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hyperspeed flash

Uber steps up political game in war of tradition versus innovation

August 25, 2014

At some point, ride-sharing giant Uber was going to find a way to take its political game to an entirely new level, despite the initial advocacy disadvantage the ridesharing industry has had versus the trade taxi industry. That new level just happened with the hiring of President Obama’s chief political adviser and campaign guru, David Plouffe, the seasoned strategist who’s more than worth his weight in the advocacy business.

“Our opponent—the Big Taxi cartel—has used decades of political contributions and influence to restrict competition, reduce choice for consumers, and put a stranglehold on economic opportunity for its drivers,” wrote Uber CEO Travis Kalanick in an open blog about the move. “We needed someone who understood politics but who also had the strategic horsepower to reinvent how a campaign should be run.”

It seems like an obvious move: Hire one of the most celebrated, successful and very public political strategists you can find to break through the logjam Uber and the rest of the ride-sharing industry is facing as the traditional taxi industry successfully gets politicians to impose new regulations on the fast growing start-ups. If you want to make a statement and you’ve got Uber money, what better way to do that than to hire the president’s top political gun? In essence, innovators find themselves forced to learn the fundamentals of the political game if they are to survive regulating constraints.   

But while it’s an impressive play that could yield Uber enormous dividends if Plouffe can work his magic, it’s not entirely clear if it’s politically savvy based on the current landscape. Hiring Plouffe, a very partisan Democrat, is a rather curious move on the part of Uber, considering that it’s received quite a bit of public support and backing from Republicans who see it as an opening for Millenial voters in 2016. Conservatives have painted the fight between ride-sharing services and traditional taxis as a classic battle in which government regulations stifle the innovation economy. Interestingly enough, Uber seems to have already adopted some of the lexicon from that movement by using terms such as “Big Taxi” in a way similar to conservatives’ popular use of terms such as “Big Labor” when referencing rival labor unions.

As a result, hiring Plouffe could be somewhat awkward for the start-up, demonstrating an understandable level of naivety on the part of its very technology-oriented leadership. Basically, innovators don’t know or understand the complexities of politics or “the game”—nor should they be expected to. They are in the business of innovating and producing cutting-edge products.

Still, it will be curious to see how Plouffe—long known for his sharp, unapologetic and hyper-partisan style—will navigate choppy political waters that are just as dominated by Republican policymakers and conservative outlets as they are by Democrats. Plouffe will have a major task ahead of attempting to persuade the other side of the aisle; and, in hiring Plouffe, Uber could risk losing an audience that’s on the verge of not only maintaining its hold on the House of Representatives, but is also projected to take the Senate after midterm elections.  

In the meantime, Uber has its work cut out for it. The old school taxi industry may fall short in the innovation category, but it has more than made up ground through skillful lobbying and overpowering the rideshare sector with massive amounts of political spending.  The Sunlight Foundation’s Stan Oklobdzija reports “the taxi cab industry has donated at least $3,500 to the political war-chests of state legislators for every $1 that Uber, Lyft and Sidecar gave.” That’s an enormous gulf of leverage despite the fact that Uber has significantly expanded its local and state lobbying activities in major urban areas like Houston, Baltimore, San Franscisco and elsewhere.

“This massive discrepancy in political giving may also explain why, since the start of 2014, at least 12 states and the District of Columbia have introduced new regulations aimed to limit these popular ride-sharing applications,” adds Oklobdzija. 

Not that politics will stop the wave of innovation anytime soon. “Startups are coming up with creative ways to reengineer cumbersome analog business processes with technology,” writes Forrester’s Michael Yamnitsky in a recent blog. “Uber uses cloud, mobile, and analytics to recreate and bypass parts of the taxi/private car value chain. It connects customers directly to drivers, and uses data and analytics to make more efficient use of vehicle capacity.”

But politics does further inflame an environment whereby innovation will find itself constantly pitched in firefights with traditional trade groups and interests struggling to defend old ground. The ridesharing disruption is one example. Yet, we also see other examples such as Amazon’s moving forward with plans to introduce delivery drones as an expansion of their offering—which could mean a threat to traditional delivery carriers like FedEx, UPS, DHL and others or, even, the Federal Aviation Administration (FAA) facing another regulatory headache. One could envision the delivery carriers—teaming up with airlines, perhaps, who also conduct some delivery functions—beginning to put enormous pressure on agencies like the FAA to stall Amazon’s drone disruptor.

The jury is still out on whether Uber and other ridesharing providers are making effective use of the political capital they will need to stall the onslaught of regulations that could quickly become an existential threat should the taxi lobby continue to experience success. Ultimately, Uber’s hiring of Plouffe is recognition that they’ll need political and policymaking expertise as much as they will need the technical expertise to keep them competitive as a major disruptive player.  

Charles Ellison is a senior analyst relations strategist for TEKsystems. He keeps close tabs on changes and public policy shaping the innovation space. He is also a former congressional staffer, senior aide to state and local elected officials and an expert advocacy strategist. You can reach him with questions and comments @twoARguys via Twitter.

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