Heyride at Your Own Risk: Local Startup Facing Potential Shutdown

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).”

3 Responses to Heyride at Your Own Risk: Local Startup Facing Potential Shutdown

  1. Freddie Fillers says:

    Unfortunately for Heyride and other mobile ride apps, this is a form of protectionism being exercised by city government under the guise of standard industry/business rules and regulations in order to protect the established taxi businesses whom the city has collected fees from for decades. This kind of move is insulting to progressive businesses who would have sat down and hammered out a deal to comply given that outdated policies and regulations be updated for the business models of the 21st century. The same thing is happening in the state of California. Here is a link to today’s story by Patrick Hodge from the San Francisco Business Times http://www.bizjournals.com/sanfrancisco/blog/2012/12/state-may-scrutinize-mobile-ride-apps.html?ana=e_sfbt_rdup&s=newsletter&ed=2012-12-05

    Established businesses take heart. The future that is unfolding around you is not about destroying the business models you’ve created. It’s about making them leaner and taking them further. Embrace the strange and find the change leaders in your businesses to help you understand where your industry is heading; or hire some.

    Good luck Heyride! 21st Century America needs progressive business models like yours as examples to follow for any hope of building a better financial future.

  2. I tend to agree with Huck that Hey Ride is more like AirBnB than it is Yellow Cab. While this may ultimately get Hey Ride off the hook as far as regulations go, it still doesn’t get the participating drivers off the hook for picking up/transporting passengers and receiving compensation or anything of value. I think Huck may have found an interesting angle in limiting the application to one’s friends as opposed to the general public. I don’t think the criminal background check will be enough to “license” drivers to transport the general public considering there are already stricter requirements than that; however, I would like to explore the difference between Hey Ride matchmaking service + General Public and a Van Pool matching service + General Public, particularly when the van pool riders are encouraged to chip in for gas.

    Rich MacKinnon, Chair
    Urban Transportation Commission