We sometimes take for granted that which is right before our collective noses. Creative destruction caused by technology is so rampant that it is practically a cliche. It is easy to ignore not only the speed at which disruption caused by technology is affecting society, but the acceleration in the pace of change. This acceleration and its effect on markets, companies and labor is astonishing.
I was reminded of this during the holiday weekend, when I saw the film “The Big Sick.” Loosely based on the real life of Kumail Nanjiani, perhaps best known for his role as Dinesh on HBO’s “Silicon Valley,” it accidentally reveals how quickly things are changing.
Nanjiani plays an aspiring stand-up comedian who now is also an Uber driver during the day. Much of the film is based on events that took place a decade earlier. It’s noteworthy that during this period, Uber did not yet exist. The iPhone, also a minor reference point in the film, had recently been introduced and was far from the near-ubiquitous device that it is today. Consider for a moment how astonishing that simple data point is: The iPhone, which just celebrated its 10th anniversary, and Uber are so omnipresent today that they serve as props in films and almost pass without notice.
Ignore the melodrama in Uber Technology’s executive suite and instead consider how quickly the app has altered the way so many people get around major urban areas. In my home port of New York City, it has totally disrupted the calcified medallion taxi industry and its monopolistic regulator, the Taxi & Limousine Commission. Morgan Stanley estimated that the yellow cab market share fell 25 percent from summer 2015 to summer 2016, and the value of taxi medallions has plummeted more than 50 percent. In January 2017, “medallions accounted for 48 percent of total trips logged by yellow taxis as well as cars dispatched by ride-hailing companies. That’s down from 68 percent in January 2016,” according to CBS. Medallion owners are defaulting on their loans and bankruptcy has become increasingly common. Taxi medallions, once a license to print money, have become unsellable.
The delicious irony is that the TLC and the medallion owners openly conspired to limit the number of medallions in New York, creating the opening for Uber to answer the demand they chose to ignore in favor of their regulatory monopoly.
Score one for free markets.
Similar changes have occurred in other cities.
Of course, Uber couldn’t have come into being without large numbers of people having a powerful, location-aware, mobile technology in their collective pockets. Apple’s iPhone is another game-changing tech innovation that we now take for granted. It has been disruptive in so many ways, perhaps none more so than the pace of change itself.
Consider a simple measure of the time it takes for a new product or technology to reach a significant milestone in user acceptance. The Wall Street Journal noted it took the landline telephone 75 years to hit 50 million users. Vala Afshar, the “chief digital evangelist” for Salesforce.com, tweeted that it took airplanes 68 years, the automobile 62 years, light bulbs 46 years, and television 22 years to hit the same user milestones.
But to really see how the pace of change has accelerated, consider the impact of technology since 2000. Twitter, Facebook and YouTube hit that 50-million user mark in two, three and four years, respectively. That may sound astonishing when compared with cars, television and light bulbs, but it’s nothing when compared with the “ Angry Birds” app, which took a mere 35 days. Of course, the ubiquitous platform the iPhone App Store provided was needed to achieve that astonishing result.
Similar digital platforms are precipitating even faster changes. More than merely creating a singular invention, these platforms allow entrepreneurs, inventors and coders to produce ever-more innovative and disruptive creations. New platforms such as Glitch allow even novice users to remix other people’s software code.
Lots of other industries are being disrupted. Consider the combination of genomics and molecular biology, and what this might mean for longevity and the treatment of diseases. We are seeing it in materials science and architecture, in chemistry and energy storage, in fracking technology and the demise of coal. Big data and artificial intelligence are also changing the way the world works.
Which brings us back to Uber: Having disrupted the taxi industry, Uber’s self-driving cars are poised to disrupt demand for drivers in Pittsburgh and Arizona. It is only a matter of time before autonomous vehicles disrupt demand nationwide for drivers (who, after all, helped to disrupt the cab business in the first place). Maybe taxi medallion owners will have the last laugh after all.
We have no idea exactly how much technology will affect labor markets, but we do know it will be significant. Heraclitus, a philosopher of flux who lived 2,600 years ago, wrote, “Nothing endures but change.” We underestimate its pace at our own peril.
Ritholtz is a Bloomberg View columnist. He is chief investment officer of Ritholtz Wealth Management.