Friday, September 15, 2017

Uber and Lyft Beyond the Management Gaffes – What’s Been Happening, and How Can They Survive?

The two largest American ridesharing companies have garnered attention, and a couple of interesting headlines, these past few months. 

The first, “San Francisco investigating whether Uber, Lyft are public nuisances,” appeared in Fox Business on June 5th.  This odd move was driven by that city’s government’s set of mostly left-leaning objections, including allegedly poor usability by those “with a disability” (does this phrase now only refer to ambulatory incapacities, as “accessible” has come to mean “wheelchair-accessible”?) and a company-dictated driver strategy that supposedly “disfavors” some neighborhoods.  Though their City Attorney also named the problem of being “stuck in traffic behind a double-parked Uber or Lyft,” since that issue could be easily solved by traffic enforcement it was clearly less important to him than the other two, as was his disapproval of drivers coming from surrounding areas and becoming “drowsy.”  Wrong.  Even if you don’t like them, running Uber and Lyft out of cities for poorly disguised ideological reasons is not the way.

The second headline, “Uber Can’t Be Fixed – It’s Time for Regulators to Shut It Down,” graced a June 21st Harvard Business Review piece.  During the company’s horrendous mismanagement streak, author Benjamin Edelman wrote that “the problem at Uber goes beyond a culture created by toxic leadership,” and that the ride-sharer’s “business model is predicated on lawbreaking,” so it “can’t easily pivot toward following the rules.”  Some of what Edelman mentioned was more skirting than flouting, by, for example, avoiding the need for million-dollar taxi medallions by dispatching through apps instead of through phone calls, and some, such as the Greyball authority-dodging effort, were seemingly determined illegal only after they were put into practice, yet the company has built up quite a track record at this sort of thing, in line with music pirating facilitator Napster’s instead of those of other large electronic innovators Amazon and Facebook. 

The conclusion Edelman reached was the same one I put forth years ago, to legally treat Uber and Lyft as the cab companies they are.  That novel-****ing-idea made it into another headline, “Uber Should Be Regulated as Taxi Service, European Legal Adviser Says” (The New York Times, July 4th).  Author Amie Stang reported on a Court of Justice of the European Union nonbinding recommendation requiring that Uber “abide by tough European rules governing taxi services,” and in effect upholding a $500,000 fine levied by French authorities “for running an illegal transportation service.”  Fair is fair.

New York’s lawful taxi companies struck back that same month with true innovation, involving “two competing ride-hail apps” Via and Curb, on a way for people to agree in advance to combining with other passengers on rides (“Share a Cab in New York City?  It’s Now Easier,” Winnie Hu, The New York Times, June 6th), in exchange for lower fares.  They seem to have organized the process well, with limits of two parties and three people and drivers not required to participate.  A fine idea. 

What may be the only way out for Uber and Lyft, and a better attitude from a certain city on a bay, made the September 12th Yahoo News, in “Lyft to begin testing self-driving cars in San Francisco.”  The experiment will offer free rides, if passengers agree, in generally autonomous but human-monitor-equipped taxis, through “an area that’s already been mapped out in very high detail.”  That effort may seem not to break new ground, but it doesn’t need to, as the more companies can practice driverless ridesharing the more it will be improved and accepted, and the sooner it will arrive as a normal practice. 

Overall, the prospects of Uber and Lyft continuing to do business as they have look bleak.  As I predicted last year, the regulators are circling.  Accordingly, ten years from now they may be long gone, or they may be in the thick of automated, and fully legal, taxis – the choice is up to them.  

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