Six Ways Uber and Lyft Lost Austin

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Austin voters have spoken — and Uber and Lyft have both left town. Officially it was about fingerprint-based background checks, but in reality it was about bruised egos and bad campaign tactics. Joshua Baer argues we need to get everyone back at the negotiating table for a fresh start.

My good friend and mentor Rick Westervelt taught me that when things go wrong, it’s usually not because of just one mistake or failure — it’s because three or four things all failed at the same time. If just one thing had gone wrong, you might have been able to recover, but when mistakes pile on top of each other it can become impossible to dig yourself out.

I believe that’s what happened with Uber and Lyft and the recent Proposition 1 election in Austin, Texas, a local election that pitted the ride sharing services against the city of Austin. In trying too hard to win over new voters, Uber and Lyft turned many of their strongest supporters against them.

The two companies should have won by most reasonable expectations— their budget was almost 100 times bigger than the opposition, they have more than 10,000 drivers in danger of losing their jobs, and I would expect more than one hundred thousand customers who use the service on a weekly or sometimes even daily basis.

Proposition 1 lost 44.29% to 55.71%. Here are six key mistakes in the campaign that cost Uber and Lyft their support in Austin.

1. Lost control of the narrative

Over the past year there was a masterful shift in the debate from “Taxis versus TNCs” to “TNCs versus the City.” Normally, the Taxi Industry is labeled as the “big money, special interest” that is trying to buy the vote and write their own regulations — but taxis were suspiciously absent from the Proposition 1 debate. Instead Uber and Lyft were positioned as the big money, special interest groups against the local neighborhood groups and safety organizations.

2. Got greedy

The petition that instigated the Proposition 1 vote asked for too much. The issue was about fingerprint-based background checks, but the Uber and Lyft funded PAC threw in a number of other items into the legislation as well, adding the ability for TNCs to drop off passengers in the bus lanes, removing the requirement to carry fire extinguishers and reducing the fees they pay. They should have stuck to just fingerprinting and not thrown in other things that distracted from the main issue and gave potential supporters one more reason to waiver.

3. Didn’t pay attention to the ballot language

Uber and Lyft funded the petition, but the City Council got to write the language that ended up on the ballot. It couldn’t have been more confusing — I doubt the average voter clearly understood what a FOR or AGAINST vote really meant. Here’s the confusing language. Can you figure it out?

PROPOSITION 1, CITY OF AUSTIN

Shall the City Code be amended to repeal City Ordinance No. 20151217–075 relating to Transportation Network Companies; and replace with an ordinance that would repeal and prohibit required fingerprinting, repeal the requirement to identify the vehicle with a distinctive emblem, repeal the prohibition against loading and unloading passengers in a travel lane, and require other regulations for Transportation Network Companies?

4. Pushed too hard

Just before early voting started, the U.S. Chamber of Commerce sent a public letter to the U.S. Secretary of Transportation suggesting that Austin was not a good candidate for the USDOT Smart Cities Challenge because of our TNC challenges. This was punching below the belt. Mayor Adler had remained neutral until that time, but this pushed him over the edge and the following day he announced his opposition to Proposition 1. I bet a few percentage points went with the Mayor.

5. Pissed off their biggest supporters

The last week before the election, after a few weeks of nonstop advertisements on television and online, Uber and Lyft started robocalling their customers and sending text messages from drivers to the riders, asking them to vote for Prop 1. I don’t think they broke any laws by sending those messages (my background is in privacy and email marketing) but they really hit a nerve with people who felt that their customer relationship had been violated. For many, this was the straw that broke the camel’s back and pushed people from neutral to against Prop 1.

6. Waited too long to pull out

I heard over and over from advocates against Proposition 1 that “Uber won’t really leave because Austin is too valuable of a market,” “Uber does fingerprinting in Houston, so why not Austin?” and “If Lyft leaves, another startup will fill the void and take their place.” They were easy responses to the only real leverage that Uber and Lyft had to begin with.

Uber and Lyft should have suspended service before voting started instead of doing it the day after the election. This would have called the bluff and made it clear that they really meant it. It would have changed the question from, “Should Uber and Lyft leave?” to “Do you want Uber and Lyft to come back?” I believe that after two or three weeks without TNCs there would have been many more Austinites showing up at the polls to vote FOR Proposition 1. They could have probably saved $8 million, skipped all of the ads, and they still would have won.

Where do we go from here?

The failure of Proposition 1 resulted in a lose-lose for Austin. Uber and Lyft are gone and Austin doesn’t have reliable ride-sharing. Whatever we do, we cannot accept the current situation. I believe it is critical that we de-escalate and repair our relationship with the two most successful TNC companies in the country instead of fanning the flames even higher.

How do we get Uber and Lyft operating in Austin again? We are currently at an impasse with Uber and Lyft saying they won’t operate where fingerprint-based background checks are required and a City of Austin ordinance that requires them.

We need to get Uber, Lyft, and Mayor Adler back at the table to search for new solutions that haven’t been considered yet. We need to put the Proposition 1 debacle behind us and move forward with a fresh start and common goals — to get Uber and Lyft operating in Austin as soon as possible.


Joshua Baer helps people quit their jobs and become entrepreneurs. He’s the founder of Capital Factory, a co-working community and accelerator designed to help startups find their first investors, customers and employees. Joshua founded his first startup in 1996 in his college dormitory at Carnegie Mellon University and now teaches a class at the University of Texas for student entrepreneurs. He was recently recognized as a Henry Crown Fellow and Braddock Scholar at the Aspen Institute, a member of the National Committee on US-China Relations Young Leaders Forum, and an Eisenhower Fellow. Joshua lives in Austin with his wife Amy and three children. The best way to reach him is on Twitter @joshuabaer.

Joshua blogs regularly on Medium at AustinStartups.com

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