Sunil Paul, John Zimmer and the Art of the Lie

While Sunil Paul (photo, left) certainly deserves credit for creating the original lies, imaginary factoids and false advertising that helped peddle his product to a misinformed public, it would be remiss of me not to give Lyft President John Zimmer (photo, below) his share of the credit for fraudulent marketing – especially in light of the fact that Zimmer appears to be succeeding where Paul failed.

Indeed, it's hard to draw a precise line where one high-tech shyster starts and the other leaves off. If one of them came up with new scam, the other would soon borrow and use it himself. In the end, they both have imperiled the public with similar bogus claims.

Paul rightly takes the credit for:

• spuriously using the word "rideshare" to describe his faux taxi service.
• falsely calling Sidecar's fares "donations" then blackballing any passenger that didn't donate.
• being among the first to redefine a "sharing community" as being an anonymous group where one person keeps all the profits while others in the community take all the risks and pay all the bills.
• Inspecting vehicles to be used as Sidecars by having the new drivers upload a photo of their vehicle.
• taking the lead in Greenwashing by claiming that putting out thousands of taxicabs with no emission controls would help reduce green house gases.
• creating a smokescreen (deliberate bad pun) by joining numerous environmental organizations to hide the fact that his company was a major polluter.
• telling the local mainstream media's "journalists" that SideCar carried a "Million Dollar Guarantee" so that these dedicated, in-depth "investigators" wouldn't bother to investigate and thus discover that Sidecar actually carried no insurance at all.
• telling his own drivers that they didn't need to carry commercial insurance on their own SideCar vehicles which meant that they would be uninsured in an accident – as of course would their customers. 

John Zimmer aped most of Sunil's spins and added a few twists of his own.

SideCar Bites the Dust

SideCar CEO Sunil Paul (photo) left the vulture capital scene with a significant quote,

"We are the innovation leader in ridesharing ..." said Paul.

What makes this statement significant is that, even while going down the tubes, Paul couldn't turn off his hype machine.

He was not and is not an "innovation leader" in "ridesaharing." Not SideCar nor Lyft nor Uber have had (or have) anything to with "ridesharing" except to use the word for the purposes of double-talk, false advertising and fraud – fields in which Sunil Paul has indeed excelled as an innovator.

Ridesharing Explained

As far as I know the only real ridesharing company in California is 511.org which is a government run non-profit. The dual purpose of 511.org is fight pollution by taking vehicles off the street and allow drivers to save money by sharing the costs of a trip with their riders. In their ads for drivers to use the service, 511.org writes:

“Carpooling (i.e. ridesharing) can save you money by dividing the driving expenses between members of the carpool. You can split the costs evenly between people in the carpool or you can split expenses by how often you rotate driving duties. If everyone drives equally, no money needs to change hands. If you are strictly a passenger, you can pitch in your share for gas and other expenses.”

Contrast this with a SideCar ad for drivers,

"You drive every day. Why not get paid for it? Make extra cash and meet some awesome people by driving with SideCar! ... Some SideCar drivers are earning $22+ per hour.”

The difference between a true "rideshare" company, then, and SideCar is that a rideshare company is a non-profit and SideCar is a for-profit company - or was trying to be. 


Some Advantages of Being a Non-Profit:

• Don't need to pay taxes.
• The numbers of cars wouldn't be regulated.
• Drivers would not need to be vetted.
• Cars wouldn't need commercial insurance.
• No responsibility for the welfare of their driver.
• No responsibility for the welfare of their passengers.
• Sidecar would not need to provide insurance for riders, drivers or vehicles.

Sunil Paul's Attacks on the Legal Definition of a Non-Profit

I was going to just summarize Paul's duplicitous career as high-tech charlatan but the arguments that his lawyers gave in an attempt to expand the definition of "non-profit" at the 2013 California Public Utilities Commission (CPUC) hearing are too rich not share with my gentle readers. Sidecar argued:

• “ ... the ridesharing exemption does not apply if the ‘primary purpose of those persons is to make a ‘profit’ but there is no definition or any guidance on how to interpret the term ‘profit.’”
• “By its enforcement actions and policy, the CPSD (Public Utilities Commission's Consumer Protection Safety Division) has apparently chosen to interpret essential and undefined terms such as “profit” as narrowly as possible. The CPSD’s position is that only “incremental” or “variable” profit (i.e., on a per-trip basis) should be considered; however ... a reasonable and practical construction of profit and a commercial enterprise is the total expenses of operation (i.e., the fixed and variable or aggregate costs). Simply put, there’s no profit where total costs exceed income …”
• "The ridesharing exemption under section 5353(h) provides for “[t]ransportation of persons between home and work locations or of persons having a common work-related trip purpose in a vehicle having a seating capacity of 15 passengers or less…and/or transportation that is “incidental to another purpose of the driver.... It is ... important that the phrase “the purpose of the driver” not be read too narrowly. A focus on driver’s state of mind would be so difficult to discern that it would create uncertainty and be impossible to enforce."
• My Note: Does "Work-related” means driving around while thinking about working? Or, conversely, does "non-profit" mean driving people for pay while thinking about your kids?
• Clarify and ensure reasonable and practical guidance and commercially reasonable interpretations of certain vague and undefined ridesharing terms and phrases including “work-related” and “work locations.”  Such terms and phrases should not be construed narrowly based on outdated historical or traditional principles of an employer-employee relationship and a traditional “9-5” home- work commuting routine. ... Rather, the terms and phrases should be construed for the varied circumstances of the current California labor force and market. The CPSD has narrowly defined these terms through its enforcement policies and actions in a manner that is impracticable and unwarranted (i.e., suggesting that a driver or passenger must be an “employee” of an entity, thereby disqualifying independent contractors, freelancers, or full time moms/caregivers from the “work-related” element of the rideshare exemption).

I'm glad that's clarified.

For more in this vein see: My Reply Comments to the CPUC on Lyft, Sidecar & Willie Brown 

These argument turned out to be too obtuse, arcane and asinine even for the CPUC to swallow. They chose to regulate SideCar, Lyft and Uber anyway. However, in categorizing them as TNCs, the CPUC effectively deregulated them by putting them under the control of the State of California instead of the cities because the state had neither the personal nor the means nor the will to regulate them.

Next: Sunil and the thrill of false advertising.

Note: How the civilized world deals with charlatans who put the public at risk.

Uber’s No-Holds-Barred Expansion Strategy Fizzles in Germany

HopSkipDrive & Shuddle: Transporting Minors – Safe or Not?

HopSkipDrive and Shuddle are recent venture capitalized startups that specialize in giving rides to unaccompanied minors.

HopSkipDrive claims to be founded by 3 mothers and actually was.

Founder and CEO Joanna McFarland has an MBA from Stanford, a BS from Wharton, has worked for 15 years in product and general management, and has two kids.

Along with the other founder mothers she claims to be part of,

 “A team that cares as much for your kids as they do theirs.’’

To an extent this appears to be true. Unlike Uber or Lyft, HopskipDrive has its drivers fingerprinted and favors Trustline , Live scan  and other safety measures for background checks.

Shuddle's CEO, on the other hand, is Nick Allen who was a co-founder of Sidecar where he clearly worked on his bs – as you can hear in this interview where he claims that Sidecar "really isn't a taxi service at all"...

Like Uber and Lyft, Shuddle formulates long and arcane arguments against using background checks like Trusline and Live scan – which are the standards for child care safety. It's unclear whether Shuddle uses fingerprinting or not. Some places they say they do. In others, they don't mention it.

OOPS - Nick Allen is out at Shuddle. Apparently the company isn't doing too well.

In any case, I would certainly favor HopSkipDrive over Shuddle. Unfortunately, they have a waiver of liability (which is normally used for dangerous activities like parachute jumping or traveling in a war zone) hidden in their Terms where they refuse to guarantee the safety of your kids after all.

I haven't had the luck to have children myself (at least not yet) but I'm advising my numerous cousins, nieces and nephews not to use either service until or unless they get rid of the waivers and guarantee the safety of the children who they transport.

For more detail you can read from my Reply Comments to the CPUC on Unaccompanied Minors below.

Note: The Austin, Texas City Council voted to require Uber and the other tncs to fingerprint their drivers.  In this they join San Antonio, Las Vegas, Portland, most of Europe and China among other places.

Remember the days when San Francisco was the leader in consumer protections and social and political innovations? Now we wonder when the Neanderthals who currently run this city and this state will catch up with the rest of the world?

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.

Why People Use Flywheel & Taxis Instead of Uber or Lyfts: Part II or No Small Print

In my last post, I left out one obvious reason why people are leaving Uber & Lyft for Flywheel and that is  price-gouging or "surge-pricing" as they euphemistically call it.

One former Uber customer who switched to Flywheel told me that he thought the so-called formulas that Uber uses to raise the prices are, "Bullshit! They just do it because they can," he said.

"You know," a businessman explained, "you just get used to doing something and you keep on doing it. Then, suddenly it gets to be too much ... One Friday night I went from the Marina to North Beach. When we got there, I learned that they'd charged me 3X. Three times the normal rate – almost $30 to go a mile and a half. That was it. It's taxis from now on."

But back to the businessman who said that taxi drivers have gotten better while TNC drivers have gotten worse.

SF Taxi Drivers Stage SFO Protest

Monday night from 9 to 11 pm, Taxi drivers protested the San Francisco Airport's decision to allow Uber, Lyft and Sidecar to pick up and drop off at SFO.

Hundred of taxis bypassed the taxi lot, rolled horn-honking around the staging areas and, eventually, picked up customers without paying the $4 SFO fee.

The drivers were and are angry because the Airport is slamming them with the wrong end of a double standard that is economically disadvantageous to them and dangerous for the public.

San Francisco taxicabs are:

1. Required to carry $1 million commercial livery liability insurance policies that are in effect 24/7.
2. Inspected by by SFO's Ground Transportation Unit – under the supervision of the San Francisco Police Department.
3. Required to have drivers who have have passed a week-long training course and a DOJ background check where they are fingerprinted.

Uber, Lyft and Sidecar:

1. Vehicles are insured for $1 million some of the time, as little as $50,000 other times, and totally uninsured the rest of the time.
2. Passengers in these vehicles are never completely covered for liability because they sign away their rights to collect compensation in case of negligence on the part of the drivers or the companies.
3. Vehicles are NOT INSPECTED by SFO or any outside agency. The TNC's offer no proof of inspecting their vehicles at all – except their word (of honor?).
4. Unlike taxi drivers, TNC drivers are not required to have a special permit or license to operate.
5. TNC drivers are not given given a fingerprinted background check. The TNC's give no proof of vetting their drivers at all – except their word (of honor?). 
6. In fact, the SFO police themselves have run several stings showing TNC drivers who did not have drivers licenses, drivers other than the person who was supposed to be driving the TNC vehicle, and several with bad driving or criminal records including one with a sexual assault conviction who had been scheduled to pick up a 22 year old woman traveling alone.

The higher standards of public safety that taxis rightly live up to are much more expensive than the deregulating regulations of the TNC's. This allows Uber, Lyft and Sidecar to temporarily undercut prices. Temporarily – because if they reach their goal of destroying the taxicab business Uber and Lyft and sidecar will, no doubt, price gauge all the time.

Cabs not picking up?

For a period of about 45 minutes passenger were indeed not getting rides. But this was not because the drivers were boycotting customers.

This problem was that the SFO police wouldn't let the taxis pick the customers up. Squad cars with flashing lights and motorcycle cops kept the cabs from stopping at the passenger pick up areas. And the SFO starters would not let customers get into the cabs that did try to pick up.

Then, the cops stopped harassing the protesting cabs, but the drivers still didn't pick up for awhile – probably because they were uncertain as to whether they should try to put the customers in their taxis or not.

After all, there is a $5,000 fine for picking up without paying the fee – a fine that has never been imposed against a TNC despite the fact they've been picking up illegally for two years.

Many customers became frustrated and went in search of other forms of transportation including the white haired businessman below who said that he was taking an Uber for the first time.

When the leaders of the San Francisco Taxi Workers Alliance SFTWA (who staged the protest) realized what was going at the terminals they talked the protesting drivers into picking customers up again and the cops into letting them do it.

The metadata on my photographs shows that the customers were still being picked up at 9:10 pm and were being picked up again by 9:53 pm

SWTWA board member Barry Korengold said that they had intended for the drivers to pick up from the start. In fact, one point of the protest was to have the taxi drivers get rides without paying the fees like the TNC's have been doing for the last two years.

This YouTube link shows taxi drivers picking up customers at 9:59 pm followed by Jeffrey Rosen of the SWTWA giving a succinct explanation of the reasons behind the protest.

En Farce: Part One

Acting, as usual, more like a spokesperson for Uber, Lyft & Sidecar than a director of Policy and Planning for the CPUC, Marzia Zafar, who was supposed to be a neutral moderator, came to the defence of the TNC conglomerates when a spokesman for the taxi & limo businesses pointed out that the TNCs did not do Department of Justice (DOJ) background checks using fingerprints.

Ms. Zafar (photo left) argued that the venture capitalized transportation corporations (VCTCs) did do background checks but did them online. She spoke as if she had scored the final point (online background checks = the DOJ's background checks) for their side and that the subject was closed.

This was – at the same time – one of the most typical and most bizarre moments of the CPUC hearings on so-called "ridesharing" that started in March of 2013.

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.

May the Farce Be with You.

When it comes to Uber, Lyft and the California Public Utilities Commission (CPUC) I never know whether the appropriate comparison is Alice in Wonderland or Orwellian doublethink.

I went to Thursday's CPUC meeting filled with optimism because it looked like the Commission was finally going to make Uber, Lyft and the other faux taxicab corporations take some responsibility for clogging the streets with tens of thousands of amateur drivers in underinsured vehicles.

Commissioner Michael R. Peevey's (photo) Proposed Decision called for Million dollar insurance limits as long as the faux taxi driver had the app turned on (not ideal but a step in the right direction). The policy would also have given million dollar uninsured motorist coverage, $50,000 coverage for both comprehensive and collision, and $5,000 medical payments for driver or passenger.

State Senate Committee on Insurance Votes for $750,000 Partial Coverage for TNCs

The bill, AB2293, that the committee passed on for a later vote on the Senate floor was disliked by almost everybody.

Uber and Lyft lawyers spoke against it because they want to limit coverage to only the time when their drivers are logged in with a passenger. They do NOT want to cover their drivers while they are logged in but don't have a customer. This makes economic sense. In that way the TNC's would save money on insurance premiums and wouldn't have their rates raised the next time one of their drivers kills a pedestrian while looking for a fare.

Taxi people spoke against the bill for several reasons:

• It drops coverage from $1,000,000 to $750,000.
• TNCs would not be covered if they pick up off the street or carry private customers.
• As to whether or not a driver was logged in when an accident occurred could be manipulated by either the driver or TNC companies like Uber & Lyft.
• Full-time commercial insurance is the only safe option for the public.
• The bill would codify "TNC" as a separate form of transportation than what already exists. It would create a new category of "charter party carriers" and pre-empt the court challenge of the CPUC's decision by the Taxi Paratransit Association of California (TPAC), which is already in the California court of Appeals.

Against the CPUC Ruling: A Protest in Pictures

Nobody gave a talk so I thought I'd let the drivers speak for themselves.

Jamming the Streets with Lyft, Sidecar, Uber & the Illegals

Taxi Services investigator Eric Richholt invited me to ride with him and his partner Andres Martinez so I could photo & videograph the gridlock caused by a couple of thousand unregulated, fake cabs on the Friday and Saturday nights.

"You wouldn't believe it," he said. "People should see this."

"Is it worse than last time we went out?" I asked.

"Oh, yeah."

Seattle Council Unanimously Votes to Regulate & Limit TNC's

SUMMARY OF CITY OF SEATTLE ORDINANCE RELATED TO TNCS (TRANSPORTATION NETWORK COMPANIES) 

-- PASSED BY FULL COUNCIL March 17, 2014
by
Anonymous

The CPUC's Proposed Decision: the Good, the Bad, the Ugly

When the hearings on ride sharing ended last spring, I discussed various possible scenarios with an ally and we thought the most probable outcome for our comments was that they would be filed away and only read if archaeologists stumbled across them a couple hundred years in the future.

This admittedly cynical view was born from the CPUC's act of ceasing the cease and desist orders against Lyft and Uber before the hearing even began. It was fostered by a perceived prejudice on the part of the CPUC  that their staff often did their best to live up to.

However, this notion turned out to be too skeptical, too world weary, too paranoid. While the CPUC clearly had made up its collective mind to legalize the fake ride sharing services before the hearings began, our comments were read and even had some positive effects on the subjects of regulation and insurance.

The CPUC's proposal was therefore much less one sided than some of us had anticipated.

Regulation

The CPUC ruled/proposed that Lyft, Sidecar, Uber and other Transportation Network Companies (TNC) are for hire transportation companies. In the process they gave a thumbs down to various TNC arguments including Uber's contention that they were merely a software company and the claims by Sidecar and Willie Brown that the companies were non-profits. The CPUC wrote in its decison,

"We reject Uber’s assertion that TNCs are nothing more than an application on smart phones, rather than part of the transportation industry. Uber is the means by which the transportation service is arranged, and performs essentially the same function as a limousine or shuttle company dispatch office. Accordingly, Uber is not exempt from the Commission's Jurisdiction over charter-party carriers."

The CPUC went on to say,

"We find this argument to be factually and legally flawed and, therefore, do not accept that the method by which information is communicated, or the transportation service arranged, changes the underlying nature of the transportation service being offered...."  and "... the Commission is not attempting to enact rules that would impose regulations on the smart phone applicationapplications used to connect passengers with drivers. Instead, the Commission is attempting to promulgate  promulgating rules that wouldwill govern the transportation service itself.


The CPUC also dealt aces and eights to Lyft & Sidecar's absurd rationalization that because they called their fees "voluntary donations," they were operating as non-profits.

"We reject the arguments made by Lyft and SideCar that any payment for rides arranged through their apps is voluntary and find that current TNCs are engaged in the transportation of persons for compensation. ... Clearly each TNC is receiving either an economic benefit or a business benefit. At a minimum, they are receiving increased patronage with the growth of their businesses."

I don't know if the CPUC exactly deserves kudos for not letting the TNC lawyers pull the wool over their eyes but the fact is that they didn't. And, the CPUC arguments for not letting this happen are well thought out and well reasoned. This opens up the possibility that reason, in the end, could carry the day.

Their decision on insurance is a little more problematic. I'll deal with it in the next post.

__________

I've had few inquiries from people wondering where to send photos of Lyft and Sidecars. You can send them to my e-mail at: amazincrocker@gmail.com Please include the license plate # if you can and there is no point in sending a pic of a Sidecar unless it is identifiable.

In this post, I'm also including a lengthy e-mail from a Lyft driver that takes up the first three comments in my comments section.