Austin tech leaders launching nonprofit ride-hailing company

A group of Austin tech and community leaders, many of whom supported Uber’s and Lyft’s Proposition 1, on Monday unveiled RideAustin, an Austin-only, nonprofit ride-hailing service that they say will launch by mid-June and will fully comply with the city ordinance that was at the center of the May 7 vote.

In the beginning, rides will originate only in the downtown area and at Austin-Bergstrom International Airport, said Joe Liemandt, the founder of Austin-based software company Trilogy and leader of a feverish two-week birthing process for the RideAustin app. The service’s geographic reach in Austin will expand only as the company’s corps of drivers grows, Liemandt said, to maintain good coverage that customers have grown used to while Uber and Lyft were operating in Austin.

The company will be “guaranteeing drivers an income to ensure quicker pickup times,” Liemandt said, a common startup strategy of other ride-hailing companies looking to establish business in a city. He said the nonprofit is recruiting Uber and Lyft executives to run the new business so that its instigators can return to running their own enterprises.

Liemandt said Sunday that various community leaders and tech companies have donated $4 million to the effort in cash and in-kind services, most of that software engineering. Liemandt’s participation is particularly striking, given that earlier this year he donated $20,000 to an unsuccessful effort to recall Austin City Council Member Ann Kitchen, who led the city push for fingerprint-based background checks of ride-hailing drivers that Lyft and Uber bitterly opposed.

But the day after Proposition 1 was defeated, as 55.7 percent of voters rejected an Uber- and Lyft-backed alternative law that would have eliminated that city fingerprint requirement, Liemandt began organizing a nonprofit option. He said that has included talking with Kitchen and other Austin officials who opposed Proposition 1, including Mayor Steve Adler, who touted the possibility of a nonprofit ride-hailing company in a news release just after the election. But Liemandt and Andy Tryba, the CEO of Crossover, a tech company that has done much of the work on the new app, said RideAustin is a private effort.

“There was a big fight, and the vote was had,” Liemandt said. “Uber and Lyft left. We are coming together to heal the wounds and move forward.

“If Austin wants ride-hailing, and wants it quickly, you have to have the whole community behind it. And a nonprofit is the best way to do that,” Liemandt said.

GetMe official irked

However, other alternatives to Lyft and Uber, who are still operating in Austin’s suburbs, also have come forward since May 7, including GetMe and Fare, and RideAustin will be competing with them.

Jonathan Laramy, a co-founder and the “chief eXperience officer” of GetMe, could not contain his frustration after Monday’s unveiling of RideAustin, talking generally of unmet promises. His implication: City leaders prefer RideAustin.

“Our only goal is to make sure the city doesn’t implode (in the wake of Uber and Lyft leaving), and we’ve been running into roadblocks,” Laramy said. “And now this morning you see why. … We can’t rely on anyone (other) than ourselves.”

Despite that, he said, GetMe has gone from 350 drivers on the road before May 7 to 3,000 as of Monday, with another 10,000 being processed.

New app promises transparency

Liemandt said RideAustin plans to lift some of the veil on how the young ride-hailing industry works. Uber and Lyft, locked in fierce competition with each other and political combat in various cities, have been averse to revealing their data. RideAustin, on the other hand, plans to be transparent, Liemandt said, sharing much of its ride and driver information with University of Texas researchers.

For instance, he said, researchers could determine how surge pricing actually works in terms of drawing out drivers and affecting customer wait times, or figure out if lowering rates (and thus boosting ride volume) helps or hurts drivers’ income. The information could also shed light on whether taxis or ride-hailing vehicles are safer, Josh Baer of the Capital Factory said in a blog post after the RideAustin announcement.

In the beginning, RideAustin plans to charge riders $1.50 a mile (after a minimum of $5 for shorter rides, comparable to GetMe, Uber and Lyft rates) and 25 cents a minute. For longer rides, Liemandt and Tryba said, that would put RideAustin rates between what Uber and Lyft were charging and the rates for GetMe and Austin cab companies.

Drivers will get 80 percent of the fare revenue, Liemandt said, comparable to Lyft and Uber in Austin, but he said the hope is that the nonprofit model will mean that the driver cut can be increased over time. RideAustin also plans to offer customers an option on the app in which all fares could be rounded up to the next dollar, with the added amount going to a charity that the rider would designate on the app.

RideAustin has applied for 501(c)(3) nonprofit status, he said. That means investors’ donations to the company would be deductible on federal income tax returns, Liemandt said, an advantage that the backers of RideAustin competitors will not have.

Drivers, demand are here

In the rush to fill the void left by Uber’s and Lyft’s sudden withdrawal after the election, GetMe and others have initially screened drivers with name-based criminal background checks rather than the fingerprint checks required by the city law passed in December. Those companies and the city have been helping drivers get fingerprinted, however, with the idea of meeting a city milestone of having at least 50 percent of drivers fingerprinted by Aug. 1.

RideAustin will use name-based checks at first, too, but will pay the approximately $40 it takes for drivers to have their fingerprints taken by the Texas Department of Public Safety. By the time rides begin in a couple of weeks, Liemandt said, the company will meet an earlier city threshold of having at least 25 percent of drivers fingerprinted, and it will comply with all aspects of the December law.

Liemandt said Uber’s and Lyft’s abrupt departure, and the strength of Austin’s tech culture, provided a unique environment for what he and his core group have in mind. While those ride-hailing firms had to come into Austin in 2014 and generate a substantial roster of drivers and a customer base, “we don’t have to do that. There are 10,000 drivers out of work.”

Uber and Lyft, he said, “left the factory behind.”

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