off the leash

Disrupt is one of the buzzwords of the technology world. It’s all about finding a legacy business and using technology to render it obsolete by providing a better, cheaper or more convenient product or service. It’s what digital music files did to the CD business. It’s what Netflix did to Blockbuster. It’s what Uber is doing to the taxi industry. And it won’t stop there.

So I would like to suggest some industries that we should focus our attention on disrupting. Industries dominated by massive corporations that have been ripping us off and underserving us for years. These are industries where the few dominant players have followed the same strategy for enhancing profitability: swallow up competitors through merger or acquisition and then, once achieving a dominant market position, drop the hammer on the customers by cutting quality, reducing service and jacking up the cost.

1. Banking

(image by geralt)

Bankers are really the leaders in the rapid growth of service inequality. If you’ve got $10k in the bank, you might get some attention. If you’ve got a million you get treated like a valued customer. Many, many businesses have gone in that direction and all of us can understand the philosophy of providing the best service for your best customers. But while it is insulting that your bank relegates you to steerage, it is even worse that these money-suckers hammer the folks who can least afford it with fees at every turn. Let’s take Bank of America for example. Without a $1500 balance you will be charged a $12 a month “maintenance” fee on your checking account. That is, unless you have interest checking. That will enable you to earn pennies in interest but pay a $25 a month fee if your balance dips below $10k. It’s beyond me what “maintenance” they perform on a savings account, but that will cost you a fiver a month. So if you put a modest amount of moeny in a savings account, the intrest won’t cover the monthly fee, so you balance goes down every month until BofA as stolen the whole thing. Better shove it under the mattress. Losing an ATM card will cost you $5, unless you want it replaced right away, then it’s $15. Another $5 if you want a copy of a statement and if you have the audacity to prefer the human touch of a teller, there’s a $5-$10 fee for that.

While we’ve become accustomed to it, every time you take your own money out of your own account through an ATM and the bank steals 2 or 3 bucks as part of the transaction you should be pissed off. Are you paying for the convenience of the technology? Or are you contributing to improving the bank profitability by enabling them to save salary and real estate costs by laying off tellers and shuttering branches.

I think there is already a good focus in Silicon Valley in how to knock off this ‘screw the 99%ers’ industry. Bitcoin reduces the role of banks to pretty much nothing. A number of online lenders offer small loans without the wait time or the bank fees. There are a number of other bank alternatives, like state owned banks, local currency and employer credit unions that become more attractive as the big banks become more and more customer unfriendly. So let’s get to it techies and drive these guys out.

2. Airlines

In many areas of business if you give them a call and order a product, especially one that costs a significant amount of money, they thank you, handle your order enthusiastically and encourage you to call again. Not these robber barons. They charge you extra for ordering by phone!

Nowhere has service deterioration set in more dramatically that in the formerly-friendly skies. It all really started going downhill when fuel prices eroded their profitability. Not content to just pump the prices, they started to charge for baggage, for a pre-packaged box of shitty food, for a couple extra inches of legroom, for an unaccompanied child, some even charge for a blanket or pillow! So then fuel prices dropped even faster than they rose. Did prices come down? Were these nuisance fees eliminated? Nope. And it is obvious that there is collusion among the UnitedDeltaAmerican triumvirate to assure that they don’t.

I’m certain that the folks who run these massive U.S airlines that bought out the competition and divvied the country up to maintain route monopolies are committed free market capitalists. But in fact they could only exist as they do because of government regulation. Open domestic routes to Virgin, to Emirates, to Lufthansa and see what happens. Will American jobs be lost? I doubt it. These overseas airlines would hire the same people to the same U.S. airport jobs. And the greedy triumvirate has been outsourcing customer service to whatever country they could find where they can pay fruit-picker wages for years anyway.

Personally I try to fly Southwest whenever possible. They don’t charge for bags, or for changing flights and the staff doesn’t seem to have been beaten into a state of total demoralization. But maybe the techies have a better idea. Surely there can be little customer loyalty left for these airlines, except for maybe the few customers who get treated royally because they’ve racked up a gazillion miles.

3. Cable TV

(image by Geralt)

When 24/7 Wall Street teamed with Zogby Analytics to survey consumers and identify the “Customer Service Hall of Shame,” who do you think they found to have the worst customer service? Comcast. Another research organization, the Temkin Group, ranked 233 organizations for the quality of their customer service. Comcast Cable was dead last at #232, tied with Comcast Internet. Time Warner Cable was #230, Charter Communications was #228 and Cablevision was #221. When Ranker.com rated the companies with the worst customer service, Time Warner and Comcast were in the top 5 (our friends from Bank of America were as well).

You get the picture. No matter how much you spend as a corporation on eliminating competition and avoiding regulation, when you treat your customers as disdainfully as this industry has, it is eventually going to catch up with you. And folks, I can see the light at the end of the tunnel. Maybe aging boomers like me are used to paying for 500 cable stations even though that includes about 450 that we will never watch in our lifetime. But younger people aren’t. And when you look at the burgeoning range of alternatives, the Netflix type services, Hulu, YouTube, the low cost devices like Apple TV and Google Chromecast, the sports leagues that are live streaming their own telecasts, it is really just a matter of time before the downward spiral of the cable TV industry picks up momentum and really starts to escalate.

4. Event ticketing

This is really about one greedy, service deficient corporation, Ticketmaster. A couple months ago I decided at the last minute to attend a college basketball game at the Prudential Center in Newark. I didn’t want to have to queue up to buy a ticket so I went online before leaving the house. I chose a $21  ticket on Ticketmaster and as I started to check out I fortunately was attentive enough to notice that TM had tacked on fees that raised the price to $34. I clicked off Ticketmaster, went to the Prudential Center and bought my ticket at the gate. Guess how much? $21

So these greedy thieves at Ticketmaster were raising the cost of tickets almost 40%. Not a penny of that goes to the performers, or in this case the colleges, or to the venue. If you paid that price, 40% of your money would go to the ticket seller. Why should the cost of attending sports events, concerts, plays or other performances be subject to a 40% Ticketmaster tax and what does this escalation in the price of tickets do to the ability of these performers to draw an audience? Ticketmaster of course is the company that at one time had the audacity to charge its customers $2.50 per to print their own tickets. So in return for eliminating the need for them to print tickets, package them and pay postage, they charged you even more. This proved to be too audacious for even Ticketmaster to maintain although I’m sure they bundled that tithe into their other fees.

I am not a start-up entrepreneurial kind of thinker but I can see how this fraud can be disrupted in a fairly straightforward manner. Build an app that makes it simple for venues and performers to sell their own tickets without needing much staff intervention, then build a consumer facing app that consolidates all the shows and events that are selling. Charge what the venue and the performers need to make money and cut out the parasites. In doing so consumers will get better value for their entertainment dollars and maybe Ticketmaster can ‘pivot’ into the bail bond or check cashing business.