Austin’s Uber And Lyft Replacements Fizzle In The Spotlight Of SXSW

Austin’s Uber And Lyft Replacements Fizzle In The Spotlight Of SXSW

New start-ups were granted practical access and spiritual absolution by the people of Austin because they reject the very market forces that allow Uber and Lyft to work well. It didn't go well at SXSW.
Mary Katharine Ham
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Every year, the SXSW conference in Austin, Texas offers a chance at a break-out moment for a new technology. The conference is famous for attracting the hip and hipsters of technology, film, and music for 10 days of panels and parties. Start-ups take the chance to pitch this demographic, as influential as it is insufferable, on new services. Twitter had its coming-out party at SXSW Interactive in 2007, GroupMe in 2011, and Meerkat in 2015. You get the idea.

This year was supposed to be Fasten’s year. Or RideAustin’s. The year of the Uber/Lyft alternative. Instead, when the techies of SXSW Interactive flooded the city, apps crashed, ride prices surged, drivers couldn’t or didn’t pick up, and a bunch of “Silicon Valley” extras were left standing in the rain on one of Austin’s biggest party nights while locals trying to get to work were stranded or priced out, too.

How did we get here? Local Austin officials effectively chased popular ride-sharing services Uber and Lyft out of the city by passing regulations that would require drivers to be fingerprinted among other things. John Davidson reported the timeline for The Federalist:

Here’s what happened. Back in December [2015], Austin’s city council passed an ordinance requiring fingerprinting for drivers, “trade dress” for rideshare vehicles, restrictions on where drivers can pick up and drop off passengers, and an onerous data reporting scheme. Among the many justifications offered by the city council, the taxi lobby, and their cheerleaders in the local press was the need to “create a level playing field.”

In response, Uber and Lyft collected more than 65,000 signatures—more than three times the required amount—in support of a more reasonable ordinance to regulate ridesharing. It was placed on the ballot as Proposition 1 and a special election was held May 7. A paltry 17 percent of voters weighed in—in a city of more than 885,000—and the pro-regulation crowd won the day by a vote of 48,673 to 38,539, thanks in part to the confusing ballot language.

Never fear, though. As the behemoths of the ride-sharing industry exited the city, “ride-hailing” services more palatable to urbane liberal sensibilities entered. The two most prominent are Fasten and RideAustin, whose central appeal to the people of Austin is the moral superiority of not responding to the free market. Fasten claims not to do surge pricing and takes only $1 per ride from drivers instead of the larger percentage of ride-sharing services. RideAustin is a nonprofit that encourages riders to round up to the nearest dollar and donate the difference to charity.

This moral superiority, however, does not translate to service superiority, particularly when the crowds of SXSW increase demand by 12-fold.

“It wasn’t the greatest page in our history,” Fasten CEO Kirill Evdakov told Bloomberg News, after outages took the Fasten app down for several hours. “Hopefully we can regain the trust.”

Fasten paid money for this opportunity, partnering with SXSW, as Lyft has done in the past, to be the official ride service of the festival. The Boston-based start-up is only available in Boston and Austin, and has deliberately kept its workforce and growth slow and small to stay viable with its $1-per-ride skim.

Evdakov told AdWeek his company has more than doubled its customer base in Austin over two days, but adding them doesn’t mean they’ll keep them, as these tweets from SXSW users suggest.

https://twitter.com/MicaBurton/status/841300791436664833

Before SXSW, these start-ups were eagerly anticipating their biggest “stress test” and their “springboard” to take on Uber.

“There’s no secret sauce,” RideAustin spokesperson Joe Deshotel told CNN days before SXSW started. “The technology is becoming easier to replicate. It’s really about culture. Do riders and drivers like what you’re doing? Do they feel like they’re a part of it?”

https://twitter.com/belliveaul/status/841288113876017152

One Internet entrepreneur even took the weekend meltdown as an opportunity to move some load-testing services. Never change, Internet.

Fasten and RideAustin will probably get these problems sorted out after this initial failure, and they publicly apologized, but as industry pub TechCrunch put it: “Austin definitely missed its chance to prove that cities are ready to function without Uber or Lyft.” This is not to say Uber or Lyft don’t crash or fall short sometimes. They do! But there is a secret sauce, and rejecting it makes success far less likely.

Fasten and RideAustin were granted practical access and spiritual absolution by the people of Austin because they boast about eschewing the very market forces that allow Uber and Lyft to work well, especially during a big event. By only allowing access for ride-sharing services that act less like Uber and more like taxis, they got ride-sharing services that work less like Uber and more like taxis, whose failures are the very reason Uber and Lyft exist.

The weekend failure led to a perfect SXSW moment— one blue check mark castigating other blue check marks on Twitter for their privilege because they expected services that claim to offer rides to offer rides.

In an ironic turn of events, Fasten even seemed to resort to the very kind of price surging it claims not to use. Why? Because on a busy night with high demand, a big event, and rain, you need price signaling to attract more drivers and quickly sort and prioritize need throughout a market.

“Boost pricing,” as Fasten calls it, is driven by customers choosing to pay more instead of the company deciding to charge more for rides, but the idea is the same— “higher prices, determined by algorithm, are necessary to attract drivers during busy times,” according to Fasten’s CEO. So they call it something different and the drivers get more of the windfall than with Uber and Lyft, but the results are equally expensive and less reliable:

RideAustin is a nonprofit organization, which doesn’t incentivize working with killer efficiency as, say, a profit motive might. As many found this weekend, good intentions don’t give people rides. Uber and Lyft do.

Back in the halcyon days before SXSW actually started and people needed rides, CNN Tech reported that Austin was showing the rest of us how to move on from a tech break-up. Austin voted to send the companies packing. The city is very happy in its new relationships and doesn’t even think about its ex anymore, according to Austin Mayor Steve Adler, who in Orwellian fashion, declared the new environment the triumph of an “open market…competition and innovation.”

Texas legislators are considering a bill that might roll back some of the onerous regulations that chased Uber and Lyft away, which may entice them to return to Austin. After this weekend, Austin may want its ex back.

Mary Katharine Ham is a senior writer at The Federalist.
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