Tech-startups have had a cataclysmic effect on obsolete business models, driving the establishment to adjust and adapt or begin the death dirge for their organizations. From Netflix’s foray into original—and superb—programming, forcing the hand of cable company fat-cats to up their game, to online-review apps putting comment cards in the public-eye, Silicon Valley’s impact on the status-quo has a boot-quaking quality that is reverberating throughout boardrooms globally.
Nowhere is this more evident than Uber’s incursion into the taxi-cab market, which in Orlando, is turning Mears Transportation’s upper-level executives legs into jelly. The ride-for-hire app, which planted its standard firmly on Orlando soil a bit over a month ago, has indisputably shaken the industry and ruffled the feathers of the institution.
As Uber touts itself as a ride-sharing smartphone application—not a taxi-service—they claim they are not subject to the licensing and regulations the city requires for traditional taxi-drivers. Political gamesmanship followed—with police orchestrating sting operations targeting Uber drivers, towing their vehicles and issuing fines for operating unlicensed cabs.
The threat of legal consequences was not enough to curtail Uber drivers—who were reimbursed by the company itself for fines and lost time—and over the weekend, Mears announced that it had halted the construction of its new headquarters, the impetus being declining profits.
In five-weeks, a tech-based neophyte took a large-enough chunk out of an Orlando staple’s profit-line to significantly alter future plans.
This result should not have come as a surprise to Mears. Like Blockbuster to Redbox, when operating on an outmoded archetype and ignoring the looming shifts in business, it typically spells disaster (and bankruptcy).
It’s no coincidence that Mears released their own app shortly after Uber’s arrival, but with the weekend’s report of their construction hiatus, it appears the damage had already been done. Mears is now in a strategic defensive position—not ideal for making money—and faced with the choice of changing their business model or accepting the fact that their business, along with their practices, will be a thing of the past.