FLYWHEEL TAXI SUES THE CPUC

Flywheel taxi filed a lawsuit in Federal Court last week against the California Public Utilities Commission (CPUC) for unfair business practices.

The main complaint is the "uneven manner" in which the CPUC is regulating "e-hail taxi companies (i.e. Uber, Lyft & Sidecar). "The CPUC," the complaint asserts, "in-behind-the-door negotiations allowed these services to obtain a state license that they have since used to circumvent all established municipal taxi rules"

"Flywheel Taxi’s suit seeks injunctive and declaratory relief against the CPUC for the CPUC’s assertion of jurisdiction over e-hail taxi companies, which has prevented municipal agencies from applying the same rules to e-hail taxi companies that are applied to traditional taxi companies, resulting in an unfair two-tier system of regulation that has created an unlevel playing field for on-demand transportation companies."

Hansu Kim (photo), President of Flywheel Taxi, said,

“Calling these new taxi services ‘ride-sharing’ is the height of irony. It’s a type of Orwellian doublespeak intended to make people feel good about them. I mean, who is against sharing? But there isn’t any sharing going on. These are venture capital backed commercial businesses trying to skirt regulatory requirements. This lawsuit is intended to make sure everyone gets to compete while playing by the same rules.”

In a telephone interview, Kim clarified this by saying, 

"Taxicabs are being treated unfairly in terms of rules that we have to follow compared to the e-hail taxi companies ... regulators either have to treat us equally under the law – where we all are regulated similarly – or, if they want to deregulate the industry, then they have to deregulate all of us." 

Flywheel is not suing for money but rather a change in laws.

"All we're asking for," Kim says, "is to be able to compete on an even playing field. ... If we have that I know we can succeed. ... I'm not afraid of technology or new services or competition – I'm all for it. This is about making sure that they have the same costs and provide the same insurance and standards of safety that we do. Even a company like ours that is incredibly innovative and progressive is not going to thrive in an environment where the competition is allowed to endanger the public with cut rate insurance, 3rd rate background checks, phantom vehicle maintenance and zero driver training."

Regulate all or regulate none," Kim concluded, "but don't regulate some."

For a list of regulatory differences between e-hail taxis and real taxicabs, and a copy of the suit – click below.

Thoughts on Flywheel/Desoto

Desoto is changing its name to Flywheel and within two months the old blue & white Desotos will all look like the above pic. The first cabs are already on the street.

Flashier, no?

Brilliant, yes!

The new color scheme acts as an advertisement for the app and the app is advertisement for the company.

However, a bit of confusion and hostility surrounds the change.

First the Confusion

Drivers at other companies who use the Flywheel app are apparently worried about losing rides. They shouldn't be.

Part of the agreement between Flywheel management and Desoto Owner Hansu Kim is that that orders will continue to be dispatched in the same way that they always have – the ride goes to the closest cab regardless of company.

What Desoto is counting on, according to part owner Matt Gonzales, is an "upsurge of advertising" that will cut into the TNC's market share and hopefully spread the wealth to everyone.

There some evidence that this is already happening. According to former Flywheel manager Sachin Kansel, the number of Flywheel orders has gone up six times over the last year. 

Flywheel also has recently picked up several investors and a new CEO Rakesh Mathur who intends to use the money to advertise and expand the Flywheel brand across the country.

In addition, former Uber and Lyft customers are coming back to Flywheel because the TNC drivers are generally inept and don't know where they are going. The refusal of Uber and Lyft to fingerprint their applicants or train their drivers guarantees a continued flow of thugs and incompetents into the future. 

As Flywheel becomes a more widely known brand we'll be getting more and more riders back – plus new riders who can now get cabs because of Flywheel in neighborhoods where they couldn't before.

In addition, Hansu Kim says that Flywheel is working on a new version of the app that will do things that Uber and Lyft apps can't. A current example of that is the ability to make advance airport reservations.

Now the Hostility

Luxor and Yellow Cab companies don't like it. Well ... of course they don't. The idea is bold, innovative and creative. As the leading dinosaurs of the taxi industry, John Lazar of Luxor and Nate Dwiri of Yellow have been doing everything they can to help themselves, and the industry, become extinct.

They are the ones who killed Open Taxi Access over four years ago. As you might recall, the SFMTA had allocated $405,000 to set up a universal app in all the taxis and John Lazar reputedly went backdoor to his former school mate and then buddy, Major Ed Lee, causing the measure to mysteriously disappear from the MTA's agenda.

At the same time, Yellow was feverishly holding back radio orders so that they could petition for more cabs. Let me spell this out: They were deliberately giving bad service so that the City would give them more medallions.

When Uber et al attacked and the dinos finally realized that taxi apps were the future, instead of embracing Flywheel as the de facto universal app, Dwiri had a relative design a Yellow app (that works about as well as the old Yellow dispatching system – that is to say, badly), and Luxor continued to back Taxi Magic – a dinosaur in its own right.

Even to this day, when Yellow can't begin to fill its shifts, they still keep drivers waiting two or three hours to start work so that Yellow can extort more money in tips. That there might be a relationship between their treatment of their drivers and the dwindling numbers of same has apparently never occurred to Yellow management.

Whatever – If it hadn't been been for the geniuses at Luxor and Yellow, Uber and Lyft would never have taken the market-share that they have.

BTW – Uber came out with a "study" that saying they did $500 million in business in San Francisco last year while the taxi industry only took in $140 million. But Flywheel calls this bullshit (don't blame me for the crudeness. I don't use such words – in print.) The actual figure should be $400 million for the taxi business.

A Few Problems

One is that the Flywheel paint job does not make it clear that the taxi also takes flags and credit cards. In addition, the cabs I've looked at don't have the advertising space on top. That space could be used as part of a campaign for Flywheel/Desoto and against Uber – could be much effective than a bus because taxies go more places.

Another is that Flywheel has a website and blog that is slick and up to date but, as an advertising tool,  could be more effective.  The contrived pic in the blog makes it look a little too much like Lyft light.

There are also continuing problems with the driver support system such has holding drivers off the app for various minor reasons. I personally am not sure what all their rules concerning accepting orders and cancellations are.

Sachin Kansal and Steve Humphrey have moved on ("happily" they say – Humphrey upped his investment in Flywheel). Therefore, it seems a good time for the new management to meet with the drivers and take a look at some of the policies that might be changed, clarified or improved.

A Conversation with Desoto President Hansu Kim

I was about to publish an interview that I'd had with Desoto Cab President Hansu Kim awhile back when local journalist's came out with the story that Kim was thinking of turning Desoto into a sedan service – one writer said that it might happen in as little as 90 days.

Mr. Kim denied that he said he intended to convert to a sedan service in  "90 days." Only that he could convert in 90 days if he had to. But has "no intention doing so."

What he was doing was giving an "if" scenario.

"What I'm saying is that the taxi business as we know it will not be in existence in 18 months 'IF' the industry continues to be deregulated as it is."

"I don't believe that the taxi business will ever disappear but it could be that full service, dispatch-centric companies will no longer be in business as they are today."

"My feeling is that in a deregulated environment, it would be a race to the bottom."

Aside from usual sensationalism and inaccuracies that one has come to expect from the local media on the subject of  taxis, the coverage of Kim's statements lack context and understanding of what deregulation of faux taxi services like Uber x really means. What Kim and the other cab companies are spending money on is public safety.

Uber and the rest are endangering the public by cutting corners. To use a metaphor from the construction business I grew up in, what they are doing (not carrying proper insurance, not fingerprinting drivers, not guaranteeing the safety of passengers or pedestrians) is the moral equivalent of pouring sand into the foundation of a building in order to save money on concrete.

Electronic Taxi Access

Kudos to Director Christiane Hayashi. For over thirty years cab drivers have wanted a universal dispatching system in San Francisco. Thanks to the Director, this dream is finally being realized.

Of course such a system was really impossible thirty years ago because the technology for it didn't exist. And, while said technology has existed for the last five years or so (Remember Open Taxi Access?), the political landscape was not ready for such a venture. To spell this out in plain English - the good ol' corrupt boys' network kept it from happening.

But, thanks to Hayshi's persistence in overcoming hurdles  (including the MTA Board's indifference, opposition from Luxor and Yellow cab companies, mindless personal attacks, cab driver paranoia and the Byzantine weirdness of the MTA) the idea is about to come to fruition as Electronic Taxi Access (ETA).

Under ETA, all apps would be required to show all the available cabs in San Francisco thus allowing the customers to choose the closest taxis on their smart phone apps. The benefits of this have been immediately obvious to every customer I've discussed the subject with but I'll spell them out anyway.

The customers will no longer have to guess which company (or companies) to call or hail because they will able to know what cabs are nearest to them. The taxis will be color coded by company so the customers can also select companies that they prefer. Coupled with pre-tipping or similar perks this should pretty much insure that the customers will get a ride in the shortest possible time.

The drivers will get the similar benefits. A Desoto driver will no longer have to go back downtown empty from the Richmond or the Sunset because a customer one block away from him or her called a Luxor and visa versa.

The balkanization of the cab industry into competing dispatching fiefdoms is one major reason that Uber et al have had such an easy time taking away our business. Drivers have been reticent to go into the neighborhoods because they have been afraid of no-goes caused by customers calling several taxi companies at once.

Electronic Taxi Access will help make us competitive again while improving service to the neighborhoods.

President Hansu Kim of Desoto Cab, on the other hand, is concerned that his company might lose its distinct brand with this system. While he agrees that all electronic hailing should be linked, Desoto is developing an app of its own which he thinks will give the public better service than anybody else in the business. He does not think that his app should be required to show taxis from cab companies that have invested nothing to improve service.

I wonder if this is as serious problem as he thinks it is? The color coding should distinguish Desoto from the other companies and, if his drivers continue to give superior service, customers will select them over the opposition and they should continue to make more money and want to stay with Desoto. If his app is really good customers will go to it to choose his cabs first. In addition, Desoto drivers will have the benefit of getting rides from other apps.

A Request for Information was put out a few months ago and the bid to create ETA was won by Frias Transportation Infrastructure (FTI) of Las Vegas.  FTI was chosen over CMT,  Digital Dispatch, Electronic Connect, Flywheel and Veriphone.

Single Operator Permits Hit the Streets

Dave Schneider, who is the thirteenth driver to be issued a Single Operator Permit (SOP), stands next to his taxi.

Schneider has driven cab for over thirty years in San Francisco but never put his name on the Waiting List. He sees these permits as correcting an injustice in the original Prop-K legislation. (For more of his thoughts on the subject see the end of the post.)

Dave seemed so excited that he reminded me of a fifteen year old who had just bought his first car and was trying to be cool. He says that he intends to drive Saturday, Sunday and Tuesday nights so that the other drivers of the cab will have some decent shifts. It's the first time in his career that he's had the choice to work when he wants.

The Evolution of an Idea into Reality.

The idea of "Peak Time" taxis has been around for at least as long as Schneider's been driving. It was given new life by driver and blogger John Han who first proposed "Single Operator Permits" during a Town Hall meeting a few years ago. Deputy Director Chris Hayashi liked the idea and ran with it. Why? It offered a solution to the eternal San Francisco problem of too much business at certain times and too little at others.

Han, Hayashi and others at the meetings originally proposed that the SOPs should be owned like an affiliate by a single driver who would be allowed to work a maximum of 60 hours per week. There would be no designation of what hours the driver should choose but it was assumed that he or she would naturally self-select to work busy times like Friday and Saturday Nights or conventions and avoid the slow times.

During the Town Hall meetings in the spring of 2011, the concept was modified. Hayashi thought that SOPs would be a good way to reward drivers like Dave who had not put their names on the List but nonetheless had driven cabs for 20 or 30 years. It was pointed out that older drivers might not want to put in 60 hours a week so the possibility of a second driver to share the cab was added.

The SOP's happened to mirror a longtime plan of SFMTA Director Malcom Heinicke for "Peak Time" taxis. The main difference was that Heinicke wanted the cabs to be driven at fixed times. There was some back and forth between the Director and the people at the Town Hall meetings. The argument that peak times actually fluctuated and changed with conventions, sporting events and so forth carried the day and 50 "Single Operator Permits" were approved by the SFMTA last summer.

The Current Plan: A Different Kettle of Fish.


The SOP's have morphed into a very different program.

1. They now have a single permit holder and will be run as gates&gas instead of affiliates.
2. The vehicles will be run for 90 hours instead of 60.
3. The vehicles will be bought and owned by color schemes.
4. The color scheme must be able to produce electronic trip data.
5. The color scheme will fill the shifts that the permit holder doesn't drive.
6. All conditions that apply to a regular medallion will apply to these permits.
1. The permit holder must drive 800 hours per year.
7. The permits are for a term of three years with an option to renew for three years. 
1. The permit holder and the SFMTA both have the right to reject renewal.
2. If the permit isn't being used properly, the MTA can terminate at any time.

What Happened?

I interviewed MTA Investigator Mike Harris who is running the program. He said the changes were made because:

1. None of the older drivers wanted to buy the cars themselves.
2. None wanted to work as affiliates or choose their own drivers.
3. The hours expanded from 60 to 90 hours because the cab companies complained that they couldn't make a profit at 60 hours.

When I pointed out that this defeated the purpose of the SOPs, Harris disagreed. He said that most of the old school drivers didn't want to drive at peak hours. They wanted to drive Sundays, Mondays or Tuesdays and leave the busy hours (along with the drunks) to younger drivers.

One Beauty of the Taxi Business ...

... is that if you do something for one group of people everyone else complains.

1. Company owners and managers don't like the SOPs because they think that they won't be profitable enough.

At Green Cab, Treasurer Joe Mirabile said that he didn't know how they were going to make money off the SOPs. On  the other hand, Green didn't have to buy new cars for the first two permits that they put out because the company recently lost a couple of medallions. All they had to do was invest in a new paint job.

Desoto Cab owner Hansu Kim said that the SOPs would make little or no profit.

"They should either have put them out with one driver/owner for the 60 hours or just given the older drivers regular medallions," he added.

However, he also said that he would pay $1,000 a month to any Single Operator Permit holder who ran the taxi through Desoto.

2. Non-medallion driver and TAC member Tone Lee, who had strongly supported the original plan of one or two drivers and 60 hours, is very upset by the expansion to 90 hours.

I ran into him at the Mariott Marquis on Thursday and he talked about how slow it was on a night that was supposed to be busy and predicted that the SOPs would have devastating effect on the Monday night business. He also thought that it was unfair to give out the permits by A-card seniority rather than to people on the Waiting List and he feared that the permits would eventually be turned into full time medallions.

Of course Tone has a right to his opinions but I think he's wrong on one of his complaints.

He said the MTA was giving the permits to former medallion holders who had already sold their medallions.

I put the subject to Mike Harris who said that two former medallion holders had applied but he turned them down. He added that allowing former medallion holders to get permits, "was not the plan and is not the plan."

He said that anybody who knew the name of a former medallion holder who was given a SOP should contact him at (415) 701-5493.

If you don't feel comfortable talking to Mr. Harris, you can send the name to me and I'll pass it on.

Lee is organizing a protest for the MTA on Tuesday July 17th at 1 PM. Refreshingly, he's asking the drivers NOT to drive around City Hall and NOT honk horns. He just wanted drivers who are upset by the SOPs to show up and speak.

If you're in favor of the SOPs, you should also show up and say your piece.

My Take

I have mixed feelings. Like Mr. Lee I liked the original plan - especially the 60 hour limit. But, I also like the idea of rewarding older drivers who have driven for years but aren't eligible for an earned medallion. Besides, 90 hours is 50 or 60 hours less than cabs are ordinarily driven. This means that drivers stuck with the really bad hours are unlikely to see much new competition.

I sympathize with the drivers who didn't sign up on the List because the only reason that I put my name on it was that I was living with a woman who used to greet me every morning by bitching,

"Did you put your name that list yet?... No! ... Boy are you stupid!"

I finally caved just to shut her up. If I hadn't had the good/bad luck to be hooked up with this Harpie, I'd be in the same situation as Mr. Schneider. I'm happy that these guys are finally getting a little something after all the the contributions they've made to the business.

As for the people on the List ... well, unless the MTA screws them (not a possibility to be discounted) in the final plan, they should be able to either earn their medallions or buy them.

I don't like the expansion of the hours but I think that fifty cabs added on Monday or Tuesday peak times aren't a real problem. Increasing the fleet by 3% isn't going to break anybody's bank.

The real reason that it was slow on Thursday (and almost every other day) are the hundreds of illegal limos and taxis either racing us down the streets or bribing doorman so they can steal our fares. My number one priority is to encourage the City and the MTA to stomp on them - while our medallions still have some value.

In the meantime, congratulations to Dave and the others.

Dave Schneider	10:45 AM (19 minutes ago)
to Dave

I'm appreciative to the SFMTA and also to Chris Hayashi who I heard was one of the prime architects of the single operator medallion.  It seems to me it CORRECTS AN INJUSTICE IN THE ORIGINAL DRAFTING OF PROP K by then Supervisor Kopp. The way Kopp wrote it and, as amended  by Daly Ma and subsequent legislation,  DID NOT CREATE A TRUE SWEAT EQUITY BASED CRITERIA for medallion qualification - you had to sign up in addition to doing the work.     But many worker drivers didn't sign up for whatever reason and, while there may be some truth in "you snooze, you lose," still they did THE REAL WORK carrying thousands of passengers, driving lots of hours, shifts and miles.     They did the work by the seat of their pants.    Now with the single operator medallion, there's a chance the working poor might be able to move into at least the lower middle class and even pay off a few bills in what remaining time remains for these often elderly and impoverished drivers for whom the so called American dream has been, more often than not, a real social and economic nightmare.    In one San Francisco appellate court decision awarding cab drivers workers' compensation, the court compared cab drivers to sharecroppers working in the fields.    Today the taxi worker struggle in many fields continue and the the single operator medallion is one drop of welcome rain in the parched taxi driver fields.  Not only single operators, but all drivers should have fair working conditions, real wages and benefits beyond "independent contractor" poorhouse status. Dave S.

Back Seat Terminals: Demonstrated

Athan Rebelos (photo, person) and Hansu Kim (photo, hands) were kind enough to show me the VeriFone PIMs at Desoto Cab Thursday.

I now understand that I made some mistakes in my previous post on the subject. For one thing, the terminals will broadcast ABC news feeds so, indeed, they can be described as TVs. (I'll mention another misconception later in the post.)

I came as a skeptic. I wasn't convinced that customers would tip more and I was very concerned about drivers not being able to control the sound.

In fact, I felt that, if I couldn't turn off the sound, I didn't want the damn thing in my cab.

The truth, as it turns out, isn't quite so simple.

• There are sound control arrows on the front seat terminal that Athan is pointing at in the picture and the driver can turn the sound all the way off.
• The ads and the public service announcements will NOT have sound.
• However - the caveat - the customer can turn on the sound for the news if he or she wants to and it overrides the driver's control.

But, the speakers are on the back of the suicide seat so they point away from the driver, meaning that the sound is fairly low when it is on. Furthermore:

• The system resets with each new fare so the sound should not remain on after a customer leaves.
• From talking to customers who have used the terminals in NYC, the first thing most of them do is turn off the sound if it is on anyway.
• So very few customers are likely to turn the sound on at all.

Conclusion: the sound at worst should be a minor annoyance.

What about the 5%? Will the tipping prompts really give the drivers more money?


The terminals have prompts that encourage the customers to tip well. If the fare is low (under $10?), they are prompted to tip $2, $3 or Other (photo).

On longer rides, the customers are prompted to hit 20% or Other. In addition, the 20% is calculated to include any extras such as airport or bridge tolls.

Hansu Kim says that studies have shown that customers tip up to 30% higher than they would without the prompts.

I don't know if I quite buy this. After all they are studying a novelty. Once the newness wears off, the tipping will probably level off as well.

On the other hand, the natural thing to do with these screens is to hit the $2 or the 20% buttons.

There is also the fact that (at VeriFone anyway) the customers do not have to sign the receipt for under $25. In fact, according to Mr. Kim the minimum for a signature is now going up to $50. This makes taking a credit card almost as fast as cash. The customers like this and, if the customers are happy, they tend to tip more.

In short, tt's hard for me to see how the tipping on these terminal would not more than the cover 5% drivers are to be charged for cashing the receipts - even in a worst case scenario.

For drivers at Town Taxi and Checker, even covering the 5% would be a huge improvement by itself. And, who knows? The drivers (other than Green's) at Citywide Dispatch might even start accepting credit card calls.

Why should the drivers be charged at all?

1. As I've mentioned, many of them are already being overcharged now.
2. The use of credit cards is expanding rapidly with huge costs to the companies. These PIMS will allow them to recover their costs.
3. The drivers should make more money.
4. The public should be better served.

The Merchant Accounts


There have been some complaints from drivers about these accounts - mostly due to the delay in being able to use the funds.

The normal hold on the money is 24 hours to 48 hours. On three day weekends, this can mean up to 4 days without the drivers being able to touch their money.

However, Hansu Kim says, that with a month or two, VeriFone will start "instantaneously crediting the driver's accounts," meaning that there will no longer be any hold on the funds..

It should also be kept in mind that these accounts have been set up so that the taxi companies can't touch the money and thus the unscrupulous companies amongst them will be unable to misappropriate the funds.

Advertising Revenue

As previously reported, 90% of the revenue will go the vendors and 10% will go to the drivers. The companies will NOT get a share.

On top of this, it will probably take three years before anybody makes a profit off the revenue. VeriFone estimates that it will take that long for the advertising money to cover the installation costs.

One More Thing


Contrary to rumor (spread partially by me) Hansu Kim says that he does not own shares in VeriFone. He says he is a paid consultant for the company and will neither receive a commission nor in any way make a personal profit from the sale of the units.

Kim also says that VeriFone will not hold a monopoly on the systems. CMT (being used by Luxor) and Wireless Edge will also be involved.

TAC 3-14-2011 Part 2

The rough draft of the TAC report on the Pilot Program was put together by Council Chair Chris Sweis (photo) after going through more than 12 hours of tapes. For this he deserves an award.

However, as councilor Carl Macmurdo and others pointed out, Sweis forgot to include Medallion Holders as one the four primary participants in the S.F. taxi industry. (A Freudian slip? Sweis wouldn't be the first owner of a taxicab company to wish that medallion holders would disappear. ) The Chair admitted that it was an oversight and promised to include a section on medallion holders in an amended draft at the next session.

As for the rest, I simply want to deal with a few points of the draft. You can read the full text in TaxiTownSf.

The discussions at TAC were mostly about the effects on Taxi Companies and Drivers on the waiting list.

1.The major effect on companies was the change from Gates and Gas to Affiliate Leases.

• In 2003 there were few cabs operated on as Affiliates.
• By 2010 more than half the taxis were affiliates.
• 56% of the medallions purchased during the pilot program have chosen to become affiliates.

Sweis and others see this as a negative.

• G and G operations, according to Sweis, "provide greater control over vehicles and drivers."
• Loss of G and G medallions "will reduce company revenues and quality control."
• Companies are losing taxis to Affiliates.
• Experienced drivers are losing good shifts when Affiliates replace them with less experienced drivers.
• Which "would lead to a decline of taxi service to the public."

Driver Tone Lee (photo) disputed this claiming that Affiliates and LTLs did a better job because the drivers worked harder and took better care of the cars that they, themselves, purchased.

Gratchia Markanian, the head of Checker Cab, made similar points and predicted that all taxis would someday be Affiliates.

Hansu Kim (photo), on the other hand, who has been strongly in favor of Affiliates, reversed his position and said that taxi companies needed gate and gas arrangement to be profitable. Coincidentally, Kim recently purchased Desoto Cab.

Councilor John Lazar of Luxor Cab said that the frozen gate rates had "killed gates and gas" arrangement. He also said, as he's said before, that new buyers couldn't afford to work under gate and gas because their loan payments were too high.

I have a few problems with these arguments - namely that neither one of them appears to be true.

• The payments on a 15 years loan are $1,798 per month. The lowest amount that a GG medallion holder is paid is $1,800 per month and the highest is $2,400 per month. In addition a medallion is worth $5,000 to $10,000 per year in better shifts etc. What can't they afford?
• If the cab companies are so strapped for cash, how come they are engaging in medallion bidding wars?

Companies are currently offering bonuses as high as $5,000 and medallion payments as high as $2,400 a month to wrest medallion away from each other. If they're so broke, where are they getting the money for their campaigns?

In the end, they passed a motion by 10 to 4 to have all cabs that are awarded to drivers on the list to be worked as Gates and Gas for the first three years.

Next: The effect on Drivers.