In 2012, a local ride-sharing company called Heyride was launched. Heyride CEO and founder Josh Huck came up with the idea after being unable to hail a cab during SXSW. The company offers a simple ride-sharing service where participants act as the drivers and consumers. Basically, smart phone users open the company’s app and either request a ride or offer to drive; drivers will receive a share of the fee for providing the service, with the remainder going to the company.
In the midst of their recent beta launch, Heyride has stirred controversy which has made their story one of hot debate. Immediately after the hopeful startup was featured on the cover of The Austin Chronicle two weeks ago, it came to light that the City of Austin sent Huck a cease-and-desist letter on October 31 based on a concern that Heyride failed to obtain the operating permits required by Austin City Code § 13-2-3(A) when ground transportation services are offered for compensation, which includes money or anything of value given either through solicitation, contract, or intended as a gratuity or donation. The City has a public policy interest in ensuring passengers of ground transportation do so safely. In order to achieve this, the City requires, through its licensing procedures, verification that drivers pass thorough criminal background and driving history checks, and carry sufficient insurance. The City is concerned Heyride may fail to adequately ensure these safety requirements are met.
Huck disputes the City’s contentions. Although people can use Heyride to give free rides to friends while avoiding a background check by signing up on Facebook, in order to be a fully verified driver an individual must submit to a criminal background and driving record check, as well as provide a copy of his or her driver’s license and insurance policy, and may be required to carry an additional liability insurance guarantee. Huck asserts that because it does not actually have employees operating as dispatched drivers, but rather merely provides a platform for peer-to-peer ridesharing, Heyride does not actually provide or operate a transportation service and thus licensing regulations don’t apply. Huck compares Heyride to Airbnb (an online service that matches people seeking vacation rentals with people who have space to rent, but one that does not actually provide the rentals), and states Heyride seeks to operate in partnership with the local community.
A recent NY Times article notes that people love services like Uber or Heyride but that companies and regulatory agencies have real problems with them. “Transportation has been one of the least innovative sectors in our society,” says Dr. Daniel Sperling. “When I look at these new mobility companies coming, where they’re using information and communication technology, at a very high level it’s long overdue and should be embraced with open arms.” Peer-to-peer systems generally operate in market niches that address overlooked areas or needs. The City needs to deliberate and decide if it’s possible to find a way to work with local entrepreneurs so as not to stifle their creative approach to transportation while maintaining public safety. As with so many transportation decisions a Ford CEO’s words come to mind, “transportation is too important to be left to the technicians (be they lawyers, engineers or app designers).”