Could Sidecar’s patent trip up Uber, Lyft?

By May 22, 2015No Comments


    Today, RSG contributor, John Ince gives us a breakdown of all the latest rideshare news.  Lyft has been busy getting funded by Carl Icahn and experimenting with social profiles while another Uber CEO is in the news for some pretty outrageous comments and you guessed it, Uber is involved in another couple of lawsuits.  Oh and we saved the best for last!

    Could Sidecar’s patent trip up Uber, Lyft?

    Sum and Substance: What’s the value of a great idea? This week a man sued Uber, saying the company stole his idea for a ride service that he hatched in 2002. {See story below… } The man says he spent years developing the idea, but it never came to fruition because he didn’t get funding. While that case so far rests on flimsy evidence, another man may have a more legitimate claim. Sunil Paul says he had a similar idea even earlier, back in 1997. Paul developed his concept for mobile ride-hailing over a wireless network, applied for a patent in 2000 and was granted U.S. patent 6356838 “System and method for determining an efficient transportation route” in 2002. Unlike the man with the lawsuit, Paul turned his idea into reality. He co-founded San Francisco startup Sidecar, which offers paid rides by private drivers in their own cars, summoned by passengers over a wireless network — just as he had envisioned.

    My Take: It was just a matter of time until the issue of intellectual property started to raise its ugly head in the Rideshare space.  There’s too much money at stake to assume that one company will be able to walk away with all the spoils without a legal challenge.  Paul’s strategy of building a company to compete with Uber has much more potential than the litigation route, which would drag on for years and drain huge amounts of financial and human resources.  If Paul’s (Sidecar’s) patent is indeed a “seminal” patent, as several experts suggest, this could prove to be a huge point of leverage in any potential acquisition negotiations down the road.

    Lyft Experiment Lets Passengers Rate Each Other And Connect After The Ride Is Over

    Sum and Substance: It reads like the plot of an awful but inevitable romantic comedy: two strangers share a Lyft Line. Sparks fly; love blooms. Just as passenger No. 2 is working up the guts to ask passenger No. 1 on a date, passenger No. 1 arrives at their destination — in a rush, of course — and disappears into the night. LOVE LOST. Or is it? Lyft is experimenting with allowing Line passengers to reconnect after the ride is over. It’s currently testing the feature in San Francisco, we’ve learned.

    My Take: The key here is to filter out the “creep” factor, but it appears that Lyft has addressed this in a thoughtful way.  It could potentially become a competitive advantage over Uber, building upon Lyft’s “community” based approach / PR strategy.

    Billionaire hedge-fund manager says Uber told him it might cut driver pay ‘because we can’

    Sum and Substance: Uber drivers return (to the company) between 20% and 25% of the fare they collect, but in the future, Uber could easily raise that rate to between 25% and 30%. This would drastically improve Uber’s profit margin, Novogratz recalls Callinicos saying. Novogratz said this answer prompted him to ask a “cheeky question.” “‘You’ve got happy employees, you’ve got happy customers, you’ve got happy shareholders. The holy triumvirate are all really excited about your company. Why are you going to risk that and push the employees salary down 5%?'” Callinicos simply responded “because we can.”

    My Take: Business Insider does very little original research in it’s journalism and this article is lacking in substance, but it highlights a powder keg of an issue – how much Uber deserves to take from the drivers for the services it provides. How they handle this issue will likely determine how successful the company will be in the long term.  If Uber tilts towards the drivers, it risks alienating investors.  If it tilts towards profitability, it risks alienating the drivers … who could easily bolt towards Lyft, Sidecar or some other entity we haven’t even heard of yet.  Interesting to note that, if this report is accurate,  the Uber CFO certainly appears to have been tone deaf to the tide of complaints on driver messages board about the 20-25% that Uber already takes. 

    The hidden anxieties of the on-demand start-up worker

    Sum and Substance: People tend to lump all Uber drivers, Airbnb hosts, and Postmates couriers together for the purposes of analysis. But in reality, there are two types of 1099 workers: people who are working these jobs as a primary source of income, and people who are working them temporarily to pick up extra spending money or add additional income to a full-time job. Nearly 40 percent of 1099 workers reported that contract work accounted for less than 25 percent of their household income. But 29 percent reported that it accounted for more than 75 percent.

    My Take: The study has a lot more breadth than the above, but this was the most interesting takeaway for me.

    Travis Kalanick has been accused of stealing the idea for Uber

    Sum and Substance: In 2006, entrepreneur Kevin Halpern was secretly working on an idea for a mobile taxi-hailing service called Celluride. While he did so, he shared office space in San Francisco with Uber CEO Travis Kalanick. Halpern is now suing Kalanick, co-founder Garret Camp, and several early investors, accusing them of stealing his idea to form the basis of Uber, … Uber denies the claims made in the lawsuit.

    My Take: Yogi Berra’ sums this one up … It’s deja vu all over again.  Didn’t we see this plot in the movie, The Social Network?  It worked out pretty well for the Winklevii Twins.  But that other guy who sued Mark Zuckerberg is now a fugitive from the law, so these stories can turn out kind of messy for the litigant if you don’t have a good legal foundation for your lawsuit.   This guy. obviously knows the drill.  He’s sued (unsuccessfully) before.   Of course, Kalanick … now a billionaire might just might settle to get him to go away … if he thinks this guy has enough of a case to cause a distraction.

    Why the Uber-Lyft War Isn’t Over Yet

    Sum and Substance: Lyft has raised another $150 million, including $100 million from noted investor Carl Icahn. The new funding is an extension of the $530 million round the company raised back in March led by Japanese e-commerce star Rakuten at a valuation of $2.5 billion. The new money is another sign that the ongoing Uber vs. Lyft ridesharing battle is far from over.

    My Take: Carl Icahn gives Lyft a strong voice on Wall Street.  This fight is just beginning.

    One-Star Uber Driver Reviews

    Sum and Substance: “Stopped the car in mid-trip to yell at at pigeon.” ….  Had a pet rat … Kept asking me to kiss his pet rat.” … and more …

    My Take:  Pretty darn funny …

    -John @ RSG

    John Ince

    John Ince

    John Ince is a former Fortune reporter and Wall Street banker. He has about 1,000 rides under his belt driving part time for Uber and Lyft.  He’s writing a book about his experiences entitled:  Travels With Vanessa:  A Rideshare Driver Tries To Make Sense of It all - For a sneak peak visit the link above.