Uber and Lyft Lose Austin — What it Means for Innovation

Uber and Lyft have lost in Austin. The Austin City Council, unable to resist the urge to introduce regulation where none was needed, replaced a year old common sense ordinance with a new one designed to “level the playing field” between Austin’s incumbent taxi companies and the upstart Uber and Lyft. Rather than pick up and leave, Uber and Lyft tried to fight city hall, and as the saying goes, you can’t beat city hall.

With Uber’s defeat, Austin loses all credibility in trying to position itself as an innovative city. While opponents of today’s election portrayed it as an election about safety and the voters versus big, evil corporations, the real issue in this election was how government can stifle innovation by picking favorites and protecting incumbent interests.

Anyone who has lived in Austin for more than a few years knows we have terrible transportation infrastructure. Whether its empty buses, toll roads nobody uses, over budget and overdue construction, or trains to nowhere, the City of Austin and it’s regulated monopolies (Capital Metro and the taxi companies) have spent billions of taxpayer dollars and delivered terrible results and mediocre service.

So enter a private company with a new model that requires zero public investment and actually delivers real, measurable improvements to our transportation problems. Before Uber and Lyft, getting into and out of downtown was a choice between taking a taxi (unpredictable waits, dingy vehicles, and sketchy drivers) or driving yourself (terrible traffic, expensive downtown parking, and the inevitable choice between driving home when you shouldn’t and wondering if your car would still be where you left it in the morning). With Uber and Lyft in the picture, these problems magically disappeared. Their mortal sin, however, is that they are self regulating and market driven. In short, they provide superior service and results without city oversight and as such are a threat to the city and it’s incumbent monopolies.

A truly innovative city government would have recognized that this was something different that was improving outcomes, taken a step back, and allowed these companies to operate as self-regulating entities until they proved themselves unworthy of the privilege. Instead, our City Council allowed itself to get hijacked by old style politics and incumbent interests, invented a problem where none existed, and then stepped in and “solved” it. Conveniently, the “solution” protected the interests of the incumbent providers. To top it off, they somehow got voters to back them up tonight.

If Austin wants to be a “Smart City”, or wants in any way position itself to be an innovation center, it needs city leaders that understand what innovation looks like and how to foster it. It needs a city government that can resist the urge to pick winners and losers and protect underperforming incumbents. Make no mistake, our city government picked it’s winner, and the losers are Austin transportation users like me who now have fewer choices.

The irony is most of the folks partying it up tonight celebrating their victory over those evil corporations will probably Uber it home tonight! Enjoy it while it lasts!