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Wingz

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.

Uber and Lyft do what they said they would

They’ve cut and run.

Uber

Uber and Lyft made good on their threat to end Austin service Monday, pulling out two days after voters rejected their $9.1 million bid to overturn the city’s rules for ride-hailing companies.

Their departure came despite offers from Mayor Steve Adler to return to the table to negotiate a compromise. Meanwhile, smaller ride-hailing firms tried to press their newfound advantage.

“If they’re saying the election results mean they had to leave town, maybe they shouldn’t have asked for the election,” said Jason Stanford, Adler’s spokesman.

“The mayor’s been very clear,” Stanford added. “They are welcome to stay, and he invites them to the table, regardless of what they choose to do at this point.”

[…]

Lyft

In notices posted on their apps Monday, both Uber and Lyft blamed their pullout on the City Council’s rules, making no mention of the failed ballot measure to overturn them.

“Due to City Council action, Lyft cannot operate in Austin,” Lyft’s statement read. “Contact your City Council member now to tell them you want Lyft back.”

Uber’s statement was similar: “Due to regulations passed by City Council, Uber is no longer available within Austin city limits. We hope to resume operations under modern ridesharing regulations in the near future.”

Let’s be clear about one thing: Uber and Lyft were not forced to leave Austin. The rejection of Prop 1 simply means that the city’s existing rideshare ordinance – which as I understand it has not actually begun requiring fingerprint checks yet – remains in place. Uber and Lyft chose to leave rather than operate under those conditions, as Uber has done for the past year and a half in Houston and as both of them have done for longer than that in New York. Nothing about the Prop 1 vote requires them to leave. It is entirely their choice. There has always been room for further discussion on this, though it’s hard to do so when the first move is to go to DefCon 5. But despite all the rhetoric and millions of dollars flushed down the pockets of political consultant and media buyers, it’s not too late to start talking.

What should happen now, then?

Fingerprint-based background checks aren’t great. The FBI’s database is known to be flawed with outdated and inaccurate information. It’s kind of like taking your shoes off before you get on an airplane—it provides the feeling of security while also inconveniencing a bunch of people for show. Still, it might turn out to be the best option—more on that in a second—but as the city considers what regulations are in everybody’s best interest, now that it has ensured that it has a full complement of options at its disposal, it should be looking beyond fingerprinting.

Isn’t Austin stuck with fingerprinting now that people voted down Prop 1?

Nope. If Prop 1 would have passed, the city would have been prohibited from passing fingerprint-based regulations. But now the city is allowed to create whatever regulations it deems appropriate. City council can—and should–be looking to tweak the current ordinance with one that, for example, doesn’t prove discriminatory against drivers of color the way that fingerprint checks do. Although we doubt that Uber and Lyft are particularly passionate about that issue when it doesn’t directly concern them, the Austin chapter of the NAACP and the Urban League certainly are, and the objections they raised deserve to be considered and taken into account.

So what sort of background check should Lyft and Uber do?

That’s the zillion dollar question here. The problem is that most jobs have a process that screens out people who raise red flags. For most companies, you go through an interview, meet the people you’ll be working for, and get offered the chance to interact with the public based on the judgment of someone who is responsible for making sure that the company is represented well. (Depending on the job, it can also come with more formal background checks.) Because the “hiring” process for Lyft and Uber is more of a “sign up” process, the system relies on computer checks to do all of that work. That’s going to result in a process that has definite flaws—and it’s going to take creativity beyond just “run a fingerprint check” to address them. What that specifically looks like is hard to say, but between Austin’s leaders and Lyft and Uber, you’d think there would be enough brainpower to consider some viable options.

[…]

So what would make Uber and Lyft come back to the table, if they can just lobby for new rules in the legislature in 2017?

A couple of things: One, they don’t want to give up market share if a competitor picks up steam here over the next year. Two, it’s hard to keep growing a company that’s opted out of too many markets. Investors who see that Lyft doesn’t operate in Austin or Houston, and who know that they may have to make some threats about leaving L.A., have to give some thought to the growth potential of the company.

So what’s the best case scenario here for everybody?

Smart regulations that don’t rely on fingerprinting would be a good place to start. Austin should want Uber and Lyft operating in the city. Uber and Lyft should want to operate in Austin. Austin should want to create regulations that keep people with a history of DWI arrests, or violence against women, or other red flags like that, from driving people around for money—but it shouldn’t enforce regulations that would, say, keep drivers of color (who are disproportionately arrested for minor infractions that don’t put passengers at risk) from working. That system may not exist yet, but creating it ought to be a priority for everybody.

More than anything, a lot of ego is gonna need to be checked. The people who fought against Prop 1, which had a sort of David and Goliath quality to it, need to recognize that the support they received on Saturday was at least as much of a response to the tone of the campaign Uber and Lyft were running as it was a show of support for the specifics of the current regulations. Drawing a hard line around those specific regulations just because they won the vote would be a short-sighted, wrongheaded move.

Uber and Lyft, meanwhile, definitely need to approach Austin City Council with some humility, and consider not just what makes it easiest for them to add drivers to their ranks, but also that there are legitimate safety issues at stake here that the current regulations fail to address.

As Vox points out, Uber in particular has a choice to make about its public image. At the very least, I don’t think this debacle helped them with that. It would be nice if they came up with a solution – even a suggestion – that was more than “trust us, our process is all you’ll ever need, and if you don’t like it we’ll come after your ass”.

As far as the statewide regulation possibility goes, this is a reminder that there are never any guarantees in the Lege.

The chairman of the House Transportation Committee on Monday said that he prefers cities to set the rules for Uber, Lyft and other ride-hailing companies, even after a municipal vote in Austin has prompted new calls for the state to step in.

Rep. Joe Pickett, D-El Paso, said he’s “more interested in what the public thinks” — and that “they spoke in Austin.” Voters there on Saturday rejected a measure to get rid of the city’s current ride-sharing rules, which will require fingerprint-based background checks.

Some Republicans say the election — and the decision by Uber and Lyft to now leave Austin — shows the need for the state to pass industry-friendly rules. That group grew on Monday to include Sen. Robert Nichols, who chairs the Senate Transportation Committee.

But Pickett didn’t join the dog pile.

If the Legislature were to get involved, Pickett said, it should be through a broad discussion about all car-for-hire models, including taxicabs and limos. And if there are statewide rules, he said, fingerprint-based background checks should be part of the agenda.

“Still, the best would be to let the local municipalities decide,” said Pickett, who stressed that he supports all the ride-hailing options, including Uber and Lyft.

[…]

On Monday, Nichols, the Senate Transportation chairman, said in a written statement that “it is important to create consistency with a statewide policy to ensure all requirements for Transportation Network Companies are uniform across the state.”

“It can be difficult for these types of companies to operate when there are different ordinances in cities that are adjacent to each other,” said Nichols, a Jacksonville Republican.

That’s the first we’ve heard from Sen. Nichols since his comment in January that seemed to support a fingerprint requirement in any statewide bill. This story notes that Rep. Chris Paddie’s bill from last session eventually had a fingerprint requirement in it before it passed out of the House committee. We’re a long way from any bills being introduced, and I fully expect this to be a headline fight next year, but all I’m saying is that the signals are mixed right now about what such a bill might wind up looking like. Don’t take any bets on it just yet.

One more thing, from that Statesman story:

Still, the exit of Lyft and Uber from Austin created an opening for GetMe, a small Texas-born ride-hailing upstart.

“GetMe is seeing an unprecedented spike in driver sign-ups, uploads of the app and transactions on the app,” said Jon Laramy, a company co-founder. “I applaud the city of Austin for standing up for, and listening to, the citizens.”

The service had 350 active drivers in the city as of Friday and another 1,600 in the process of joining up, Laramy added, a number that he expects to grow.

[…]

GetMe isn’t alone in the Austin market. San Francisco-based Wingz is primarily an airport shuttle service but plans to expand its “private car service” in the next month, the company’s CEO said Monday.

Another company called zTrip offers a variety of services, including airport vans, limousines and a Williamson County cab service and also is eyeing quick growth, owner Billy Carter said Monday. A third upstart service, Phoenix-based Fare, told the Statesman it’s interested in Austin.

By far, the best thing that could happen as a result of this, regardless of what goes on next year in the Lege, is for multiple viable competitors to Uber and Lyft emerge. I mean, isn’t that how a free market is supposed to operate? Let a thousand flowers bloom now that the field has been abandoned by the top predators. We all win in that scenario.