Grand Budapest Spare Room at Zoltan's House

You Can't Replace Bellboys With Code, Just Wheels

I stole this from Twitter long enough ago I don’t remember where it came from. Will credit if you tell me!

My first adult job when I turned 18 was as a bellboy in a hotel. This was an idiotic idea. I was at a job fair, I saw this, and because of The Who song “Bellboy” I thought this would be a brilliant idea. It was not. It was a lot of drudgery mixed with monotony and very low pay. My fond memories of it are mostly fond memories of being 18.¹ But it was also the year 2000, when we were at the crossroads of the analog and digital worlds, and my memories fit into that pattern. Days where you’d be indulged in the old world, serving celebrities like George Foreman and Joan Rivers. Days where you’d drive an Oracle engineer and have them explain things that were, at the time, mind-blowing. But, other than the hotel van having a car phone, we were, like all hotels, an ancient innovation. Hotels are timeless. This was not the kind of industry that needed disrupting.²

That’s not to say that it didn’t need changes. One of those changes – and one you younger readers may not even appreciate – relates to the department that was always our nemesis: Reservations. Sitting – we had to stand all day, they sat – in a room just behind the front desk, we had a whole team of employees whose job was simply to take phone calls from people making reservations. Yes, an entire department. Tediously filling out reservations. Over and over. These were good service jobs but, still, not overly productive. And it’s not multi-decade lingering bitterness to accurately describe this as what it was: middlemen.

Here's the thing, they never had any sort of special skill, or information, or ability to produce something. What they had was access to the (user unfriendly) reservations system. What was once a book was now a computerized database. The person who wanted to stay in the hotel couldn’t access it, so they had to speak to a middleman who would check if there was availability, see what the rate was, and then input the reservation. That’s all. So, what if you gave people direct access to the reservations book?

It's funny, if you told us in 2000 that we’d let people walk behind the desk and put in their own reservations, our minds would’ve been blown. But that is, essentially, what you do when you make a hotel reservation. You check to see if there’s availability, you check what the rate is, you put down the credit card information and reserve it. Seems simple enough. Seems like something there’s no need to have an entire department handling. The hotel saves money on employees and the customer has an easier experience. And, once you converted the analog reservations book – which could only be accessed with proximity – into a digitized database – which could be accessed from anywhere – this was inevitable.

This is an experience that has occurred in countless industries over the past twenty years. Someone primarily acted as a middleman – adding very little real value to the transaction – and they’ve been replaced by a technological solution. This is, of course, what’s devastated retail over the last twenty years.³

But the story of reservations becoming easy isn’t where “disrupting the hotel industry” ends. There is, of course, Airbnb. This is where I’m supposed to extol its virtues. Except I detest Airbnb. I both dislike their impact on livability and housing and I dislike it as a business. And although it is roaring now, if there’s one thing I don’t have long term faith in, it’s Airbnb.⁴ But to explain that, and to get into the second part of this, let me talk about another job I once held.  

Flash forward 16 years, and I was a lawyer fresh off one of the worst jobs anyone could hold. And while I didn’t need to rush to find another job, I was terminally bored. That’s what I hit upon a brilliant idea. Despite years of effort I could not learn Austin. I vaguely knew where things were but I never had the simple repetition of learning my way around this city I moved to. So, I started driving for Uber. And it worked. I learned the city inside and out. I knew how to get from any place to any other place. I learned the good places to go, the restaurants, and where the seedy underbelly of the city was.⁵ It was loads of fun, and I was somewhat melancholic about returning to law practice when it was time to do so. And in that time, I learned first hand about the great innovations of Uber.

First, the pure tech part of this, and this should sound familiar. The old way of getting a car, by hailing one down, was objectively terrible, not just inconvenient – and rife with racism – but also being responsive enough to market forces that it is only useful in a tiny sliver of locations. The widespread adoption of telephones allowed for you to call for a car, but this was also inconvenient, particularly pre-cell phone. And anyway, the cab dispatcher was a middleman. Cutting them out through the power of the interconnectivity of digital communications as a helpful innovation. Pairing that with frictionless payment systems was a gift from the heavens for anyone who had to deal with paying for cabs in cash or their suspiciously always broken credit card machines.

But none of this was truly disruptive. This was akin to the change in hotels: using the interconnectivity of digital communications to make things more convenient and supplanting middlemen with code. But cabs always had the problem that they were a constrained supply. As you may recall, supply and demand have a relationship with pricing. Uber did not just increase demand but it drastically increased supply. And it did so by its greatest innovation, the one that got me behind the wheel for them: it made it okay to be a cab driver.

Part of this was because of their VC financed assault on the regulatory hurdles. But what was once unfairly⁶ low status work – typically associated with negative stereotypes about immigrants and one of Robert De Niro’s most mentally unstable characters – now became something people could do in their spare time. No training, no hiring process, no specially designated vehicle. Anyone could do this. And, weirdly enough, we all just accepted this. Talk about a disruption. Imagine if tomorrow you could just walk into a restaurant and serve some tables for a few hours, pocket the tips, and then bail. And then imagine everyone is just cool with that. This is the real disruptive force of Uber.

Likewise, this is the real disruptive force of Airbnb. They made it socially acceptable to run a hostel. They made it socially acceptable to pay to stay in someone’s apartment instead of a hotel. This is much more disruptive than a website that just connects these people to do something that would have been unthinkable just a few years ago.

But, much like Uber, it has a problem. In many ways, the bloom is off the rose for Uber and Lyft. And it’s not because people suddenly decided it was weird to be a part time cabbie or get into a stranger’s car. It was because they weren’t tech companies. They are transportation companies, subject to all the problems that entails. And part of the problem is the difficulty in making a profit. Even benefiting from regulations that strangled the laws of supply and demand, taxi companies were always low margin businesses. There’s just not that many people who are willing to pay enough of a price to be driven somewhere that they’re paying substantially more than the price of labor and vehicle costs. Uber was able to digitize away the dispatcher, but, how much money do you think that person was making? I’ve seen Taxi, I know Louis De Palma was no Frank Reynolds on the fictional character wealth scale. Why did we think digitizing that guy would make for immense profits?

Here's the thing: the car and driver are not the middleman. They’re the whole point. It’s into the realm of science fiction to digitize the vehicle. And replacing the driver with code has proved far more difficult than expected. Thus, you’re left with boring old transportation companies, who can’t exactly disrupt their way around inflation, gas crises, and rising prices.

Similarly, Airbnb is not a tech company. Oh, you can search for places to stay on their website? Man, that’s unheard of! They’re just a hospitality company. And just like Uber and Lyft, they’ll have to compete with the incumbents in their industry. And just like Uber and Lyft, they’ll benefit from not having to follow the basic rules of business, like consistently making profit and being legal. But, unlike Uber and Lyft, they can never win. What Uber and Lyft were providing was so almost identical to their competition that they were able to dominate the ground transportation market. They have essentially replaced taxi cabs. But Airbnb can’t replace hotels, there’s just too much of what a hotel does – primarily, being solely devoted to being a hotel – that an Airbnb can’t. They can carve out a share of the market, but they’re just a new type of hotel. Which means for all this talk of disruption, what we got was a new type of hotel and a load of pirate taxis.⁷ That’s all.

Netflix tried to create something truly new for the digital age, but they couldn’t change how people think. Uber and Lyft (and eventually, I believe, Airbnb) were able to change how people think, but unfortunately, it wasn’t for anything new. What if, however, there was a tech company that managed to completely change people’s thinking and change how you experience the world and did it all by making the most traditional of ideas in the most skeuomorphic way possible? Well, obviously, there is, it’d be pointless if the answer was “no, that doesn’t exist.” But we’ll talk about who that is next week as our series on disruption rolls on.

1. That and the fact that one time when I made a delivery to her room, Anna Kourkikova answered the door in a towel. This will mean nothing to any of you under a certain age or those of you who have not had the mind of an 18-year-old boy. But, as an 18-year-old boy in the year 2000, this was a life changing experience.

2. Even though this series is more in line with what we think about when we hear “tech” I always like pointing out that technology goes far beyond microprocessors and code. My job was already dying at this point due to a technological innovation. Although I did not work off tips the way a restaurant server does, the difference between me having a crap night and a great one was tips. Celebrities, with one notable exception, were a jackpot. Golfers, even more so. Senior citizens were – and this would surprise my restaurant friends – like a goldmine. But I needed to carry people’s bags. And somewhere, some asshole decided to put wheels on luggage. Dozens of people everyday would say “No thank you” as they extended the handle to wheel their own bags. And my pockets filled with lint, not money. Remember, everything is tech.

3. Originally I had a digression here about travel agencies, since travel agent is the job that is most associated with the dying days of the pre-internet era. Unfortunately, I wasn’t able to find the level of statistics I wanted to support my point so I’m cutting it down to a footnote. People think travel agencies are gone but they’re not. Over a third of all hotel books are still done through travel agencies – they’re just online ones like Expedia. The travel agent is gone, but you’re still going through a middleman who is laying in the cut. It’s just less human.

4. If this seems bold, remember I’m kicking myself on having written – in December 2021 – a piece on how Netflix was a house of cards (yes, I had that awesome pun) but thought people would think I was ridiculous. Then I finally published it after months of Netflix getting their teeth kicked in. So, I may as well make bold predictions now. And despite Airbnb looking like it has finally become a profitable company that has turned a corner, I don’t think it’s promising long term.

5. This is one of my best pieces of advice: if you’re new to a city, drive for Uber for a couple months. It essentially subsidizes the type of constant driving you need to learn while also forcing you into places you’d never otherwise go. This is great life advice and do you realize this is free? Smash those like and subscribe buttons and share on social media. Thanks, you owe me that much.

6. I say unfairly because I think our relationship between status and value with professions is profoundly screwed up. Our lowest status professions are usually the ones that provide the most value and joy to the world. Our high-status professions typically do the opposite. Trust me, I’m a lawyer.

7. The term for unlicensed cabs that I’m more familiar with involves a derogatory term for the Roma people. So, I went to Wikipedia and apparently these types of cabs are called “Pirate Taxis” in both Mexico and Scandinavia. That sounds very cool.