24 Comments

Summary:

It’s cold and rainy during SXSW and people are demanding Uber — or some other form of on-demand transport to help them get around the festival. I wish they wouldn’t.

Austin apparently needs Uber, according to a marketing pitch started by the San Francisco-based on-demand cab company ahead of the South by Southwest Interactive festival held in the Texas Capital. The company, which has a beef with city rules dictating fares for sedans and limits on paid ride-sharing, has made a Twitter campaign out of the issue asking people to tweet #AustinNeedsUber.

And especially since Saturday dawned rainy and cold, people are obliging. But as an Austin resident, an Uber customer and someone who is able to look beyond the idea of disruption and to think about what that disruption actually will entail, I wish Uber wouldn’t use the epic influx of guests to advocate for changing the laws of the city I have to live in year round. That’s a job for the people who live here.

And there are people who live here who are pushing for changes in the city’s Transportation code that will allow ride sharing and improvements to the current system of licensed cab and hired sedan drivers. There is certainly demand for more transportation services in town.

In some ways, SXSW is the ultimate opportunity for testing elastic demand in the real world. And that’s great for startups pushing for the sharing economy. The estimated 30,000 people (plus unregistered folk and attendees’ families) coming to the city to participate in SXSW interactive as well as the tens of thousands coming for the Film and Music portion of the festival all have to stay somewhere and make their way around the city for a 10-day period.

While hotels in the city are charging fees that are as high as $899 a night, I could find private rooms on AirBnB for $200 fairly close to the downtown area. If you want to go far north I saw rooms in the Northwest Hills area near my home for $92. As for cars, SXSW sponsor Chevy has brought a fleet of cars to Austin and is giving people rides for free (Austin rules don’t allow people to pay for ride sharing). Uber also has UberX cars offering rides for free roaming the downtown area (much to the chagrin of the Austin Rodeo attendee who wanted a ride) as well as Uber Black services and pedicabs.

But given the investigations about the lack of oversight and training by Uber in San Francisco, plus the ongoing questions about safety and insurance, I’d rather Austin take the issue of ridesharing under consideration outside of a Twitter campaign geared toward SXSW attendees. The city has already issued a report last year and approved a version of ridesharing that has resulted in a carpooling app called Carma getting approved.

Fundamentally, the issue here is also one that disproportionately affects visitors. Most Austin residents own their own cars or if carless, could use Car2Go or Zipcar, both of which have service in the city.

So while I’m all for expanding my options and giving the cab companies a much-needed bit of competition, I don’t need a San Francisco-based service that comes to Austin once a year to come in and demand that we play by its rules.

  1. Yes you saw those cheap hotel prices in NW Austin. But there is no vacancy. My daughter who is here to visit tried.

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  2. Wait, so I thought you were actually going to defend the city’s rules on the merits. Can *anyone* defend the way cities regulate ride sharing on the merits?

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    1. There are arguments on both sides. I think the limits on sedan pricing is blatantly anticompetitive, ad can’t see a justification. when it comes to ride sharing services I do want a discussion about training, insurance, vehicle quality and safety that I don’t think Uber has fully addressed.

      My point is that Austin needs to have these discussions. And we should do it with Uber and other companies throughout the year — not just via a campaign aimed at SXSW attendees who may not even live here.

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      1. James Valentine Rincon Thursday, March 13, 2014

        In the author’s defense – this article was written on a typewriter while she was watching a Betamax. If you need to get in touch with her, just ask the switchboard girl to connect you to here rotary phone.

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  3. Once a year? What about the ACL festival? How about the F1 weekend in November? How about the Longhorns home games?

    Austin is becoming an increasingly popular destination and an important part of growing that momentum, IMHO, is offering services that people are used to in other ‘hipster’ cities, e.g., Uber, Hotel Tonight, AirBnB, etc..

    Let market demand steer implementation. The company will deal with any growing pains because failure to do so will jeopardize the model, not just the business.

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    1. Greg Knieriemen Sunday, March 9, 2014

      “Let market demand steer implementation.” – Exactly. A point entirely missed by this post.

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      1. Greg, I respect your position, but ride sharing has a high element of public safety associated with it. I want rules in place, albeit not rules that stack the deck in the incumbent’s favor as has been the case in transportation.

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  4. Stacey,
    Competition is when both teams or companies are playing the same game or in the same industry. Do you realize that sf is looking to regulate ride share because of the mess it has created in California. Estimates are 10,000 more cars on the streets of San Francisco every day looking for rides. Questions about insurance and the fact that uber X drivers personal insurance is voided per the state of Texas. A minimum is a distinction between luxury transportation and the taxi cab which is public utility that is required by the state of Texas for all citizens in the municipalities. That includes people that don’t have smart phones and credit cards and the disabled. You seem like nice person who would not discriminate in order for you to have a black car? Ridesharing companies are gypsy taxis that are unregulated and unsafe.

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    1. You are absolutely correct, Steve. And many people do not realize the likelihood of being in a car with no effective insurance when they hire a gypsy operator who does not have commercial coverage. Our company carries commercial insurance, we drug test our drivers, and have full background checks run through the state. We can guarantee that you are covered in an accident, and are not being driven by a felon. I am an opponent of many of the taxi protection laws currently in place in Austin. However, I do believe that a certain level of security and safety requirements is within the scope of city government as a matter of public safety for the tourists.

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    2. Stagnation and corruption is what you get when you use legislation instead of innovation to protect a market segment. In the case of the US taxi industry, before Uber came along the only customer-oriented improvement in service I witnessed in my lifetime was a willingness to accept credit cards.

      I might be more sympathetic to the taxi companies if they hadn’t been abusing the drivers with a corrupt plate racket for so long.

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  5. wkdpostcards Sunday, March 9, 2014

    This discussion should be both about insuring Uber and Lyft are safe AND about taxis needing to evolve into a better customer experience.

    Speaking as someone who uses multiple ride services:

    – Everything costs more or less the same. Taxis are marginally cheaper in ‘prime time’. UBER’s and Lyfts marginally cheaper in ‘regular time’. So for me it’s really a ‘consume experience’ call:

    – Ubers and Lyfts are easier to find because their apps actually work and are free to use. The splintered taxi apps available have yet to catch up.

    – It may change in time, but UBERs and Lyft’s cars right now are cleaner than taxis.

    – UBERs and Lyft drivers go out of their way to make rides more comfortable: free water, a friendly smile. Friendly service totally counts.

    – UBERs and Lyfts provide an ‘accurate’ route and time estimation because they rely heavily on GPS. A knowledgeable taxi driver with ‘lots of shortcuts’ is nice in rush hour, but that same taxi driver adds uncertainty when he starts taking you down a route that is unfamiliar.

    – Perhaps most imporantly: UBER and LYFTs have immediate customer feedback loops through ratings systems. No trying to dial an 800 number or looking for a taxi driver’s badge if something isn’t right.

    Again, Uber and Lyft should certainly be insuring that their vehicles are safe. That said, these startups are showing consumers that they should expect any ride they take to be a pleasant experience: clean, friendly, predictable, and easy to hail.

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  6. Scott Wainner Monday, March 10, 2014

    Curious if you’ve used Uber, Stacey? It’s not about SXSW. It’s about bringing a super convenient transportation service to a city where tons of tech early adopters (who go there on business, or who live there and want to get around without driving sometimes) want it. The experience with Uber is far superior to cabs (you don’t fear for your life in an Uber), there is no money that changes hands (you just get out after ride), and of course the experience of calling an uber via the app is easy. Their model is frictionless and all about quality customer service and making you feel safe — honestly, it’s silly not to embrace that.

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    1. I have used Uber in both Washington DC and in San Francisco and mostly enjoyed those experiences. However, I have feared for my life in a variety of Uber, cab and private driver situations. I love the ease of payment and the convenience of Uber, but I think that there are legit questions about insurance and public safety that have to be answered.

      On the surface Uber looks like a panacea, but it has its problems as we’re seeing as adoption increases. And those problems have a public safety component and cost implications that merit discussion. I’m not anti-Uber. I am against outsiders pushing a solution without proper discussion about it by the locals who live in the city.

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  7. Marc Pickering Monday, March 10, 2014

    Stacey, you are right that the City of Austin shouldn’t give SXSWers anything they demand. Few people would disagree with your statement. Uber ultimately has to make its case to the city and/or to state authorities, who will (we hope) weigh the issue on its merits.

    But I think you are wrong to perpetuate the idea that Uber has a lot of questions to answer about safety and costs. Of course, there are growing pains, and yes, Uber needs to get serious about safety. Yes, someone will need to take steps to regulate the industry. But even a half-baked oversight system is going to be an improvement on the current taxi monopoly that currently exists in Austin.

    The costs of inaction are being borne today by people in Austin: residents and a modern underclass of poorly-paid taxi drivers – this isn’t a problem only for the annual SXSW pilgrims and visitors from out-of-town. Residents suffer from the lack of consumer choices and an insufficient number of taxis overall. Getting a cab home from downtown on a weekend night is nearly impossible – I have sadly seen residents choose to drive their own vehicles after a night out drinking on the town rather than take a cab home, because they thought it was their only option. Meanwhile Austin’s poorly-paid taxi drivers rent their licenses for ~$250/week from a City-of-Austin-protected racket run by Yellow Cab, Austin Cab and Lone Star Cab. That’s more than $10,000 per year, for a license which only costs the cab companies $400/year to maintain. Sadly, Austin’s taxi drivers are the losers here as well, who in some cases make below minimum wage salaries when all the costs are tallied up. The only winners in the whole scheme are a couple of dozen one-percenters in Lakeview who own those three companies and have a state-sanctioned license to print $5M+ per year for themselves.

    Which takes us finally to the issue of safety. Tragically, 30,000 people die on the roads in America every year and road accidents cause billions in damage. Given Uber’s explosive growth, it’s inevitable that an Uber driver is going to get involved in an accident. However, I question the idea that taxi drivers are either better trained or better able to avoid accidents or road deaths. Austin, unfortunately, has it’s own history of taxi drivers being attacked or killed by passengers (far less likely to happen with Uber because both parties self-identify), passengers being attacked by drivers, and pedestrians being killed by taxis. If you are genuinely concerned about safety, the way to do this is to reduce the number of cars on the road, and to tell your Texan friends to stop buying those “Everything-is-Bigger-in-Texas” pickup trucks, which are twice as likely to be involved in fatal accidents than smaller cars. “Safety issues”, by the way, is the justification of choice for licensing and certification monopolies discussed above, including license systems that protect incumbent hairdressers and beauticians in certain states. In fact the safety issue that concerns me most is that I’m probably going to have to walk three miles home on Friday night after attending SXSW because I won’t be able to get a ride home. I hope South Lamar has gotten safer at 3am than it was when I last lived in Austin in 2009.

    In the meantime, we should let the people make some noise about it (even out of towners like myself). #AustinNeedsUber

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  8. Thank you @gigastacey for your @gigaom piece that takes a fresh view on the ongoing Uber/Lyft/Sidecar debate. I would like to thank you for mentioning the city report by the Urban Transportation Commission Recommendation Number 20130813-004A which defined legal, or unregulated, ridesharing as a service that limits “reimbursement up to federal rates”, and approved my firm Carma to operate in Austin.

    Disclaimer: Carma considered to be legal ridesharing by the Federal Transit Administration, Federal Highway Administration, Texas Department of Transportation, Texas A&M Transportation Institute (TTI), the Central Texas Regional Mobility Authority and the City of Austin. Carma is proud to have patiently worked for two years to obtain all necessary approvals from the appropriate Federal, State and Local agencies before launching in Austin earlier this month. If citizens are frustrated with their government or regulations, then we have well defined processes and elections for making changes. Bullying, or outright ignoring, the local elected government officials and existing laws is simply not a constructive method for change.

    When you get in your car, and pick someone up, the you drive together to your school/work/event… that’s called “Ridesharing”. When your job is to get in your car, and pick someone up and drive them to school/work/event for a profit… that’s called a “driver for-hire”.

    Ridesharing has been an important part of American culture since the invention of the automobile. Federal definitions for “Ridesharing” may be found in many programs and laws set by Congress (US Public Law 112-114), the IRS Federal Commuter Tax Benefit (TEA-21 Transportation Equity Act), Federal Congestion Mitigation and Air Quality Improvement Program (CMAQ), the Federal Highway Administration, Federal Transit Administration and many State Department of Transportation DMV laws. In all cases, the definition includes language whereby the driver may not earn a profit.

    We recognize the motivations to root for vendors like Uber after heavy lobby efforts, social media campaigns, celebrity endorsements, and the recent decisions by other cities to established rules governing a new class of transportation providers referred to as Transportation Network Companies (TNCs). But I must ask you to please choose a new term other “rideshare” providers, when agencies like the California CPUC and even the City of Austin have made it very clear they are NOT rideshare vendors.

    Uber, Lyft and Sidecar have been marketing behind the term “Ridesharing” to avoid regulation. For-hire vehicles are on the road far more than private vehicles and thus have higher insurance liabilities. The taxi profession is consistently ranked as “high-risk”, based upon the increased miles traveled and the number of accidents and crime. A relevant comparison to these firms would be the tow truck industry. AAA Members download a smartphone app, and push a button to request a tow, then software dispatches the closest driver in their network. AAA has hundreds of employees who recruit, inspect and insure each of these independent contractors is covered by the same special licensing and regulations for each of the state or localities they operate. Its clear Uber, Lyft and Sidecar are enabling “for-hire” drivers who earn a profit (part-time or full-time) driving other people around.

    Thousands of more cars on city streets, providing short distance on-demand trips, may be convenient for ad-hoc riders, but it’s a large financial burden on each city. Each automobile is comprised of 30,000+ parts and weighs more than 4,000 pounds. These vehicles will not be parked while their owners are busy at their day job, and instead these vehicles will be on city roads for more hours and miles, driving unfamiliar routes, with lots of different people getting in and out of vehicles on busy city streets. Taxi license fees generally go into a cities general fund to help pay for the maintenance costs >$0.05 per vehicle mile traveled, but these new “for hire” drivers are currently leveraging the same infrastructure without providing any city, state or federal taxes or fees.

    The average US commuter drives 25+ miles to work each day, and the 2012 Urban Mobility Report from TTI shows Dallas, Houston, Austin and San Antonio commute times greater than 40 minutes during peak hours. Taxis, and peer-to-peer taxis like UberX/Lyft/Sidecar provide good solutions for addressing the first/last mile problem, but with base pricing above $1.00 per mile (not including surge pricing) they have an insignificant impact on daily peak hour congestion. Transportation is a complex problem that requires a web of solutions unique to the geography and needs of each city. Subways may be efficient in New York, Chicago and San Francisco, but would they be a good solution for Austin?

    The biggest traffic problem in Austin has nothing to do with getting around downtown, but instead starts in the far suburbs, and by the time those cars reach Mopac or I-35 we are all stuck in daily peak hour gridlock. If you live near MetroRail then its your best option, otherwise we need to try to carpool or vanpool into the city where you can find many options including; Capital Metro, Car2go, Ridescout, Austin B-cycle and yes lots of licensed Taxis.

    Capacity will never keep pace with demand, and we simply must change our habits.

    Respectfully, a native Texan and fellow Longhorn
    – Paul Steinberg, VP Business Development for Carma

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  9. Jonathan Rueda Tuesday, March 11, 2014

    I booked a ride to the airport with YellowCab well ahead of time. Got a confirmation and everything but they cancelled on me 15 BEFORE my trip. Uber picked me up ten minutes later and I was able to catch my flight. I heard several stories of pre arranged pickups where the cabs would just not show up or the company would say “Sorry we’re delayed 1 hour.” If Austin taxi’s want to keep competition away they need to focus on providing better service!

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  10. Marmon Hammer Tuesday, March 11, 2014

    Good god, Stacey. I’m an Austinite and I couldn’t be more in favor of Über, Lyft and their ilk coming to town. Yesterday, that is; not a year or two from now. There’s a reason why worldly visitors to our fair city have baffled looks on their faces and post snarky tweets about the embarrassing transportation infrastructure and policy in this city. And they’re right, and you and the City Council could both benefit by taking the blinders off and learning from cities that are actually progressive. Hell, maybe you a should just move to Dallas or San Antonio and leave those of us living in 2014 alone. We’re looong overdue for these companies to provide competent service where Yellow Cab and Capital Metro miserably fail.

    Quit being a small town isolationist and get with the program. You sound like the Austin City Council members of 15-20 years ago. Remember them? There’s a reason this city is so far behind in public transportation, bicycle infrastructure, inter-city highway infrastructure, etc. You dinosaurs need to quite reacting and start creating forward thinking policies that create meaningful change before it’s painfully necessary.

    By the way, your willful refusal to address the drunk driving issue in Austin is intellectually dishonest, at best. Perhaps you’re not a drinker or stay out late, but try using the Yellow Cab Hailacab app during busy times or late at night in neighborhoods deemed less desirable to be worked by cabbies, like the Eastside. Last time I tried to get a cab at 2am on the Eastside – about 2 months ago – I waited 3 hours. 3 hours!!! Know what my other options were? Walk 10 miles home or drive drunk. How’s that for your safety? Everyone in this town knows that the majority of drivers on weekend nights have had something to drink, which is a sad state of affairs, especially when you’re coming from cities where at least a few other options (buses, trains, et. al.) are available. How do you reconcile your safety concerns with that fact? Would you rather clutch your pearls as you drunkenly drive home, or do it in the safety of an Über or Lyft? We are the only – the ONLY – tech-centric city with absolutely no alternative transportation options for people imbibing at bars and restaurants on a given night. Next time a drunk driver does something stupid, imagine what could have been by the simple press of a button and a reliable transportation service.

    You don’t represent common sense or public opinion in Austin, thankfully.

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