Here’s Why the Fate of Uber & Lyft in Austin Matters to Everybody

This May, voters in Austin decide whether to accept Proposition 1 and repeal the city’s stringent regulations on ridesharing (which include forcing drivers to be fingerprinted, making pickups and dropoffs take place in a queue like taxis at airports, and more) or to reject the proposition and keep with the regulations. Uber and Lyft, the companies with the most to obviously lose, have poured tons of resources into the fight, informing voters what a YES vote means and why it matters.

For the most part, this issue has kept to Austin and hasn’t taken the attention of people outside of the city. It’s also seen as an issue that pertains just to ridesharing — the sharing economy at most.

These are both dangerously shortsighted perspectives.

As Austin Goes, So Goes…

The entrepreneurs and investors in Austin have done an impressive job building up the city as a hub of entrepreneurial progress. While it is no Silicon Valley, people do move to Austin to launch a venture. Companies like Dell, Facebook, Homeaway, and Whole Foods have major offices or headquarters in the city. Incubators and accelerators like Capital Factory churn out successful startups at an impressive rate.

Through all of this, Austin is still “weird.” The city still has its hippie scene, cool coffeeshops, food trucks, and music festivals. The fear that a tech elite will fundamentally change the culture of the city and why people visit Austin has proven to be mostly hollow. Change happens in culture as it does in technology, but any visitor to Austin from another city can hardly argue that it isn’t “weird.”

And this works in its favor. People can come spend a weekend in the middle of Texas and experience everything from these hip restaurants and coffeeshops to go visit a pitch day of cool new tech companies. Austin is one of very few state capitols that doesn’t have a weird, artificial character to it (go visit Albany, NY or Harrsiburg, PA or Lansing, MI to see what I’m referring to).

It’s this acceptance and openness to new and different things that makes Austin an attractive beachhead for entrepreneurs launching a new product.

If you were building a new service or venture that makes a big guess on how people will act if given the proper tools (i.e., get into a stranger’s car or stay in a stranger’s home), would you want a focus city of yours to be a city with a track-record of openness to new and weird things or one that has defined itself as stodgy and opposed to newness? Nobody launches new products in Detroit anymore for a reason.

It may not be obvious, but Austin has set itself apart as a city worth trying things in among entrepreneurs and potential founders. If you can prove a service works in Austin, that is a considerably smaller hurdle to get over compared to showing it works in a city with few startups and a popular culture opposed to new things.

This should matter to potential founders all over the country. Even if you aren’t considering a beachhead launch in Austin, when one of the most accepting and curious cities in the country brings the hammer down on new and exciting things, you have to worry about what this means for a broader cultural trend. Just as showing that a product works in Austin can be good for founders, showing that a regulation works in a city as accepting as Austin can empower cronies elsewhere.

Why Risk the Risk?

This shouldn’t just worry you if you want to launch an “Uber for X,” it should worry you if you have any interest in founding or being involved in founding any new product.

Any new venture is inherently risky. Despite what the #entrepreneurship hashtag on Instagram may tell you, a good entrepreneur is risk-averse. When you launch a new venture, you do everything in your power to reduce the downside of that venture. You control for as many variables as possible. You’re already playing a risky game, why would you want to increase the number of risky variables?

This is one reason why new founders are advised to incorporate as Delaware C Corporations — investors are also risk-averse and know the canon of law in Delaware is more established and thus more predictable than elsewhere.

If you were thinking about launching a product in a number of cities, why would you want to launch it in a city that has shown itself to be hostile to new and different ventures that challenge an established status quo? Why would you run the risk of subjecting yourself to being shut down by regulators?

Unfortunately, this isn’t the first time established interests in Austin have aligned against a new venture taking on the status quo. In 2012, the city took on Heyride, another ride-hailing service that launched specifically in Austin. Heyride was eventually acquired by Sidecar but not until after precious time and resources had been spent taking on skeptical regulators.

Maybe this game can be played an infinite number of times. Maybe regulators can try to step in every time something new and different changes the ways we view human behavior. Maybe Austin can stay weird (I sure hope so), but every time a city council picks one of these battles (usually at the behest of special interests), it runs the risk of putting a big, “Closed For Business” sign up to the rest of the country.

A final note of optimism: I think this fight — or at least, what it represents — matters to everybody who has ever dreamed of a better future and of building that future. There are certainly worrisome trends from political powers, but these trends are actually quite small when compared to the wave of new ventures and ambitious risk-takers. The speed at which creative problem solvers and the startups they craft can move is astonishing when compared to the speed at which stodgy interests and political institutions move. Even if a battle is lost, the war is ultimately on the side of the creators.

Regardless, I hope to tell nay-sayers elsewhere, in the words of Davy Crockett, “You may all go to hell and I will go to Texas.”