Off the Kuff Rotating Header Image

RideAustin

RideAustin tries to hang on

I wish them luck.

The return of Uber and Lyft to Austin has put the city’s only ride-hailing nonprofit in a fight for survival.

RideAustin, one of several small companies that started operations in Austin after the ride-hailing giants left the city in May 2016, is now seeing its ridership cut in half since the two returned to town. The company is slashing expenses and cutting staff, said CEO Andy Tryba.

“We always knew that at some point Uber and Lyft were going to come back. So we’ve always prepared for it,” Tryba said in an interview with The Texas Tribune, adding that RideAustin expected a big drop in rides — but didn’t think it would happen so fast.

[…]

RideAustin, which began operating in June 2016, was notable as the first ride-hailing company to run on a nonprofit model that promised better pay for drivers and allowed riders to donate to local charities through the app. It’s seen ridership steadily increase over the past year — which spiked to more than 110,000 weekly rides during the South by Southwest festival.

But RideAustin’s fortunes turned during the Legislature’s 85th regular session this year, when lawmakers passed a statewide regulatory framework for ride-hailing companies that supersedes local ordinances — including Austin’s. Gov. Greg Abbott signed it into law on May 29, and Uber and Lyft returned to Austin the same day.

The drop in ridership for RideAustin was swift and dramatic: last week, the company provided 22,000 rides — less than half of the 59,000 rides it operated in the week before Uber and Lyft returned. Tryba attributed part of the loss to UT-Austin students leaving town for the summer, but he also acknowledged that a large share of rides was recaptured by Uber and Lyft.

[…]

RideAustin is working to avoid the same fate as Fare, a Phoenix-based ride-hailing company that shut down operations in Austin just a week after Uber and Lyft’s return. In an email to customers, the company said it couldn’t “endure the recent loss of business.” Other ride-hailing services that had started operating in the initial vacuum have also gone out of business over the past year.

The city’s ride-hailing market changed significantly after Uber and Lyft left. Researchers from the University of Michigan, Texas A&M and other universities conducted a study about how Uber and Lyft’s departure changed riders’ behavior in Austin. They found that only 40 percent of respondents transitioned from Uber or Lyft to other ride-hailing companies, while 60 percent started making similar trips using other transportation, like biking, walking or driving a personal vehicle.

Chris Simek, a researcher at the Texas A&M University Transportation Institute that authored the study, said that among those who chose another service, “about half reported using RideAustin most often to make that type of trip. About a third reported using Fasten most often, and about one in 10 reported using Fare most often.”

Simek said the research team plans to do a follow-up study to analyze the market now that Uber and Lyft are back.

See here and here for some background. I had hope that the Uber-less Austin model of multiple firms actually competing to be better or at least different than each other would successfully fill the void, but either there wasn’t enough time for people to adjust or they just liked Uber and Lyft too much. That survey suggests there was something to the latter point. Be that as it may, I hope RideAustin can hold on and develop into something that could be replicated elsewhere. Anything that provides a better way for the drivers to earn a living is worth having.

The post-Uber Austin rideshare experience

Texas Monthly notes the issues that some people faced during SxSW hailing a ride, and considers the rideshare landscape in Austin post-Uber and Lyft.

But the thesis that Austin is experiencing a crisis around ride-hailing apps is an old one, and it’s incomplete. RideAustin, which as a non-profit makes all of its numbers public, gave its millionth ride in February. Drivers are happy with the rates they make on RideAustin (which gives them the full amount of the ride) and Fasten (which takes a flat fee out of each ride, rather than a percentage like Lyft does). Most of the year, the companies’ servers can handle the load, and it’s likely that they’ll each be improving their servers based on what happened at SXSW.

Still, despite the fact that the city seems much happier with the current state of its ride app regulations than the tech fellas who come in for SXSW, things might end up getting a lot friendlier for Lyft and Uber anyway. That’s because the disruptive innovators in the tech world have an ally in the Texas Legislature, which seems increasingly likely to pass statewide regulations that would prevent cities like Austin (and Houston, which has a similar ordinance—and which keeps Lyft, but not Uber, from choosing to operate in the city) from determining what the rules that drivers and the companies through which they find passengers will have to follow will be in each city.

There are three different bills in the Lege, all of which would create a statewide rule that would supersede local regulations, and the Senate began debating them last month. (Similar legislation was proposed in 2015, though it ended up dying without a vote.) This time, though, momentum is on the side of the companies that hope to see the legislation passed—the Texas Tribune reports that “at least one of the bills is widely expected to eventually move on to the full Senate for a vote,” which, in an environment that’s increasingly hostile to the idea of local control, has a strong chance of passing.

All of which is to say that the question of whether or not Austin’s leadership “ruined” ridesharing is ultimately the wrong thing to focus on. It’s true both that Austin tends to get around pretty well without Uber and Lyft, and that the two companies are pushing hard for legislation that would change the dynamic there dramatically. Perhaps the real question, then, is what happens to Fasten, RideAustin, and the rest if Uber and Lyft come back?

That’s a tougher question to answer, but it’s the one on which the future of ride-hailing in Austin hinges. For now, RideAustin and Fasten are doing a job that satisfies customers and drivers. But if Uber and Lyft decide to cut costs to consumers for six months, eating the expense of the service, they could easily make RideAustin and Fasten seem like overpriced relics of a bizarre moment in the city’s history. It may not prove sustainable (currently, Uber’s passengers pay for only 41 percent of each ride, and the company was projected to lose $3 billion in 2016), but it doesn’t have to be sustainable: it only has to chase away the competition.

I have mostly resigned myself to the fact that the Lege is going to pass a statewide rideshare law that will forcibly overrule the ordinances passed in cities like Austin and Houston regarding these services. The bills that are being considered have some good points to them, and there is certainly an argument to be made that a uniform statewide approach makes more sense and will serve customers better. But I think that latter part will only be true if there is robust competition among multiple rideshare companies, ant not just an Uber/Lyft duopoly with a legacy cab service for a declining share of riders. As such, I have two hopes for what happens after Uber and Lyft make their mandated returns to Austin. One is that they will find a market that isn’t as into them as before thanks to the presence of many other viable services, which forces them to innovate and compete not just for riders but also for drivers. And two, if Uber and Lyft take the approach of trying to kill off their competition instead by leveraging their billions in market capitalization to subsidize their service until they’re the only players left standing, that the Legislature recognizes this anti-free market in a way that some people say taxi regulations are, and take action to correct it. Let’s just say I have more hope for the former than for the latter.

Rideshare companies in Austin are complying with its fingerprint requirements

Well, what do you know?

Uber

All eight of the ride-hailing companies operating in Austin met a city requirement to have at least half of the rides they provided in July come from drivers who passed fingerprint-based background checks, according to a city memo released this week.

Achieving that Aug. 1 benchmark — the first major regulatory milestone since the Proposition 1 election in May — shows how quickly the smaller competitors built their networks of drivers, even with the fingerprinting checks and other requirements that prompted Uber and Lyft to leave Austin.

Taken as a group, the smaller companies provided more than 350,000 trips in July, almost 11,300 a day, during what would normally be a slack period because enrollment is light at area colleges during the summer.

[…]

Lyft

The city since January has received 3,771 fingerprint-based, criminal background reports on potential ride-hailing service drivers, according to the memo from Austin Transportation Department Director Robert Spillar to the Austin City Council.

All of those, including those whose checks occurred earlier in the year, were vetted against a list of disqualifying criminal offenses set out in a June 2016 ordinance, Austin Transportation Department spokeswoman Cheyenne Krause said. Of those applicants, 86 were rejected for failing their background checks.

The companies, most of which still have some drivers working for them who haven’t been fingerprinted, reported having 8,985 drivers. However, the memo says, individual drivers might be counted two times or more in that total because many of them work for more than one of the eight companies: Fare, Fasten, GetMe, InstaRyde, RideAustin, Tride, Wingz and Z-Trip.

The companies, by city ordinance, had to by Aug. 1 have at least 50 percent of their rides for the preceding month provided by a city rules-compliant driver, either as a percentage of hours driven or miles driven. According to the memo, using information supplied by the companies, Wingz and Z-Trip were at 100 percent. RideAustin was next, at 89 percent, followed in order by InstaRyde (86 percent), Tride (73 percent), Fare (69 percent), Fasten (58 percent) and GetMe (55 percent).

It gets harder from here – by next February, 99% of hours driven or miles driven must be provided by compliant drivers. I suspect the city may wind up being a bit lenient on that, if the companies lag and it makes sense for them to do so, but we’ll see. Point is, the companies that are in Austin post-Prop 1 have cleared the first hurdle. Was that so hard? You tell me.

What a free market in ridesharing looks like

It looks like Austin right now.

Uber

When Uber and Lyft left Austin last month, they thought they were sending a message to the Austin City Council and other local governments looking to regulate them. Instead, their departure may pave the way for a revamp of ride-hailing in Austin that could draw the notice of other cities.

At least six new companies have launched in Austin, all emerging from the ashes of the Proposition 1 election that left the capital city without the two industry giants in vehicle-for-hire apps, which are also sometimes referred to as transportation networking companies.

“What [Uber and Lyft] have left us with appears to be the only open TNC market in a major city in the world, maybe,” said Austin Mayor Steve Adler. “In the marketplace, when you have a monopoly, or in our case a duopoly, that leaves town, what you would expect to see in the market is innovation and competition. And that’s what we’re now seeing happening in Austin.”

[…]

While other companies offering similar services had operated alongside Uber and Lyft, none had seen anywhere near the same level of success. An estimated 10,000 drivers found themselves out of work after the two companies ceased operations.

Newer faces have quickly flooded the market. There’s Arcade City, getme and Fare. There’s also Fasten, Wingz, zTrip and RideAustin. And InstaRyde will have its official Austin launch later this week.

Many of these companies, most of which have business models similar to those of Uber and Lyft, are still finding their footing, rushing to get drivers on the road and apps on Austinites’ phones in the race to emerge as the face of peer-to-peer transactions in the city. Some sprouted roots in Austin before Uber and Lyft left but have seen a recent boost in business.

Yet all of these firms still operate in the shadow of the two ride-hailing giants, struggling to distance themselves from their competitors while still offering comparable services. Even now, it’s unclear if any of these new companies will be able to offer the same level of coverage or see similar success.

[…]

Despite the turmoil from the election, Adler said he stands by the council’s decisions, even as the fallout has captured national attention.

“I have talked to mayors from around the country about this issue,” Adler said. “My position on this is that cities need to be as innovative and creative as are the industries and businesses and economies that it intersects with … There’s a suggestion that what’s happened here demonstrates that Austin is not an innovative city, and I don’t think what happened here indicates that at all … Austin is where ideas go to become real.”

Adler said it was unclear what the ride-hailing environment will look like down the line, but he said he is certain there will be “choices operating at scale in the city.”

The future could depend on whether the Legislature decides to take action on the issue next year. Immediately following the departures of Uber and Lyft, Sen. Charles Schwertner, R-Georgetown, said he will file legislation on the issue next session that emphasized a free market. Other GOP lawmakers expressed similar concerns on social media after the election.

Adler said while statewide regulation is “certainly an option” the Legislature can use, the atmosphere in Austin has already significantly shifted since the election.

“I think that when some of the legislators initially spoke, it was uncertain as to whether or not Austin had adopted something that would prevent the market to function,” Adler said. “I would say the evidence at this point would at least suggest that the market is working well.”

There’s little the Legislature can do until the 2017 session, but the House Committee on Business and Industry is holding an interim hearing on Wednesday to discuss “how Texas can support shared economy growth in the state.” Uber General Manager Sarfraz Maredia has been invited to testify.

In the meantime, the future of Austin ride-hailing will be determined by the market, Adler said, “as opposed to government deciding.”

Boy, wouldn’t that be a kick in the pants? I wonder if Sen. Schwertner and his Republican colleagues will recognize it if it is happening. I’ve been harping on all this for awhile, so I’ll try to restrain myself here. I don’t expect all these companies to be successful – frankly, if one or two of them make it, that will be great. Austin represents a unique opportunity for these companies. Let’s see what they can do.

RideAustin

Another new player gets set to enter the Austin rideshare market.

Adding to the growing number of ride-hailing options in Austin since Uber and Lyft’s wholesale evacuation, a new nonprofit, community-based app called RideAustin was introduced today at the Alamo Drafthouse on South Lamar.

The app is being described as “innovative,” as well as made “by Austin, for Austin,” according to Joe Deshotel, RideAustin’s PR representative.

The initiative is a collaboration of Austin-based tech entrepreneurs and community leaders, for service that “[brings] the community together to build local solutions for Austin’s ridesharing future.” Formed as a nonprofit, and led by billionaire Austin tech giant and Trilogy founder Joe Liemandt and Crossover founder Andy Tryba, RideAustin’s overarching goal to become a “community asset,” per Deshotel, begins with uniting tech advancement with social responsibility.

Only two weeks in the making – Deshotel himself joined the group a week ago – the app joins Get Me, zTrip, Wingz, and still-in-the-works Warp Ridesharing. The RideAustin app will go live for iPhone users this morning, with service starting in June. (The Android version of the app is also expected to roll out in June.) Prospective drivers can start the on-boarding process, and get themselves scheduled for fingerprinting.

Blue-sky success would involve a smooth scale out from its initial services areas: the Austin-Bergstrom International Airport and the Downtown area, for which exact parameters haven’t been set. Not having “to worry about shareholders” as a nonprofit, it “will allow drivers to earn more [RideAustin will take a smaller than industry-standard commission] and riders pay less while helping local charities.”

Initial ride pricing itself is unknown, but unlikely to be as low as Uber and Lyft, at least to start. As reported previously, the best current option, Get Me, has been struggling with driver/rider matches, often forcing riders to wait longer than 10 minutes – Uber took an average of three minutes – and pay significantly higher prices.

Two unique RideAustin app features include a fare roundup option and “optional surge pricing,” says Deshotel. The fare roundup feature would allow riders round their fares up to the next dollar over the fare, to be given to a choice of as-yet-determined charities.

The more interesting (and potentially problematic) feature, optional surge pricing, would allow riders to opt-in to surges, allowing them first ride at premium cost. Riders electing not to opt-in, or financially unable to do so, will remain in driver queues, placed behind those accepting surge pricing. Though RideAustin is surely a business in all contexts, even with its additional aims at targeting the underserved and disabled, locating balance will be paramount, and could throw its first-look presentation as community-facing into immediate question.

Having this be a nonprofit is an interesting variation, and while I’m not exactly sure how well that will work, I see no reason why it can’t work. The point is that we should all hope that at least a couple of these new ventures find success, which they are then able to bring to other cities. I’ve heard an awful lot about the “free market” in ridesharing over the past several months, but the truth is that the rideshare market was and currently is entirely dominated by two enormous firms. That’s a “competitive” market in the same way that the broadband and cable/satellite TV markets are competitive. Surely that’s not what we really want here, right? I’ll say again, the single best outcome here is for multiple viable alternatives to Uber and Lyft to emerge. That would be good for riders, good for drivers, and good for city governments that don’t want to be held hostage by a couple of would-be monopolists. The Statesman and Buzzfeed have more.