6 ms·

Uber: A Feisty Start-Up Is Met With Regulatory Snarl

83 points by rpm4321 14y ago

chernevik 14y ago
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.
- rpm4321 14y ago
  >> My advice to Uber? Slow down. Figure out what the other side is about, and I mean all about, good and bad. I agree with most of what you said, except for this. They are in the land grab phase. If they don't continue to expand aggressively, someone will eat their lunch, ala Groupon. My advice is for them to take some serious funding, and start cutting checks to lobbyists, PR, and god forbid, politicians. Play the game. I feel horrible saying it, given that it helps feed the machine, but it's their only option to build a truly disruptive business in an area that needs disrupting mainly because of regulation and bureaucracy. Google and Microsoft both learned this lesson too late, and it's hurt them both dearly.
  - chernevik 14y ago
    That strategy is doomed politically. Sound political strategy is a mix of rhetoric, pr, and institutional advocacy. The last would be especially true in something like this. Even if "corruption" were the whole story here -- and it is not -- it would be beyond simplistic to imagine it could be met by cash payments to the proper pockets. This board routinely laughs at idiot corporations attacking technology problems with mass expenditure. Well, this is a similar sort of problem. There is no "land grab" here. This is not a technology problem. There will some day be network dispatched cabs. For Uber the question is will they survive to be part of that architecture, or will it be built up around their mistakes.
    - rpm4321 14y ago
      I didn't mean to imply that the political process is purely transactional and that they can just throw money at the problem, but from all of the mainstream coverage I've read on Uber - and all of the quotes attributed to various politicians and regulators contained therein - it's clear that they are currently losing the political war. As you yourself stated, they are clearly in the right, but that's no guarantee of victory. Extensive PR and lobbying, while not a cure all, could go a long way towards rectifying that imbalance. Regarding the land grab, I really disagree. They already have a handful of domestic competitors cropping up, and I wasn't even aware of that Hailo company that objclxt mentions above, which sounds pretty formidable. If they sit around doing a bunch of navel gazing on the nature of the political process and civil discourse, they are toast.
gojomo 14y ago
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.)
gsibble 14y ago
Love it. Their middle finger to regulators actually makes their rides feel less expensive and more like civil disobedience. Keep it up guys.
pekk 14y ago
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 14y ago
  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 14y ago
    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)
1010011010 14y ago
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.
j0j0r0 14y ago
the more I learn about daus, and the people that hate him, the more _i_ like him...
- fruchtose 14y ago
  Could you explain a bit more? I am curious to hear your opinion.
jiggy2011 14y ago
"Summoning a taxi or car service with your smartphone feels like the future" I remember doing that in 1998 by dialling a number.
jaysonelliot 14y ago
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 14y ago
  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 14y ago
    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.
kunle 14y ago
You know you're winning when your competition knows that the only way they'll win is by changing the law.
YokoZar 14y ago
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.
aneth4 14y ago
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.
kokey 14y ago
Reading this article is surreal, it sounds like it's part of an Ayn Rand tribute novel.
viggity 14y ago
Light bulbs?!? You can't sell light bulbs. What will happen to the candle maker's guild?

83 points by rpm4321 14y ago

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.

rpm4321 14y ago
>> My advice to Uber? Slow down. Figure out what the other side is about, and I mean all about, good and bad. I agree with most of what you said, except for this. They are in the land grab phase. If they don't continue to expand aggressively, someone will eat their lunch, ala Groupon. My advice is for them to take some serious funding, and start cutting checks to lobbyists, PR, and god forbid, politicians. Play the game. I feel horrible saying it, given that it helps feed the machine, but it's their only option to build a truly disruptive business in an area that needs disrupting mainly because of regulation and bureaucracy. Google and Microsoft both learned this lesson too late, and it's hurt them both dearly.
- chernevik 14y ago
  That strategy is doomed politically. Sound political strategy is a mix of rhetoric, pr, and institutional advocacy. The last would be especially true in something like this. Even if "corruption" were the whole story here -- and it is not -- it would be beyond simplistic to imagine it could be met by cash payments to the proper pockets. This board routinely laughs at idiot corporations attacking technology problems with mass expenditure. Well, this is a similar sort of problem. There is no "land grab" here. This is not a technology problem. There will some day be network dispatched cabs. For Uber the question is will they survive to be part of that architecture, or will it be built up around their mistakes.
  - rpm4321 14y ago
    I didn't mean to imply that the political process is purely transactional and that they can just throw money at the problem, but from all of the mainstream coverage I've read on Uber - and all of the quotes attributed to various politicians and regulators contained therein - it's clear that they are currently losing the political war. As you yourself stated, they are clearly in the right, but that's no guarantee of victory. Extensive PR and lobbying, while not a cure all, could go a long way towards rectifying that imbalance. Regarding the land grab, I really disagree. They already have a handful of domestic competitors cropping up, and I wasn't even aware of that Hailo company that objclxt mentions above, which sounds pretty formidable. If they sit around doing a bunch of navel gazing on the nature of the political process and civil discourse, they are toast.

gojomo 14y ago

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.)

gsibble 14y ago

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

pekk 14y ago

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 14y ago
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 14y ago
  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)

1010011010 14y ago

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.

j0j0r0 14y ago

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

fruchtose 14y ago
Could you explain a bit more? I am curious to hear your opinion.

jiggy2011 14y ago

"Summoning a taxi or car service with your smartphone feels like the future" I remember doing that in 1998 by dialling a number.

jaysonelliot 14y ago

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 14y ago
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 14y ago
  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.

kunle 14y ago

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

YokoZar 14y ago

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.

aneth4 14y ago

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.

kokey 14y ago

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

viggity 14y ago

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