Transportation Innovation’s Crucial Ingredient
For the revolution to succeed, smart regulators and thoughtful entrepreneurs will need to work together.
One constant in my last two jobs -- in the Chicago's mayor's office and as an investor in early-stage companies that hold the potential to solve urban problems -- has been a focus on managing and innovating in transportation. The landscape has changed dramatically over the past five years, creating the opportunity for both cities and private companies to make it simpler, cheaper and more efficient to get around. But progress is often stalled because the public and private sectors see themselves in silos and too often find themselves at odds. The reality is that their mutual success is wholly dependent on one another, and both companies and cities will be far better off when the dialogue changes to be more collaborative.
My former boss, Mayor Rahm Emanuel, often said that people hate the status quo but they're not too fond of change either. This mentality governs much of the public sector's approach to disruption in transportation, and it is understandable. After all, no elected official wants to be in charge when her city's streets slow to a crawl or her constituents are held hostage by unregulated industry. But too often this means no change at all when risk-averse leaders prioritize self-preservation over innovation and ultimately under-serve their residents.
The best approach is for government leaders to see their role as setting the ground rules and allowing new solutions to flourish within them. This is especially true when startups leverage public goods like roads to supply their services.
I confronted this challenge head-on in Chicago in 2012. We had come into City Hall a year earlier on the promise of opening the city's doors to technical advances that bring new solutions to old problems. The emerging rideshare industry seemed to answer that call, but did so in the wrong way. The leader in the space had no interest in working with local leaders to craft baseline standards for rider safety, data sharing and more.
By that time, we in City Hall were a few months behind our constituents: The technology had already taken off, people clung to it because of the service it provided, and government was left responding to threats from the incumbents and disrupters. We eventually got it right, and the model that was enacted in Chicago to regulate ridesharing became a national standard. But considerable resources were spent on all sides to fight that battle because government was caught off-guard by emerging transportation options.
Today we're seeing a similar story play out in a very different way. In Seattle, for example, LimeBike has become the first dockless bikeshare system to be deployed in a U.S. city. It did so by working with government but without the types of public subsidies that will ultimately bring down larger, traditional bikeshare companies. Seattle saw this coming, and is responding the right way by working with the incumbents and the innovators to establish a set of rules by which any private partner must operate. Instead of shutting the market or picking a winner, the city government is defining the parameters and welcoming young companies to create new solutions. (My company, Ekistic Ventures, serves as an adviser to LimeBike because we believe that through technology innovation and by deploying at scale LimeBike is likely to become an integral transportation provider that solves a critical problem for cities.)
Probably the most contentious transportation issue confronting governments right now is the deployment of autonomous vehicles. The federal government is drafting regulations, while states and cities struggle to come up frameworks of their own. Not all companies have been willing to work within those frameworks. Uber flouted California rules and deployed driverless vehicles without approval despite the fact that a process has been in place since 2014, while Google, Tesla and many other companies have received permits and accepted a set of ground rules to deploy small test fleets in a smart way.
Companies deploying driverless technology need to engage with policymakers at all levels of government early in the process to exchange feedback, address concerns and agree on basic rules of the road for testing and eventual roll-out of the vehicles. Groups that represent industry and consumer advocates have popped up to advocate for sensible rules, but some companies still refuse to even come to the table. George Hotz of comma.ai, for example, threw in the towel on his project to add self-driving technology to some vehicles rather than comply with a request for information from the National Highway Traffic Safety Administration.
We are in the infancy of this transportation revolution, but it is clear from these examples that success will come when smart regulators and thoughtful entrepreneurs look at the transportation system as a whole and innovate on a piece of it within an approved framework. The successful players on both sides will be those who, rather than trying to reinvent the wheel or disrupt entire systems, respond to changing consumer demands and advances in technology to create more efficient and equitable transportation options.
The key ingredients are governments willing to set narrow rules to ensure consumer protection rather than picking winners and losers and emerging companies willing to play within those rules. There are a lot of potential pitfalls in that simple statement, but we are seeing an increasing number of examples where this approach yields significant benefits for citizens.