The Austin Ride-Hail Chronicles: A RideAustin Followup (UPDATED)
(Update: After further consideration of the matter — coupled with a swift (virtual) kick in the ass by one of my former editors — I decided to excise a considerable chunk of the original content in this article. In hindsight, I realize I violated a rule of journalism I learned from the aforementioned editor: write what the people need to know, but VERIFY EVERYTHING. In this case, I did not, and I regret my error in judgment.)
It’s now been exactly a month since I published an article about RideAustin, one of the local ride-hail startups that launched in Austin last year after Uber and Lyft left town. (NB: If you haven’t already done so, I’d recommend reading it first before delving into this piece, if only to understand some of the references herein.) From my own perspective at least, I intended to emphasize two primary points: first, RideAustin’s ridership plummeted after Uber’s and Lyft’s return to Austin not because of “price-sensitive customers,” as its leadership had claimed, but rather because ride-hail customers prize reliability and consistency above all else — and neither RideAustin, nor any of the other TNC startups that arose amidst the ride-hail vacuum following Uber/Lyft’s exit, had succeeded in developing an app Austinites felt they could rely upon. Second, I questioned whether RideAustin had a raison d’être in the first place, given that the emergency situation it was explicitly intended to rectify had been rectified by the time it launched, even in beta mode.
As part of my analysis, I mentioned my skepticism — based directly on discussions with three founders and/or senior leaders of established Austin-based nonprofits — about whether RideAustin, a 501(c)(3) nonprofit that directly competes against for-profit business entities, had successfully fulfilled the requisites necessary under federal law for maintaining tax-exempt status. At no point did I intend to impugn either RideAustin itself or anyone involved with the company, or even remotely infer that anyone had willingly and knowingly misclassified RideAustin in any way. If they did not, in fact, meet the IRS standards for nonprofit classification, I assumed it would have been a genuine, unintentional mistake — which as a serial entrepreneur I realize are routine in the earliest stages of any startup. Every founder screws up at some point; almost none of them do so on purpose.
While I realized when writing my article that my arguments would likely ruffle some feathers — though I mistakenly assumed my most controversial point would be questioning RideAustin’s very existence — I had no idea how much of a ruckus it’d stir up. Suffice it to say it’s been a learning experience, wake-up call and object lesson all rolled into one. Here’s what’s gone down since the piece went online. (7/18 note: I’ve added Andy Tryba’s responses to certain parts.)
1. RideAustin’s CEO accused me of writing the article out of spite because he “wouldn’t give me a job.”
After publishing my earlier piece on Austin Startups, I posted a link to it in the Austin Tech Alliance group on Facebook, where TNC-related subjects have generated considerable discussion over the past year. At this stage in my life I’d say I have a fairly thick skin with respect to criticism, but I have to admit I was taken aback when RideAustin CEO Andy Tryba responded to my post with some flat-out character assassination:
Jeff — I realize that you’re still upset at me for my decision to not hire you into RideAustin — and I’m fine with that…
This wasn’t quite a knife in the back; it was more like a series of a dozen vitriol-filled darts aimed to hit me simultaneously. To state the obvious, Andy’s inference was that I wrote the article out of vengeance — and, in turn, its content was either heavily biased against RideAustin or total bullshit. In reality, the only total-bullshit element here is the accusation — and it’s incredibly insulting bullshit at that, considering that nearly ALL of my work relative to TNCs over the past three years has stemmed from both my deep-seated interest in progressive public-policy initiatives as well as my equally strong interest in consumer advocacy. (Note that the latter is how I ended up on the working group established by the Austin City Council in summer 2014 and tasked with developing a regulatory infrastructure for Uber and Lyft, which had recently launched service in Austin. As I noted in my first Medium article 18 months ago: “One of my areas of expertise is consumer-protection law, and as such I joined the group as a proxy of sorts, representing the interests of Austin citizens as a whole.”)
The less-obvious part is Andy’s apparent confusion between the concepts of me readily seeking employment and offering to help what I then believed was a promising nonprofit with great potential; you can read my response for yourself. And note that Andy wasn’t content with insulting me on only one platform; he did so on Medium and Twitter as well. Oh, and for the record, the only thing that even mildly irked me about this whole affair was Andy ignoring my suggestion that he needed detailed legal advice — preferably via a knowledgeable tax attorney — with respect to organizing RideAustin as a nonprofit. Keep reading to see how that one’s turned out.
(Note: Andy has now apologized for his earlier actions, which I very much appreciate. In his words: “Lastly — I apologize for what you’re calling my ‘character assassination’ on your previous blog post. That was not the intent but it appears it was taken that way. Again — my apologies.”)
To be fair, my original article had a couple of parts with unintentionally ambiguous phrasing that could at least be construed as a suggestion of malfeasance on RideAustin’s part, and I appreciate Capital Factory’s Josh Baer pointing them out (I subsequently rephrased one part of it and deleted another). In any event, all of this happened within the first couple of days after the article went live, and I assumed that was the end of it.
I was wrong.
2. Texas Monthly not only published an article on the same subject; its reporter appropriated most of my own material without attribution.
I didn’t get wind of it until nearly a week later — hey, I’ve had a busy month! — but on June 29 Texas Monthly posted a feature titled “The Saga of RideAustin” on its website. While it at least linked to my original article (see third paragraph), its reporter “borrowed” all of the following from it — none of which had been previously published by anyone else (or even discussed in any public forum, to my knowledge). Starting with my broad arguments he appropriated:
- Prop 1's small turnout not representing sentiments of actual TNC users, as clearly evidenced by Uber’s and Lyft’s rapid recapture of a majority of RideAustin’s market share.
- RideAustin’s curious status as a 501(c)(3) nonprofit that directly competes with for-profit businesses and uses paid professional staff. (NB: If Andy Tryba was mad at me for misinterpreting some of my comments as a personal attack, I’m assuming he must’ve gone postal after reading what Texas Monthly published about it.)
- One of my two core points: why RideAustin exists in the first place, particularly considering it wasn’t needed per se even before Uber and Lyft returned to the market. (To be fair, the Texas Monthly article describes at length the machinations of RideAustin’s cofounders prior to the Prop 1 vote, and thus framed this question in a different fashion.)
As for the “curiously specific” references in both articles:
- My citation of an academic paper published by the economist Steven Levitt, one which rather conclusively showed that ride-hail passengers aren’t generally price-sensitive. (NB: This was admittedly the point in the piece where they linked to my own article, though in a notably offhand fashion.)
- Noting that RideAustin’s “Round Up” feature — which lets passengers round up their final fare to the nearest dollar, with the excess amount directed to the charity of their choice — isn’t new or novel, plus a similar easy-donation program has been used by H-E-B for several years now. (Hundreds of other companies offer them as well, but TM’s reporter couldn’t even be bothered to source a different example than mine!)
- Austin Mayor Steve Adler successfully brokering a compromise agreement with Uber and Lyft that would’ve stopped the Prop 1 vote from going forward, only to have the city council soundly reject it.
- The Prop 1 ballot resulting in over 10,000 Uber and Lyft drivers being put immediately out of work.
- RideAustin’s failure to publicly post a copy of the 990 form required from all 501(c)(3) nonprofits by the IRS.
I guess it’s possible all of the above are coincidences, but that seems unlikely.
3. There are more questions than answers regarding RideAustin at present, particularly in light of the Texas Monthly article about the company.
Aside from posting a vigorous (but warranted) response to my original edit of this article, Andy Tryba has been keeping a low profile as of late, and unfortunately this extends to RideAustin’s formerly transparent sharing of its ridership data. While he’s stated to the local media that its decline in ridership has leveled off, RideAustin has nonetheless stopped sharing the extensively detailed metrics concerning its ridership that it routinely published prior to Uber’s and Lyft’s return. To be fair, it’s no longer required by law to supply this data to the city of Austin, but on the other hand it was never “required” per se to supply it to the general public. That said, its reasons for doing so were directly related to its stated nonprofit mission. Now that questions about RideAustin’s nonprofit status are formally “newsworthy,” this likely isn’t the best time to be less forthcoming than before on the subject.
In my response to Andy’s response to my original edit — yes, even I feel confused after writing that clause — I included a list of items requested of RideAustin (by myself and others) that have not, as of this writing, been produced. Given RideAustin’s considerable emphasis on transparency over the past year, I strongly believe it would be in the ride-hail community’s best interests for the company to supply each of the following items:
- Its ridership data for the 5–6 week period since posting your own Medium article, detailing RideAustin’s surprise drop in ridership in the first and second weeks following Uber’s and Lyft’s return
- Its IRS 990 form for the previous fiscal year
- Any formal legal analysis addressing the issues raised about its nonprofit status. To quote Texas Monthly’s summation: “RideAustin isn’t a typical nonprofit because it competes with for-profit firms. That could endanger its tax-exempt status because of something called the ‘commerciality doctrine,’ which the courts use to determine whether a nonprofit organization is operating exclusively for tax-exempt purposes. Besides competing against commercial firms, another factor is whether a nonprofit uses paid professional staff.”
- In line with the previous bullet: a breakdown of how much of RideAustin’s $7 million in funding was spent on paid professional staff (in other words, Crossover) as opposed to nonprofit-specific endeavors
- An explanation for why RideAustin hasn’t continued to seek out potential sources of outside funding (e.g. did its leadership fail to develop a worst-case-scenario Plan B in the event Uber’s and Lyft’s return to Austin — which both its CEO and COO have claimed they knew was inevitable — resulted in an unusually severe drop in ridership?)
- Finally, my own requested analysis — posted on the Austin Tech Alliance’s Facebook group about six months ago — regarding one of the single biggest “known unknowns” in ridesharing: the comparative value of fingerprint-based background checks versus electronic background checks. My understanding is that RideAustin performed both types of them for nearly its entire pool of drivers, if only to get them onboarded as swiftly as possible (the results of fingerprint checks can take several weeks to process in some instances). This may very well be the most important question, from a public-policy perspective, that RideAustin can answer — and it may literally be the only entity anywhere with the necessary data to generate an accurate answer (and feasibly willing to share it). While I understand why it didn’t want to provide such data before the state legislature passed HB 100, the bill which preempted all local ride-hail ordinances in Texas, I don’t see any rational reason for withholding it now.
So: it’s been a strange month — on top of an already strange two years. While I guess I should consider it a compliment of sorts that Texas Monthly ripped off my article (a la “imitation is the most sincere form of flattery”), I’m nonetheless pissed that they did so without adequate attribution. And I wasn’t even planning on writing anything else specific to RideAustin; my next feature, still in the works, will focus on Lyft and Uber. Nonetheless, I’ve always been a firm believer in transparency among entities with a public-policy aim, as well as an advocate for pro-consumer policies among private companies, and I still feel a followup was warranted. I strongly believe in the people’s right to know the truth about individuals and institutions granted the privilege by government of serving their needs in some way, shape or form — a belief which absolutely extends to exposing instances in which they fail to live up to their promises.
(NB: If I’d stated anything here that you believe is false or otherwise misleading, please let me know. I’m not infallible, and I readily admit when I make mistakes. On that note, I’d like to issue a correction for my last piece: I stated that Fasten likely experienced “the biggest decline in traffic” among Austin TNCs since Uber and Lyft returned. While Fasten hasn’t released specific ridership metrics to this effect, I have it on good authority that my assumption was false, and that RideAustin had the biggest drop.)