Can Ride-Sharing Startup Lyft Survive the SoCal Heat?

First time accepted submitter Kyle Jacoby writes "The app-powered on-demand ride-sharing startup, Lyft, has brought its trademark pink mustaches to San Diego. After a successful venture in San Francisco about a year ago, Lyft has since expanded to offer their services to other congested cities, like Boston, Los Angeles, Seattle, and Chicago. Despite the utility of the service, Lyft (and related services Sidecar and Uber) has recently come under fire from the city of Los Angeles, whose department of transportation issued cease-and-desist letters to the startup. It seems that the service has the taxi community in an uproar, who believe that Lyft ride-share drivers should be required to obtain the permits similar to those required of taxi drivers." Nothing like some regulatory capture for Independence Day. Amid the ongoing strike of BART workers in the Bay Area, I bet some people are using on-line organization tools for ride-sharing with a similar upshot.

Comments

Lyft's rating system is bonkers

[brunes69]

"Passengers and drivers rate each other after every ride. If you rate a driver below 4 stars, youâ(TM)ll never be matched with that driver again. If a driver's average falls below 4½ out of 5 stars, they are removed from the Lyft community. It's our way of maintaining high-quality standards."

Can anyone tell me what the point is of a 5 star rating system if anything below 4.5 stars gets you kicked out? All this is going to end up doing is artificially inflating ratings. Basically everyone will be a five star driver or a zero star. It makes no sense whatsoever. I would think any logical system would have at least 3 stratas of "Excellent/Well above average", "OK", and "Average, but would ride with again".

Re:Lyft's rating system is bonkers

[Citizen of Earth]

When do we get to start rating individual taxi drivers? There are a few of them I'd like to never be matched with again!

Re:Lyft's rating system is bonkers

[NitWit005]

You're falsely assuming they want average. They probably want excellent service only. If you want to ensure people only get excellent service, you're going to have to have a harsh cutoff built into the system somewhere.

Re:Lyft's rating system is bonkers

[brunes69]

Requiring 4.5 stars out of 5 is not a 90% approval rating. A 90% approval rating would have a "Do you approve of this driver? Yes/No" poll and require 90% to be yes.

A 90% approval rating on a 5 star program would mean 90% of people must rate at 3 stars or higher. Not that the average rating be 4.5 stars or above. It is TOTALLY different.

Your comments point out the problem perfectly. " I imagine that a driver that does their job on time, is safe, and doesn't smell too bad gets an automatic 5 stars.". So what does one do to get 3 stars? Stink of onions, run red lights, and be late? That's a 3 star driver?

Then what is a 1 star driver, someone who runs over your wife and then spits on the corpse?

By designing the rating system this way they are FORCING a skew to the right. It's idiotic. The only reason I can see them doing this is for some marketing tactic where they can claim they have all 5 star drivers without explaining the meaning.

Re:Lyft's rating system is bonkers

[LVSlushdat]

Thats the same kinda shit eBay has been doing with their DSR b.s. since the inmates took over the assylum, after Meg Whitman left. its a 1-5 scale and if you as a seller drop below about 4.5 you get hassled by eBay and can be prevented from selling. I started selling on eBay back in 1998 but when the current management started screwing it up, I quit.. Looks this outfit has the same grade of moron in *its* management.

Re:Lyft's rating system is bonkers

[squiggleslash]

No he's not. He's saying that if you have a ratings system where 5 means "Good", 4 means "Not good but could have been worse", and 1-3 means "Fire this guy", then people's default vote will be 5, and it'll be impossible to determine who's actually a good driver, and who just does the minimum.

eBay is a good example of this idea in practice. By rights, the right item arriving as described during the advertised delivery period should be rated a "Neutral" transaction, and an average eBayer should have mostly "Neutral" ratings. But because of... well, I don't know why, but somehow we got to the point that "Neutral" means bad, and so the score of an eBayer is completely useless - you genuinely can't tell the people who go the extra mile from the people who do just enough to avoid getting fired. (And interestingly their attempt to introduce more fine grained seller ratings fails for the same reason.)

Wait, what?

[gstoddart]

It seems that the service has the taxi community in an uproar, who believe that Lyft ride-share drivers should be required to obtain the permits similar to those required of taxi drivers.

Carpooling should have the same license as a taxi?

What utter crap.

Re:Wait, what?

[Anonymous Coward]

I'd agree with you IF Lyft was a car pooling service. It is not. It is a service for freelance taxi drivers. This is NOT the same thing as car pooling.

Lyft is much more like a taxi company than a carpooling connection network. They're just trying to pretend that they're not.

Re:Wait, what?

[anagama]

That was my thought as well, but it turns out it isn't carpooling -- it's a paid service, and a fairly steep one at that.

http://www.lyft.me/drivers
From the "become a driver" page: "Drivers are making up to $35/hr + choosing their own hours."

It sounds like a taxi service, except Lyft doesn't have employees, doesn't have to pay unemployment or workers comp insurance, and then if there is an accident, will the driver's private insurance which most likely assumes you are not being a public carrier, pay out?

Re:Wait, what?

[icebike]

Agreed. Its quite a bit different than Slugging that is/was popular in some cities.

These newer programs have apps for ride matching, rating systems, and at least informally set fees. Its a regulation dodge more than anything else.

Still, I would love to see a similar rating system for individual taxi drivers, because half of them don't bathe, 60% of them are surly, 5 to10% of them on any given day don't look remotely like the credentials hanging in the cab, and the vehicles themselves are filthy and often barely road worthy.

Re:Wait, what?

[CastrTroy]

I agree with you. However, I don't see why taxis get to be a protected business. If I have a car and want to charge people to drive them around the city, why shouldn't I be allowed to? Sure there's some safety aspects about getting into a car with a stranger, but there's safety aspects with many things in life. You don't need a special license to watch over people's kids, you shouldn't need a special license to drive someone around town.

Re:Wait, what?

[Wonko the Sane]

I'm pretty tired of people like the GP apoligizing for mafia shakedown tactics.

That's all these protected industries are - state-created monolopies that get to use the force of law to enforce their turf and enrich a few taxi drivers, city employees, and politicians at everyone else's expense.

If people are able to use technology to outmaneuver and bypass indefensible laws then good for them.

Re:Wait, what?

[anagama]

You do need a special license to run a day care service, and you should need a special license to drive people around unless you have a few million in the bank to pay for the damage you cause.

Lots of people work in the underground economy to avoid taxes, and while there is some short term gain to be had be outside the system, there are reasons why the system exists. Some of it bullshit, like wars and NSA and so forth, but some of it comes out of the labor movement and is designed to help and protect workers. Things like unemployment and workers comp. By working under the table, when something goes wrong, you are really screwed. And big business is always looking for ways to shift the costs of doing business onto the worker. This is probably one of those ways.

I don't know about every state, but one of the big games businesses try to play is telling people to become independent contractors. They think that if their workers are ICs, they won't have to pay workers comp premiums. Except the WA state statute doesn't talk about "employees" -- it talks about "workers where the essence of the contract is personal labor." So a while back, it was a popular way for taxi companies to shirk their responsibility by leasing cabs to drivers and making them independent contractors. Didn't work and they got spanked because the drivers provided only personal labor.

In the case of this company, where they act as dispatcher arranging payment, pick up, drop off and act as boss (they'll essentially fire you if you don't live up to their standards) -- that's personal labor. And while you may provide your own car, that isn't good enough to get beyond the "worker" definition (been tried). So anyway, if this company is operating in WA and not paying premiums, it's going to get fined, and if a worker gets hurt while driving, they'll be on the hook for all the claim costs.

Re:Wait, what?

[HornWumpus]

Avoid starting a business in Washington state. Check.

Re:Wait, what?

[JThundley]

I work for a limousine service, here's just a couple of things I can think of off the top of my head. Insurance, which was mentioned earlier. If you get in an accident, is this guy's private not-for-hire insurance going to cover you? We drug test, I can't imagine an individual drug testing himself. We monitor employee's hours making sure that they get enough sleep and we see them in person when they pick up cars. We're able to judge their appearance to make sure they look fit and healthy enough to drive and are also dressed professionally. We wash our cars every day. We have an office that keeps track of things and can send another car to pick up a passenger should something unexpected happen. If you use Lyft and schedule a pickup and then your single and only driver needs to make stops or gets stuck in traffic, what do you do next? We check their DMV record and straight up fire people if they get into 2 accidents in too short of a time span. We do regular maintenance on the vehicles constantly to make sure they're in top operating condition. In this industry, you get what you pay for. We're a business and we're good at what we do and have streamlined processes for making our business run efficiently. If you go with some Joe off the street, he's going to be learning all of this from day 1.

Re:Wait, what?

[demonlapin]

The number of taxis in NYC is fixed, and the price of a "medallion" to operate one hangs around $1M (source). That's not an open-but-regulated business. That's a closed, protected one.

Re:Wait, what?

[Rockoon]

Yet the city that we are talking about, San Francisco, also has a rigid number of Medallions issued out and thats it. If you want to own a cab in San Francisco, you have to buy a Medallion from an existing Medallion owner. There isnt an application process where you can apply to get a license and if you look like a great person to operate a cab you will get a Medallion.. its not like that at all, nor does anyone at all pretend that thats the way it is. The City doesn't. The Medallion owners don't.

If you examine all the large cities, you will find that fixed-number-of-medallion setup is overwhelmingly the norm.

..and its not just taxi services that have this protected-from-competition arrangement, and often the laws are written quite plainly to state that the licensing board for the industry must consider the impact a new license would have on existing license holders.

For example, Connecticut just recently rescinded a law which protected moving companies after a long battle with an out-of-state moving company that wanted to do business inside the state but could not get a license to do so on the grounds that the additional competition would hurt the existing license holders. Note that the article I just linked to states "Unfortunately, the old standard will still apply to taxi, livery, and motorbus carriers."

So while you sit there claiming that not all cities are like NYC, well my friend entire States are exactly like New York City. What I really think is that you dont have a real grasp of the amount of government regulation there is in the country, nor do I think that you have even a casual understanding of the intent of nearly every regulation. I think that you are likely to be someone that has regularly defended greater regulation of things that are already so regulated that the current players dont have to worry about any competition, a situation that devolved into an event that got you to call for greater regulation to begin with (housing bubble? yeah, I predict that you blame the housing bubble on a lack of regulation.)

Re:Wait, what?

[blackest_k]

Well lets see what is wrong with that.
first there is insurance. Ordinary car insurance is for social domestic and pleasure and driving to and from work.
Carrying passengers for hire or reward is specifically excluded. Taxi insurance is around 10x more expensive.

For a car to be a taxi it has to meet a more exacting standard in addition to the usual road tax and Mot there is also a Taxi inspection which is like the Mot test but to a higher standard. Taxi's also have to carry a certified fire extinguisher to meet the regulations as well for example.

Medical this is more recent but just having a driving license isn't enough, you also now need a medical report and again that is to a higher standard. One reason why I don't drive a taxi any more.

Then there is also the criminal record and background checks which covers everything even 'spent' convictions
and anything the police have recorded about you ever.

And yes you do need a license to look after children, as a taxi/ private hire driver to work on council contracts I had to be badged for that to gain approval to carry children & vulnerable adults. That includes personal interviews and a European Criminal Record check. Thats the same vetting procedure as a nurse or childcare worker or school teacher has to go through.

That second badge can get suspended very easily if there is any complaint made. On some jobs there has to be an escort with the child. Once one child accused the escort of hitting him as he got into my taxi. Completely false charge as I would have seen it happen and kind of creepy too as you don't know why someone was suspended until the police interview you. you tend to think the worst, that the escort may have molested the child, and how would you know when your driving exactly what is going on behind you. Even though the escort was innocent they were suspended for 6 weeks with no pay since they are paid by the job.

Of course once that kind of incident happens you get to realise how vulnerable you are if you are carrying kids without an escort. Then there are passengers normally drunk who can attack you and thats no fun believe me.

So yes there is a bunch of regulation and licensing that has to be gone through. It's not there just to keep taxi drivers in jobs and there are times when you will spend a lot of time waiting for a job and you don't get paid if your empty.

However perhaps the most important aspect of the regulation is insurance because if you are in a car wreck in an unlicensed taxi, there may not be any insurance at all and while you may lose your career a limb without the insurance you might find there is no compensation no help with medical bills and your life is ruined.

Does this help answer your question?

   

Re:Sharing?

[Trepidity]

Yeah, the prices are definitely more taxi-like than rideshare-like as well.

If you look at ride-sharing via places like Craigslist, payment is usually roughly on the order of the cost of gas, maybe rounded up. E.g. if you get a ride from SF to LA, a typical asking price is for you to pitch in $50.

But the prices on Lyft seem to be on the order of $15-20 for a short ride within SF, which is more like taxi prices. At that cost you're hiring a paid driver, not pitching in for gas in a rideshare.

Re: Sharing?

[maden]

But the state sees nothing of this money, and they don't like that!

Its stil bonkers.

[brunes69]

If you have 100 four stars you will be kicked out. The system is basically saying you need to give any driver you want to keep five stars, all the time. This makes a 5 point rating system pointless and it might as well be a boolean "Keep? Yes / No" flag that is averaged.

Re:Its stil bonkers.

[Capt.DrumkenBum]

Just like ebay ratings.

Re:Its stil bonkers.

[tlambert]

If you have 100 four stars you will be kicked out. The system is basically saying you need to give any driver you want to keep five stars, all the time. This makes a 5 point rating system pointless and it might as well be a boolean "Keep? Yes / No" flag that is averaged.

People other than engineers do not do the mathematical reductions like this in their head, and then act accordingly.

Personally, I never thought eBay would go anywhere, since it's not actually an auction; the mathematical reduction is "second lowest bid ceiling plus bid increment", given that you can give a bid ceiling, and it will automatically "bid" for you. But seriously, on the back end you could just insertion sort the bid ceilings, look at the first two in the table, and make the decision on that basis. I thought the OnSale model, in which actual bids were being placed, in a non-automated fashion, was more of a real auction, and that they'd own things.

But I had not taken into account that ordinary people don't do the mathematical reduction, and find the convenience of not having to watch their "bids" of more value than the actual "auctionness" of the auctions.

I imagine they have "proprietary" back end safeguards against things like "perpetually lower-than-5-rating passengers, or some other means of throwing out the outliers so that they can keep their driver pool up, in case that ever became a real issue for their business expansion. I suspect at this point, they'd rather have twice as many drivers that are unhappy about being thrown out of that role than they currently have, as a PAC to be able to have an effective block to counter the taxi interests. So if they don't have the rules behind the curtain, expect the rules in front of the curtain to change soon.

Otherwise, it occurs to me that the taxi lobby could have a few people sign up as 5 day a week riders and perpetually rate the drivers "1" in order to reduce the number of drivers below the level of viability by gaming the published rating system.

Re:Its stil bonkers.

[similar_name]

Personally, I never thought eBay would go anywhere, since it's not actually an auction; the mathematical reduction is "second lowest bid ceiling plus bid increment", given that you can give a bid ceiling, and it will automatically "bid" for you.

I work at a real auction with real auctioneers. We have proxy bids if that's what you're referring to. It works no different than if you sent a rep to bid for you. The seller sets a floor of say $1000. If you place a proxy bid of $1500 and the increment is $100 you essentially start the bidding at $1100. If someone in person at the auction bids $1200 you automatically bid back $1300. The person at the auction can bid back. In theory the person at the auction should be following a similar formula. They should already know what they're willing to spend.

I do see people in person bid others up just because they are new or because they don't like them for some reason. You may have no interest in buying something but can still make the other person pay more than they otherwise would have. After all if you can make someone else spend more money they won't have it when it's time to bid on what you want.

Re:Its stil bonkers.

[Weezul]

There are sellers on ebay who create sock puppets to bid up the second highest bid. If they hit your bid ceiling they retract their previous bid, so you still win the auction, but near the highest price you considered. Always abandon the auction by retracting all your own bids if you observe suspicious bidding or retractions.

Re:Sharing?

[gl4ss]

Yeah, the prices are definitely more taxi-like than rideshare-like as well.

If you look at ride-sharing via places like Craigslist, payment is usually roughly on the order of the cost of gas, maybe rounded up. E.g. if you get a ride from SF to LA, a typical asking price is for you to pitch in $50.

But the prices on Lyft seem to be on the order of $15-20 for a short ride within SF, which is more like taxi prices. At that cost you're hiring a paid driver, not pitching in for gas in a rideshare.

the price is not the distinctive thing.

the distinctive thing is simply if the driver would have made the trip regardless. if the driver makes the trip because of the cash, then he is a hired driver...

Where is the service?

[fyngyrz]

No, the distinctive thing is that you're paying for a ride. That's a service.

Not saying that the city/state whatever needs to be involved, but I *am* saying that to pretend this isn't a paid service to the rider is disingenuous.

Suppose a taxi driver was thinking of going downtown to Bruno's for a good pizza slice. Turns around, heads down Broadway, there you are, waving your hand. You get in and tell him, Bruno's, please! Did that suddenly turn the taxi ride into not-a-taxi-ride? No, of course not.

Re:Where is the service?

[sjames]

What made it still a taxi ride is that if you told him "Anywhere but Bruno's", he would still take you where you wanted to go. It would be ride share if his response was "Nah, I was going to Bruno's".

Re:Where is the service?

[gl4ss]

I've had taxi drivers tell me they didn't want to go where I wanted to go. They're taxi drivers not slaves.

Maybe they think there'll be a bad traffic jam where I'm going and they won't make as much money. Or they're finishing their shift soon and want to be in a different area when they do. Or they want to head to another area which they think will make them more money.

actually their taxi license depends on them taking you where you ask.

Re:Uh, what?!

[icebike]

Do you not see how other people drive on the road? Now you want to get in their car and let them drive you?

WTF

Do you see how Taxi Drivers drive on the road?
They are paid by the mile, so even if you ASK them the slow the hell down, they won't.

Why not take the rating system of Lyft and apply it to Taxi Drivers?

Better yet,
Why not have a QR code right there on the cab window, so you can see this driver's picture and record BEFORE you get in the cab?

Agreed, star ratings suck.

[Weezul]

They should ask five-ish specific questions like :
(1) Was the driver on time? If no, how late?
(2) Did the driver and vehicle seem safe? If not, explain.
(3) Was the driver polite?
(4) Was the vehicle clean?
(5) Was the driver friendly, curt, etc.?

Some questions like (1-4) are used to qualify drivers. Any personality questions like (5) are used to match up people with drivers they'll like more, but influence the qualification only minimally.

Down side, if they're matching up curt drivers with curt people, and bubbly drivers with bubbly people, then when they occasionally cannot make that match, they might need to warn the user : "Apologies. We think you're an anti-social bump, so usually we trying pairing you with similar drivers, but we just kicked out our only surly driver here for not bothering to remove the jagged rusty metal spikes from his passenger doors. So today all we got is the bubbly flower child who'll drone on about chakras and vegetarian recipes. I hope you don't mind. She's very safe. Ask her were to buy weed during your visit."