Who is John Galt? Uber, Lyft, Sidecar & the Culture of Deception

One answer to the above question is that Uber CEO Travis Kalanick thinks he is. Why else would he have t-shirts printed with the Uber "U" asking, "Who is John Galt?"

Kalanick obviously identifies with the hero of Ayn Rand's novel Atlas Shrugged. For those unfamiliar with Rand's philosophy, she sets the innovative genius against a society rife with democrats, communists, unionists, socialists, corrupt politicians, seedy journalists, the overweight, sleazy lawyers, environmentalists and their various shills.

I confess that I was a big fan when I was 19. Naturally, I identified myself as a potential fellow genius but beyond that I was attracted by the integrity of Rand's characters: Galt, Howard Roark from The Fountainhead, and Rand's persona Dagny Taggart. The books were not only about greatness vs mediocrity but truth vs lies.



It didn't take me long to realize that Ms. Rand was not one of world's great thinkers. (What can you really say about someone who claims to be a philosopher and calls Immanuel Kant, "a witch doctor"?) Her ideal world would look like late nineteenth century or early twenty-first century America under naked capitalism, only more so – a few rich, a powerless middle-class, the masses trying to earn enough to feed themselves. Nonetheless, the blunt honesty of her characters stayed with me as an ideal.

Be that as it may, Kalanick clearly sees himself as Galt's heir, as the great disruptor who frees his genius and society from corruption in the sacred name of innovation. As he famously put it in an interview,

“We’re in a political campaign, and the candidate is Uber and the opponent is an asshole named Taxi,” Kalanick said. “Nobody likes him, he’s not a nice character, but he’s so woven into the political machinery and fabric that a lot of people owe him favors .... We have to bring out the truth about how dark and dangerous and evil the taxi side is.” 

Anyone who has been following Kalanick's machinations knows who really should be called an "asshole" and how ridiculous and hypocritical his duplicitous proclamation is. While Ayn Rand would probably have approved of his price gouging, Uber-man really has little in common with Galt and nothing of the fictional character's integrity.

Kalanick isn't so much an individual as he is a venture capitalized corporation. Furthermore, Uber is in no important way different than Lyft or Sidecar except that the later two companies invented Uber's best product – the faux taxicab posing as a rideshare. During the California Public Utility Commission (CPUC) hearings on so-called ridesharing last year, attorneys from the fake taxi trio shared strategy and used basically the same arguments to justify violating any law likely to diminish their profit margins.

Travis and his associates have already bought (or are in the process of buying) the political machinery and favors of the powers that be in numerous locals with massive amounts of their venture capital. Kalanick is much less a disruptor than a corrupter and the "Google juice" he's been splashing around has tainted not only politicians and the press but a large swath of the general public including his drivers, symbiotic entrepreneurs and car salesmen. The corrupt politicians, seedy journalists, sleazy lawyers, and the various shills that Ayn Rand so detested belong to Kalanick's team.

Innovation, Innovation, Innovation

... is the word of the year and there are three types of innovation in question here: technological, marketing and product placement.

The Taxi App

There is no doubt that this app is a brilliant upgrade on previous dispatching systems. However, it wasn't invented by Uber. Several different people created variations of it at approximately the same time. I've personally seen a dozen of them. The major ones besides the apps of the faux taxi companies – Uber, Lyft and Sidecar – are the true taxi apps: Hailo, Taxi Magic and Flywheel (formerly Cabulous). They all connect a driver in a vehicle directly to a customer with an smartphone app.

It would be hard to say which app is better. Uber's is slicker and probably has the best network, at least in San Francisco. Hailo which operates in Europe, Canada, Japan and the East Coast probably has the most creative features. Flywheel, which follows all insurance rules and local regulations, is the only San Francisco app that offers prearranged rides to the airport.

You would think that, with all the advertising hype that Uber and Lyft and Sidecar  engage in, one of them would be the most popular. But that isn't the case in San Francisco – the birthplace of them all. According to Yelp, as of August 1, 2014, the most popular taxi app is Flywheel which is rated 4.0. Uber and Lyft score 3.5 and Sidecar brings up the rear at 3.0.

Not hard science but if Uber had come out number one you could probably read about it in the Washington Post.

A Taxi with a Taxi App is a Superior Product.

One reason cabs with taxi apps are still holding their own against Uber's attempt to destroy them is that a taxi app is more than just an app, it's a transportation service. The app doesn't just connect smartphones. It connects people and puts them in cars with humans who drive them through traffic to a destination.

A few years ago, when the faux taxis arrived on the scene, the  San Francisco Taxi service was admittedly inadequate. There weren't enough cabs when it was busy and it could be extremely hard to get a taxi in the outlying areas – which was why the faux taxis met with such initial success.

However, the innovative leaders of cab companies like Desoto saw the error of their ways and quickly retooled adding Flywheel and expanding their numbers of corporate customers. Flywheel now has 2000 cab drivers on their service and is as fast or faster than anyone else.

But what makes San Francisco taxis superior is the fact that they are safer, greener and have professional drivers.

In fact, many people are going back to using taxis because of the ineptitude of the drivers at Uber and Lyft. I hear a story like this one from a customer almost every shift,

"I live at 7xx Geary. The Uber driver took me to an address four blocks away. When I told him that it wasn't my apartment, he told that I wrong because his GPS said that he was in the right place. He refused to take me home."

S.F taxis also have million dollar plus liability policies that operate 24/7, workers compensation, safety measures like 24 hour live phone connections to their companies, cameras recording both inside and outside the cabs and a 311 number that passengers can call that connects to the police if necessary.

San Francisco also has the greenest taxi fleet in the country with 97% of the vehicles hybrids or low emission vehicles.

By contrast, what the faux taxis have is hype.

Marketing by Hype, Hype and More Hype: or what ever happened to Truth in Advertising? 

Many people think that Uber, Lyft and Sidecar were typical start-ups that were so eager to get their product out that they didn't think about regulations. Nothing could be further from the truth. They thought about the regulations first. Lyft's President John Zimmer and Sidecar's CEO Sunil Paul operated with bad faith – with deceptive advertising –  from the start and Kalanick soon joined them.

Zimmer and Paul deserve to take bows for being among the first to exploit the ideal of the "sharing economy" for their own personal gain. Their true innovation was the deliberate misuse and perversion of  words in order to avoid transportation regulations, taxes and insurance laws. They figured out how to "share" the profits while pushing the costs of their service onto their drivers, passengers and the public.

 To understand this, first look at what the companies are actually doing, then look at what they originally said they were doing.

A passenger uses an Uber, Lyft or Sidecar app to hail a driver. The driver accepts the ride, picks the person up and drives him or her to a location. The passenger pays a fee based on time and distance.  The driver gets paid 80% of the fee and the company keeps 20%. Both the company and the driver make a profit from the transactions.

In all fundamental ways, then, the services that the faux taxis provide work exactly like a taxicab, except for the fact that San Francisco taxis are legal, the drivers are trained and their vehicles are insured.

Lyft and Sidecar, however, initially claimed that by calling their business "ridesharing," a customer's payment a "voluntary donation," a driver a "community driver" and a customer "member of the Lyft or Sidecar community" the experience became somehow legally different. But, what really changed? Nothing. In fact, if you didn't give them a "donation" they wouldn't pick you up a second time.

Sunil Paul deserves a special hypocrisy award for giving speeches about how his "carshares" were saving the environment at the same time as he put a couple of thousand illegal cabs with no emission standards on the street – undoing by himself the gains against pollution made by converting San Francisco taxis into a green fleet.

These are legit businesses?

How deceitful, deliberately irresponsible and dangerous these people were (and are) didn't become clear to me until I applied to become a driver at Lyft and Sidecar in January of 2013. Both companies claimed to do thorough background checks, train the drivers and inspect the driver's vehicles but they didn't really do any of these things. Neither company asked for a social security number and Sidecar inspected my car by looking at a photograph that I uploaded to them.

As a former insurance underwriter, I was especially interested in reading the insurance contracts. When I asked to see one at Lyft, my interviewer, who had already hired me, became hostile and told me that only the CEO had a copy. I then e-mailed John Zimmer to ask for a copy. The next day I received this response from the Lyft Administration,

"We appreciate the time you've taken to explore the Lyft community. We approve drivers through an ongoing assessment of several criteria including customer service orientation. At this time, we are adding you to our wait list and may contact you in the future as the community expands."

Sidecar claimed to have a "Million Dollar Guarantee" that was "subject to certain conditions, limitations and exclusions, the details of which can be found in our Program Terms available from Sidecar upon request."... "The Guarantee is not insurance and should not be considered as a replacement or stand-in for primary automobile insurance. The Guarantee does not cover certain excluded losses."

When I tried to find out what the "conditions, limitations and exclusions" were I was given a classic run around as they transferred me to one person after another who wouldn't answer my questions. During the CPUC hearing in the spring of 2013, a Sidecar attorney tacitly admitted to me that the company had never had insurance.

In the year and a half since I went undercover, nothing has really changed except that all the faux taxi services now ask for a social security number – a fact for which I give myself the credit.

Uber, Lyft and Sidecar have been semi-legalized by the CPUC but allowed to regulate themselves, meaning that their actions are still essentially the same – expect that the CPUC didn't buy the b.s. about "carsharing" and labeled them as " a livery service."

Uber now says that their new drivers should take a driving course but does not require them to do so and a few months ago was inspecting vehicles the Sidecar way – by unloading car selfies. Sidecar says that they have a two-hour classroom training sessions (which sounds the same as the sort-of-class I took) and John Zimmer says that his drivers spend "30 to 40 minutes" driving with a "mentor" who also inspects the vehicle. I imagine that they are "mentors" because they are neither certified driving instructors nor licensed mechanics.

By contrast, cab drivers are required to take a one week course and pass a test before they can work. The class for limo drivers is seventy hours. Cabs are given major inspections once a year at the airport, the tires are inspected by drivers every shift and the brakes are checked regularly.

Still, the CPUC accepts the word of honor of Travis Kalanick, John Zimmer and Sunil Paul as to whether or not they'd done anything at all. Let me repeat that so you can digest it slowly... the CPUC accepts the word of honor of Travis Kalanick, John Zimmer and Sunil Paul as to whether or not they've inspected their cars or vetted their drivers. Nobody checks to see if what they say is true.

Lies of Omission

When I took up parachute jumping a time ago, I waved my right to collect liability insurance in case of an accident or negligence. I was given a paper with the clauses I needed to sign and a person stayed with me while I read it in order to explain anything that I didn't understand.

This was quite a different experience than that of the drivers and passengers of Uber, Lyft or Sidecar. For they have all waved their liability rights too – although I've yet to meet a driver or a customer who knew it.

How could they know it? They gave away their rights when they downloaded the apps and clicked "agree" in the appropriate space. And they were given no warning or indication that this is what they were signing. Even if they had wanted to read the terms or agreements, they would not have been able to so on a smartphone. The latest Uber agreement is 19 pages long in 12pt type and the good stuff is buried on page page 14. It's also hard to find the terms on their websites although it is there if you search hard enough.

The text is slightly different per company but they all make you sign away your rights to sue or collect liability in the case of negligence on their part or the part of their driver. Here's a short version from Sidecar,

"... Nor does Sidecar warrant, endorse, guarantee, or assume responsibility for any property damage to your vehicle, personal injury, up to and including death that occurs as they result of the ride or your use of the service."

It's not only the customers of Uber, Lyft and Sidecar who unknowingly sign away their rights but their drivers do so as well. This is the the final paragraph of Lyfts Limitation of Liability from July 2014,

"Lyft has no responsibility whatsoever for the actions or conduct of drivers or riders. Lyft has no obligation to intervene in or be involved in any way in disputes that may arise between drivers, riders, or third parties. Responsibility for the decisions you make regarding providing or accepting transportation rest solely with You. It is each rider and driver's responsibility to take reasonable precautions in all actions and interactions with any party they may interact with through use of the services. Lyft may but has no responsibility to screen or otherwise evaluate potential riders or users. Users understand and accept that Lyft has no control over the identity or actions of the riders and drivers, and Lyft requests that users exercise caution and good judgment when using the services. Drivers and riders use the services at their own risk."

Notice that the bold print (my emphasis) contradicts Lyft's advertising about background checks and safety screening. From the driver's standpoint, if they get attacked it's their problem. They can't even collect Workers' Compensation for injury like they would if they were driving a real taxi.

Finally, there is this passage from Uber,

"The quality of the transportation services scheduled through the use of the service or application is entirely the responsibility of the third party provider who ultimately provides such transportation services to you ... and that use the application and the service at your own risk."

The "third party provider" is Uber-speak for "driver." They use this ridiculous euphemism as part of their equally ridiculous claim that they aren't in the the transportation business. They set the rates for both the passengers and the drivers. They collect the money and pay the driver. They hire the drivers. They blackball undesirable passengers. They tell their drivers where the best places to pick up are and, if the drivers don't pick up a high enough percentage of the fares, Uber fires them. But Uber isn't in the transportation business. Right!

All this is uber-slimy but it's not unique. Every generation has had its snake-oil salespersons. The State of California has a law to keep people from being fleeced by con artists like Travis Kalanick, John Zimmer and Sunil Paul. It's Section 1542 of the Civil Code of the State of California which reads like this,

"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which known by him must have materially affected his settlement with the debtor."

I'm not a lawyer but, in this context, I take this to mean that someone who signed one of these "agreements" without looking at it or understanding that they were giving away their rights to collect liability for a company's negligence – would still have those rights.

It appears that Uber thinks so too because they also make the unwary app-downloader agree that,

"You expressly wave and release any and all rights and benefits under Section 1542 of the Civil Code of the State of California (or any analogous law of any other state) ... "

Lawyers tell me that this probably wouldn't hold up in court (If you hadn't read the agreement and there is no reason to think that your are signing away your rights, how could you knowingly sign away your rights to not sign away your rights?) but it would intimidate a lot of people. In any case, the text provides an answer to questions I've been asking myself since I first came across these charlatans.

Morality aside, how could they make themselves so vulnerable to legal actions?

It would cost money to have an actual mechanic inspect the vehicles but it's a standard cost for anyone in the transportation business. On the other hand, it would not cost the faux taxi companies money to require a driving course for new drivers or have them get fingerprinted. The new workers in any industry traditionally pay for these things themselves.

What it would do is slow down the hiring process and eliminate some of the felons they could otherwise put out on the streets. This was very obvious during my 3 minute interview at Lyft. It was seconded more recently in an article by John Brooks of KQED,

“It was like a factory,” said a 27-year-old male driver from Oakland. “I went in there and in a five-minute turnaround, I was an Uber driver.”

“I went down there and there were just hundreds of people signing up,” said Mikey, a 32-year-old UberX driver from the East Bay. “I see someone, he gives me the phone and asks if I saw the training video. He said, ‘You’re all good to go.’ ”

One thing that struck me was the refusal of Uber, Lyft and Sidecar to fingerprint anyone. It takes about two days to get the results back. John Zimmer gave a speech against fingerprinting at the CPUC hearings on ridesharing where he claimed as a reason the fact that "not everyone has fingerprints."

For once Zimmer wasn't lying. I looked it up. The condition is caused by a genetic mutation. According to researchers there are only FOUR FAMILIES ON THE FACE OF THE EARTH whose members do not have fingerprints.

Fingerprints are the only way you can actually tell if a person is who they say they are. (As for the four families – the lack of fingerprints should identify them.) From Zimmer's refusal to use fingerprints, I conclude that he and his pals would rather deal with an occasional assault on a customer or a reckless driving accident than miss out on the 20% the driver would be giving them in the meantime.

Uber, Lyft and Sidecar apparently think that their concealed and deceptive terms and conditions will protect them in most cases. For the rest, they'll force people to sue them. They've got the lawyers, the venture capital and time on their side.

Notes on insurance; or, is there a lie that Uber wouldn't tell?

Insurance is really pretty simple.

What you start with is the danger to a person and the cost of an accident.

1.There is a high risk or danger in driving a commercial vehicle, especially when transporting passengers because: the driver is under the pressure of time, usually drives during the most dangerous hours of the day or night, drives in heavy traffic and has to deal with many distractions such as talking to customers, figuring out the best routes, looking for the next customer or taking a dispatched call.

2. This is why personal liability policies all exclude commercial activity and won't pay if a driver uses his or her own car commercially. According to the Personal Insurance Federation of California whose members write the majority of personal lines auto insurance in California,

"... using a private vehicle as a livery service ... is clearly not covered under a standard policy; if an accident occurs, coverage would not exist."

3. There is no difference between a working taxicab and a TNC vehicle that is connected to a TNC app. Whether or not a customer is in the car is irrelevant. The vehicle is working commercially in either case.

4. From the standpoint of a pedestrian it is the same whether they are hit by a car a with or without a customer.

5. There is no greater risk when driving a customer then when the driver is empty and looking for a customer. If anything it's the other way around. The driver without a passenger is more likely to be distracted by looking for dispatched calls or street flags or speeding to get to an area where there is more business.

6. The amount of insurance coverage for a risk should be calculated by how much potential damage an accident is likely to cost – not by how much a company feels that they should pay. Given the costs of surgery and hospitalization anything less than $1 million is inadequate.

This is why taxi companies in San Francisco carry one million dollar liability policies that apply 24/7.

Uber and Lyft, however, want to make it complicated. They want to claim that there is a big difference between how much insurance is needed for a driver with a customer and a driver who doesn't have a customer but is looking for one. One Million Dollar insurance should cover the driver with a customer. But Fifteen thousand is good enough when a driver has no customer but is looking for one.

Are the cars that much lighter without a customer?

Apparently not light enough. When an Uber killed Sofia Liu last New Years Eve the driver didn't have a customer and was looking for one. The bills for this accident are calculated to go over a million dollars.

But, Uber not only doesn't want to pay for the Liu accident but doesn't want to pay for insurance against any future accidents of this kind either. See this comment from an Uber attorney given during the CPUC hearing last spring,

"Contrary to information circulated by certain interests, personal insurance companies have covered incidents that have occurred during period 1." (7) (Period 1 is the time when a driver is looking for a customer but doesn't have one).

This contradicts the policy of the PIFC stated above and information that I've gotten from 14 different personal insurance companies – all of whom said that they would not pay if the driver was working commercially. And, the Uber lawyer makes the statement without giving a concrete example except for footnote (7) which reads,

"For instance, the tragic accident in San Francisco on New Year's Eve that occurred during such a period, the driver's insurance company has offered up the limits of the driver's personal auto policy."

"The tragic accident" was the killing of Sophia Liu and the Uber attorney's statement is a flat out lie.

According to the Liu family attorney, Christopher Dolan, the insurance company who covered the Uber driver did not pay the Liu family and did not offer to do so.

Just to clarify the sequence: (1) One of Uber's unvetted drivers negligently kills a child and severely injures other family members. (2) Uber claims that their insurance doesn't cover the accident (although the wording of the CPUC's ruling on insurance could easily have been interpreted the other way) and refuses to pay. (3) Uber then lies during comments at the CPUC hearings in order to make certain that the CPUC won't rule to extend coverage for the next family that is destroyed by an Uber driver.

Uber, Lyft and Sidecar, if nothing else, are consistent. They are as callous to their own people as they are to the public. Despite knowing full well that their drivers will not be covered by personal liability or collision insurance if they cause an accident, Uber, Lyft and Sidecare continue to tell their drivers that personal liability insurance is "all you need."

Let me now repeat the question: Is there a lie so sleazy that Uber wouldn't tell it to improve their bottom line?

Who is driving the car?

Among the more absurd claims that Uber spokespersons and Lyft President John Zimmer repeatedly make are that their background checks are "stricter than that of taxicabs."

A good response might be to ask them:  Why wasn't the Uber driver who killed Sophia Liu driving a cab?

The answer is that a taxi background check would have turned up his reckless driving record.

In any case, here's a sample of what you get from cattle calls without fingerprints.

Numerous reports throughout the county like this on one August 27, 2014 at NBC have turned up things like this:

San Francisco Police Department Commander Richard Corriea said that,

 "In just the last three weeks, airport officials at SFO identified more than 295 TNC drivers without permits, and some who did not even have licenses. They also found drivers breaking their own company’s rules by borrowing cars or sharing company issued phones with drivers not approved by the TNC. (My emphasis.) Officials at Oakland, San Jose, and Los Angeles airports also issue citations to TNC drivers without permits. LAX police have written over 200 citations to UberX drivers in the last four months for illegally picking up passengers at the airport."

"Police said that some of the UberX drivers they have encountered have criminal records. One driver was a registered sex offender and was at the airport to pick up a 22-year-old woman who was traveling alone." (My emphasis.)

"Police warn the public not to use the ride service companies... A public that they feel, may not even realize includes drivers breaking the law.

“You put yourself at risk,” said Corriea. “You don't know whether the driver has a license or not, whether that car is insured, who that driver is.”

The lack of real backgrounds checks and accountability make Uber and Lyft magnets for people with bad driving and criminal records.

Where there is smoke ...

If you look online, there have been numerous incidents of violence and abuse involving mostly Uber drivers but a few from Lyft as well. These include:

• The scary and ridiculous - like the Uber driver who locked a woman in his car  so he could steal her phone and give himself a five star rating.
• The creepy – like the Lyft driver stalking his passenger.
• The frightening – weird harassment.
• An alleged assault on a pedestrian by a Lyft driver.
• An alleged homophobic verbal and physical assault by an Uber driver.
• An Uber driver charged with fondling a customer in Chicago.
• An Uber driver arrested for sexual assault in Washington D.C.
• An alleged kidnapping and rape by an Uber driver in L.A.
• Another Uber driver arrested for raping a teenager  in Washington D.C.

Unfortunately, I could go on. Considering how short a time the faux taxis have been operating there have been an awesome amount of these attacks.

To be fair, taxis are not free from sin either as this writer for RYOT so subtly contends. The writer gives two examples: a New York driver who committed his crime in 2011 and a Santa Cruz driver who actually was not a cab driver but an illegal cab driver who had been refused a taxi license three times. In short, yes it is Uber's fault that assaults by Uber drivers keep turning up in the press and it will be as long as Uber refuses to do thorough background checks.

Of course, no matter how well a background check is done there is no guarantee that you won't have problems. Some violent people fly under the radar. The world appears to be full of serial killers who everybody thinks are nice guys. Some people might not be violent except in certain situations. The job is naturally aggravating, customers can be abusive and this can lead to aggressive behavior.

What responsible business people would want to do is make certain that their service is as safe as they can possibly make it. But, as I think I've pointed out – Uber, Lyft and Sidecar are not run by responsible business people.

Uber gave this response to reports of a woman who claimed she'd been chocked and assaulted by an Uber driver,

"... our understanding is that an argument broke out between the driver utilizing Uber’s technology and one of his passengers - an argument that was provoked by the passenger."

That's possible. I've driven a taxi on Friday and Saturday nights for more than 20 years and I've been in innumerable arguments started by customers. In fact, I've been punched, spit on, hit with a bottle and threatened with death. But I have yet to put hands around any one's neck or so much as touch a woman. The only time I've ever touched anybody was to either block a punch or push an assailant harmlessly out of my cab.

Travis Kalanick used this incident as a forum to blame "the media for thinking that Uber is 'somehow liable for these incidents that aren't even real in the first place.' Kalanick also stressed that Uber needs to 'make sure that these writers don't come away thinking we are responsible even when things go bad.'"

Of course, what Kalanick was referring to is the Limitation of Liability that Uber makes people who download the app sign without knowing it. I can't wait for the suit on this one.

Although John Zimmer and Sunil Paul are less obnoxious than Kalanick, they are on the same page when it comes to the safely of their passengers, drivers and the public. It's the one that reads: "We don't give a fuck!"

It was in that spirit that the greed-driven threesome used their hoards of lobbyists and Internet trolls to kill bill AB 612 when it was recently presented in the California State Legislature.

"The bill would have required the companies to get driver background checks from the state Justice Department and driving record information from the DMV. " Those agencies will only provide that information if the legislature requires them to. "It also would have implemented period drug and alcohol screening, and barred the companies from hiring drivers within seven years of felony convictions for such crimes as fraud, forgery or larceny.

All those requirements are identical to those for taxi and limousine drivers. Furthermore, the same background checks are used by the NSA and the FBI. It's the best in the business.

An interesting question is:  Why would a legislature charged with legislating public safety allow tens of thousands of unvetted drivers (of potential felons and reckless drivers), to transport the public of the State of California? Or, is that a question that answers itself?

A query for another day.

In the meantime, if you want to safely get to your destination – take a taxicab. That's what I do when I'm not driving one.