Amidst government threat letters and millions in venture funding, we estimate that ride-sharing startups such as Sidecar and Lyft now make up one-third of the drivers in San Francisco. Initial reviews also suggest that ride-sharing is faster, cheaper, and more pleasant than a traditional taxi service, but can these new startups build credibility around their service?
In just over a year, the startups have grown to make up about one-third of the drivers in San Francisco. Sidecar has announced a promotion for the 500th driver signup, and a recent email from the Lyft community manager confirms about 250 Lyft drivers in San Francisco. Give or take a couple of hundred from smaller, no-quite-the-same companies such as Zimride, we can put the number of drivers in the city at about 700-900. On the other end, traditional taxi companies have a driver force of about 1,750 in the city (approaching 2,000 according to my cabbie this morning).
Of course, this doesn’t necessarily mean that ride-share drivers make up one-third of the drivers on the street at any given time. After all, they get to make their own hours (or choose not to work at all). Nevertheless, in high demand times, such as immediately after the Giants match last night, Sidecar had drivers to spare (according to my Sidecar app), while traditional taxies were nowhere to be seen thanks to the limits of the number of allowed taxies on the road.
Ride-sharing startups have boomed in San Francisco thanks to the unwavering support of their funders. On October 10th, Sidecar was rewarded $10million in Series A funding to expand their service nationally, with focus on Seattle. This comes just in time, as the companies face an unquenchable demand. In order to compensate, Lyft has had to impose a wait list, fees for ride cancelation, and large cash incentives for signing up to be a driver.
Most users aren’t complaining, and they often report a pleasant experience with ride-sharing, one that is better and cheaper than a traditional taxi. Ride-sharing drivers have to pass a set of quality guidelines, but the real accountability is set in the user/driver ratings. Each user and driver has a public rating, so if a driver has been consistently rated as a poor performer, he/she is out of the draft. The same can be said about passengers, as drivers are not likely to pick someone up who always vomits in the backseat. Rejoice! The free market works.
Regulators have stood their ground, issuing cease and desist letter to a number of these companies in major cities. Uber, a private car service, had to shut down its taxi hailing app in New York after regulators scared potential drivers away. On the other hand, Hailo, a UK startup with a similar service in Boston, has received the blessing of local regulators.
To be fair, regulators are citing important issues such as passenger safety and the fairness of driver payment. Although there a set of criteria to become a ride-share driver, they are not as vigorous as a traditional taxi driver. Moreover, ride-share drivers do not receive any company benefits, as they are technically working for themselves. In fact, that’s the primary reason ride-share companies have been able to avoid any fines, as the driver payment system is entirely donation-based, with passengers paying the driver an optional suggested donation (based on a community average). By this system, ride-sharing companies aren’t traditional taxi companies; they are transportation match makers.
It is likely that we will be hearing more from regulators, especially if/when any issues arise involving the safety of ride-share passengers. Until then, you might consider applying for Sidecar’s new Community Manager position in Seattle.