The Ridesharing Cluster$!@% in Austin

The repercussions of Uber and Lyft leaving the city are growing each day. Hopefully they aren’t lasting, but I do feel more concerned about them than last week and the week before. There’s no denying we now have more people driving after one or many drinks. Many drivers are out of a job or extra income. The service industry will likely lose revenue because of people staying in or calling it early. Travelers are slowly showing frustration after coming to a city with poor transit options (look at social media). Newcomers and Austinites that sold their cars are questioning their decision. Thought leaders are mocking our city, enough to where it could create false perception with outsiders. The most distributed publications are shining a bright, burning spotlight on our city for the poor handling of all of this; that spotlight isn’t pointed at Uber and Lyft much. Underground ridesharing is now a thing. Parents are wishing their children had the safe travel option of Uber and Lyft back — ironic to say the least. This list goes on.

Some are trying to support Arcade City, a company with an ethically questionable CEO at the helm. We’re also supporting GetMe who has an anonymous CEO (seriously?). In a vacuum, that seems unreal. Who apologizes and takes responsibility for the countless errors happening with GetMe requests? A support team. I don’t believe these errors are reasons to not use the service, but they are natural growing pains to resolve. We, in the startup world, all know that an early stage company has a CEO to take responsibility for blunders. That level of caring and customer service is critical to earning and maintaining trust. Period. The same goes for any organization.

I don’t mean for those comments against competitors to be a smear campaign. It’s a matter of a lot of people that voted for Prop 1 being worried about Uber as a big business and not operating with the best character at times. No one and nothing is perfect, including Austin.

If your argument is, “They didn’t have to leave,” then consider the other side. They also didn’t have to create thousands of flexible jobs in Austin. People that couldn’t have easily found contract work all of a sudden could make their own hours. They didn’t have to give us life-changing transit options like carpooling and individual ridesharing service at a reasonable price. They didn’t have to create a huge push, as misguided and erroneous as that campaign was, to stay unhindered in our city because it’s an important market to them and us. I’m sure team members at Uber and Lyft will lose their job over the poor campaign for Prop 1, but it’s done now. What they can’t afford is to have a city like Austin set a precedent that hurts the way they have successfully operated and positively impacted many cities. My guess is those ‘many cities’ will learn from Austin’s mistake and do whatever is necessary to get to the table to work together.

I originally thought we’d be looked down on for a bit and that would fade and be forgotten. This is becoming a great reminder as to why Austin operates differently and stands as another signal risk to outsiders looking inward for various reasons. We have a great city and all of this will be smoothed over by a state-regulated decision eventually, but the in-between could be harmful to the city in a lasting way.

Finally, as I view the current situation from a sustainability perspective, I cannot imagine the opportunistic ridesharing companies entering the Austin market get very far.

Uber and Lyft had to raise a ton of money to scale because it’s difficult to turn a profit while growing as an on-demand service unless massive scale is reached (and even then…). The only way to expand and make sure cars are available everywhere, at all times, was to throw cash at the problem. It’ll be interesting to watch the small, opportunistic players try and operate for more than a year if demand skyrockets. Do they just raise more money? Are investors willing to invest large amounts of cash into a company that’s likely going to lose the moment Uber and Lyft enter or re-enter a market?

I say that as a point against thinking replacements will easily find their groove. That groove has heavy external factors, like investor confidence, to appease. A 20M+ deal into an Uber competitor in the U.S. that operates opportunistically where Uber temporarily isn’t sounds unlikely, if not crazy. With that, I’ll leave you with this odd post that quotes two different city council members referring to using tax dollars to support local competitors. Ann Kitchen calls them “misstatements.”

In a perfect world, Austin gets to the table with Uber and Lyft and successfully negotiates them back. Mayor Adler says we’re still eligible for the $50M smart city grant. It’s hard to imagine we don’t get at least a little ding. Successfully bringing them back to town quickly could be even more reason to get the award. If all else fails, the Texas Legislature is meeting in January, and that feels like it can’t come soon enough. Their pro-business history is a good sign.

I don’t know how to help local politics at the moment but creating more healthy conversations is the right step. At the end of the day it’s only a matter of time until they’re back in Austin, we can move on from this mess, hopefully unscarred. Let’s not be defensive of the poor decisions that have led to this point. They will be fixed. I encourage Austin tech members to join the Austin Tech Facebook group that was created recently. Josh Baer and Dan Graham are telling everyone to standby for an initiative that’s coming to help all of us get active in the policies affecting tech in Austin and the city, in general.

My final note: I love this city. My job was to help move the best founders we could find to Austin and accelerate them here for 13 weeks. Most of them stayed and that’s something I am extremely proud of. Many of those founders weren’t immediately excited to pick up and move their lives, significant others, and employees’ lives here, but we made sure they got excited enough to commit and experience the startup ecosystem we have — it’s a strong one.

Originally published at on May 18, 2016.

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