

Uber: A Feisty Start-Up Is Met With Regulatory Snarl - rpm4321
http://www.nytimes.com/2012/12/03/technology/app-maker-uber-hits-regulatory-snarl.html

======
chernevik
Uber had better understand that in politics, just because you're right,
doesn't mean you win.

As a Bad Person I take it as a given that there is some kind of corruption,
more likely soft than hard, in metropolitan taxi regulation. That doesn't mean
there aren't legitimate interests represented by those regulators, and those
legitimate interests will be the rhetorical focus of the incumbent protection
campaign. Uber would do well to appreciate those legitimate interests and get
well and truly on the right side of those questions. Uber would also do well
to understand the unstated agendas, legimate and otherwise, and strategize for
meeting those.

Legitimate questions? IANA taxi expert but I would guess: \- Value of
incumbent licenses. In NY cab drivers and companies spend hundred of thousands
for medallions. There are whole financing structures built around those
values. Protection of those values is probably a key objective of the
regulators.

That really is a legitimate problem. For one thing those values support an
industry that provides jobs to working class people. For another the city
probably views those values as a signal of the stability of its policy
environment.

\- Stability. Policy makers may well believe that the taxi system works on a
number of dimensions, that systems like Uber may not work as well on all those
dimensions, and that they may disrupt the system with unknown consequences.

\- "Universal service". One of those dimensions may be service availability to
low income neighborhoods. Cabs are supposed to take fares anywhere. Regulators
may fear that poor people may not have iPhones to play in Uber, and that
drivers would discriminate against some neighborhoods if the poor people did.
It would not surprise me that the tacit model behind the cabs is "you take the
high fare business traffic to the airports, but also the lower revenue low
income traffic." The high revenue types effectively subsidize the low revenue
types. This model happens EVERYWHERE in the regulated universe.

I wouldn't be surprised if the regulators were also simply trying to maintain
their nests by maintaining control, and maybe some actual hard corruption.

But these folks are very, very capable at city politics. They've got their
10,000 hours in and they will kick your ass if you don't. I don't care how
right Uber is, if they find themselves going up against race and class
politics they will get erased.

My advice to Uber? Slow down. Figure out what the other side is about, and I
mean all about, good and bad. Figure out how you're going to meet the real
problems and the legitimate and / or understandable objections of the
incumbents. Figure out the arena where the final decisions will be made
(probably the city councils), get to know those players, and figure out how
you can win there.

Uber can't probably do this on current staffing. They need first class
political advice, and at a local level. Finding the right people won't be
easy. But they need people with those 10,000 hours in the right places, and
pronto.

~~~
wisty
> For one thing those values support an industry that provides jobs to working
> class people

So does Uber. Restricted supply, and price fixing don't tend to create as many
jobs. They are higher paid jobs, or would be if the drivers themselves owned
the permits.

> Universal service

I've never been to New York, but I've never been on a Uber thread without
hearing some New Yorker claim that taxis won't offer universal service (mostly
refusing fares which take them out of Manhattan), but Uber does.

> My advice to Uber? Slow down.

Nope. They should keep their speed up, and hope they survive the political
game of chicken. It's like Air-bnb - their best chance is to get the public on
side, so the politicians won't screw them. It's not the right way to do
things. It's dodgy. It might be illegal, and probably should be. But they
aren't in a market where "should" wins.

~~~
sk5t
My experience in Philadelphia with "universal service" is that cab companies
will simply state an outrageously long wait to pick you up in an area that is
even slightly out of their desired path. On the other hand, once you've
boarded a cab in a cab-populated place, they'll take you where you want to go.

------
jaysonelliot
Uber's behavior during Sandy was a colossally boneheaded move. Of course
they're able to rationalize the 2x "surge pricing" by talking about increase
in supply, etc. To a certain subset of the public, it made sense, and they had
their defenders in quite a few places.

What it really did, though, was generate massive amounts of bad publicity as
journalists took the opportunity to dash off quick "Price Gouging" stories,
inflaming the public and giving ammunition to those who would like to take
Uber down.

Uber had a golden opportunity during Sandy. They could have dug into their own
pockets and paid their drivers the 2x pricing, while keeping the rates as-is,
or even giving a Sandy discount. The monetary cost would have been absorbable,
and the benefit to their image would have been immense. Instead of regulators
pointing to their "price-gouging" during the storm, there would be journalists
and riders coming to their defense, talking about what a good thing it was
that we had a company like Uber in New York City.

If they failed that simple test of PR101, it's not surprising that Kalanick
and his company are having a hard time navigating the insular and heavily
political waters of municipal regulatory boards. There's more to succeeding in
business than having a great product. You've got to learn to play the game.

~~~
viscanti
They DID dig into their own pockets to pay drivers the 2x price. Their "surge"
pricing was in effect for a very short time. It's been reported that they paid
over 100k out of pocket to help boost supply. They're a young, inexperienced
company, and went with the tool they usually do when they are supply
constrained and need more drivers (increase prices to incentivize drivers).
They quickly changed course and did the right thing.

~~~
uptown
Yes - but ONLY after they got slammed in the media about their surge pricing,
and were told they may be subject to fines for price gouging.

"They're a young, inexperienced company"

True. But they're also challenging regulations saying they shouldn't have to
play by the same rules as everybody else. Here they got burned, and they have
no-body to blame but themselves.

~~~
viscanti
Where have they ever said they shouldn't have to play by the same rules as
everyone else? They vet their drivers and ensure that all meet the
requirements to drive locally. They're using licensed, commercially insured
drivers who meet all the regulations for their city. How is that not playing
by the same rules as everyone else?

Cab dispatch companies work in all the cities Uber is in, and Uber meets
exactly the same regulations those companies do. Should Uber double drug test
drivers? Should they double inspect vehicles for emissions? Or are we OK with
knowing that all their drivers are already in compliance with all local
regulations in each city? I guess I don't see what regulations they're
skirting, or why there's a need for more regulation now. There's a
considerable difference between what Uber does (provides a way for licensed
limo drivers to fill their spare capacity) and what companies like Lyft and
Sidecar do (allow anyone to drive without commercial licenses or commercial
insurance).

Uber is a young company. I don't think anyone is advocating that they'll do
everything perfectly. It's pretty easy to imagine stumbling through some
learning experiences like they did their first hour after hurricane Sandy,
when they went with the tool they're used to using in similar non-emergency
settings. They quickly corrected their actions, and seem to be learning. If
they continue to flub future post-emergency responses, then I could see the
issue. Until then, I applaud them for learning (or appearing to), and don't
fault them for not breaking non-existent regulations (they're following all
local regulations in each city, and shouldn't need to ask for permission to
run a legal business there). The criticism they face is from people with
vested interests in an outdated business model. Those people deserve to be
called out.

~~~
uptown
"How is that not playing by the same rules as everyone else?"

There are a few examples, but one was with tracking their travel with GPS
instead of the approved meter that others were required to use:

[http://blogs.hbr.org/hbr/mcafee/2012/08/bostons-uber-
ruling-...](http://blogs.hbr.org/hbr/mcafee/2012/08/bostons-uber-ruling-a-
triumph.html)

Uber was banned in Boston for awhile, and eventually the ban was overturned,
but the fact remains that they did ignore (intentionally or unintentionally)
the existing regulations for metering travel. I'm all for forward-thinking
solutions to problems, and personally I think GPS is a better solution - but I
grow tired of companies that repeatedly ask for forgiveness rather than
permission as their modus-operandi.

~~~
viscanti
The "approved meter that others were required to use" was for taxis, not
limo/towncars. Their GPS units are significantly less opaque than the status
quo for limos (which really comes down to just naming an arbitrary price, or
having to pay for a full hour regardless of use). In the Boston case, a lower
level regulator with ties to the taxi industry issued the cease and desist, it
was his supervisor who removed it, because there was in-fact a basis for using
GPS to track time/distance.

Why should Uber ask for permission to run a legal business? The city of Boston
agrees that their business is legal, and that GPS is OK. They're using
commercially licensed drivers with commercial insurance, leveraging a system
that existed well before Uber. They're simply making it more efficient for
both sides (fill spare capacity with riders who need a car). Their drivers and
cars meet all local regulations. Their outspoken opponents aren't doing so for
the public good, they're doing it because they represent an entrenched power
who is threatened. Legal businesses don't have to ask for permission, and
shouldn't be asked to.

------
YokoZar
So, to "protect consumers", they are proposing the following regulations:

* A rule to forbid luxury car services from using GPS to meter the precise time and distance * A rule to forbid drivers from accepting electronic hails * A rule that forbids limousines from arriving in less than 30 minutes.

The regulators are going to have a hard time convincing anyone they're
actually doing this in the consumer's interest.

------
gsibble
Love it. Their middle finger to regulators actually makes their rides feel
less expensive and more like civil disobedience. Keep it up guys.

------
1010011010
Matthew W. Daus and his ilk are simply protecting their own power and money.
They have sewn up the market and want to keep it that way.

------
aneth4
Why is Uber not headlining a political movement not to be regulated
unnecessarily?

I think most consumers don't want this regulatory interference, and many would
probably be willing to participate in a movement to protect Uber and the like.
A consumer and voter movement would be far more effective than tangling with
regulators and cartels.

I would certainly reconsider my vote for a politician playing this sort of
protectionist game. "XYZ wants to take away your right to convenient
transportation" may go a long way.

------
kunle
You know you're winning when your competition knows that the only way they'll
win is by changing the law.

------
jiggy2011
_"Summoning a taxi or car service with your smartphone feels like the future"_

I remember doing that in 1998 by dialling a number.

------
kokey
Reading this article is surreal, it sounds like it's part of an Ayn Rand
tribute novel.

------
gojomo
FTA: "While the regulators discussed ways to clarify the legality of these
apps, they also proposed guidelines that would effectively force Uber, a San
Francisco start-up, to cease operations in the United States."

These regulations and agencies were created in response to a wildly different
system of car-based transportation from decades ago, one where drivers,
agencies, payments, customers, and misbehavior were all harder to track and
punish. A gypsy cab could operate unsafely, mislead customers (especially out-
of-town visitors), and disappear with cash: no recourse.

Uber and more generally the category of mobile-dispatched-and-paid transport
are now _so different_ from that past that the best approach will be to let
them operate to see what happens. The fears about 'anyone in a basement'
preying on consumers and then disappearing reflect a pre-internet, pre-mobile,
pre-credit-card mentality and may not be relevant at all, except in the
imagination of threatened incumbents and bureaucrats.

New restrictive guidelines, like those from this "International Association of
Transportation Regulators" conference, should only be crafted in response to
any actual abuses that materialize. Even then, they should only be deployed to
the extent that the standard laws of consumer protection (implied warranties,
truth-in-advertising, liability law, etc.) don't work, _and_ competitive
consumer choice (aided by their mobile devices) doesn't work.

(There used to be special informational failures in cab-dispatching that made
the usual consumer protections not work well. Those failures have been solved
with mobile/reputational dispatch-and-payment. Every person, car, dollar, and
ride is now far more accountable, even without government regulation, than
ever before.)

------
j0j0r0
the more I learn about daus, and the people that hate him, the more _i_ like
him...

~~~
fruchtose
Could you explain a bit more? I am curious to hear your opinion.

------
viggity
Light bulbs?!? You can't sell light bulbs. What will happen to the candle
maker's guild?

------
pekk
The original headline reads "app maker uber hits regulatory snarl" - as in,
encountering an obstacle. The HN headline reads "feisty start-up met with
regulatory snarl" - as in, the government is snarling at them for being a
feisty start-up.

This is just inflammatory, it's not accurate on any construal of the story

~~~
rpm4321
Hi Pekk, I posted this headline, and I copied and pasted it almost verbatim -
adding only the "Uber:" label at the beginning for clarity. NYT sometimes
changes headlines on stories, and even uses alternate headlines for some
links.

If you go to the NYT home page and scroll down to the Technology section below
the fold, you should see the link/headline I used.

When I click through to the story, I still see the headline I used and I can't
seem to find the one you are referring to, so maybe it customizes the headline
based on which link you clicked?

~~~
pekk
You are right, I was reading from the title instead of the header tag, which
also contains the pointlessly inflammatory language. Mea culpa (and NYT's)

