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The Revolution Will Be Rideshared

Gretchen Schrafft | April 29, 2013 | Story Tech World

It was June of last year, and Shawn Nguyen and his girlfriend were running late to an event. Not wanting to roll the dice on one of San Francisco’s taxi dispatch companies (he lives in the Inner Richmond, a patch of the city that’s often a cab Siberia), he decided instead to try SideCar, an app-enabled ridesharing service that had just launched. Within five minutes, a friendly amateur chauffeur rolled up in an old Mercedes and delivered the couple to their destination, on time and for about $4 less than the price of a cab—an experience that Nguyen describes as nothing short of amazing. Within weeks, he was a devoted customer.

Ask pioneering rideshare users around San Francisco, and you’ll hear similar raves about Lyft, SideCar’s pink-mustachioed competitor, and about Uber, the original smartphone powered ride service, which started in 2010 and is currently rolling out its own ridesharing component. “You get into a Lyft, and the person is welcoming,” says Kristen Berman, a behavioral researcher who lives in Hayes Valley. “They have a smile for you, and there’s comfort in having a real conversation.” The service has even improved her social life. “I’m much more inclined to accept invitations because it’s easier to get around. Lyft has made me more of a yes person.”

Of course, whether or not a driver smiles at you is but one small variable in the typical transportation equation. Much more important are the three big questions: Is it safe? Is it convenient? Is it affordable? (Whether or not it’s preferable to Muni is fairly obvious.) Increasingly, customers of the city’s insurgent ridesharing companies are answering yes, yes, and yes. Simply put, San Franciscans need better ways of getting around. “It’s just a pain in the ass to get a cab in this town,” says mobile app developer and Uber fan Kayvon Beykpour, who uses the service every day.

And it’s not just regular citizens who are converts. “Uber is keeping cars off the road, and we ought to support it,” says City Hall adviser Tony Winnicker. Winnicker has been tapped by Mayor Ed Lee for the Sharing Economy Working Group, an initiative to foster the growth of companies, like Airbnb and TaskRabbit, that allow laypeople to offer and request services online or through an app. (Uber isn’t strictly a ridesharing company because until recently it contracted only with town car companies and licensed taxicab drivers.) “The sharing economy creates wealth in a very democratic fashion,” says Winnicker. SideCar was a boon to Nguyen, for instance, after he nearly emptied his savings account to buy an engagement ring for his girlfriend. He signed up to be a driver, and he can now earn $200 to $300 on a busy Friday night.

All of which is why many San Franciscans— excluding taxi drivers, owners of dispatching companies, and others whose livelihoods are tied up in the transportation status quo—are thrilled with the rise of Lyft, Uber, and SideCar, all of which have ambitious expansion plans. Uber has moved to 31 cities worldwide. Lyft is planning its expansion beyond San Francisco, Los Angeles, and Seattle. And SideCar is now in nine cities. “In many ways, ridesharing is a sleeping giant that’s started to awake,” says Susan Shaheen, codirector of the Transportation Sustainability Research Center in Berkeley.

Of course, all is not sunshine and communal roses in this new transportation landscape. There is, for one, the imposing presence of what you might call Big Taxi. Last November, lawyer Gary Oswald filed a class action lawsuit against Uber on behalf of the city’s cab drivers. “These are the guys who are taking it in the chops,” he says, pointing out that the average cabbie already makes a substandard living and that things will get worse if these services continue to grow.

Then there are the thorny regulatory issues: Also in November, the California Public Utilities Commission (CPUC), which is charged with regulating advance-booking transportation companies, fined Lyft, SideCar, and Uber $20,000 each for failing to comply with previously issued cease-and-desist orders, citing passenger safety as the primary concern. (Other cities have been even less welcoming: When SideCar launched in Philadelphia in March, three drivers were fined $1,000 each and their cars were impounded; in Austin, SideCar filed a lawsuit against the city for trying to keep the company out.)

Similar battles are being waged all across the sharing economy as municipal and state governments wrestle with questions about what kinds of licensing, taxes, and oversight make sense for businesses that operate virtually and “employ” a rotating group of regular citizens. Last year, Airbnb found itself in hot water in a dispute over whether the company should be subject to the city’s 14 percent hotel tax, a battle it fought—and lost. After being hit with the CPUC fines, both Lyft and SideCar refused to comply and adopted the Airbnb argument: that the old rules need to be updated instead of reining in the new companies. “Asserting that we are operating a transportation carrier,” SideCar founder Sunil Paul posted on the company’s blog, “is like saying that Airbnb is a hotel chain, that Travelocity is an airline, or that eBay is a store.”

Read more: Questions about regulations, insurance.

The outcry following the CPUC fines was loud. A petition to revoke Lyft’s and SideCar’s cease-and-desist orders racked up more than 9,500 signatures, with many supporters commenting on the safety of the services. Lyft cofounder John Zimmer claimed that the safety measures already in place at the company—criminal background checks, DMV record checks, and a milliondollar excess liability policy—are “above and beyond” those required by the CPUC. SideCar has similar procedures and insurance, and Uber’s partner services are screened and sanctioned by either the city or the state.

Of course, this is all new territory, and insurers in general are reluctant to get behind these ventures because they don’t know what sorts of risks are involved. There are even questions about whether Lyft’s and SideCar’s insurance policies would hold up. So far, none of them has had to be tested, which leaves the issue hanging, somewhat uncomfortably, in the balance. All this gray area notwithstanding, customers note that ridesharing drivers have an interest in playing it safe. “I’ve been in taxis where I felt like I was going to die,” says Sevasti Travlos, a solar company employee who moved to San Francisco last year. “SideCar drivers are protective of their cars and want to do a safe job.”

The CPUC is tight-lipped about its internal processes, but less than a month after it levied the fines, it agreed to initiate talks on new regulations— and soon issued temporary reprieves for Lyft and Uber. (Their headaches aren’t over, though. At press time, San Francisco International Airport banned ridesharing companies from the premises until the CPUC issues its regulations.) Again, SideCar is in a different position. Its fine and cease-and-desist order are still in place because it refused to sign the interim agreement that Lyft and Uber did. It claims that because it’s the only service that requires customers to list their destination up front, it’s the only true ridesharing company and should be regulated differently.

The CPUC’s new rules aren’t due out until June, but ridesharing and other app-enabled transportation services are certainly here to stay. “I think we’ve had a productive relationship with the CPUC over the past two years,” says Ilya Abyzov, Uber’s San Francisco general manager, “and I don’t think California has any interest in jeopardizing its status as a state that incubates innovative, groundbreaking companies.” Indeed, it’s the CPUC’s promising stance on ridesharing that inspired Uber’s new peer-to-peer option.

Winnicker agrees. “Ridesharing is very San Francisco, and we should nurture that, not jump because it threatens an existing order.” Soon, even the city’s cab drivers may get on board: The SFMTA just passed new legislation that will make San Francisco’s entire fleet of 1,700 taxis electronically hailable from one app. (And who knows? Maybe the competition will be the kick in the pants that cabbies need to tone down the wild driving and be more hospitable.)

What’s the next chapter in San Francisco transportation going to look like? More shared point-to-point services, for sure, like the city-initiated bike-sharing program that’s due sometime this year, and the electric scooter rental company, Scoot, that launched last year. Lyft’s Zimmer is already dreaming about a time when the line between services begins to blur. He describes a vehicle of the future: “You tap a button, and this pod arrives and picks us all up because we’re all going in the same direction. And there’s a digital display that says, ‘You have two friends in common, and you both like this type of music.’”

Shaheen would be happy with something a bit more down to earth—and a lot more likely. “It would be amazing to have an app where you say, ‘I’m going from San Francisco to Oakland—what are my choices?’”

Originally published in the May 2013 issue of San Francisco.

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