Taxis Are Fighting Back – California Approves Flywheel

Harry here.  Hope you all had a nice Christmas.  I took a couple days off work and spent time with family and ate a lot of good food 🙂

Today, RSG contributor John Ince takes a look at the Flywheel taxi app and how the latest regulations in California could mean big things for the taxi industry in the US.  But is it too late?  I’ll actually be interviewing the CEO of Flywheel, Hansu Kim, on the podcast next week, so if you’d like me to ask him any questions, feel free to leave a comment below.

small rideshare vehicle covered in wrapping paper for Christmas
Taxis Are Fighting Back – California Approves Flywheel

California approves Flywheel, the app that makes taxis work like Uber

Sum and Substance: Flywheel, an app for booking regular taxis, got the green light from California regulators Tuesday to offer its “TaxiOS” technology to cab owners to replace the current, outdated jumble of meters, dispatch, advertising, navigation systems, and credit card readers. The new technology, which runs on a single, cloud-enabled smartphone, is being pitched as a way to help the traditional taxi industry regain market share lost to ride-hailing companies. Or, as Flywheel puts it, “California has finally set a level playing field for taxis in their war against Uber.”

The decision by the Golden State’s Division of Measurement Standards, which regulates commercial measuring devices like taxi meters, to allow taxi owners to use Flywheel’s app comes after a successful pilot program in San Francisco. Now all California taxis have the option to use Flywheel, where the company has approval to operate throughout the state for one year pending full type certification.

Cab drivers have long complained that taxi owners’ failure to innovate helped facilitate Uber’s rise to prominence. In many ways, Flywheel’s TaxiOS mimics Uber by removing the clutter from inside a for-hire vehicle and replacing it with a single smartphone mounted on the dashboard. It apes some other Uber features too, like fare splitting between passengers to enable carpooling and pickups closer to drivers’ homes. But whether it catches on will depend on Flywheel’s ability to steal customers, and drivers, from Uber’s platform, which mainly operates as a black car service but also allows regular taxi drivers to pick up fares under its uberT function.”A smartphone in every car is the only way to advance the taxi industry, and we now have a mobile platform that can replace every expensive and outdated piece of taxi hardware, while making drivers and fleets more money than ever before.”

My Take:  This is but one more indication that taxi’s are not going to get pushed aside easily.  The Uber / Lyft apps aren’t magic and taxis can do it too.   However, other aspects of the ridehailing experience still leave taxis at a competitive disadvantage.  For starters, taxis don’t have a ton of investor capital like Uber and Lyft and can’t compete on price.   

So even armed with Flywheel, taxis still cost a lot more and there’s that image of the surly taxi driver who couldn’t care less about the comfort of the passenger.  But if Uber loses in court this summer in San Francisco, and if investors stop throwing money at Lyft and Uber (see article below), taxis may be able to get back into the game.

Ride-hailing firm Lyft plans to raise up to $1 billion in financing: Bloomberg

Sum and Substance: Ride-hailing app Lyft, Uber’s biggest competition in the United States, expects to raise up to $1 billion in a new round of financing, Bloomberg cited a Delaware state filing.  The document filed by Lyft on Friday evening did not indicate how much had been raised, who was investing in the round or list a valuation, Bloomberg said.

The latest round of funding could value Lyft at about $4.5 billion, according to Sven Weber, a financial filings expert, while Justin Byers at VC Experts estimated it closer to $3.9 billion, Bloomberg said. In its previous fund raising round led by Japanese online retailer Rakuten, Lyft was valued at $2.5 billion.

Lyft, which makes a smartphone app that allows passengers to summon a ride, currently operates in about 150 U.S. cities. Earlier this month, Lyft formed new partnerships with two Asian on-demand ride services, Ola and GrabTaxi to gain a toehold in the booming overseas markets. Lyft, which announced an alliance with Didi Kuaidi, China’s largest ride-hailing company, back in September, has formed a coalition that will allow passengers to use all platforms to hail a ride as they travel between the United States and Asia. Activist investor Carl Icahn’s Icahn Enterprises has a $100 million investment in Lyft Inc. Uber expects to raise as much as $2.1 billion in a financing round that would value the company at $62.5 billion, Bloomberg reported earlier this month.

My Take:  This is an astounding amount of money for a startup that is still losing two dollars for every dollar of revenue. It also comes at a time when other so-called Unicorns are finding investors cool to their new offerings.  Somehow Uber and Lyft seem to be immune to the reality checks that are now sweeping through investor circles.  

Uber is now in the process of raising another $2.1 billion at a valuation of $62.5 billion.  Meanwhile, drivers find it more difficult to make a decent income with fare cuts, larger “service” fees and commissions being taken out of their paycheck each week.  What’s wrong with this picture?

Uber driver accused of attacking 2 customers with ice scraper

Sum and Substance: Kourtney Wilson and Toni Sanders left the Winter WonderFest at Navy Pier on Tuesday evening to discover their car had been towed. That was just the beginning of a bad night that would end with Wilson and Sanders scuffling with an Uber driver wielding an ice scraper, according to the two women and police.

“Never did I think that he was going to attack us in the middle of, you know, downtown Chicago during rush hour,” Wilson, 29, said by phone Wednesday. But the driver, Chieh Wang, 37, denied attacking her, though he did acknowledge having an argument. “I will explain to the judge in the court,” he said.

Wilson said she and her friend requested an Uber ride around 6 p.m. after discovering their rental car gone. The two ducked into a Whole Foods at 255 E. Grand Ave., then Wilson went outside to meet the driver while Sanders, 32, was getting rung up. But Wang was already starting to pull away in his Toyota Prius, Wilson said. She chased after it and knocked on the trunk. The car stopped, Wilson got inside and Wang started to leave again, she said. Wilson said she asked Wang to wait for her friend, but he became “very agitated and didn’t want to wait.”

Wilson got out of the car and started to head back to Whole Foods. She said Wang left his car and asked if she wanted to fight him. She said she walked away and asked for another Uber ride. Wilson and Sanders went around the corner to wait for the new driver, and Wang drove away, she said. But moments later, Wang returned, pulled up next to them and stepped out, Wilson said. She said she took out her phone. “I started filming him because there was no reason for him to be pulling up again.” She said Wang took an ice scraper out of his trunk, cursed and started hitting her and Sanders with it. Bystanders stepped in, telling Wang to stop, and called 911, she said.

My Take:  This is part of new subcategory of road rage media stories that we might call Rideshare Rage.  With all the stresses that rideshare drivers put up with and passengers who seem to have no clue about inconveniences they’re causing, it’s little wonder that some small percentage of drivers lash out.  

In this case, the weapon was an ice scraper, which isn’t sharp enough to do any real damage, but the entire incident will surely cost the driver his job and possibly a fair chunk of change in court settlements.  Again, one might reasonably ask: is this gig really worth the hassles?

Exclusive – U.S. Justice Dept probes data breach at Uber: sources

Sum and Substance: The U.S. Department of Justice is pursuing a criminal investigation of a May 2014 data breach at ride service Uber, including an examination of whether any employees at competitor Lyft were involved in the episode, sources familiar with the situation said.

Earlier this year, Uber revealed that as many as 50,000 of its drivers’ names and their licence numbers had been improperly downloaded. An investigation by Uber determined that an Internet address potentially associated with the breach can be traced to Lyft’s technology chief, Chris Lambert, Reuters reported in October. Department of Justice spokesman Abraham Simmons said on Wednesday he could not confirm or deny a criminal probe.

No one has been accused of any wrongdoing, and it is unclear whether anyone will ultimately be charged in connection with the breach. A recently hired attorney for Lambert, former federal prosecutor Miles Ehrlich, said Lambert “had nothing to do” with the breach. “Given that Uber apparently lost driver data, a law enforcement investigation is to be expected,” Ehrlich said. “And the benefit is that the culprit here is going to be identified – and that’s going to remove Chris’ name from any conversation about Uber’s data breach, as it should.” In a statement on Friday, Lyft said “we have not been contacted by the DOJ, U.S. Attorney’s office or any other state or federal government agency regarding any investigation.”

My Take: This development doesn’t take us any closer to an understanding of what really happened here.  It’s the kind of story that grabs headlines but an investigation like this is so sensitive that nothing will be publicly divulged until it’s complete.  In the meantime, all we can do is speculate.  My speculation is that Uber is trying to milk this for all it’s worth in terms of PR value and Lyft will deny everything. 

Ford CEO Outlines Plans To Compete With Ride-Hailing Services

Sum and Substance: Ford Motor Company plans to roll out a fleet of hybrid cars, and it’s also developing new ride-hailing services. This is Ford’s latest effort to not just sell cars, but drive people and gain entry into the ride-hailing economy dominated by Uber and Lyft. NPR’s Ari Shapiro talks with the Ford CEO Mark Fields about the company’s move into other markets and the future of the auto industry.

ARI SHAPIRO, HOST: Ford has just announced a $4-and-a-half billion investment in electric vehicles. And the company wants to be known for more than making cars, so Ford is also moving into ridesharing services, trying to compete with companies like Uber. With so many ridesharing companies out there already, why do you think the world needs another one created by Ford?

FIELDS: Well, we think we might bring a lot of unique approaches to the business. First off, as an automaker, we’re really focused on our core business, which is designing, developing and manufacturing and marketing terrific cars, utilities and trucks. At the same time, we’re seeing a lot of the societal factors around congestion and what that means for mobility going forward, and that’s why we’re thinking also of ourselves as a mobility company, which means, how do we make people’s lives better, and how do we provide mobility maybe beyond our traditional definition?

My Take:  Uber and Lyft’s success is attracting a lot of interest from incumbents in other industries and with good reason.  Uber has gone from zero to $62 billion in valuation in just over five years, largely because it’s viewed as an app based technology company.  

In the process, they leapfrogged stodgy old companies like Ford in valuation.  Now Ford is thinking, “Can we re-imagine ourselves and sprinkle some of that tech pixie dust on our aura, and presto – we’ll become a hot company that investors will suddenly start throwing money at.” At least that’s how the fantasy goes.

Uber CEO, Travis Kalanick, named finalist for Time Magazine Person of the Year

Sum and Substance: Meet the eight final contenders. A shortlist of candidates chosen by TIME magazine’s editors for the 2015 Person of the Year. Of the eight contenders, there one name that stands out to those of us in this space: Travis Kalanick, who as CEO of Uber drove his car-hailing company to a nearly $70 billion valuation, but also drew criticism about the downside of the sharing economy.

My Take:   Whatever your feelings are about Uber, you can’t deny the impact it’s had on the world.  Kalanick and his team deserve credit for putting ridesharing on the map.  BTW:  He didn’t win – the award went to German Chancellor Angela Merkel.  But just getting mentioned in this list is pretty noteworthy.

Drivers, what did you think about the week’s top stories?

-John @ RSG