here, there and everywhere, how can one both reinforce and keep the huge advantages that these businesses have delivered to consumers? If they are unsustainable long-term, we’re looking at the re-emergence of fragmentation, poor and disparate user experiences⁴ and the threat of seeing local monopolies rise from the ashes phoenix style. Indeed, how can we level the playing field for the independents, the larger players and the individuals? Good question. And whilst there isn’t a clear answer, there is a plausible one; decentralisation, taking advantage of a serendipitous alignment of technology.
And the stars and planets aligned
We are sitting in an almost perfect technological alignment, a beautiful convergence of otherwise disconnected technologies. Here, in 2020, amongst every single hold-my-beer moment that the year is providing to keep us “entertained”, technology is quietly arranging the pieces necessary for the future decentralised economy. It is providing trust, reputation, value exchange and scale — the key pieces necessary to implement, say, a decentralised Uber. And it has been demonstrated, largely in isolated proof-of-concepts that it is possible. Regardless of any desire to hold decentralised solutions back, they are coming, because they solve too many of the problems for them not to happen.
So let’s look at just a few of the key things in our alignment of goodies that enables what was not possible before:
- Verifiable claims and proof-of-location. These are all zero-knowledge-proof related, and all come down to self-service verification that asserted credentials are actually true. Are you insured? Are you regulated to carry people? Is your restaurant A or B rated for hygiene? Being able to independently verify that these claims are true transforms the scope of being able to do business in a decentralised environment.
- Self-service participation. You need not ask anyone’s permission to take part. There is no gatekeeper. If you benefit from full KYC and background checks, you can get these credentials in a way that can be verified by others. If you’re a small restaurant wanting to have your products delivered, you can on-board yourself, your credentials and start immediately.
- Trust and reputation. Alongside ZKPs, we have a blockchain that keeps self-service trust data about who did what, when and with who. Those who do not tolerate risk can filter according to the history of what their value provider has done in the past.
- Ease of value exchange. Tokens, supported by the underlying blockchain, allow for friction-free value exchange by all parties. Digital and human, it is now possible to create a “bank account” and use it without any of the traditional epoxy that pours into the wheels of progress and gets in the way of making things happen. High performance, low-cost value exchanges and pay-for-services/smart-contracts by tokens work seamlessly, can be bootstrapped from nothing and can be managed independently of human intervention.
- Agent based approaches. Autonomous economic agents are digital entities able to make decisions on their own behalf as well as on behalf of those who created them. They can represent value, or a desire for value, and find, negotiate and transact with each other. As independent, small computing units, they are able to be decentralised effectively: distributed across many computers on the network. Additionally, they provide a common language for communication, so that agents that have never seen each other before are able to talk and do business in a meaningful way.
- Smart contracts. Digitally settled contracts where the terms and conditions are described by code, and settled independently of any parties outside the contract. These can enforce escrow, be used for dispute resolutions, deal with decentralised insurance and much, much more. They are a key component of implementing decentralised delivery.
- Scale, security and stability. Decentralisation enables scale. With no centralised entity, adding additional computing power to the network scales its capacity. Client/server based architectures cannot achieve this, as eventually, the individual controller can no longer orchestrate the components around it. A population of simpler systems can be expanded or reduced freely, is robust and resistant to individual component failure.
- The paper trail. The permanent, global state provided by blockchain ensures that nobody can edit history for their convenience. It gives transparency, and integrity to a growing state database. When it comes to packages that are sensitive to shock or temperature ranges, for example, being able to automatically log conditions from sensors on a permanent ledger has enormous value in that all parties (including fulfilment via smart contracts) can verify conditions were met free of human influence and involvement.
- Decentralised dispute resolution. One of the key advantages offered by centralised dating agencies such as those in the gig economy is that of customer service and dispute resolution. Smart contracts, coupled with tokenised incentives, can offer a reliable income stream for the honest to be involved in collective dispute resolutions. This is key to creating a safe, trustworthy environment for all parties.
As people are fond of saying, when it comes to statistics and specification comparisons, you can support any point you wish by being flexible about what you choose to include or not include, and clearly a bullet point list of wonderful things doesn’t magically make the issues vanish. And there are issues. Liability, for one. Then there’s decentralised scheduling and optimisation of a multi-dimensional problem like delivering pizza, packages and people (sometimes all at once). It’s non-trivial, but it is solvable. And it’s all very well to talk about decentralised insurance and dispute resolution, but it’s another thing to implement it effectively. And we at Fetch, and others, are on the case with these problems and more.
And remember: when we talk about delivering people, we mean so much more than just a ride into town. Imagine this: “deliver myself to London for a meeting, I’ll stay the night in a hotel, meet a friend for lunch and return home to Cambridge in the evening.” with agents that represent hotels, parking, traffic congestion, trains, stations and more, all of this is possible, in one app, working directly with the value providers, with no centralised orchestration required. A personalised solution, as organised by your personal representative agent, just for you.
Sitting in the middle, acting as an economic dating agency and trust provider is precisely what the gig economy blitzscaled businesses do. New technologies mean that they are no longer necessary in order to provide the same service. It is now possible to do everything that they do, but in an entirely decentralised environment. And whether that takes hold today, tomorrow, next year or beyond, it will happen eventually, because it’s economically attractive and value providers and users benefit enormously.
The consumer is happy because they get more, and the value provider is happy too: with the margins returned to those providing the service, and the ability to combine otherwise disconnected services together, being self-employed is suddenly economically viable. Furthermore, for those that don’t want to worry about being their own boss, it’s now practical for individuals to be part of local, smaller co-operatives or businesses to provide flexible employment: they get, on average, less, but they get security, sick pay, paid holidays, and other benefits from being employed. Nobody is being forced to be a contractor. This is a compelling story because it’s fair for everyone.
Is it game over for the big players in the gig economy?
The existing centralised players in the gig economy offer an outstanding product experience to end-users and value providers alike. Effective user experiences are rare, and the Ubers of this world and others with this expertise are able to interface to a decentralised delivery network like anyone else, the difference being that they are users of rather than owners of the underlying infrastructure: they run trains, but they no longer own the track too. They are presented with an unparalleled opportunity to build the gateway apps that enable seamless on-boarding, effective product comparison and an interface that mere mortals can make sense of. Their expertise is the difference between consumer bafflement and consumer joy, as with it, users can conduct an orchestra of moving parts without their brain exploding from the complexity. This time, though, all participants win without the whole thing descending into a tragedy of the commons.
The playground is different, as ownership and control is distributed. It is this change that means that individual value providers can choose to take part as independent contractors and are still able to fund their place in society. To them, it’s the difference between merely existing and living. This is a key aspect of the broader, more equitable way in such a decentralised network functions. It’s a powerful concept that allows for more complex problems to be solved for consumers, and delivers a more efficient use of existing assets in the economy, but only if the cards are played well (and that’s by no means certain).
New technology is an enabler, but is not a solution in its own right. As I have slightly mis-quoted Douglas Adams on many occasions, people don’t want technology, they want to get things done. And if you are able to get things done in a way that is fairer, personalised to the individual, delivered free of friction and hassle and do so cost-effectively then it’s a winner.
We’re armed with the unique opportunity to build a decentralised delivery network that’s owned by those who use and provide the service. The scope is huge: delivering yourself from London to Sausalito is not a single dimensional problem like getting home in the evening. It isn’t conducted at the earliest opportunity. It requires planning, involves vast numbers of component parts and the best solution changes in real-time and must be adapted to. It’s the largest decentralised application ever conceived.
It’s time to make use of a near-perfect alignment of technology to do what technology should do: make getting things done a pleasure.
We’re building it. You can too. Join us in the #ddn channel on the Fetch.ai developer Slack and let’s get on with it.
-
Twitter: @pretzelsnake
[1] — I’ve written about economic dating agencies before, but from the perspective of hospitality and travel.
[2] — this isn’t a word, but it should be.
[3] — some Internet Explorer oddities-from-the-past were still causing rapid ageing of web developers until just recently. Ask them about it. It’s fun.
[4] — this is happening in other industries. Take streaming video. Netflix was attractive because, amongst other things, it enabled cord cutting: a cost-effective, one-stop-shop for everything. But now you need four or five subscriptions, all with their own UX and issues, and it’s getting worse. One day, in a decade or two’s time, there will be a Netflix of Netflixes and the cycle will reset.
