Opportunity lies where trust breaks down

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I’ve been using a lot of Uber lately, and have been thinking about the service even more. Being a new resident of San Francisco, the unreliability of taxis is something that takes a little getting used to. You call a cab and, if you’re lucky, eventually it shows up. More often than not, it doesn’t. This is not a problem most of the time since you just hail a cab on the street and if it stops – you’re in. But there are occasions that require a little more reliability than that.

I’ve spoken to several cab drivers about the situation and most say that you simply call three cabs (from three different companies) and then one of them will probably show up. It makes the overall situation even worse since all three cabs might decide to come, but only one of them will get the passenger.

The problem stems from a break down of trust in the system. If the cab driver can’t trust that the caller is still there once he/she gets there, then the likelihood of them picking someone on the way there is much higher. The same goes for the caller – if the cab rarely shows up otherwise, why not just grab any cab that happens to pass by? This is, of course, a vicious circle. 

However, where trust breaks down there is also opportunity. Uber has a premium offering by driving town cars, but I think for many the premium is simply that the car turns up. It’s quick, convenient and reliable. Their recent venture UBERx (that drives hybrids at a lower price) seems to support this theory. Not only is it an elegant idea to use remnant car inventory cruising around the city, it is also filling in the blanks of a trust system that has failed. And by doing so – creating a whole new market for itself. Very impressive.

There are many other markets where trust is low, albeit not as low as the SF cab market. Two of my favorite love-to-hate-industries are banking and insurance. Although I was too early in my predictions that these markets would be disrupted (you know how hard predictions can be), I still feel that they are ripe for change.

Do you trust your insurance company to help you out if something goes wrong? Probably to some extent. But what is their listed value of the object that you have lost – is it the same as the value you place on it? Probably not. Many have decided against contacting their insurance company simply because it is too much trouble for too little money. In short – people don’t trust the insurance to help out in the way that it was originally intended when it was purchased. I think there’s something there to be explored.

Banking is the same. This well-written piece (about an investment bank, but still) shows the contempt that they show for some of their customers. Documentaries like Inside Job show an industry that clearly isn’t putting their clients first. The current Libor situation will not help here either.

All in all, there is a break down in trust in these markets too. It is obvious in banking, and somewhat slower (and more accepted) in insurance. The trust is disappearing, and thus the opportunities are starting to occur. I wonder who will be the first to fully exploit them.

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