Worried about your business being “Uberized”? Concerned that your services need to get more like AirBnB? Well, hope you’ve got deep pockets…
There is a pernicious meme that is well established in business that relates that the Internet is basically free. In turn, it relates that technology using the Internet (and mobile too these days) are basically free. And that armed with just a bit of cheap technology, a few nocturnal hackers and a great idea the likes of Uber and AirBnB are revolutionizing the world.
This is dangerous poppycock because it misses out two significant, crucial factors. The likes of AirBnB and Uber are equipped with some clever technologists, some interesting technology, ridiculous amounts of money and patient investors who aren’t expecting a quick return.
That last bit of the narrative rarely gets a mention.
Last year, Fortune magazine reported that AirBnB was projected to be making a loss of $150m on revenue of $900m, alongside taking an additional $1bn of investment on board.
Last month, Forbes magazine reported that in the first half of 2015 Uber lost nearly $1bn.
A billion dollars. In six months. On an app that books taxi rides.
The Uberfication/AirBnBfication story of transformation that neglects to talk about the investment leads to crazy talk, and massively inflated expectations.
In the autumn the government announced that £1.8bn would be being invested across government for digital transformation. Now that is undoubtedly a very large amount of money. But it’s just over 2 1/2 years of the money that Uber is currently burning ON A TAXI APP. Now I’m sure that building a taxi app is really complicated and everything, but not at the same scale as running AN ENTIRE COUNTRY.
Just by way of comparison, the National Programme for IT (aka Connecting Health) set out with a £2.3bn budget over a three year lifetime. Nine years and an estimated £12.7bn later the project was canned.
Of course, since then, we’ve learned. Technology has moved on. There are massive success stories from the private sector like Uber and Air BnB that have managed to transform entire industries like disruptive magic, and are profitable after spending next to noth… oh.
It’s not all doom and gloom. Technology has changed. You don’t need to do monolithic massive projects any more. But I don’t see any evidence that BIG projects still don’t lead to BIG costs. And ignoring the BIG costs of the digital poster children is making false claims that are very unlikely to be delivered.