Austin's Mayor Is Keeping Ridesharing Weird

Steve Adler is telling Uber and Lyft not to worry about obeying city laws, while also cozying up to their competitors in potentially awkward ways.

Uber threw a "driver appreciation" party in Austin on Thursday night. It was an odd gesture. After all, the ridesharing giant had stopped operating in the city 24 days earlier, so many of the attendees weren't technically still Uber drivers. And while some drivers were pining for the company's return, others were too angry to show up at its parties. "When I got the invitation, I said, 'Why would I go now? Appreciation for what?'" said Ligia Friedman, a former Uber driver who's furious the company cut off her sole form of sustenance without warning. She stayed home. 

But free food has a way of speaking for itself. A slow but steady stream of mostly paunchy middle-aged men filed into the Palm Door event venue, walking past tattooed hipsters on East Sixth Street who might have been their customers had Uber not pulled out. Inside, the drivers ate barbecue and mingled among themselves. Several hundred people stopped by over the course of the evening.  When they left, they had no better sense of when Uber might start offering them work again, instead of just pork. 

Uber's "driver appreciation" party in Austin.

Photographer: David Williams/Bloomberg

Uber and Lyft are no longer operating in Austin, but they're hardly gone. Last month, they halted service after a ballot initiative failed to overturn a law requiring them to fingerprint drivers. Supporters say the law will help weed out people with criminal records; the ridesharing companies say fingerprinting could deter casual drivers from signing up.

Joe Deshotel and Andy Tryba of RideAustin.

Photographer: David Williams/Bloomberg

Uber and Lyft are approaching the loss in Austin as a setback rather than a final defeat. Both companies still have offices in the city staffed with permanent employees. They still have allies and are holding meetings with various public officials who are searching for a face-saving way to get Uber and Lyft back ferrying people from home to work, bar to restaurant, airport to convention center. But, as yet, there's no clear formula to break the stalemate at City Hall. 

Even as the ridesharing giants do their utmost to maintain a connection to Austin, upstarts are doing their best to sever it. They're creating Facebook pages where people can offer rides for cash, passing out flyers to potential riders standing in line at taco restaurants, signing up drivers and offering jobs to the Uber and Lyft workers standing idly by in their local offices. 

The newbies are operating on the quixotic notion that there's still an opening for a new player to emerge in a market dominated by two Silicon Valley startups with billion-dollar war chests and years of experience. Sure, Lyft and Uber invest far more money launching in a new city than many of the upstarts can afford to lose. But Austin is a unique situation: a major American city where the biggest players primed the ridesharing pump and then self-deported. It's hard to see a better opportunity for a radically different model of ridesharing to emerge. And several of the new guys on the ground are aiming high. The implications could go beyond Austin. 

Steve Adler, mayor of Austin.

Photographer: David Williams/Bloomberg

On the other hand, if these efforts fall flat, Uber and Lyft may end up with more leverage to craft the political landscape. In that case, they would return from a few months or years in the wilderness even more entrenched as the inevitable solutions. If they think the current excitement around new ridesharing startups will fizzle, Uber and Lyft don't have much incentive to rush. "They'd love it to just fail, to have apps try and fail," said Joe Deshotel, director of community engagement at RideAustin, a local nonprofit ridesharing group. "They could say, you can't do it if you're not Uber and Lyft." 

Stuck in the middle is Steve Adler, Austin's mayor. Adler thinks he can put his stamp on the city by burnishing its reputation as an exciting playground for experiments in urban transportation. One of his political priorities is to seek millions in federal funding to promote a so-called smart city plan based on autonomous buses, sensors that know which parking spaces are available, and, yes, a culture of ridesharing.

Adler has a lot riding on having Austin come out of this looking like a town pushing toward the future instead of clinging to the past. So he's desperately trying to play both sides of the local ridesharing battle, even if that means sending out strange signals about the city's attitude toward its own laws. He has quietly assured the big ridesharing companies that they would have nothing to fear if they continued to operate without changing their practices. "There's no fingerprint enforcement specified and set out in the ordinance," he said. "I have communicated that to Uber and Lyft."

At the same time, Adler has pushed for the creation of local alternatives, whose viability almost surely rests on Uber and Lyft staying away long enough for them to gain traction. He insists that this is an exciting time for Austin. "What we have in this city is two companies that in essence built the factories and then left, but they turned over the keys. They left a universe of drivers. They left a universe of riders," he said. "What happens when you have an open market in a city? What'd you expect to find is competition and innovation. That's what we're seeing here." 

"What we have in this city is two companies that in essence built the factories and then left, but they turned over the keys"

One of the first things greeting visitors to Austin-Bergstrom International Airport is a big advertisement for a service called Fare. The sign describes Fare as Austin's newest rideshare app. That distinction may well have been true 10 days ago, but it already seems woefully out of date. Fare works like a glitchy early build of the Uber app. Open it up, press a button, and—if you're lucky enough to not have the app mysteriously cancel the call—a driver like Omar Orchid will pull up and usher you into his car.

Photographer: David Williams/Bloomberg

Orchid is a recent Austin transplant who drove for Uber and Lyft until they shut down. His perspective on the local situation is typical of the city's professional drivers. He's not sad Uber is gone—he felt the company consistently squeezed him financially. At the same time, he has nothing good to say about the government or the senior citizens who voted down the company's anti-fingerprinting ballot initiative. 

Fare is a passable solution at best, in Orchid's view. Of course, it's better than Get Me, which enjoyed a quick moment of prominence in the immediate aftermath of Lyft and Uber's pullout. That one had no good system for assigning riders to drivers who were close by. Every ride request became a free-for-all. "It's like you gathered 200 dogs in one room—hungry dogs—and threw a piece of meat in the middle of the dogs," Orchid said. "They have to fight for who's going to get it first." 

This has led to a bumpy road for people like KristinAnn Janishefski. About eight months ago, she gave up her car, convinced that she could piece together a suitably mobile life by walking to work, asking her boyfriend to drive her around to run errands, and calling the occasional Uber. With the company gone, she feels consistently stranded by unreliable service from taxis and the new apps. She often just walks between her office, her apartment, and other places she needs to go. "It can take me an hour to walk to my yoga studio," she said, noting that this means she does less yoga. "It's affecting my health in a really weird way." If things don't change soon, Janishefski says, she may end up buying another car.

There is no shortage of efforts aimed at making that unnecessary—Wingz, Fasten, zTrip, the Austin Underground Rideshare Community. Many of these companies function like tweaked versions of Uber and Lyft, and operate like fairly standard tech startups. But two notable members of the new crop have adopted more unusual structures. They're not necessarily defined by the features of their app, but by their conception of the role that ridesharing should hold in the wider life of the city. 

The libertarian candidate, so to speak, is Arcade City, which claims to be a tech startup but is really just a private Facebook group. It's not hard to get into the group, and once you're in you can put up a post asking for a ride or offering one (or offering mechanical expertise or asking for someone to help move a washing machine).  Arcade City is not the only forum set up for riders and drivers to connect, but it's the biggest, with about 30,000 people signed up. 

James Strife, a driver with Arcade City.

Photographer: David Williams/Bloomberg

Until May, James Strife had been scraping together a living doing hair and driving for Uber; the company even helped finance his car. He was driving when he heard that the ballot measure had failed, and he said he pulled over and cried. For several days, Strife was scared he'd lose both his housing and his vehicle. 

It wasn't long before he found Arcade City, though, and now he claims to make three times his former salary. "I make stripper money," said Strife, a prototypical Austin hipster with a tattoo of a dancing cactus behind one ear. In part, the extra cash comes from not having to split fares with a middleman. But Uber's relentless drive to push down fares meant that people were paying far less than they were willing to. His average fare for a ride is much higher than it was with Uber. 

Strife acknowledges that what is better for drivers isn't necessarily good for riders. "I think this is temporary, because riders are going to do what's more convenient for them," he said. "I am literally just riding this wave until it crashes."

Arcade City founder Christopher David.

Photographer: David Williams/Bloomberg

Christopher David, Arcade City's founder, is more optimistic. He recently moved to Austin for the rideshare rush, and just set up shop in a local startup incubator on Wednesday afternoon. David clearly relishes casting himself in the role of the visionary. Padding around his new digs in a V-neck T-shirt, mesh basketball shorts, and red house shoes, he gives a rambling, enthusiastic explanation of Arcade City's plans. It's long on tech buzzwords and short on internal consistency. 

David's primary contention is that Arcade City will never have to abide by fingerprinting requirements, or most other government mandates. That's because the organization is just a way for people to find one another, rather than the transportation network companies the city regulates (although David says he plans to launch a ridesharing app in the next two months that will be a lot like Uber or Lyft).  "We push the regulatory and compliance decisions out to the drivers and say, look, you're welcome to access our platform and pay us a little fee to do so, but you're taking responsibility for the liability considerations."  

The mayor just smiles indulgently when the subject comes up. "These Arcade City kind of things are what happens when you have extreme demand and the supply melts away," Adler said. "They're not ultimately safe because there's no control. It has issues and problems and I'm not sure it's legal."  

Photographer: David Williams/Bloomberg

Adler has been more actively engaged in another novel ridesharing effort. The day after the ballot measure failed, the mayor invited a group of local policymakers and businesspeople to his house. Among them were Austin City Council member Ann Kitchen, who led the campaign to require fingerprinting, and Joe Liemandt, chief executive of software firm Trilogy, who funded a campaign against her. "You both care about the city, we have a new problem to solve. Let's solve this problem," Adler recalls telling them. "We had a gap we needed to fill." The next day, the mayor issued a statement saying the city was exploring the creation of a nonprofit ridesharing group with local businesspeople.

These were the seeds of RideAustin, funded by local investors and run out of Liemandt's office. Over the weekend, it began testing rides with more than 200 riders and about 20 vehicles. All of the drivers have been fingerprinted, according to Deshotel. For now, RideAustin is operating only downtown, and plans to expand capacity slowly as it tests out its operations. The nonprofit has raised several million dollars, and seems to be better capitalized than most of its competitors. 

Photographer: David Williams/Bloomberg

Many in Austin see RideAustin as an arm of City Hall—a perception Deshotel is keen to quash. "We don't want that image—we're already having to fight that image," he said. Still, a RideAustin recruiter claimed the city had asked her to pull together an experienced team to get the new service off the ground. She contacted Uber and Lyft employees on LinkedIn to see if they wanted to become RideAustin's chief executive. Other companies grumble privately about RideAustin's coziness with the city government because they say the new service will be able to influence ridesharing policy to its advantage.

Before the ballot measure, Adler proposed several alternatives for voluntary fingerprinting, none of which went anywhere. In recent weeks, council member Ellen Troxclair has said Austin should revisit that idea, which the local government of San Antonio recently adopted. But it's unclear why council members who felt like they have already won would accept such a compromise now. Adler says it's not clear how the city can break its current stalemate.

State legislators have also begun to discuss passing a law that would pre-empt Austin's local fingerprinting requirements. But they're out of session until 2017, meaning that Uber and Lyft could be waiting another year to get back into Austin—assuming they choose that route. The longevity of the local ridesharing options could very well depend on how long it takes to find a compromise that Uber and Lyft will accept, said Andy Tryba, the founder and CEO of Austin-based tech startup Crossover, who is serving as RideAustin's interim chief executive. 

"If they came back tomorrow, would we still have to do it? Maybe not," he said. "But if they came back two years from now, and people were already using it, and got used to it and liked it, and it was contributing to the Austin community, then I don't know, we'll have to see whether people switch off it or not."