Freelancing: Disrupting the Competitive Market

As an observer of the industry, I find it interesting to think about the confluence of restoration, the end users and the insurance community and try to find any sort of connectivity. The reality is that the macro business environment is driving changes more than local business or restoration industry issues.

I suspect that unless you are a student of technology, it may be easy to miss many of the changes coming. In this column, I would like to explore the freelancer trend, including how it intersects with established businesses. I read an article recently where the author coined or borrowed the phrase “Uberization.” The race to implement the Uber model has started in our industry. Recently, Crawford purchased We Go Look, which, as I understand, allows them to quickly find the nearest adjuster or claims representative and dispatch to the loss location. This allows them to get eyes on the site and control the loss before anyone else can get on location, which helps close the window for control of the loss. In the past, it might have taken days for the insurance company to have representatives onsite; now it could conceivably be less than an hour. I am not sure if it is an adjuster or just first responder, but however you look at it that could be a game changer. Previously a restorer could market to the agent or property manager and get onsite before the adjuster or the approved vendor contractor was dispatched. With new technology and systems, the claim can be immediately documented with the damages verified and a video or photos uploaded to the system. The in-house adjuster will have information to start settling the claim immediately.

I have spoken to others that have the industry experience and leadership to drive a consumer-oriented program. The concept is that the customer will be able to locate restoration professionals near their property and select the nearest and best based on their profile and client reviews. Part of the challenge will be to create awareness for the service, since restoration is a relatively low-frequency occurrence. The developers have many ideas that address this challenge, and from a restorers perspective this makes sense and has promise. I am sure the developers have a much stronger vision than just a Yelp-type review site. Time will tell how this plays out, but consumers are very comfortable with using, and in many ways expect to use, technology to purchase goods and services.

I have been thinking a lot about the Uber model lately, and I enjoy talking with the drivers about their thoughts and experience. It is a brilliant model when you think about Uber’s business. They are a taxi company that does not have any cars. They have figured a way for the operators to foot the bill for the capital so they can expand around the globe using other people’s money. Meanwhile the consumer gets a predictable service at a lower cost than before and after arrival, simply steps out of the car and walks away. Users can see an upfront price and get an email receipt for that amount sent via email. This model works very well for Uber and for the consumer. The drivers are content, but it is a job, not a business for most. Their ads tell the story, “Get your side hustle on.” This is a second job — not one’s main source of income. Don’t get me wrong: I have talked with many who are working a reasonable schedule and making good money. and they are happy. At the same time, I also hear stories of Uber working to create a fleet of autonomous driving cars to eventually replace many of the drivers. As a driver you have used your capital to help expand the operation, all while hearing stories of how your employer is working to eliminate your job!

On my last ride, one driver told me that Uber cut their fees by 20 percent, and it was, of course, passed on to the drivers. Just like that, a 20 percent pay cut. Every day the drivers log in to start working and before the assignments are sent, they accept the terms. If you choose not to accept the terms then you don’t work. When you are dependent on one or several sources for all your work, then they are in control of your business and not you. This is the predicament for the Uber driver as well as, unfortunately, many restoration companies. They become dependent on the program work and do not take steps to differentiate their work sources, either because of entropy or simply not having a strategy.

Going back to the Uber model, I have thought about the players in the personal transport industry: taxi drivers, taxi companies, Uber drivers, Uber, and private shuttles or drivers. The taxi companies used to be in control. They paid a lot of money to obtain medallions for many cities or airports in order to obtain limited drivers on the road. The consumers were used to mediocre service and often stood in a taxi line in order to get to their destinations. This pushed riders to transport companies such as Super Shuttle where you had to endure a circuitous ride from the airport to your hotel. You can also wander in a rental car in order to get to your destination and then pay high parking fees. Depending on the city and the cab company, the drivers drove their own car or a company car, but either way did not make much more than wages. Uber disrupted that industry, and the established players may not have even saw it coming. As a result, nearly everyone loses except for Uber and maybe the driver.

What does this mean for the average restoration company? I am not sure. One thing is that the competitive market is likely to be disrupted — even with predictable and comfortable relationships. This week I am driving a large boat through a canal in France. I have found that my eyes need to constantly scan the water while I am simultaneously adjusting the wheel because the turning comes after the steering not at the same time like in a car. Watch your rudder, and be aware of low-hanging branches — then it can be a really fun ride.