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DeSoto Cab Company Creatively Destroyed by Ridesharing

Scott Lucas | July 22, 2014 | Story Tech World

Thanks to changes in consumer preferences, one-quarter of Hansu Kim's fleet of two-toned taxi cabs sits idle every day. So the vociferous critic of new ridesharing companies like Uber and Lyft has decided that if he can't beat them—he'll join them. Well sort of, but not really. It's complicated.

Kim's DeSoto Cab company is returning his 200 medallions to the city of San Francisco and re-registering the vehicles in his fleet as limousines, according to the SF Weekly. That move will save him a bundle in fees: A medallion runs $2,500 a month, whereas the fee to the state is just $250. It also frees him up to pick up fares in cities surrounding San Francisco (taxis can't do that without getting fined).

You can't say he didn't see the writing on the wall. Kim recently told the Examiner that he'd be surprised if local cab companies survived another 18 months in San Francisco. He'll be keeping DeSoto's brand and paint scheme, but transitioning to the new regulatory status within the next 90 days.

So is DeSoto becoming a rideshare company itself? This is where things gets complicated. There's no indication that Kim will be adopting smartphone-based technology for consumers to call the cars, the peer-to-peer rating system that services like Uber use, or the more flexible demand-pricing model. So if you figure that some combination of those things is what has moved consumers into the rideshares, then Kim isn't really joining them.

If, on the other hand, you think it's the precise bureaucratic status of the applicable regulations that customers are paying attention to, then DeSoto should do fine. As SFist points out, "Both the cost and regulations would be more lax if DeSoto changes to the new business model." Potentially, that could lead to lower consumer costs.

Time will tell. But if this is the tipping point, San Francisco could soon learn what a city with no taxis looks like.

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