From Drones to Sharing Economy, Don’t Disrupt the Disruptors


Napa Valley met the Silicon Valley at the recent Xconomy Retreat on Technology, Jobs, and Growth (aka the Napa Summit). Experts in cutting-edge technology huddled with business leaders and investors in the California wine country to explore what’s on, and just over, the technological horizon.

Over the course of the two-day event, drones and the sharing economy came up again and again as game-changing technologies with the power to improve our lives. At the forefront of “disruptive innovation,” drones offer the potential for speedy and efficient delivery of supplies and medicine to far-flung areas, better and more effective crop production, and safer infrastructure monitoring and maintenance, among many other advances.

The emerging global market for business services using drones is estimated at more than $127 billion, according to a study by PricewaterhouseCoopers. Here in the U.S., we deliver six billion packages weighing less than three pounds every year. These deliveries—whether they’re replacement parts for your car engine from eBay or a new pair of shoes via Amazon—are the perfect candidates for drone delivery.

Drone delivery will take noisy trucks off our city streets, in the process reducing urban traffic, cutting fuel consumption, reducing carbon emissions, and speeding up delivery times. A huge win, but only if we create the right policy environment for this technology to thrive.

Despite this economic potential, we are concerned that a patchwork of conflicting and confusing state and local regulations could hinder growth and investment in drones and related services. For U.S. competitiveness and leadership, as well as safety of the national airspace system, it’s crucial that states and localities recognize and defer to the Federal Aviation Administration’s jurisdiction, its recently released nationwide rules, and other subsequent policies that balance safety and innovation.

The sharing economy is similarly creating new job opportunities, while bringing critical services to underserved areas.

Airbnb has given more than 350,000 people a platform to become entrepreneurs—and at the same time, provides accommodations in areas where traditional commercial lodging is either unavailable or beyond some people’s budgets. For example, when Pope Francis visited Philadelphia last year and all the hotels and motels were booked, homeowners stepped up—via HomeAway and VRBO, as well as Airbnb—to accommodate the overflow of visitors who came to town to see him.

During that time, Uber and Lyft augmented Philadelphia’s taxicab fleet to help people navigate through the hundreds of thousands of visitors the papal visit drew. At the same time, those ridesharing services put extra money in the pockets of drivers and used vehicles that otherwise might sit idle for 95 percent of the day.

Uber adds an estimated 50,000 new drivers every month, and 54 percent of Lyft customers say the ridesharing service enables them to get to destinations that would otherwise be inaccessible. In both cases, these successes come despite the numerous regulatory hurdles and other roadblocks regularly thrown in their path by the legacy taxicab industry and its political allies.

In that sense, Uber and Lyft are textbook examples of “disruptive innovation,” and they should be welcomed by cities, rather than resisted, as was the case in Austin, Texas.

In May, Austin voters upheld a city statute requiring fingerprinting of drivers, a measure that won’t significantly strengthen public safety beyond both companies’ own strong background checks. As a result, Lyft and Uber pulled out of the city, rather than comply with the burdensome requirement. It was a lose-lose situation for a rapidly expanding city that’s also a booming tech hub.

And what happened when the biggest ridesharing companies pulled out of Austin? A host of smaller startups swooped in to fill the void—confirming that residents are eager for innovative transportation solutions.

Cities such as Philadelphia and Austin also should embrace Uber and Lyft for the ancillary benefits they provide; namely, relieving traffic congestion by expanding public transit options.

In some markets, thanks to the connectivity provided by the Internet of Things, ridesharing services are collecting and sharing road and traffic conditions in real time—and in some cases, sharing data with governments that enables smarter management of urban growth.

Innovative business models such as drones and ridesharing have always disrupted the status quo, and that makes some uncomfortable, particularly those who benefit from maintaining the status quo. But we should never let the status quo—however entrenched, however politically powerful, however comfortable—stand in the way of the next great technological leap forward. We must always keep our eyes trained firmly on the horizon.

Gary Shapiro is president and CEO of the Consumer Technology Association (CTA), the U.S. trade association representing more than 2,200 consumer technology companies, and author of the New York Times best-selling books, Ninja Innovation: The Ten Killer Strategies of the World's Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. Follow @GaryShapiro

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