"I wish the Mission would just gentrify faster," a 20-something acquaintance recently said to me, complaining about the bar scene in San Francisco's artsy Mission District. "I'm not trying to step over a homeless guy just to pay $14 for a drink, you know?"
I wanted to be shocked. After all, this guy had grown up in the Bay Area and attended college with me at University of California, Berkeley; the whimsical charm of San Francisco shouldn't have been lost on him, even if he had grown up to become a "tech bro."
We live in an economic climate where the newest, hottest businesses are born out of Silicon Valley, and all of them seem to cater to two major principles: "time is money" and "luxury is for everyone." The most successful among them, like Uber, cater to both.
The on-demand economy has commodified convenience. With the tap of a button, food from restaurants that don't deliver can be at your door in 45 minutes (soon by drone); laundry is picked up, washed, and folded at your demand; parking tickets are fixed without ever having to get back in your car to contest them. All of life's minor inconveniences are handled, with the added benefit of feeling pampered by a veritable cadre of personal valets.
With near every whim satisfied in just a few taps, is it any wonder that my dear tech bro was surprised the Mission hadn't fully evolved into a yuppie paradise as quickly as he'd have liked? And more importantly, is this recent entitled economy of convenience — made by millennials, for millennials — the new status quo?
After a week ordering every on-demand service I could reasonably justify, I'm scared to find out.
The rise of the on-demand economy
The tech-enhanced convenience economy traces back to the first dot-com bubble. Dating back to 1999, sites like SeamlessWeb (now GrubHub Seamless) and Eat24 delivered food straight to doorsteps, succeeding where predecessors like Kozmo and Webvan failed. Both have continued to grow exponentially, in tandem with a handful of locally based startups that provide similar services. And others innovated on the idea: Startups like BlueApron aim to take the guesswork out of cooking by shipping refrigerated boxes filled with ingredients and recipes for a week's worth of meals. Sprig and SpoonRocket now offer fully cooked healthy lunches and dinners — a health-conscious counterpoint to the heavy restaurant meals Seamless sends to your door. Feeding ourselves, the most basic human need of all, has been thoroughly disrupted.
But it's not just about cutting out inconvenience. This on-demand economy is selling a lifestyle, and it's a lifestyle that's constantly innovating on itself. You can't throw a rock without hitting an Uber or a Lyft car anymore. ReservationHop launched in San Francisco (to a chorus of detractors) to auction off OpenTable reservations to the highest bidders who forgot to make their own reservations. Apps like Fixed take care of my parking tickets. Laundry services like Washio and FlyCleaners compete to pick up, launder, and drop off my clothes, all so that I don't have to walk two steps outside of my apartment and potentially make awkward small-talk with neighbors.
All of these services are constantly reminding us that our time is valuable, and more importantly, that we are deserving of luxury.
Look no further than Uber's motto: "Everyone's private driver." Even though Uber is largely used as an alternative to taxis these days (and most millennials I know opt for the cheaper UberX option), the behavioral psychology is still the same: You deserve this convenience. Even in New York, where cabs are still plentiful and slightly cheaper than an UberX, taking the pain point out of hailing a ride is worth the extra few dollars.
How did this on-demand economy gain so much traction — especially when they're selling services that, to be quite frank, we should be able to handle on our own? The cynical will tell you that it's because the days of domesticity are now gone. Home-economics classes are things of lore, and domesticity is on a massive decline.
As Ruth Graham wrote in an op-ed for the Boston Globe:
Many young Americans now lack the domestic savvy that it takes to thrive. The basics of cooking, shopping, and "balancing a checkbook" — once seen as knowledge that any young woman, at least, should have — are now often not learned by young people of either gender, even as we've come to understand their major societal implications. And for adults, these skills have receded as well. In the family of 2013, more than 70 percent of children live with two busy working parents or a single parent, which means more takeout, cheap replacement goods instead of the ability to fix or mend, and fewer opportunities to learn essential home skills within the home itself.
The even more cynical will tell you that it's the product of an insane work-hard-play-harder culture, standard in the tech industry. Fewer hours spent grocery shopping, folding laundry, and calling restaurants for Valentine's Day dinner reservations means more hours spent coding, disrupting, and ultimately… changing the world.
The convenience factor
Where did the need for startups that focused on a user's convenience come from? In a climate that was previously focused on disrupting big industries in world-changing ways — say, helping researchers figure out how to manually code entire genetic sequences, rather than auctioning off parking spots to the highest bidder — these startups seems out of place and narcissistic, even for Silicon Valley.
According to Button CEO Mike Jaconi, the transition was spurred by entrepreneurs who saw how well enterprise-focused startups worked and applied the same model to slower-innovating consumer industries. "The fast-moving technology companies competing in this arena have developed new models that are transforming industries which have historically been slow to innovate. The ground transportation, grocery, and restaurant industries are prime examples of hyper-growth categories in the on-demand world — growth that is in a large part a result of the application of new technology on top of existing infrastructure."
While delivery services like Kozmo and Webvan were wiped out in the first dot-com bubble crash, they paved the way for the e-commerce startups of today. Products are significantly more cost-effective now, which lowers the barrier to entry for a consumer on the fence about spending a few extra dollars on something they should be able to do themselves.
The mass adoption of smartphones has been the real game-changer. Smartphones made onboarding new clients far easier, to the point where it's second nature from the consumer's perspective. Nowadays, companies that don't have easy-to-use iPhone and Android apps — no matter how useful their website may be — usually find themselves quickly falling behind.
Freelancers are also more readily available than ever before. They make up 15 percent of the current workforce and are expected to make up 20 percent by 2020. That means there are more people willing to sell their services via sites like errands app TaskRabbit, or deliver lunch for meal service Sprig, or loan their cars out to make money via Uber and Lyft.
It's easy to look at all of these conveniences as entitlement, and in a large way, they are. But just as important as luxury is is customer service. The threat of on-demand ratings tends to breed nicer workers, which in turn pulls better customer interactions: The entire system wins.
Uber, currently embroiled in controversy, used to be known for its excellent customer service: Anything less than a three-star rating for a driver would trigger an email from an Uber community manager asking how the service and the driver could do better. Complaints usually resulted in Uber credits for the aggrieved passenger.
All of this has led to unprecedented attention from venture-capital firms. As Jaconi theorizes, investors have firmly bought into on-demand startups — an industry once thought extremely volatile, due to a multitude of issues surrounding both scalability and consumer preference. "The institutional investor community's belief in the on-demand economy is unequivocal," Jaconi wrote. "[O]ver $4.8 billion in capital has been invested in on-demand companies, with $2.2 billion invested in the last 12 months alone. The transportation industry alone has amassed over $2.1 billion in financing, including Uber's most recent $1.2 billion financing round at a $18.2 billion valuation."