The Peer Economy Under Fire

This last week was a rough one to market the peer economy. Berlin recently announced that Uber was effectively prohibited from their city while several others, such as Barcelona and London, continue to voice adamant opposition to rideshare services. As per usual, Airbnb is faced with challenges across the globe. 

Justin Sullivan - Getty Images

In addition, the peer economy is constantly being critiqued in the media. Time.com recently posted an article titled "6 Horrible Things the Sharing Economy is Being Accused Of". Sabotaging each other, wrecking the housing market, and illegal currency trading were a few of the troubling accusations listed. The article highlights that the shared economy can be "brutally cut-throat in the way that seemingly everything and everyone is monetized", which unfortunately, has resulted in a slew of negative press. 

The New York Times recently did a profile piece on a few sharing economy employees, specifically highlighting a mother of 3. The Times followed Jennifer Guidry on a 19 hour work day, doing everything from giving rides, to cooking private meals. Guidry talks about how the sharing economy gives her the flexibility she needs to spend time with her kids but comes with the instability of any ad hoc job. 

“I like my freedom — fixing someone’s cabinet, driving, pulling up weeds, cooking,” she told me as we sat in her dining room on Monday morning, recapping her weekend of work. “I would not like to do any of those things as a full-time job.”

Guidry sheds light on what it is really like to work in the gig economy, and what the payoff is. While she enjoys her work, the article poses concerns about the lack of stability and benefits that come with a traditional full time job. While some platforms have started to offer some services to employees, such as discount health insurance and accounting services, economists worry that it may not be enough.  

While some may see the sharing economy's recent increase in negative media as a sign of impending doom, this could be a very unique opportunity for the sharing community. Watching an economic movement develop in real time has never really been an option before. Enthusiasts can use this advantage to approach issues as they occur and come up with solutions before they become a characteristic of the collaborative economy. The question is whether or not we are willing to utilize this opportunity as a community or if the competitiveness of business will prevail. 

What do you think?

Lyft Continues it's Battle to Expand to NYC

Lyft has expanded to 60 US cities and had hoped make it 61 with the addition of New York City last Friday. However, NYC has declared Lyft an "unauthorized service" and threatened legal consequences if the ride-share app launched. Lyft held off as long as they could before announcing they would work with the Taxi and Limousine Commission:

"Today we agreed in New York State Supreme Court to put off the launch of Lyft's peer-to-peer model in New York City and we will not proceed with this model unless it complies with New York City Taxi and Limousine regulations. We will meet with the TLC beginning Monday to work on a new version of Lyft that is fully-licensed by the TLC, and we will launch immediately upon the TLC's approval."

Lyft assured the public that there was no TRO (temporary restraining order) or injunction, but that everyone agreed to meet Monday if Lyft held off on their launch. Wall Street Journal reports that the decision was less nonchalant than Lyft lets on. They state that familiar face, New York Attorney General Eric. T, Schneiderman (from the Airbnb's subpoena in NYC earlier this year) and plaintiff Benjamin Lawsky, filed court papers on Lyft's original launch date in order to stop the company from operating in the state. 

"Lyft's arguments are a disingenuous attempt to disguise old-fashioned lawbreaking that jeopardizes public safety," Messrs. Schneiderman and Lawsky said in a news release. Schneiderman is no new face to opposition of the shared economy and knows that NYC will set a standard for other cities worldwide. 

Lyft's competition Uber, managed to get licensed in NYC after initially launching without the TLC's approval. Some have speculated that this was because Uber had recently hired Ashwini Chhabra, the then TLC deputy commissioner for policy and planning. Many within the taxi industry find this to be very suspicious:

"About 4-5 weeks ago, [we] ... accused Ashwini of working for Uber presently and in the past," Evgeny Freidman, who owns one of the largest taxi fleets in New York, wrote to TLC Commissioner Meera Joshi shortly after Chhabra's hire, according to the New York Observer. "I would insist as a major stake holder in this industry ‎that the TLC open a [Department of Investigation] investigation into this matter."

However, several industry experts believe that Chhabra's hiring had nothing to do with Uber's licensing but rather that Uber agreed to play by the TLC's rules, which up until now, Lyft has refused to do. Uber has embraced regulations and operates only with city-licensed vehicles. TLC spokesman, Russell Murphy states:

"From our perspective, … Lyft is unique from Uber in a larger sense because they’re not following TLC regulations. Uber, at least from what the TLC says and what Uber says, is following all the regulations,"
 

So yet another legal battle to watch in the sharing economy. Let us know what you think, will NYC grant Lyft a license? Or use them to set an example for other "unauthorized services"? To read more check out the Business Insider article on Why NYC's Lyft Crackdown Probably Isn't Linked To Uber and Wall Street Journal's coverage of Friday's decision.

Taxi Protests Gridlock Downtown Washington DC

A caravan of angry taxi drivers gridlocked downtown Washington DC this Wednesday. The source of their anger? Ride-sharing services such as Lyft, Uber and Sidecar.

A taxi caravan of hundreds drove slowly and honked car horns as they held up traffic on Constitution Ave on Wednesday. Photo via Washington Post

Photo via Washington Post

Cab drivers all over the world have been protesting these new ride-sharing services claiming they have an unfair advantage over traditional taxi drivers. Cabbies must follow strict regulations and require special licensing to operate. Regulations on ride-sharing apps are still being decided and at best, a gray area. 

Wednesday's gridlock has been the newest form of protest from the taxi-industry and it wasn't just in DC. Drivers in London, Paris, Madrid and Berlin brought traffic to crawl earlier this month, honking their horns and waving signs denouncing the local transportation agency and taxi apps.

Wednesday's protest shows that cab drivers will not back down and raises concern as to just how far they will go. Considering that some of these protests have gotten violent, the question now is how (and how quickly) regulators will respond. Driver's voices have been heard in some areas including Virginia, who recently issued a cease and desist letter to Lyft. Where in other cities, such as Seattle, ride-sharing apps have been welcomed as competition to local taxi services. 

"Authorities said Pennsylvania Avenue Northwest opened in both directions around 1 p.m. The roadway had been closed from 15th to 9th streets Northwest because of the protest. The street closure caused other delays in the downtown area. Ironically, because of the protest, some people reported difficulty hailing cabs."

Check out the Washington Post article and let us know what you think. Are these protests getting out of hand or are they warranted? 

Seattle decides in favor of Uber, Lyft and Sidecar.

Back in March, Seattle city council voted to heavily regulate ride-sharing apps like Uber and Lyft by capping the number of active vehicles to 150 each. Considering Uber claims to have around 1,000 drivers in the city, this initiative would have severely limited each company's capacity to meet demand.  Yet by mid-April these regulations were suspended due to more than 36,000 signatures on a repeal petition (double the 16,510 required to force a public vote).

Now, after more than a year of debate, Seattle Mayor Ed Murray announced an agreement between the taxi industry and ride-share apps. App-based transportation platforms such as Lyft, Uber and Sidecar can continue to operate without any limit of drivers. The key terms of the deal include:

• Transportation network companies and their drivers will be licensed and required to meet specific insurance requirements.
• The City will work with the industry to clarify or change state insurance law to account for recent changes in the industry, similar to recent actions in Colorado.
• There will be no cap on the number of transportation network company drivers.
• The City will provide 200 new taxi licenses over the next four years.
• Taxi and for-hire licenses will transition to a property right that is similar to a medallion in other cities.
• For-hire drivers will have hailing rights.
• An accessibility fund will be created through a $0.10 per ride surcharge for drivers and owners to offset higher trip and vehicle costs for riders who require accessibility services.

This is a huge change from the March decision not only because of the unlimited drivers, but also because you can now hail for-hire drivers, a right originally reserved for taxi's only. 

“I believe Seattle once again will lead the nation in showing how what appears to be conflicting interests can actually come together,” Murray said after announcing the agreement. “We have deregulated a highly regulated monopoly, allowing taxis and for-hires to become far more competitive than they are in the current situation. We are recognizing that a technology exists that is rapidly changing the marketplace.”

GreenCab Taxi General Manager Chris Van Dyk, talked with Geekwire about the decision:

“The experience in Seattle in years past, in San Francisco and in Ireland now, is that if you have unlimited entry, if you have no limit on the number of taxi and for-hire vehicles, operators simply cannot make a living wage, and the industry goes to hell in a handbasket, and in a relatively short time,” Van Dyk told GeekWire. “The economics of the industry are counter-intuitive, because of the low threshold of entry. Apps do not change this.”

We have yet to hear if the taxi industry will choose to fight the decision or not. 

Seattle joins a small handful of cities allowing ride-sharing apps including Chicago. It seems like every city has a different attitude when it comes to the sharing economy, Miami police are impounding Lyft drivers while Uber is banned in Brussels and in high court in London. We're curious to see if this decision holds in Seattle and if will influence other cities still in debate. Regardless, it's becoming more and more obvious that the sharing economy is here to stay.

Check out the complete article by Geekwire and let us know what you think.

Why are people Sharing?

While the Sharing Economy has become increasingly popular you may have wondered why people are choosing sharing over ownership. In the Report "Sharing is the New Buying, Winning in the Collaborative Economy" by Jeremiah Owyang, Vision Critical and Crowd Companies they asked over 90,000 people why they share goods, services, space, transportation, and money. They found that the top reasons people participated in sharing was because it is more convenient, it has better value and it's a unique experience.

Check out the rest of study here and the recent dissection on why people share here and let us know what you think. Why do you share?

Airbnb becomes the Sharing Economy's first Billionaires

This last week it was announced that Airbnb was in talks of funding that would value the company at $10 billion making it's co-founders the first billionaires of the Sharing Economy.

“The trio’s first funding came in 2009, when they got into famed tech incubator Y Combinator and eventually impressed founder Paul Graham as well as Sequoia Capital, who put up $600,000 in seed funds after the program. The company’s raised money from a range of Silicon Valley elite investors since Sequoia, which was joined in a Series A round by Greylock, SV Angel, and angels including Ashton Kutcher. In 2011, it raised $112 million at a valuation north of $1 billion led by Andreessen Horowitz and joined by DST and General Catalyst Partners as well as Amazon.com CEO Jeff Bezos. The next year, it raised $200 million in a Series C round led by Founders Fund along with its existing investments in a deal that values the company around $2.5 billion.”

Now valued at $10 billion from private equity sources, Airbnb is worth more than Hyatt Hotels. Check out Forbes coverage of the big deal here and let us know what you think. What does this mean for Airbnb and the sharing economy? Will this become an ultimate goal for all sharing economy platforms? 

Seattle City Council Votes to Limit Rideshare Services

City legislation around the world are making decisions on where they stand in the sharing economy. We've seen San Francisco Announce their Sharing Economy Working Group and have become the poster child of American Shareable cities. Other cities like Amsterdam and Seoul, Korea have been endorsing the sharing economy and are actively working to become shareable cities. Even the United States Congress has started to address the sharing economy and it's impact. But not everyone is convinced that this movement is right for their city. Portland, Oregon has opted to exclude ridesharing until it can fully understand potential impact.

The latest news is from Seattle, Washington where city council has met several times over the last few months to discuss ridesharing and recently decided that they would limit the amount of rideshare services to 150 drivers (per company) on the street at any given time of the day. So far the ruling seems to satisfy no one. Lyft, Uber and Sidecar all released statements of extreme disappointment in the ruling.

In a statement, Lyft outlined its objections.

By passing an ordinance that does not prioritize public safety or support consumer choice, members of Seattle’s City Council have shown that their sole intent is to eliminate competition and protect existing industries in Seattle. This ordinance will eliminate Lyft in Seattle; local residents who drive for Lyft on their way to work, while they are running errands, or on the weekends to make ends meet will no longer be able to act as drivers, especially when passengers who have chosen to live car-free in Seattle need them most. While safety is often brought up as a reason to apply an old regulatory model to an innovative transportation solution, the truth is that new technology provides an opportunity to increase safety above and beyond what has been done previously. In comparison to existing requirements, Lyft’s $1M commercial liability policy is more than three times the $300,000 requirement of Seattle taxis. Despite today’s disappointing decision, we will continue to stand strong as a community and do everything possible to ensure a path forward that allows ridesharing to thrive in Seattle.

San Francisco’s Uber released a statement by its general manager in Seattle,  Brooke Steger.

It is extremely disappointing that the Seattle City Council Committee on Taxi, For-hire and Limousine Regulations has chosen to ignore the tens of thousands of their constituents who support uberX and, instead, decided it is a good policy to protect the taxi industry and effectively shut down uberX in Seattle as we know it. This decision will put hundreds of small businesses out of work and leave them without an opportunity to earn a living. The Committee has sent a strong message that they support the status quo over opportunity, transportation choices and safety. We hope when these regulations come to the full Council that innovation and safety win the day.

And Sidecar weighed in with a statement similarly expressing disappointment.

Sidecar is focused on offering safe and affordable transportation in Seattle. We share the Seattle City Council’s goal of making transportation safe for its residents. In fact, we have safety measures in place that exceed what is required by Seattle taxis. But the City Council’s decision today to cap the number of Seattle rideshare drivers is not about safety. It’s designed to protect the taxi industry by eliminating competition.These regulations move Seattle in the opposite direction of innovation by restricting consumer choice for residents who depend on safe and affordable transportation alternatives like Sidecar. Seattle residents want choice in transportation. We are disappointed that the Seattle City Council moved in favor of regulations designed to protect the narrow business interests of the taxi industry over the interests of its citizens.

- Check out SFGate's Blog Post for more info

It's easy for supporters of the peer economy to be upset by rulings such as this but these aren't easy decisions to make. April Rinne explains the dilemma best in her perspective piece "How Shareable is Your City".

To date, city governments and the sharing economy companies have rarely been seen as partners. More often, city leaders have dealt with transformative new business models from a reactionary position.  This is understandable: the rules governing many new businesses were developed for an industrial age in which mass consumption and ownership were the norm, and before today’s technologies existed, so they don’t fit within current regulatory structures. Moreover, regulators must strike a balance between competing pressures – from the public, incumbents and a variety of other stakeholders – to encourage innovation and maintain public safety.

The proposal in Seattle still needs to be officially passed by the entire city council on March 10 and would take effect 30 days after being signed into law by Mayor Ed Murray. 

What are your thoughts on this? Do you think city council's ruling was fair? If so fair to whom?

Taxis vs Ride-Share

One obvious issue arising from the increase in ridesharing companies is the impact it will have on the taxi industry. The taxi industry is highly regulated by the government including how many cars they can put out and how much they are allowed to charge. Taxi drivers are mandated to obtain special licensing as well as attend special courses just to be allowed on the road. As of right now, most ride sharing drivers are not required to meet any of these regulations along with many others.  Some taxi drivers are already seeing a financial impact and the debate is reaching government levels. Jon Brook's article "Will 'Ride Sharing' Kill San Francisco's Taxi Industry?" highlights the frustration that taxi driver's are feeling since Lyft, the Ride Sharing App, started in their city in 2012. 

“On the streets of San Francisco, what might be called the “Mustache War” has begun, pitting the traditional taxi industry against the networked ride services like Lyft (of the pink mustache), Sidecar and UberX. In September, the California Public Utilities Commission approved regulations to oversee the ride-service startups, which allow passengers to hire private drivers through smartphone apps.”

— KQED

San Francisco drivers aren't the only ones feeling an impact. In the article "Taxis vs ride-share: How one cabbie views the industry's transformation", Frances Nazarian of Los Angeles says that business is slower since ride-sharing came to town, but she is more bothered by what she sees as unfair competition. 

“The likes of Uber don’t have nearly as many regulatory hoops to jump through. Unlike taxis, they can raise their prices during peak times, and they can pick and choose which rides they accept and which neighborhoods to serve.

“I guarantee I could get on the Uber app right now and call from where we are right now, South Central, and not one Uber driver would take that call, or Lyft or Sidecar,” said Nazarian. “Basically, they want to work in the most affluent areas of town.”

Uber has been advertising for drivers in LA, promising they can make up to $60,000 a year.

That’s twice what Nazarian averages.”

— SCPR

San Francisco established their Sharing Economy Working Group in March of 2012 whereas Portland has chosen to wait and see how other cities regulate before allowing ride sharing.  

What do you think? Are taxis at a disadvantage? Do you see similar issues arising in other areas of the sharing economy?