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TMCNet:  City trying to shut down app-based ride service

[November 22, 2012]

City trying to shut down app-based ride service

Nov 22, 2012 (Austin American-Statesman - McClatchy-Tribune Information Services via COMTEX) -- Josh Huck, creator of an app that helps Austinites in need of a lift find drivers willing to give them one, sees himself as a social networking entrepreneur. But the city of Austin announced it has issued a cease-and-desist order against the company.


City officials reason that because Heyride passengers pay drivers, it is subject to the city's strict regulations, which are intended to give customers reasonable assurances that a taxi service will be reliable and safe.

The city's announcement came after the Austin Chronicle published a lengthy profile of Heyride, which launched in October. Authorities say Heyride will be stuck in park until it secures the necessary permits, though Huck said he plans to keep operating until he meets with city officials next week.

"The onus is on us to communicate exactly who and what we are," said Huck, a 31-year-old University of Texas grad with a marketing background. "The more we parsed (the city's cease-and-desist order) the more we realized they don't know what we're really doing." City rules have trailed -- and likely will continue to trail -- technology. In late 2009, as the City Council discussed the driving-while-texting ban, advisory panels spent months discussing whether the ban should apply, to, say, GPS devices. The ordinance was passed, but such discussions continue.

Chris Nielsen spent three years seeking permission to operate his Electric Cab of Austin company, which uses a small fleet of electric-powered carts. City rules at the time didn't specifically address his kind of operation, and several of his drivers were arrested because they accepted tips and thereby, in the city's eyes, became unlicensed cab drivers. Nielsen alleged the influence exerted by taxi companies was a main cause of his problems.

Heyride, which employs no drivers but collects a transaction fee, is another kind of company that isn't addressed in city rules.

The idea for the company came to Huck in March. Exhausted from the South by Southwest music festival and trying without success to hail a cab, Huck considered asking a driver for a ride. He didn't, but the idea behind Heyride was born.

By late October, the six-person Heyride company was ready to launch its iPhone app. It works like this: Users download the app and register with the company, providing some personal and social networking info. Passengers use the app to solicit rides. If a Heyride user can provide a lift, the driver and passenger negotiate a price. The phones' GPS guides them to one another. When the ride is done, money is exchanged through stored credit card info.

Heyride collects 20 percent of whatever the passenger agrees to pay. More than 500 people have signed up, Huck said.

"Who among us hasn't gotten a ride and offered the driver some money for their time and trouble " he said. "Everyone in this town has a story about inconvenience and transportation. It's a common pain point." That is an assessment shared by Mike Merriman, who was visiting Austin from Britain for the Formula One race and who said the paucity of cabs was one of the city's few drawbacks.

"That should be addressed," Merriman said Friday. "It really is a tremendous hassle trying to find one." For more than a year, the City Council has been debating the proper number of cabs. The city has limited the number of licensed cab drivers to about 270.

City spokeswoman Karla Villalon said Heyride, by facilitating paid rides, should have to go through the same steps as its competitors, such as proving to the city that drivers have passed criminal background checks.

"It's a public safety issue," Villalon said. "It's like the city regulating restaurants for health and safety or regulating construction sites to ensure there are proper protections for the workers." Over time, Heyride users build up a profile and the company tracks whether they follow the rules. Huck said all drivers are required to pass a background check. Drivers who don't pass a background check can only receive requests from people who are friends through social networking sites.

"Drivers dispatch themselves. We just provide the platform," Huck said. "We are not a cab company." NOTE: This story has been updated to indicate that Heyride has been issued a cease-and-desist order and has not been shut down as previously reported.

___ (c)2012 Austin American-Statesman, Texas Visit Austin American-Statesman, Texas at www.statesman.com Distributed by MCT Information Services

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