Ride Sharing in Austin, Phase 3

  • June 5, 2017
  • Scott
  • 0 Comments

So this happened. And it means Uber and Lyft will be coming back to Austin, because they have the regulatory regime they want now, not just in Austin, but state-wide.

I think the Economist captured it well: “An inglorious return to Austin for Uber and Lyft“:

The ride-hailing giants left in a huff a year ago, after Austinites had the temerity to vote in favour of maintaining the city’s requirement that the firms perform fingerprint checks on their drivers, as traditional taxi companies must. The pair have long resisted being held to the same standards as taxis, with an insistence bordering on arrogance. They have also tended to assume that customers had their backs. So it was a rude awakening when, after forcing a city-wide ballot on the issue, and spending close to $9m on their campaign, Uber and Lyft found themselves on the wrong side of the progressive Austin population, which didn’t want to be pushed around by big companies from out of town.

I think it was a rude awakening for many in Austin who assumed the dynamic duo would run over this vote as they have run over many cities in the past.  Uber and Lyft presumed their popularity as services would prevail at the polls – and it didn’t work out that way.  In a sense it exposed how shaky the ground they stand on really is, from a regulatory point of view, and from a support of the population point of view.  Fewer people voted for the ordinance than signed the original petition (which didn’t have the ordinance language in it).

Uber and Lyft may well find that it will not take long for them to return to their earlier position of dominance. Still, the whole episode pokes holes in the invincibility the duopoly once seemed to possess. They were rescued by a sympathetic state government—this time. But in the future, if they are unwilling to play by the rules established by cities in less friendly states, they could once again find themselves on the outside.

This is just not the narrative that Silicon Valley is selling.  This isn’t how it is supposed to work.  These companies aren’t supposed to depend on suborning the legislative bodies, they’re supposed to rebel and regulations be damned.  Success in spite of the regulations, rather than depending on regulations to succeed.

Likely Uber and Lyft will begin to dominate in the Austin TNC landscape again.  But I like to think about this a bit like Starbucks coming to town. What can you do if you’re a local operator to compete when the big guys come to town?

The first time this played out, the taxi companies couldn’t or wouldn’t adapt quickly enough to compete, though they were still surviving.  This time around, Uber and Lyft are entering a market that has established competition.  Will locals switch?  Visitors, we have to assume, will be tempted to use their usual ride sharing network, rather than a local option. So what is a Ride Austin or Fare or Fasten to do?

  1. Emphasize local.  Ride Austin has a real edge here. The charitable giving, the fact that it is a non-profit.  The fact that it is locally owned/operated so all the money you pay stays in our local economy.  Make Austinites feel as good about using their local ride share as they do about eating at a local restaurant (Austinites are well-known for their disdain for out-of-town restaurant chains).
  2. Advertise at the airport – capture visitors coming into town. Tell the feel-good story.
  3. Move up-market.  I’m not saying you can’t compete in the largest part of the market, but differentiate by being *better* in some way, rather than cheaper. The big guys can always buy their way to cheaper, they don’t have to actually operate more efficiently, they just can spend more money.  How many successful coffee shops sell coffee dramatically less than Starbucks, versus slightly more?  And then focus on providing a better overall experience (Houndstooth, Caffe Medici, thank you).
  4. Find allies – in Cap Metro, the bus system, the city, non-profits, and others, who can help fund you, keep you in the game, or put you in front of riders at events.
  5. Keep being the authentic option.  We’ve all seen Uber’s behavior as a company the last year.  Be the company that doesn’t abandon customers and drivers, and that has proven you can operate a TNC successfully under Austin’s rules.

I know the odds are stacked against you, folks, but I’m rooting for you to succeed. Austin will benefit from a local option, and from escaping the duopoly.  And then the question is market dynamics – will the market support 3 or more players or does it “naturally” devolve into one or two dominant players.

Regardless, the TNCs who came to Austin over the last year should have our thanks – they did their best to fill a void, and provide a service.  Personally, I’m going to be giving my business to businesses that invested in Austin, as long as that’s an option.

 

 

 

 

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