Tag: regulation

Autonomous Vehicles and the Impact on Cities (Singularity University Global Summit)

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Here’s a 20-minute talk I did at the Singularity University Global Summit last month. It’s a crash-course (no pun intended) on the different types of autonomous vehicles and use cases, the challenges that stand in the way of city-scale deployments, and ideas for how autonomous vehicles will transform cities, not just transportation systems.

Builds on ideas from these articles:

Personalized Medicine and Public Good: 3 Critical Issues (Part 2 by Johnathan Ng)

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This article is the second part in a two-part series by Dr Johnathan Ng of Epibone, on personalized medicine and public good.

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Personalized Medicine and Public Good: 3 Issues that Must Be Tackled

In my first article, I gave an overview of personalized medicine: personalized disease-modifying drugs, autologous cell therapies and stem cell therapies.

It is easy to be swept away by the promises of precision medicine. In his speech on the Precision Medicine Initiative, then-President Obama made uplifting points, “And that’s the promise of precision medicine – delivering the right treatments, at the right time, every time to the right person… we want to have a nation in which the accidents and circumstances of our birth aren’t determining our fate, and therefore born with a particular disease or a particular genetic makeup that makes us more vulnerable to something; that that’s not our destiny, that’s not our fate – that we can remake it.” 

Indeed, the potential benefits are tremendous, but so are the risks: in the form of escalating medical bills, with unproven – or worse still – harmful treatments. In this article, I give Governments and Healthcare providers three areas to pay attention to when it comes to personalized medicine: Regulation,  Healthcare Finance, and democratizing the benefits of personalized medicine.

  1. New Pressures on Regulation

As new personalized treatment modalities emerge, regulators are facing increasing pressure to green-light interventions, even if clinical benefits are not clear – to provide patients with a chance to live.

A watershed case was the US Food and Drug Administration (FDA)’s ruling against a scientific advisory panel, in favor of patient advocacy groups to approve Exondys 51 marketed by Sarepta for treating Duchenne Muscular Dystrophy. Despite a majority (7 to 6) of the experts citing inadequate convincing clinical evidence, the FDA director greenlit the approval of Exondys 51 due to a lack of clinical alternatives. Many commentators felt that this case set a precedent for the approval of personalized medicine products based on surrogate endpoints without clinical benefits.

There are also many grey areas when it comes to regulating clinical trials. As with any emerging technology, the benefits come at a risk, which people desperate for a cure may be willing to take. Due to the exploratory nature of trials involving new treatment modalities, patient safety is often left in the hands of researchers: a simple search on ClinicalTrials.gov shows nearly 6000 clinical studies involving stem cells, some of which have not been approved.

Some of these trials have resulted in debilitating consequences. For example, severe adverse effects, some resulting in death, turned the spotlight on Juno Therapeutics’ lead CAR-T cell therapy for treating adults with late stage acute lymphoblastic leukemia. The risks of stem cell therapy are also not well understood. Although treatment with autologous fat-derived stem cells has been used for various indications, a poorly administered trial recently led to permanent eye damage in three elderly patients with macular degeneration (damage to parts of the retina in one’s eye).

Without proper regulation and well-controlled clinical trials, the safety and efficacy of stem cell treatments cannot be determined.

Some researchers show more caution than others. In the first human trial that uses an induced pluripotent stem cells (iPSCs) derivative, investigators from Japan successfully treated macular degeneration  by administering retinal pigment epithelial cells grown from the patients’ own stem cells. Yet, after identifying a few mutations in the second patient’s cells, the RIKEN group decided to suspend the trial in September 2015 before obtaining clearance from health authorities in Japan to resume in February 2017. Perhaps all scientists and clinicians would do well to hold themselves to a similar standard.

Regulatory bodies such as the FDA must continually engage and balance the needs of the scientific, patients, and clinical communities in meeting these new regulatory challenges – unfortunately, there are no easy answers.

2. New Pressures on Healthcare Finance

With the flood of new interventions, another issue to consider is cost. If all interventions are fully reimbursed (i.e. paid for) by state and private payers, the healthcare system will soon become bankrupt. Yet, if no help is given, the cost to patients of living longer is bankruptcy. The American Society for Clinical Oncology (ASCO) wrote in a brief that a patient living with cancer is now three times more likely to file for bankruptcy than a healthy person.

Policymakers must strike a fine balance of curbing the rapid rise in healthcare spending without disincentivizing innovation and depriving patients of access to life saving treatments.

When weighing the clinical benefits of a new drug product with the cost, healthcare economists typically apply a measure called the incremental cost effectiveness ratio (ICER) which takes the difference in cost between the new drug and existing alternatives and divides it by the change in quality adjusted life years (QALY). The National Institute for Health and Clinical Excellence (NICE) of the U.K., for example, sets an ICER limit of £30,000 per QALY gained for new drugs including targeted therapies. Most policymakers in the U.S. generally apply an ICER limit of USD$50,000 per QALY gained.

Early evidence suggests that personalized medicine tests are generally cost effective, with 20% of them resulting in cost saving and more than half achieving ICER of less than $50,000 per QALY gained. However, measures of cost effectiveness apply a single threshold to a heterogeneous population. If reimbursement was based on this alone, some people would receive more healthcare than they would choose, and others less. As such, commentators have noted that “reimbursement mechanisms for targeted therapies are still very blunt in an era of personalized medicine”.

Policymakers must leverage data and work with other stakeholders to improve reimbursement policies, especially taking into consideration the underserved population. Yet, the onus does not belong to the policymakers alone. Drugmakers, payers and clinicians are very much involved in the determining how drugs are priced and reimbursed. Recently, there have been exhortations by clinicians for more value-based pricing whereby reimbursement is contingent upon patient outcomes. The focus on outcomes could ensure that personalized medicine realizes its full clinical value. To achieve that, drugmakers could enter risk-sharing agreements with payers for partial reimbursement prior to demonstrating clinical effectiveness.

Alternatively, clinicians can also exert pricing pressure on drugmakers indirectly. In 2012, researchers from Memorial Sloan Kettering Cancer Center (MSK) evaluated the drugs Zaltrap and Avastin for treating colorectal cancer. Although Zaltrap cost twice as much as Avastin, the MSK researchers found no differences in efficacy between the drugs. Consequently, MSK decided to not recommend Zaltrap to patients and this led the drug’s co-marketer Sanofi to drop the price.

Together, stakeholders can work to ensure that personalized medicine is conscionable and cost effective.

3. Democratizing the impacts of Personalised Medicine

Finally, perhaps personalized medicine should be about more than just the diagnosis and the cure. Personalized medicine could go a long way towards disease prevention and mitigation by engaging the laymen and teaching them to monitor and manage their own health. In a recent trip with my parents to their dental appointment at a polyclinic in Singapore, I could not help but notice that the Health Promotion Board set up a booth that encouraged senior citizens to get screened for colorectal cancer. Participants were instructed to fill out their information, collect samples of their stool at home in the kits provided, and send the kits back for analyses. Though seemingly mundane, campaigns like this are probably the most effective way of bringing personalized medicine to the masses.

Low cost point-of-care diagnostics can also help to bridge the divide between first world medicine and third world need for solutions. After all, if the goal of personalized medicine is to understand and improve lives, esoteric treatments will hardly do a majority of the public any good.

Finally, it is a positive development that countries are thinking about how to democratize the benefits of personalized medicine. For example, the U.S. National Institute of Health is collecting data from underserved populations that are historically underrepresented in biomedical research, so that they too can benefit from personalized medicine.

In conclusion

We have already seen the good that personalized medicine can do. Yet, if we want the broader public to benefit from personalized medicine while minimizing both the financial and clinical risks to society and patients, there is still so much more that we must do. Stakeholders must continue working together to advance the personalization of medicine, not for fame or fortune, but for the greater good.

Johnathan Ng
Thanks, Johnny!

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Thanks for reading this two-part series on personalized medicine and public good. When I started this blog, one objective was to use it as platform for issue-experts in technology fields to give us mini crash-courses, and to sketch out the implications for society. I am sure Johnathan will be more than happy to discuss these issues further. Let me know if you’d like to be connected!

Interview with Bert Kaufman, Head of Policy and Regulation @ Zoox (Self Driving Cars)

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Today, I’d like to introduce you to my friend Bert Kaufman, Head of Corporate and Regulatory Affairs at Zoox, one of the hottest self-driving car start-ups in the Valley.  I’ve previously written about why tech companies need policy teams more than ever, and Bert’s work is at the forefront of this.

When I first met Bert, we had already heard of each other, and immediately hit it off. In addition to being extremely kind and generous, Bert is a killer combination of a big-picture, systems thinker – from his days in Washington – and an embodiment of the generous, action-oriented, and creative start-up culture in the Valley, where he currently works.

In this interview, I ask him about his transition from Washington to Silicon Valley, issues surrounding self-driving, what he wishes Government folks knew, and how else he thinks technology should be harnessed for public good.

This is my third profile piece on folks who work at the intersection of tech and public good, following Xinwei Ngiam and Kenneth Tay. Enjoy!

 

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  1. Tell us a little more about yourself. Why did you move to the Valley after almost 8 years in Washington?  

I spent most of my time growing up on the East Coast and down South, so from a cultural standpoint, I always thought Washington was a great mix of north and south—“The Northern most Southern city.” From a professional standpoint, I am a lawyer who loves policy issues, so I gravitated towards Washington after law school. But what I discovered about myself over the past decade is that I really love building organizations and organizing initiatives around good ideas. And there is no better place in the world to build these things than the capital of innovation and entrepreneurship. My move out to the Bay Area was prompted by my fiancée who was in graduate school at Stanford, and because my role as an appointee in the Obama Administration was winding down.

  1. What did you enjoy most about your job in Washington and how did it prepare you for your current role at an autonomous vehicle startup?

Before joining the Obama Administration in 2013, I spent five years growing an organization called Business Forward. We started Business Forward to help business leaders from across the country do a better job of advising Washington policymakers and, conversely, to make it more efficient and transparent for policymakers to listen to business leaders. Through that experience, I faced the challenges of building an organization from scratch and learned the importance of taking a long-term view. Our funding came from about 60 large companies—our members—and I traveled around the country, engaged with thousands of people, and learned about issues that businesses of all shapes, sizes and ages faced as the country emerged out of the 2008-09 financial crisis.

That experience prepared me for the chance to join Penny Pritzker’s team at the Commerce Department. Not only did I get to work for an incredibly brilliant, demanding, and hard-working leader in Secretary Pritzker, but I also had the opportunity to help build and manage an initiative we created called the Presidential Ambassadors for Global Entrepreneurship. This initiative worked across The White House, Commerce and State Departments, USAID, the Small Business Administration, NASA, and with some of America’s most successful entrepreneurs to mentor, motivate, and in some cases fund aspiring entrepreneurs from across the U.S. and around the world. I also worked on policy issues related to the digital economy on areas like data privacy and cybersecurity.

In my role now, as an in-house lawyer working on policy in a sea of engineers and computer scientists, it’s important to communicate clearly and to understand the policy implications of the technology that we’re developing. This is important both within my organization and externally. Transportation is a highly-regulated space, for many important reasons. As a society, we want people to move around freely, but we also want to ensure that they can do so safely. The advent of autonomous vehicles will lead to innovation in road safety. What we are doing is so new that we have the opportunity to create best practices that can set the bar for future policy.

Policy is really important to any technology business intersecting with regulated markets. Technology startups that fail to consider policy or regulatory implications do so at their own peril. Conversely, regulators need to understand that the regulations should be nimble, flexible, and fair and not cumbersome. These principles will allow technology to advance on a level playing field.

  1. What is one thing you’ve learned or experienced that you wish your colleagues in Washington had a chance to?

Meaningful innovation is hard and takes time, so it is important to take a long view. Government can and should catalyze and support innovation through funding basic and applied research and challenge grants. Government should set ambitious policy goals while at the same time leaving innovation to the private sector.

For example, between 2004 and 2007, DARPA (the Defense Advanced Research Projects Agency) set out some “Moonshot-like” challenges and put forth a modest amount of prize money for autonomous vehicle-related technology. Today, the payoffs are huge. The teams that competed in those challenges are the fathers and mothers of all the autonomous driving R&D now taking place across the entire automotive industry. In other words, a series of small government challenges have generated an enormous amount of private sector investment and job creation. Two lessons here: the first is that a little can go a very long way; the second is that government set a goal, got out of the way, and let academia and the private sector drive the evolution of the space.

  1. Self Driving Car technology is one of the hottest areas in the Valley. What are a few things the international community should know about Self Driving Cars?

Three points here:

  • First, autonomous technology will usher in a paradigm shift as large as when we transitioned from the age of the horse and carriage to the age of the automobile. Getting around will allow for increased productivity, and for people who live in areas with poor access to public transit, it could make it easier to access jobs and opportunities. We will also think about real estate differently. For example, much of real estate today is built for and around the automobile. Think parking lots and parking garages. In a world of shared autonomous vehicles, demand for parking decreases.
  • Second, the first rollouts will happen in cities in a ridesharing model, not in vehicles sold to end customers. Cities can benefit from shared electric, autonomous transportation because it will ease congestion and decrease pollution. As more people move into cities, the idea of individual car ownership becomes less tenable. In this model, liability shifts away form individuals towards fleet managers and manufacturers.
  • Finally, and most importantly, safety is paramount. In the U.S., more than 35,000 people are killed every year in automobile collisions. Most of those fatalities are caused by human choice or error. Autonomous vehicle systems will be designed to interact safely on the roads with other road users like human drivers, pedestrians, and cyclists.

  1. Moving away from Self Driving Cars, what is one problem in society today – perhaps one you encountered at the Department of Commerce – that you think we can solve more aggressively using technology?

I think that technology, correctly harnessed and understood, has the potential to improve the lives of many. Technology underpins most of our economy today, and it’s only going to compound over time, so we need to use technology to do a better job of training and educating people for the jobs of the future. Governments can identify important priorities and strategies and incentivize education and training so that people are prepared and trained for an evolving economy.

Finally, as I said earlier, if the private sector’s job is to drive innovation, government should work to ensure that there is an adequate social safety net in place for all people as the economy changes.

Thanks, Bert, for sharing your insights!

 

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Bert, Zoe (his super-woman fiancee) and Talia!

Why Do Tech Companies Need Policy Teams More Than Ever? (An Evening with X, Andressen Horowitz & 23AndMe)

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The Stanford Business School just launched a new Policy Innovation Initiative. Earlier this week, I attended their launch event featuring Sarah Hunter, Policy Director of X (previously Google X), Kathy Hibbs, Chief Regulatory Officer, 23&Me, and Ted Ullyot, Partner of Policy and Regulatory Affairs, Andreessen Horowitz.

Why the need for policy and regulatory thinking within the tech world?

The motivation is simple. In the past decade or so, software innovations have dominated. We’ve seen how great software platforms – sometimes built by tiny crack teams – can scale rapidly in way that completely changes markets. Think Amazon and Ebay for commerce, Facebook, Snapchat, Instagram for social networking, Box, Salesforce, Workday and Slack for enterprise solutions (decode: software that helps us manage our HR, customer relations and intra-office discussions with much less pain). The market is increasingly saturated with software solutions for almost every area of life. Hence, while will continue to see gains in productivity and efficiency in these systems because of Artificial Intelligence, pure software will no longer be the area of rapid technological innovation.

Instead, technological innovation in the next decade will be dominated by technologies spanning hardware (things that are in our physical world) and software (the virtual world). Examples include self-driving cars and surgical robots, which are performing physical functions but controlled by algorithms in the virtual world. A term often used to describe this general area is “cyber-physical systems”.

Here comes the challenge: objects in the physical world are more directly risky to human life than software systems. Furthermore, these objects can harm people who don’t choose to use them – I choose to download Facebook if I can stomach the risks to my personal privacy. On the other hand, even if I never buy my own Self Driving Car, my life could be at risk if someone else owns a faulty one. There is a more acute need to manage risks to the general public.

Hence, the regulatory landscape is stacked against emerging tech. First, Legacy regulations abound to protect consumers from death or physical harm, such as long Food and Drug Administration (FDA) and vehicle/driver-licensing processes. Second, Because of potential harm to human life, regulators are likely to approach the emerging technology from the perspective of ‘mitigating every risk’ (read: adding even more new conditions and clauses). Third, regulations and legislation are typically based on precedent, and are hence biased towards incremental (as opposed to disruptive) improvements in incumbent tech and business models.

Regulatory risk will be the major Go-to-Market hindrance for most emerging tech companies in the next decade; if they fail to address regulations, a company could be dead in the water before they even begin. Policy teams within tech companies exist to minimize this regulatory risk. They advise companies on questions such as:

  1. Who do we need to influence so that regulations fall in our favour? Policy teams often go above regulators to paint visions for politicians: how the emerging technology will solve social problems and create new economic opportunities.
  2. Should we work with regulators to co-create new regulations, or break the regulations? The risk of breaking regulations varies – if you’re able to get widespread support from users (think Uber+AirBnB), you may be able to force regulators into certain positions. It’s more difficult to take this approach for hardware solutions.
  3. If we desire to co-create new regulations, what approach should we take? One company designed their own set of self-driving car regulations, which never came to pass because the technology was pivoting so quickly.
  4. How early should we engage regulators? Generally, it isn’t good to give regulators surprises, but sometimes engaging too quickly before there are good answers on how to mitigate the risks will scare them into coming down hard
  5. Is it even worth trying to enter this market, or should we start where regulations/Governments are more relaxed? For example, most successful drone companies tested outside the U.S.

The role of policy teams in tech companies can be likened to master chess players. They get to know the kings, queens, knights and pawns who influence the regulatory system, and appeal to a range of motivations to move the pieces in their company’s favour.

Each speaker pointed out that regulators aren’t technological dinosaurs who intentionally regulate technology to death (though they are often caricatured this way). They simply have a different bottom line, which is to minimize risks and externalities. Put this way, regulators and innovators can provide a healthy check and balance to each other.

Areas I Hope They Address

I’m excited about this initiative by Stanford Business School and would love to see it be a neutral place for tech and policy to folks to discuss the best approaches to regulating emerging tech. Here are some areas I hope they will address.

How do companies manage the competitive vs collaborative dynamic in lobbying for regulatory change?

On one hand, there are great advantages to be the first mover and defining the regulations in your favour. Kathy from 23&Me shared that if you are able to set precedent, all your competitors have to follow your standards. This locks is a certain competitive advantage. There are other circumstances where working collaboratively is more productive. For example, on the same issue, politicians and regulators might be far more willing to listen to a group of local start-up founders than large multinationals like Google. Smaller companies sometimes have to work through trade associations because they lack the scale needed for lobbying.

Will start-ups lose out as this policy/regulatory expertise becomes more critical to success, yet is dominated by large players?

Small companies are often unable to recruit for the policy/regulatory function because of their resource constraints. This is why VCs like Andreessen Horowitz have policy teams that advise their stable of start-ups. Will more of such advisory services become available to start-ups? Who will provide them?

We are also starting to see coalitions such as the “Partnership in AI” by Google, Facebook, Amazon, IBM and Microsoft – no doubt one of the objectives is to lobby Governments on AI-related policies. How do start-ups fit in? Is there a risk that the agenda is overly swayed by large companies?

An idea for policy teams in tech companies: Go beyond lobbying for regulation; work with Governments to support widespread adoption of emerging tech

One of the themes of the night was how tech companies need to paint a vision to politicians on the benefits of the emerging technology, so that they support favourable regulatory change.

I think we have to go further than persuading politicians to get to the point of favourable regulation. Widespread adoption of emerging technology especially in areas of healthcare, transport and education is hindered by more than regulation. For example, change can’t take place if you don’t inspire, resource, and manage the morale of teams on the ground who are accustomed to existing ways of work and will not change just because a new technology exists. I saw it first hand when I worked at the 40,000-strong Ministry of Education in Singapore.

Without this, politicians will find it difficult to move, even if they agree strongly with tech companies’ visions for the future. Singapore’s Prime Minister, who takes a personal interest in Smart Nation, recently lamented that the whole effort is moving too slowly. This, coming from one of the most efficient Governments in the world, suggests that there are deep-seated issues in achieving widespread adoption of technology.

Here are some things that are essential for widespread adoption of emerging tech, but that Governments/Politicians will not be able to tackle alone:

  • Painting a vision that shows implementers and constituents how emerging tech will exponentially improve their reality;
  • Tying concrete benefits to these emerging technologies such as creating new local jobs;
  • Actively advocating for programs that help people deal with the downsides disruptive technology, such as re-training for displaced workers.

These are areas that policy teams within tech companies can consider as they seek to move chess pieces in their favour: not just to achieve favourable regulations, but to see widespread adoption of their technologies in regulated sectors.

<if you work in a policy/reg team within a tech company and already work on these areas, I would love to hear from you>

In the coming posts, I will also feature folks who work in policy/regulatory teams within Silicon Valley and Singaporean companies. Look out for those!

The Dark Side of the Sharing Economy in Transport (and Three Solutions)

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photosource: cnbc

The shared economy is a net positive for society…

In my previous posts, I’ve talked about how the shared economy – expedited by technology – can have tremendous benefits for society. For example, it can mitigate the feeling the inequality by closing gaps in the transportation experience. The benefits are even greater when private companies work with Governments to reach the elderly, poor and underserved.

I’m pretty sure that the shared economy in transport has a net positive effect on the economy too, though evidence is nascent. Last March, Lawrence Katz and Alan Krueger conducted the RAND-Princeton Contingent Worker Survey, which showed a substantial rise in the incidence of alternative work arrangements[1] for workers in the US, from 10.1% in 2005 to 15.8% in late 2015. Strikingly, this implies that all of the net employment growth in the US from 2005–15 appears to have occurred in alternative work arrangements.

One reason is that the shared economy provides part-time or intermittent work for people who otherwise cannot find a suitable job. All these Uber drivers I’ve met before – the young man who lost his job and needs time to search for new employment. The father fighting a costly custody battle, who needs a flexible job so he can show up in court. The lower-income mother who needs to supplement her day job to pay for her mortgage. Uber driving is a particularly attractive part-time job – typical part-timers get paid disproportionately less than full-timers. In contrast, Alan Krueger and Jonathan Hall found that no matter how many (or few) hours Uber drivers work, their hourly earnings were the same.

…BUT the distribution of benefits matters, and here’s how cities should think about it

Even though the shared economy creates tremendous new value, the distribution of value favours some groups over others. The tensions that arise can undermine companies operating in the shared economy, as we’ve seen in several cities worldwide. Cities need to consider how they may ensure a fair distribution of the shared economy’s benefits along three dimensions:

  • Workers vs companies
  • Incumbents vs new entrants
  • Now vs 10 years’ time, especially with the advent of autonomous vehicles

Companies would be wise to work collaboratively with cities to resolve these issues early on, rather than lock horns in costly legislative battles, or get blocked from new markets.

  1. Fair Distribution of Benefits Between Drivers and Companies

The shared economy benefits both ride-sharing companies and their drivers, but arguably companies benefit a lot more. The business model of ride-sharing companies like Uber, Lyft and Grab is to provide a technology platform which enables matching of riders to drivers. These drivers are essentially self-employed contractors who log on to the platform whenever they wish. Many are able to find work and supplement their income through this platform.

However, these drivers are not employed by ride-sharing companies and hence do not receive certain benefits. In Singapore, employers are required to contribute up to 17% of their employee’s salary to a savings account for housing, retirement and healthcare. In the U.S., many receive healthcare insurance through their employers, who are often able to get better rates than individuals. In the UK, employees are protected by the minimum wage legislation. Drivers for Uber and Grab do not receive such benefits because they are not considered employees.

As companies rely more on these self-employed workers to fuel their business, risks are passed from companies to workers. As Singapore’s Deputy Prime Minister Tharman Shanmugaratnam has said “….it serves the interests of the company because they’re really pushing risk to the contract worker…who actually can’t take much risk – the risk of instability in wages and the risk of not being prepared for retirement because of a lack of social security contributions.”

Cities need to start shifting their social policies to accommodate the rising proportion of self-employed workers. At the same time, companies need to discuss reasonable ways to spread benefits and share risks with workers who are self-employed. It need not be all or nothing. There has been talk about creating a “third classification” of workers who have some benefits of employees, while retaining the independence of a contractor. This gives both the business and worker flexibility while providing some social protection.

Working with cities on some “in-between” solutions will help business avoid lengthy legal battles down the road. For example, Uber is appealing a ruling by London’s employment tribunal recently that it should treat its drivers like employees, including paying the national minimum wage. I would go so far as to say that it is the responsibility of ride-sharing companies to start engaging in these discussions, because many of their workers face an uncertain future when autonomy arrives (third point).

  1. Fair Distribution of Benefits Between Incumbents vs New Entrants

The arrival of ride-sharing companies like Uber very rapidly redistributed benefits in the transportation system, creating new winners (e.g. consumers, new drivers) and losers (e.g. taxi drivers). Yes, there were probably more winners than losers, but the losers suffered a huge impact on their livelihoods. For exampe, many taxi drivers in the U.S. invested large sums in their license – in Chicago, the median cost of a taxi medalllion in late 2013 was USD$357,000. Having the value of your medallion plummet is like losing your home!

Cities dealing with disruptive innovation need to quickly level the playing field between incumbents and new entrants, to ensure that the distribution of benefits is not overly skewed in the direction of new entrants. 

In the case of ride-sharing, issues like driver training requirements take the forefront. For example, Singapore placed 10 hours of training requirements on Uber/Grab drivers, while significantly cutting down the training hours required for taxi drivers (now, they only need to spend 16 hours on in-class training, compared to about 60 hours previously). We also cut down course fees for taxi drivers, and scrapped the daily minimum mileage – a move which helps taxi drivers minimise empty cruising just to meet their quota.

It is in the interest of disruptors to avoid a total regulatory lockdown by avoiding a zero sum mentality in these negotiations.

  1. Fair Distribution of Benefits Between Present and Future

Finally, while we reap many benefits now, there are two important long-term considerations for cities working with ride-sharing companies.

First, many ride-sharing companies are at the stage where they are flush with investment, and can afford keep their ride prices artificially low. What happens if cities “outsource” their transportation to ride- companies, which eventually raise the prices beyond what regular citizens can afford? How can cities set up their transport systems such that competition can easily arise – keeping prices in check – or that public options can bounce back quickly? A city needs to ensure that even as people reap the benefits of the shared economy today, these benefits can be sustained over time.

Second, the big elephant in the room is autonomy. Full autonomy = no more need for drivers.

Autonomy will further redistribute the benefits away from drivers towards companies, and for all we say about new jobs being created, I’m pretty sure many of these drivers won’t be the ones to do it.

Because many drivers are self-employed workers not covered by social protections, they will be in particularly difficult situations.

It will be some time before full autonomy at scale is realised, so it is not too late to start conversations on how to ensure that drivers don’t get the short end of the stick when their jobs are replaced. One immediate action companies need to take is to give drivers information. Drivers, while not employees, are stakeholders in the company’s business and should be informed about the timeframes and implications of autonomy as the field evolves. In addition, much more can be done to help them with skills and future employment, a topic I will cover soon.

Conclusion

Over a series of posts, I’ve argued that the shared economy is a net positive for society and economy. This post, I posit that we need to work together to ensure that these benefits are distributed fairly between drivers and companies, incumbents and new entrants, present and future.

This is not the ambit of cities or Governments alone; companies seeking a sustainable business model in essential public services like transportation would be wise to work closely with cities rather than to be caught in costly legislative battles, be locked out of markets, or worse still – to be exploitative in their practices.

[1] “temporary help agency workers, on-call workers, contract company workers, independent contractors or freelances)