Lyft Some Weight Off The Argument

San Francisco, origin of the pink mustache. (Wikimedia photo)

The ridesharing debacle made its debut most recently in St. Louis over Easter weekend. Members of the young, hip intelligentsia are at odds, not for the first time, with the city fathers, with a judge issuing an injunction banning Lyft operations. As a city whose management often comes across as being a bit more defined by entrenched civic power than market forces, St. Louis can in many ways afford to push hard lines that cities like Chicago can’t. While St. Louis boasts a highly dedicated enclave of smart, vocal, entrepreneurial folks who are getting amazing things done, the city isn’t inundated by the never-ending deluge of high rent-paying citizenry that defines the success of disruptive technologies like Lyft in Chicago, so civic power remains pretty entrenched. The crackdown has been as controversial as the rollout in both cities, but St. Louis hasn’t yet seen a rally of political power in support of ridesharing (I suspect it will).

But I’ve got a message for those besot with woe and the troubling notion that the government of a shrinking Midwestern city would ever challenge novelty: It’s going to be okay. But first, we have to have a critical look at the conversation that’s happening and take into account some things that are missing.

While I’ve been following Lyft and Sidecar since their early days, I started following the debate when it heated up in Chicago, which offers a competitive environment of licensed cabs, licensed black cars, Uber, UberX, Sidecar, and Lyft, and even alternatives like a peer-to-peer ridesharing network being developed by CNT, which pioneered now Enterprise-owned iGo. In a city where, as a pedestrian, cabs will aggressively honk at you to try and cop a fare, it’s nice to have an alternative accessible from your iPhone. The taxi industry is less convinced, and the city is furious at the notion that corporations could sneak into their city and operate a business without going through the proper channels (n.b.: without them getting their required cut, that is, through regulatory channels).

In a March hearing, an alderman schooled Lyft’s executive representation, demanding to know how much money the city had received from Lyft for its operation of services. Nothing, it turned out, so, in addition to a lawsuit by the taxi industry alleging that the city inappropriately allowed these ridesharing companies to violate their turf in a way that actually ended up discriminating against potential passengers who didn’t have access to smartphones (an interesting legal argument and I think ethically probably pretty true, if not legally viable), the city now wants to regulate ridesharing apps. The venture-backed companies whined, saying that paying the fees to the city would kill their business, which is based on the (theoretically– I’ll explore why in a minute) managerially-lean business model of peer-to-peer transactions.

So, my first bit of advice to St. Louis? Settle down. Any time an innovative product, solution, or project comes onto the scene, there is guaranteed to be a knee-jerk reaction, especially in a city that can’t figure out how to keep its streets paved or keep its eponymous landmark festivals from relocating to the far-flung suburbs. (Why, you all were up in arms when Chicago reversed the flow of its River to dump sewage into the Mississippi, and that seems to have worked out alright! Sort of…)

Complaints against Lyft include that in providing essentially unlicensed transportation mediums, they are subverting regulations that are often meant to  protect the safety of passengers, and, whether or not these regulation do a perfect job of always making people happy, enable effective tracking and record keeping that is often readily available if something should ever go wrong.  Corporations are cagey because they’re not required to be accountable to anyone but their investors, and the city of Chicago actually had to subpoena these companies to get the information they wanted.

Getting Beyond Trendy Innovation

To me, ridesharing has little to do with the ethics of taxes being paid or $350,000 medallion costs being paid (a princely sum that equates to about ten years of average income). Sure, that’s an unfortunate nuisance, but probably necessary that we’re disrupting an extremely broken system. That plus the fact that in addition to cab rides in Chicago being exorbitant, you have as much of a chance of being in the back of a car driven by a quite friendly driver as you do being in the back of a car driven by a speeding lunatic who can’t understand your directions amid shouting unintelligibly into his Bluetooth. In other words, I like to have a relationship with the driver, and that’s what the p2p system allows– in addition to affordability.

Affordability, however, is challenged by the idea of a company that will go to any length to penetrate a market. Think about Uber, a barely five-year old company that grew from literally an idea to over eight hundred employees– and is hiring en masse. With about $1.5 million seeded by 2011 to a Series C round of $258 million in investment capital raised in August 2013, it stands to reason that Uber is looking at growing– a lot. And who pushes growth? None other than venture capitalists, who are becoming the new big banks. There’s a limit to innovation when it’s dictated by these actors, who may fail frequently in their investments but make their money off the big success stories. Limits to innovation are, in this sense, also limits to sustainability, since the fees collected from every ride don’t get recirculated locally but rather go straight into the pockets of the funders. A challenge to innovation, to be sure.

St. Louis cabbie Umar Lee likened rideshare drivers to scab workers, a comparison that I think is apt when you consider that for as little money as taxi drivers may make, the rideshare companies are inundated with profits. He echoed questions raised by the Chicago lawsuit in real terms of equitable transit accessibility in a recent blog post:

“Lyft and Uber aren’t coming to serve good ole St. Louis hoosiers [local, often derogatory slang for ‘common folk’] or North St. Louis. Nope, they are coming by invitation and for the hipster population ( and to a lesser extent business people and college-students). Hence they kicked off at Nebula [coworking space in an “up-and-coming” neighborhood] ( the center of hipster thought in St. Louis).”

So, ridesharing becomes problematic not only for challenging the taxi cabs but because it’s not really addressing transit accessibility overall. Not that most customers care about transit accessibility, but the issue is important because it Tech is painted as the new Messiah and the savior of shrinking cities– and until we recognize that “tech” is really just a series of marketing venues and channels to deploy and aggrandize venture capital, we can’t get to any meaningful achievement of actual innovation. If transit accessibility is the issue, let’s fix that rather than just buying into the latest well-marketed product craze.

Nat Zorach

Nat M. Zorach, AICP is a city planner, community development professional, and MBA candidate at American University's Kogod School of Business, based in Detroit.

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