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Chopped Livery: Start-Ups Revolutionize the Cab Industry 

Wednesday, Mar 27 2013
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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.

It also was outside the law.

About The Author

Rachel Swan

Rachel Swan

Rachel Swan was a staff writer at SF Weekly from 2013 to 2015. In previous lives she was a music editor, IP hack, and tutor of Cal athletes.


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