What would happen if everyone just started playing taxi driver?

Whether the sharing economy succeeds or not is all in the regulations, according to entrepreneur Fazli Koc. But it’s not a simple matter of too many or too few rules. Instead, he says, legislatures need to regulate smarter

Turn back the clock 100 years and imagine you earn your living driving a horse-drawn carriage. Now imagine that you begin to see more and more of a new invention: a horseless carriage. At first they are a fad. Then they are an annoyance. Before you know it, they are a competitor, and finally you’re out of business.

That’s pretty much the situation that a lot of businesses are facing right now, says Fazli Koc, a 22-year-old tech entrepreneur.

He’s convinced that today’s version of the horseless carriage is the sharing economy. On the one hand, it threatens to undermine existing businesses like taxis and hotels, but on the other, it offers consumers more personalised and ultimately more convenient service.

“Imagine what would happen if anyone could just pick someone up and take them for a ride for a fare?” he says. “You’d probably have an easier time getting a ride, but the formal operators would probably also disappear.”
It’s the regulations, stupid

He recently returned from a stint in Silicon Valley, where he gained insight into how these new firms, which rely on apps or other computer technologies to connect borrower to lender, are being integrated into the American economy, and how their experiences could be applied here.

His assessment: the degree to which the sharing economy succeeds in the two countries depends a great deal upon regulations and the approach decision-makers take to it.

“In Denmark, you can’t run a sharing economy business in certain fields,” he says, bringing up the example of taxis again.

The regulations for taxi operators, he says, allow you to book a ride with someone in a car ahead of time, making services like GoMore legal. But you can’t have someone pick you up on the street, ruling out Lyft and Uber, which have seen rapid growth in the US.

“It’s fair that there are rules, otherwise you risk unfair competition, but it just means that we can’t develop businesses in quite the same way as in the US, where they generally don’t prevent people from developing new businesses.”

Beyond the question of fairness, he also says that it is reasonable, given how Danes approach the development of new businesses.

“Lawmakers here are quick to recognise whether it makes sense to capitalise on a development like this.”

In the case of cars, it didn’t, but when it came to lodgings, they could see that sharing platforms could help add extra capacity for visitors without the need to build new hotels.

“We saw this flexible capacity being used really well during the Eurovision Song Contest. Without it, there might not have been enough rooms, or enough rooms affordable to everyone who wanted to come here.”

The quick and the well-regulated

Being quick to make a decision about whether to accept certain types of sharing-economy businesses has also had the benefit of addressing potential conflicts before they arise.

“That’s unlike a lot of places in the US,” he says. “There, cities are having to adjust their laws either to help one type of business or the other.”

One thing that remains undetermined – both in Denmark and in the US – is when tax authorities will start seeing sharing economy firms as mainstream – and ripe for taxation.

“Right now these businesses are still in their infancy, and taxing them as formal businesses might stunt their growth. When they get big enough, tax officials will step in. By not assessing them taxes or other fees we are giving them an advantage. There is a certain tolerance for that now, but later it won’t be fair.”

Besides, he says, with the potential size of the sharing economy, the Danish state would be losing out on a big source of income if it didn’t tax them as businesses.

“They just won’t be able to ignore the sharing economy.”


By Kevin McGwin

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