Overcoming barriers to business success
Uber’s recent results were sufficiently robust that it felt able to divert a portion of its free cash flow to a $20bn stock buyback. The company is listed on New York’s NASDAQ stock exchange and has a market cap in excess of $180bn. More than this, it has become a firmly established part of our lives; the verb ‘to Uber’ is now a well-established part of the Western vernacular. So, it may be easy to forget that it was once a controversial and scrappy start-up. Uber was frequently accused of breaking the law, skirting and ignoring regulations; to some this was reprehensible behaviour, but to the vast majority of us this was a necessity to bring taxi services into the 21st Century.
The unfortunate part of the story is that Uber had what many do not. Uber had incredibly deep, venture-capital-sponsored pockets that enabled it to develop its software, establish itself in our cities as an essential service, and ride out the legal and regulatory challenges levelled against it. It is a shame that so many of our projects, start-ups, and entrepreneurs are stymied by the dead hand of government regulation.
Before Uber, outside the big cities, it was a very difficult to get a ride home unless you booked well in advance. Even in the big cities, hailing a taxi away from the central districts or the main road, particularly when it was raining, was hard graft. Even once the taxis had arrived, they were painfully expensive. Ride-hailing apps have changed all this; whether it is Uber, Lyft, or Bolt, you can get a ride to take you from A to B with full knowledge in advance of the cost. If there is a shortage of drivers at any one time, the innovative use of surge pricing helps rectify the imbalance – this is pure market pricing in action.
The service is better and the cost is lower for consumers, and that is a good thing. That is how innovation works in a free market. We all win, except the incumbent cab drivers who are upset because their cosy cartel is broken and their fees are no longer distorted upwards by over-zealous regulation. ‘The Knowledge’ is an example of this regulatory burden. Black Cabbies must have passed the exam to gain their licence, but two years spent learning the street map of London is not time well spent in an age of GPS and Google Maps.
Uber’s tactics attracted criticism at the time but it was the only way to break into the market and effect change. They were accused of operating in legal grey zones, building critical mass and mobilising users and other stakeholders for political power[1], as if mobilising users of a good service is wrong in a democratic society. No one group has the monopoly on political power, certainly not the media, lawyers, or regulators, who were bypassed by Uber’s tactics.
Uber was able to weather the regulatory and legal challenges and establish itself, but in doing so lost about $33bn and only started to make money in 2024, cementing itself as a profitable company in 2025. Uber, though, is the exception. The rest of us wrestle with the planning authorities, whether it is to build a house extension or establish a new business. There are appeal processes for rejected projects, but resorting to any sort of redress is so expensive that engaging lawyers is now seen as a menace or a threat rather than something that might give rise to an equitable outcome.
President Trump and the Republican Party seem to realise that some rolling back of the frontiers of the state is required to allow for growth. It is a difficult path to tread, however the UK has become a more difficult place to launch and run a business, and it is clear that the government needs, and wants, to trim back a regulatory system that Chancellor Rachel Reeves claims has a ‘disproportionate attitude towards risk’.
Despite this, last month the government set up a football regulator to give “fans a greater say in how their beloved clubs are run” (presumably this includes the fans seen making vulgar gestures at each other at every game). The Premier League has long voiced its concern that a regulator could have “a negative impact on competitiveness, clubs’ investment in world-class talent, and the aspiration that drives our global appeal and growth”. So which is it? Perhaps the answer is a Regulation Regulator – a body that monitors and curtails the government’s desire to contain and control through pernickety laws and regulations. Just a thought.
[1] https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=3559&context=aculty_scholarship
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