Chopped Livery: Start-Ups Revolutionize the Cab Industry

Martin Kazinski felt like a traitor the day he joined Uber. He'd been driving taxis since 1989 for about $15 an hour, and the work didn't quite make ends meet — he still ran another business on the side. When a new car-hiring start-up came to town, Kazinski saw opportunity. He went down to Uber's Howard Street offices, plowed through the interview process, and emerged with a company-issued smartphone.

Now the phone sits atop the dashboard of Green Cab number 291, ready to spit out orders from tech-savvy customers who download the app and supply their credit card information.

"This is the taxi driver's office," Kazinski says, pointing to the gadgetry on his dashboard — the old-fashioned meter and dispatch radio; the Uber smartphone; and the Flywheel app which wires in calls from his company, Green Cab. The nasal voice of a dispatcher buzzes insistently on his radio. He hasn't turned on the Uber app, yet — for now, he's still a regular taxi driver.

But over the last couple months Kazinski has spent a lot more time in Uber territory, squiring affluent passengers from SOMA to Pacific Heights and the Marina. His Uber smartphone is specifically designed for a taxi driver — he inputs fares directly from the meter, paying 10 percent to the company and collecting an automatic gratuity from the customer.

At first, the app induced a weird mess of complicated feelings, he confesses. It provided extra business — mostly bread-and-butter trips from SOMA to North Beach or Pacific Heights — and allowed him to cherry-pick customers. But it also required a Faustian bargain with a flashy competitor. Taxi companies had already accused the new start-up of skimming "cream" off their business, leaving behind all the more down-and-out customers. One of Kazinski's co-workers called him a sell-out.

"I had extremely mixed feelings," Kazinski says in his brusque Polish accent. "You know? I feel like Khrushchev when he visited the United States, and said to Nixon, 'Look, you gonna sell us a rope which we gonna hang you with."

He learned to live with the guilt. In an increasingly cutthroat market, the extra business was too important.

Now he turns off the dispatch radio and clicks on the Uber smartphone. "So hey," he says, speaking to the phone in a low, conspiratorial tone. "Are you ready to make some money?"

The Uber phone purrs obligingly.


In the four years since it handed San Franciscans a software app to summon livery services — Town Cars and limos — on their smartphones, Uber has upended the city's transportation industry. It provided a faster, slicker alternative to the old taxi system, perfectly tailored for a population whose members perform every task on smartphones and pay for every transaction with credit cards. It quickly became the city's most successful "cab" company — without ever purchasing a fleet of its own.

Yet the company didn't just introduce a new app; it also played on fundamental tensions between technology and the law that have simmered in Silicon Valley for years, and that are now spreading to other parts of the country. Like the housing rental service Airbnb, Uber embodies a new form of Internet-powered, free-market capitalism that prides itself on putting the consumer first. The way to do that, company execs discovered, was to slough off all the old encumbrances: Uber has very light overhead, offers few labor protections to its drivers, and ignores laws it feels don't apply to it.

As it grew, expanding its business to from Town Cars and limos to traditional cabs and small hybrid cars, Uber became both a go-to dispatch and an evangelist for "disruptive" innovation.

With tech a new romance for San Francisco's political establishment, Uber made a name among politicians. Taxi companies had long underserved the city, leaning on lobbying and cronies at City Hall to suppress innovation. Now, even members of the political old guard were fed up. No one seemed to mind that Uber flouted regulations — being outside the law only added to its glamour.

But having an outlaw system also has generated hostility from cab companies, who think they're being stiffed by the added competition. It's angered drivers who don't like the uncertainty of working as hired guns. It's led to fierce battles between the various car-hire start-ups that blossomed in Uber's wake. And it may take an extremely valuable permitting asset out of the city's hands.

But these issues churn away far from the people trying to get quickly to work, or trying to get home after a night out. For them, Uber and other transit start-ups are building an accessible city.


Originally, young founders Travis Kalanick and Garrett Camp pitched the company then called Ubercab as both a "lifestyle" service and a utility. They envisioned a livery company that would masquerade as a software company, poaching licensed commercial drivers and piggybacking on their training and insurance. Uber's only product would be an exquisite, perfectly-engineered app, which would allow users to hail Town Cars, limousines, and, later, taxis from their smartphones, using a GPS to track the driver's location.

The company's identity separated from the taxi industry early on, when it changed its name to "Uber" in response to complaints that the company was falsely billing itself as a cab company. But by functioning as a referral service rather than a fleet rental, Uber could recoup dividends with far fewer overhead costs than the average taxi company. Apps are relatively cheap to make, and Uber's model — like that of many Silicon Valley companies — is remarkably lean. Kalanick already had launched, and aborted, a series of other businesses by then, and vital connections in the tech world allowed him to fill Uber's coffers almost instantly. Cab service had long been spotty in San Francisco, and well-heeled techies had the brain power to fix it. Uber expanded to 30 cities worldwide, projecting an "aggressive" growth plan for 2013. By all measures, the idea was brilliant.

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37 comments
LeeTramp
LeeTramp

I could go on with my position on this issue, but plenty has been said. I just wanted to thank Rachel Swan for the excellently researched and well written article--very thorough.


CabStriver
CabStriver

I am a cab driver and I have an Uber device, flywheel and my companies dispatch. people should know Uber is the lowest paying fares I ever get and thus I never turn it on unless I'm desperate. Uber 100% misrepresents itself to the drivers and customers. The customers are lead to believe that the driver is being paid well with the meter and a nice 20% tip. Uber takes 10% of the meter from us, so all we get at best is the meter plus 10%, possibly the meter plus 5% if the customer has the tip set to 15%. on a $6.80 fare, that is $7.48 or less. A flag off the street more often than not would give you $10 bucks for the same ride. Uber never tells the customer how much they take. Uber also charges a $1.00 pick up fee and keeps that, too, so the customer sees a pretty big total for their ride, assuming the driver gets most of it. the $6.80 ride would total $9.16. What is worse is that Uber only ever shows the driver that final total, saying "YOU have been electronically paid $9.16 for your fare" They are counting on the fact that most drivers are not smart enough to know they are actually only getting $7.48, not $9.16 and never do they give us any itemized break down of what we actually made, just a lump sum paid out the thursday of the following week. I keep track of every total they flash at me, every meter amount and crunch the numbers in reverse to see if I got %5 or 10% above the meter and this exactly adds to the total I get the next week. I guarantee the cabbie in this article has NO CLUE he is only getting what I outline above, just assuming he is getting the meter, plus the dollar plus the %20 tip. If you log in to your account, all it shows is the gross amount the customer paid for each trip, never once does the true lower amount appear in detail. 

Flywheel, on the other hand, I will use all day, every day. It costs the customer the exact same amount as Uber, but all flywheel keeps is the dollar fee, and gives the driver the full meter and the full tip and clearly shows you exactly what you get, plus they pay you within a couple business days as opposed to a week and a half.

A good day for me is when I never even need to turn on my Uber app, try flywheel.

inhumandecency
inhumandecency

When I call a taxi to my apartment at 6th and Geary, I wait -- sometimes up to two hours -- while a surly phone dispatcher repeatedly insists my cab is almost there. When I take a cab home, I get dangerous drivers who reek of smoke and snarl at me when I try to pay with a credit card. And now the cab companies want me to feel SORRY for them because Uber and Lyft mean they can't squeeze me quite as hard, and the city says they might-maybe-sorta change? To hell with them.

LeftOutInTheRain
LeftOutInTheRain

Sorry, but the lady in the Alemany projects isn't going to get a taxi today anyway.  San Francisco cab drivers consider themselves as airport shuttles and can't be bothered to pick up those who need a ride in town - expect to wait for hours, and one may never show up at all.  As for the qualifications of the drivers, don't make a cat laugh.  Taxi driving is the last resort of immigrants, legal and not, convicted felons, those skimming SSI disability, and other lovable types.  I have one of these living on my block.  He's an alcoholic and pot smoker who's on total disability, has two felony convictions, and has smashed up several cars.  Yet both the taxicab company and the government are happy with him driving a cab. Excuse me, I'd rather wait for the housewife with a Jetta.

jimminycricket666
jimminycricket666

Wow, look at the hysterical reactions from the vested interests of the status quo...these coming from members of the monopolistic taxi/medallion/government complex.  As a customer of Uber I can confidently claim that Uber has consistently provided me more on time service and better customer service than the standard BS taxi cab services.  It's what happens when you get rid of government enforced monopolies (i.e., crony capitalism).  Thanks Uber and Lyft!  Competition is so liberating! 

John Lilly
John Lilly

Cab companies did this to themselves. They had plenty of opportunity to change with the times, but failed on all counts. Overpriced, unavailable when you need them, surly drivers who can't communicate, entitled attitude, lack of technology, etc.

imtreble
imtreble

Martin!?  Really?  You use a MEDALLION holder who received his from the waiting list for $0 and works ONE Saturday a week!  Additionally, he is using a cab paid for, maintained and insured by Green.  I am so sick of these articles that do nothing to help resolve the problems and issues in the cab industry in SF.  Wow another one sided fact picked article.  Why did you not mention that Martin also receives ride requests on the Flywheel app via the FREE phone mounted in his Green Cab for YEARS??  This is NOT new so why are these "reporters" acting like a cab hailing app is so innovative?!  It is apparent that this writer has be engaged to do marketing and promotion for Uber probably with free rides!!   Uber was started by a self indulged douche bag to serve other spoiled Ayn Rand screw anyone else cause I want  I want I want greedy boring dregs.

healied2
healied2

Yes - how can we forget the Julie Day murder case which took place in 1999 and may have been an accidental death according to the medical examiner. True  -the driver was bonkers and is still in a mental hospital but that could happen in any line of work. This is the only case before or since of anybody (maybe) being killed by cab driver in the history of San Francisco.

On the other hand, two Uber drivers have recently been charged with assaulting and possibly raping their female passengers.

Cab drivers are indeed vetted and (unlike at Lfft etc) are fingerprinted by the MTA. 

It is true that there has been much corruption in the taxi business but it's minor league compared to the corruption of Uber and Lyft. Venture capital has put them in league of their own when it comes to buying politicians. Why else would the CPUC take away Cease and Desist Orders from Lyft and Uber just BEFORE hearings about the legality of their businesses took place?

As for Hayashi's work not being relevant - have you really considered the other alternative? If Lyft and Sidecar are given the final okay by the CPUC, it would effectively mean is actually close to the situation now. Nobody would be vetted and Chechen war criminals will be legal. The accident rates will soar and you won't have to wait another 13 years to find another dead body.

Able_Dart
Able_Dart

Cab Drivers who claim that taxis are inherently safer conveniently forget the Julie Day murder case. San Francisco's cab companies, especially the smaller ones, are basically unvetted. Your local, city approved cabbie could very well be a Chechen war criminal on the lam. If I am forced to take a cab I use Luxor or Veteran's, that's it. And no way in hell will I take a Town Taxi. I use my FastPass and Uber very frequently. 

The cab companies have no moral leg to stand on here. They'll say anything to justify their stakes, which are the product of previous side deals with local government. The new on-demand car services made a side deal with the riding public instead. Meanwhile Christine Hayashi seems to doggedly defend her past work for it's own sake, failing to understand that it's no longer relevant. It would would not be the first time that working on taxicab regulation turned an earnest professional myopic, bitter, and crazy. She should consider a move up before it's too late for her.

sfmf2013
sfmf2013

The SFMTA want to charge long time cab drivers $300,000.00 for a taxi medallion, while at the same time Mayor Ed Lee and Willie Brown embraces Uber, Lyft, and Sidecar. What a complete conflict of interest. Ed Lee sure love the taxi industry when he needed campaign money to run for mayor.

I could not agree more with Hayashi more that Lyft and Sidecar are a ticking time bomb. Unfortunately, it is going to take a few bad accidents and people getting injured for public to realize that commercial passenger insurance is an absolute MUST. The insurance Lyft claims to have does not cover accidents. They supposed to carry a million dollars worth of coverage for EACH vehicle, NOT a million dollars worth of coveage for the entire fleet. This is common sense in both the taxi and limo industry.

awayneramsey
awayneramsey topcommenter

The idea of “the sharing economy” is equivalent to the superfluous duplication of high-risk businesses that embodies the Wall Street Ponzi scheme, with incentives provided by neoliberal capitalism. That is, deregulation, privatization, and government realignment, subjecting countries and citizens to fungible speculative assets. Growth induced disparity eventually ensues. Uber, SideCar and Lyft are rent-seekers, feeding off disengaged, reckless consumers who have no notion of the future consequences.

healied2
healied2

Corrected version

This is a strange concoction of truth taken out of context, and erased context coupled with misinformation and a lack understanding of what little information that the writer did get right, that I'm blown away. I'm sorry to have wasted hours of my time trying to education this woman about a business that was clearly too complicated for her to understand. On the other hand, she did tell me that she'd pretty much had it written before she started: with a copy of Atlas Shrugged in one hand and a check from Uber in the other?


One thing that she did seem to understand is that the vehicles put out by Lyft and Sidecar are NOT INSURED. That is to say that everybody who steps in one these cars (or in front of them) is at risk. 

Why is something so fundamentally important to the people of San Francisco not in this article?

If you really want info on the subject check out the blog; The Phantom Cab Driver Phites Back.

One other thing, I've talked to a dozen or so reporters over the last few years and this is the first writer ever to print something after I told her that it was off the record. I told her that it was something that would embarrass another person and she printed it anyway.

This says just about everything there is to say about the quality of the journalism in this piece and the mentality of the person who wrote it.

Ed Healy

healied2
healied2

This is strange concoction of truth taken out of context and erased context coupled with misinformation and a lack understanding of what little information that the writer did get right, that I'm blown away. I'm sorry to wasted hours of my time trying to education this woman about a business that was clearly too complicated for her to understand. On the other hand, she did tell me that she'd pretty much had it written before she started - with a copy of Atlas Shrugged in one hand and a check from Uber in the other?


One thing that she did seem to understand is that the vehicles put out by Lyft and Sidecar are NOT INSURED. That is to say that everybody who steps in one these cars (or in front of them) is at risk. 

Why isn't something so fundamentally important to the people of San Francisco not in this article?

If you really want info on the subject check out the blog; The Phantom Cab Driver Phites Back.

One other thing, I've talked to a dozen or so reporters over the last few years and this is the first writer ever to print something after I told them that it was off the record. I told her that it was something that would embarrass another person and she printed it anyway.

This says just about everything there is to say about the quality of the journalism in this piece.

Ed Healy

araucaniad
araucaniad

I live and work in San Francisco: the SFMTA should be working for me, not for the drivers or cab companies. This is a private industry; if a cab driver can't find fares, he'll find his own way out of the industry. What the regulator should focus on is protecting the public: universal service to/from all areas of the city, accepting credit cards, adequate coverage at all hours of the day, and making sure there is financial responsibility in place in case of accidents. Nothing else matters. I have spent too much time on hold with Yellow Cab only to have the line go dead, and too much time waiting for a dispatched cab that never arrived. Yes, the rules ought to apply to all service providers equally, and no one should be able to compete by unfairly dodging regulation -- as long as those regulations are designed for the benefit of consumers.

wawawuwu
wawawuwu

The taxi industry in SF has been so corrupt, greedy and unsafe for so long that I have zero guilt about taking a Lyft instead of sitting in the rain for 20 minutes only to have the first cab that actually stops ask where I am going and then say "I don't go there" before driving off and leaving me alone.

They brought this upon themselves.

guest2
guest2

Chris Hayashi bravely tells it like it is and points out the big lie that cab companies have told for decades. On the other hand she just recommended 320 more cabs this year.  That is no doubt do to the influence the politically connected big cab companies have. She is not obsequious by any means but does what she is told just like anybody with a boss. She tried for an app but Luxor, no doubt by and thru Willy, got Nat Ford to kill it.

If a cab picks up a thousand passengers a day the cab company makes exactly the same profit.  They only want more cabs because that means more profit, caring less that a huge untapped market is available if delivery of the product was remotely efficient. Need proof? Stand on any busy corner and call a cab then notice how many empty ones of different stripes go past wanting only another fare and are oblivious to you.  

With few exceptions, these cab company owners are as dishonest and venal as anybody you will meet in a lifetime. They think nothing of squeezing every dime possible from poor immigrants with no options to go anywhere.  


Guest
Guest

If this article underscores anything (well done, BTW), it's that the SFMTA is willing to believe a lot of conspiracies, but it is not willing to concede the basic fact that there have historically been times when it was near impossible to get a cab in San Francisco. I don't take town cars because I want to -- I take town cars when it becomes uncertain that I will ever be picked up by a cab. Congrats to the start-ups who recognized a business opportunity among thousands of underserved consumers.

danforeman666
danforeman666

I drove cab here and in L.A. for 30 years and finally left the business when I could see it was on a downhill course. I was on "the list" to get a medallion, until the MTA came in took that little stipend away. The greedy cab companies, the incompetent taxi commission and the MTA can all implode now, and I say good riddance. I feel bad for the drivers, but something had to change. No longer can they have their money extorted, as was the case with all this "independent contractor" nonsense. The market will now be flooded with every unemployed tech worker now driving some sort of cab-like vehicle, and the city's customers will be more than happy. Eventually something really tragic will happen, like a fatal accident, and when they realize there was no regulation or insurance to cover the consumer, something truly revolutionary will happen. The city will come up with it's own cab company, like MUNI, and pay it's drivers a living wage and health care. The rates will be set to address that, and the drivers will be screened to make sure they won't kill someone. Of course MUNI's record is pretty bad at this, but they need to be cleaned up  too. It's all up to the public!

sfmf2013
sfmf2013

@jimminycricket666 The Taxi Industry would be even better if it didn't have government regualtions that uber and lyft do NOT have to follow.  The reason uber seems to give better service is because the the demand for them is NOT as high as a taxicab. Even at our worst, people still want cabs first. If you want someone to dress in a suit to kiss your ass, then you should call uber. If you just want a ride from point to point, you call a cab.

sfmf2013
sfmf2013

@John Lilly The entitled attitude really goes both ways in the taxi industry. I don't say sh.t to my cusomers, don't refuse credit card, don't refuse to go any part of the City(even HUNTERS POINT), drive so f..king calm, and people are still rude to me...but at the same time I do not defend the actions of many cab drivers. I know exaclty what you are talking about, SIR.

The Cab Companies have had their heads so far up their ass when it came to the techonlogy that it makes me sick. Should people lack such common sense be operating cab companies??lol!!

The problems of the SF taxi industry are truly much more deeper rooted than people know, at the publics expense. 300K for a taxi medallion while mayor Ed Lee embraces the competion. SFMTA rewards the companies by giving  them direct lease medallion while drivers those waiting on the list for many years get NOTHING unless they want to pay 300K.

It's all BAD!!!!

sfmf2013
sfmf2013

@Able_Dart  I wouldn't say cabs are safer because anyime you get into a car with someone else driving your at high risk. Although, on the other hand, cabs are properly INSURED, regardless of how crappy the company or the driver is. Believe it or not driving a cab is much more dangerous for the driver than it is for the passenger. Assaults and robberies are abundant on cab drivers in SF.  NOT to mention the overall stress and horrible treatment by passengers. This is something the public does not really know or care about. The Julie Day murder case is truly a black  eye on the taxi industry, but NOT all cab drivers should be punished for the actions of one evil human being. That being said, I am a firm believer in better training for cab drivers. As well as, incentives for those cab drivers who are loved by the public.

Ragazzu
Ragazzu

Boo! Anecdotal. There's no substitute for skilled experience, which is something cab drivers--however nutty at times--have in spades.

Seriously, why would you ride with a company that fights safety regulations?

driverchick30
driverchick30

@healied2 This writer is well known by lefties in the East Bay for doing exactly what you describe, and also for the fact that she actually has turned against her very informants who bring a story to her.  She did this in her East Bay article, titled Obama Drama. She was brought a story about how the official Obama campaign folks were actually doing things all over California to jeopardize that campaign, and she never followed direct leads she was given that would've proven that point. Instead, she wrote a glowing story about the official campaign folks and turned a negative light on the most radical dedicated workers in that campaign. If anyone is ever approached by her for a story- stay away. 

healied2
healied2

@wawawuwu They already are corrupt. They started by breaking laws. They have venture capital behind them and enough juice to make yellow cab's management look like choir boys. They appear to have bought the CPUC and word on the street is that they are either bribing writers or threatening to sue any magazine that writes anything bad about them.

guest2
guest2

@guest2  

I was in error when I said 320 cabs were recommended. It was 120

guest2
guest2

@guest2 

 I erred when I said 320 cabs were recommended. It was 120

laughtiger
laughtiger

@guest2 Wait and see, Lyft and sidecar will turn out to be at least as dishonest and venal as the cab companies.  Uber has already proven itself in this.  I guess you are screwed if you drive for a living in San Francisco.

jimminycricket666
jimminycricket666

@sfmf2013 @jimminycricket666 Who said anything about needing anyone to kiss my ass?  What about a ride showing up when it's supposed to?  Without having to deal with a rude dispatcher?  What about ratings systems for drivers? Gee, what a concept!  I have nothing against cab drivers at all but man oh man, the cab companies and their political allies can shove it!

sfmf2013
sfmf2013

@driverchick30 @healied2 O yeeah! ...and the sky is green, too. Are you going to believe me because I said so??? I doubt any Lyft or Sidecar driver even knows what an ACCORD certicate of insurance for PL & PD even looks like. By law, you can't even buy this type of commercial passenger insurance without a taxi licence or a TCP licence. Lyft and Sidecar have NEITHER type of licence, so how are they going to have insurance to cover them. Maybe, they might a general liability policy, but that still does NOT cover passengers or drivers.

healied2
healied2

@driverchick30 @healied2 Have these Lyft drivers ever seen the policy that John Zimmer claims is covering them? He's never shown the policy to anybody else and, from my experience, Lyft looks for gullibility as a primary quality in their drivers. Certainly more important than driving skills. Is this individual insurance or umbrella insurance? Can one of those drivers show you the policy? Will they talk to me?

sfmf2013
sfmf2013

@jimminycricket666 @sfmf2013 I have to agree with you about the cab companies and their political allies. Between them, the robberies, assaults, and other crappy passengers....you can easily see why the taxi industry in SF is beyond repair

healied2
healied2

@sfmf2013 @driverchick30 @healied2 Maybe Maybe Maybe - not. Wouldn't clowns like Zimmer and Paul be flashing their policies in front of everyone's face if they actually had insurance that covered the public and their drivers?

 
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