January 7, 2019 (1781 words)
::
A truly diabolical startup idea that I really hope never actually materialises.
Tags: inequality, startups
This post is day 7 of a personal challenge to write every day in 2019. See the other fragments, or sign up for my weekly newsletter.
Over the holidays, I had the extremely unpleasant experience of having a car towed because it was “ilegally” parked [according to some byzantine and fairly unclear regulations]. The experience of having to take a Lyft to a sketchy towing lot and paying $200 to get the car back was pretty shitty, but it got me thinking. Most Americans can’t easily come up with $400 in an emergency; paying $200 to get your car back would probably be out of the question for a number of people. (That number can be higher, too, if your car weighs a lot, or if you didn’t pick it up within the first 24 hours, or you’re in an area with especially lax legislation.)
Which means that if you don’t have a lot of spare cash, and your car gets towed for whatever reason, there is a very real possibility that your life gets a lot worse. Maybe you have to turn to a payday lender to be able to get your car back, which means that you’ll immediately start to owe extortionate interest - possibly accruing indefinitely. Maybe you’ll have to sell something important to you. Or maybe you just don’t have access to a car for a while, which means it takes you longer to get to work because public transit is underfunded, which means you have less time to care for your family or just like live your life (or maybe you lose your job). And in the meantime, your car sits in a lot gathering dust, amassing “storage fees” and counting down the days until it gets sold at an auction.
Now, any person with empathy would look at a situation like that in horror and think, how unfair. They might conclude that the fees shouldn’t be so high, or the terms shouldn’t be so punishing, or maybe public transit should be vastly improved so that people are less likely to need private vehicles in the first place.
A startup founder, on the other hand, would look at that situation and see it as an opportunity.
Enter Tow.io: Airbnb for towed cars.
[To be clear, I am not saying this is a good idea. Only a startup founder with absolutely no moral scruples would ever consider this. That is to say, quite a few of them.]
The car-towing industry operates with a massive inefficiency. Because of the existence of “poor people” (our target market), there are all these cars sitting in a lot, totally unused, and possibly never to be reunited with their previous owners. These “poor people” would probably like their car back one day, ideally without having to pay the full fee, and would probably be willing to cooperate to a high degree to make that happen. The towing companies, on the other hand, probably wouldn’t mind a bit of extra revenue, especially if they don’t have to do any extra work for it.
Now, these towing companies (essentially privatised cops for peoples’ cars) can operate fairly freely - customers have no obvious & easy way of contesting their car being towed. The company that has taken their car has pretty much all the power here, and if a customer wants their car back, they usually just have to pay the fee. On the other hand, the towing company isn’t all-powerful, as their fees are often limited by local regulations, and they can only physically move the car in its entirely; they can’t necessarily get inside it, or say drive it around, without committing a crime (i.e., hotwiring the car). But moving it is okay, so they move it to their own lot, and wait until the unlucky owner comes around in order to sheepishly pay the fee.
Here’s where the startup opportunity comes in. Broadly speaking, there are two types of customers: those who will pay the fee immediately, and those who, for whatever reason, will not. Those who want their car back right away and can afford to pay it will do so (even if resentfully), so there’s no inefficiency there - those people aren’t the target market.
Your target market, on the other hand, may find it hard to pay the fee. They may need some time to come up with the money, or are contemplating the possibility of never getting their car back.
This is your goddamn beachhead market right here. These people are vulnerable, and in need of help. You, Tow.io, are here to help them. You are their friend, sidling up to them in their time of need. They have arrived at the towing place feeling all sorts of emotions - angry, confused, worried, indignant because they don’t think they violated parking laws. The agent of the towing company has named an exceedingly high cost to getting their car back. They don’t know what to do. But then the agent says:
“If you can’t pay this right away, don’t worry. We have a partnership with a company aimed at helping our most distressed customers. All you have to do is sign these forms and give us the keys to your car, so it can be rented out. Depending on how much money your car makes, you can have your car back in no time at all.”
So they hand over their keys and possibly a down payment as well, depending on the payment plan (i.e., how quickly they get their car back). This is where the magic happens. You, Tow.io then partner with some other company that handles renting out other people’s cars. [i.e., you don’t really need any expertise or assets - you’re just the middleman operating between other middlemen, making you a lean startup par excellence.] Maybe something like Turo or Getaround, which are basically Airbnb for cars (“peer-to-peer carsharing”). Or a ridesharing company like Uber or Lyft. Once the car has made back enough money to pay off the towing/storage fees, then Tow.io brings the car back to the towing lot where the car’s actual owner can pick it up again. Of course, Tow.io will charge a handsome fee for this service (taken as a cut of the income generated), but the car’s owner is probably just so grateful to have their car back that they don’t even care. In any case, they don’t really have any power to refuse. What else are they going to do?
In startup lingo, this situation would be considered a win-win. People get their cars back even though they couldn’t afford to pay the fees, and the towing company gets their fees. It may even be a win-win-win, as there are now more rental cars (or Ubers, or Lyfts) available on the market, which could drive down costs for those consumers. Or even a win-win-win-win, because Tow.io gets to become a billion-dollar company, making some tech dudes rich in the process.
This kind of reasoning is what I’d call a failure of imagination. Seeing this situation as win-win is to be completely trapped within the horizons of the initial starting conditions, treating them as given and being unable to conceive of alternative possibilities. So many assumptions around what “poor people” should have to endure just for existing are taken for granted. Rather than contesting the current conditions - trying to improve them - this business model is essentially starting from the axiom that poor people are currently penalised for being poor, and we can make their lives slightly less terrible while also enriching ourselves. Rather than trying to actually tackle the problem at the root, the stereotypical morally bankrupt startup approach is to keep the situation mostly the same in order to monetise it.
In software development terms, this is akin to congratulating yourself for implementing a few small bug fixes when really the whole system architecture is terrible and needs to be rewritten. Also, your company got acquired, and the product you’ve been working on is being discontinued, and you’re being laid off as part of the new CEO’s cost-cutting strategy. And now your spouse has taken the kids and left.
That analogy got away from me a little bit. My point is that this sort of thinking - particularly rampant in Silicon Valley - is flawed, because it’s missing the bigger picture. It’s a local optimisation when really what you need is a total refactoring.
In the case of our hypothetical Tow.io, the ostensible goal might be “helping” people whose cars have been towed, but that’s clearly just a means to an end. The business model requires people whose cars have been towed and who cannot afford to pay the fees immediately. You can imagine a startup like this eventually lobbying local politicians to increase maximum fees for towing and increasing the number of no-parking zones (similar to real-life tax prep software companies lobbying against tax reform).
Tow.io doesn’t actually have to be a startup, by the way. However, if it is pitched like a startup, with a dumb zeitgeisty name and a sexy-looking app, it’ll be so much easier to raise a lot of money right away, which would allow it to quickly capture the car-towers market and because the dominant player in the field. If Tow.io found a way to incorporate the blockchain, even better. And once you’ve captured your beachhead market, you could consider expanding in all sorts of directions: you could buy up the towing companies; you could find ways to target even people whose cars haven’t been towed; you could convince the owners of the cars to be the ones driving the cars around in order to take some of the rideshare market away from Uber/Lyft/etc. The sky’s the limit, when you’ve raised millions of dollars and don’t have empathy for other people.
So why did I write 1,781 words about this silly and obviously hypothetical startup idea? Because I think it’s indicative of a particular way of thinking: one that’s simultaneously clever on a small scale (in spotting inefficiencies) and extremely terrible on a larger scale. It’s an illustration of the worst of startup culture, which is sadly imbricated with a horrific neoliberal rationality that values a few startup assholes getting rich way more than it values everybody else having actual freedom over their lives.
Please don’t start this startup, or any startup like this. You would not actually be “helping” people; you would instead be using “helping people” as both excuse and stepping-stone to being able to profit from their helplessness, which will eventually incentivise you to keep people helpless. If you actually want to help people, find the root of their problems and tackle that instead.
(The problem is probably capitalism. Maybe try disrupting that.)