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The End of the Government Sponsored Taxi Cab

Dear Laissez Faire Today Reader,

Imagine this scenario. You’re the head of a brand new company. Your competitors have been in the market for centuries. They’re well organized, powerful, and politically connected. Your product is revolutionary, but you’re having a tough time getting your name out there. And even worse, you’re having an even tougher time explaining your product to new customers.

So what do you do?

You get your competitors to do all the work for you.

That’s pretty much what happened to the livery startup companies Uber and Lyft in a number of European countries last week. And it’s a great example of what’s commonly referred to as the Streisand Effect.

Back in 2003, the American entertainer Barbara Streisand tried to suppress pictures of her oceanside estate that were published on the Internet. She sent a cease-and-desist letter to the photographer, asking him to remove the images. Some news outlets eventually caught wind of the story and it quickly became popular online.

So instead of ignoring the pictures and letting them hide in its small corner of the Internet, she brought it more attention and made the situation even worse.

The cab companies in Europe should have learned from this lesson. You see, they know these innovative ride-sharing companies threaten their business and livelihood. They’ve spent years creating as many barriers to entry and regulation hoops for new competitors. They’re threatened by a company that can do the same service at a fraction of the price.

So they went on strike…

Then the news picked up the story…

And every news outlet explained why they were on strike… because there was a new company out there that could provide better service at a lower price.

Free marketing to a group of potentially pissed off customers. The owners of Uber, Lyft, or any other innovative taxi company must be ecstatic. But don’t just take our word on it. Take a look at the aftermath of the European taxi strike.

One report is already saying Uber has seen a 850% increase in signups for their service. People might have been on the fence about the service prior to the strikes. Maybe they didn’t understand how it worked. Or they were worried about these non-government sanctioned taxi drivers.

Suddenly you have trusted journalists and experts talking about it, explaining how it works, and why these tax companies are threatened by it. For anyone who’s had a poor taxi ride, it’s a dream come true.

People who argue in favor of more government intervention usually offer the same arguments as the cab companies. In order for them to open up shop and offer taxi services, they had to go through all the legal and regulatory hoops. They paid the fees demanded by the government, and they fulfilled all the stipulated requirements. Now they should be allowed to enjoy the fruits of their hard work.

Companies that dare to be different are going to make sure that doesn’t happen…

Uber isn’t like the other start up companies you might find out there. They got a foothold into the market because they found a number of investors that believed in their vision of the future. And that pool of investors continue to rise.