Lyft Launches in St. Louis, Meets Opposition from City, Taxicab Commission

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The ride sharing service Lyft debuted in St. Louis Friday, setting in motion a confrontation regarding the new service and existing taxicab regulations. According to the Riverfront Times (RFT), the St. Louis Metropolitan Police Department (SLMPD) assigned two cars to finding Lyft vehicles, with an officer and St. Louis Metropolitan Taxicab Commission (MTC) agent in each. Less than 30 minutes after launch, Lyft drivers were being cited for operating an illegal taxicab business.

SLMPD employed a version of hot spot policing, most commonly used to place more officers in areas experiencing an increase in dangerous crime,  to target Lyft. MTC Deputy Director Bob Oldani told the RFT they would be targeting “wherever the younger crowd goes,” including The Grove, Cherokee Street, and the Delmar Loop. Lyft has said it will cover any citations and legal costs incurred by drivers.

The challenge posed by Lyft in St. Louis and elsewhere is that it’s a “disruptive” business model, or an innovation that creates a new market and value network, disrupting an existing market and value network. This is where the understanding of what Lyft is, and what, if anything, to do about it, diverges.

“We’re trying to get (Lyft) to do business the way everybody else does business,” Olandi reportedly told police charged with stopping Lyft drivers.

There’s a hint of understanding that Lyft is different than existing taxi services, however inarticulate. Again according to the RFT, Oldani told SLMPD officers that Lyft drivers are “college-educated people who work during the day and drive mom and dad’s car on the side.” When Lyft drivers are pulled over, they were given a list of taxi companies they can work for legally

No one paying attention can claim that Lyft isn’t a different business model. Should it be regulated in some way? Probably so, after all we regulate dog grooming and pretty much any other business that operates in the city. Lyft currently operates in 34 cities, meeting with varied regulatory response from local officials. In San Francisco, where the company was first launched in 2012, Mayor Ed Lee has proclaimed July 13 as Lyft Day.

Lyft - St. Louis

Lyft has been met with an enthusiastic response from users in St. Louis, with positive mentions across social media. City and MTC officials also went online, to express their opposition.

The City of St. Louis Mayor’s Deputy Chief of Staff, Eddie Roth latched onto a blog post by long time St. Louis cab driver Umar Lee, stating “This is as brilliant and compelling an exposition as I have seen from anyone on any subject,” summarizing the post as “#lyft skims hipsters & poor and working-class lose drivers.”

It’s a pro-regulation protectionist argument oddly keyed on “hipsters”, which one must understand is the lay term employed by St. Louis City officials and local media to describe roughly anyone under ~40 years old who drinks cheap beer, or craft beer, shops locally, or online, is a young professional, or living with their parents…you get the idea. You should read Umar’s post.

St. Louis City Health Department Director, Pamela Walker, opined in a Tweet, “I’m supposed to get in a car with a pink mustache driven by some creepy guy I”ve never met, who is not regulated? #strangerdanger #confused.” You can cut the dissonance with a knife. For many, getting into a Lyft car with a driver whose photo and Facebook profile is readily available, and who has received passenger ratings and have rated passengers, makes more sense than trusting the MTC.

As a business, Lyft seeks to fill a gap in current transportation options. Part-time drivers can earn a paycheck and users have another transportation option that may allow them to reduce car-ownership, or rethink it altogether. If existing taxicab service can fulfill this market role, Lyft may not succeed.

Although not regulated by the MTC, Lyft isn’t exactly a Libertarian dream. Drivers are required to submit Department of Motor Vehicles and criminal background checks, conduct an in-person interview by Lyft employees, pass vehicle inspections and a two-hour training and safety session, be 23 years of age or older, and have had a driver’s license for more than three years. The company has a zero tolerance drug and alcohol policy, and insures each driver with a $1 million per-occurrence liability policy. Any driver averaging less than a 4.5/5 star rating by Lyft users is dropped from the service.

The City wants Lyft to register with the MTC, which has previously blocked app-dispatched ride services from starting in St. Louis. Lyft asserts that existing regulations do not adequately address their new business model and hope to work with the city to shape new regulations.

Lyft - St. Louis{neither Lyft itself, nor its launch party is approved by the MTC – image from Nebula Facebook page}

As the rift over Lyft comes to a head, it might be considered a cheap shot to mention the big increase in homicides this year in the city, maybe less cheap to note the selective enforcement of city agreements, ordinances, laws outlining multi-million dollar financial agreements with casinos, professional baseball teams, and developers with more than $400M in tax assistance pledges in hand. But if one were to consider such things, it may be easier to understand skepticism of city official’s plea to trust in regulation and their judgement.

Without having to explicitly change the stance on Lyft, why wouldn’t a city desperately wanting to be recognized as a hotbed for innovation, simply state, “We welcome Lyft and other innovative businesses to St. Louis, a place that has been a start-up city since our first days. Lyft is a new model of business that many communities are discovering how to manage. Just like any business operating in St. Louis, we believe that Lyft should follow some simple rules. To this point, we don’t believe they’re in compliance, but we will work with them and existing services to ensure that St. Louis innovates in a way that makes sense for our residents and businesses”?

Business models like Lyft are obvious and comfortable evolutions for a generation used to online dating, websites like Trip Advisor, and Facebook. Lyft’s round peg may be in violation of St. Louis’ square hole, but Frank DeGraaf (@CountonDowntown) summed up the issue on Twitter, writing, “I’m convinced that @lyft, @Uber, and the like will become the new normal, even in #STL There’s no stopping it, just adapting to it.” And that may just be as brilliant and compelling an exposition as I have seen from anyone on any subject.

 

Top image via Infuz at blog.infuz.com/

Read one comparison of a traditional taxi experience versus Lyft: I’m a mom with a poky kid, trying to get to work as quickly as possible, and I did that 34 minutes faster with Lyft.

The Wikipedia entry describing Lyft.

A quick video on how Lyft works:

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  • DB

    Does lyft have a city business license and occupancy permit somewhere in the city? 2nd, do the drivers have a city business license and a home business waiver, all need to since they are making money in the city. Both parties should pay city taxes.

  • John

    I’ll get in whatever fucking taxicab I want. If Lyft is the closest one, that’s what I’m using.

  • rgbose

    The last census said St Louis County had less than 1M people, does MTC still have authority? Or does the statute mean that city+county has to be greater than 1M? http://www.moga.mo.gov/statutes/C000-099/0670001802.HTM

    • DB

      It does.

      • dempster holland

        The statute is somewhat ambiguous but I think it means that
        a regional taxi commission consists of St Louis and a county with
        more than a million people. If St Louis county has less than a
        million people, then the regional taxi commission would consist
        only of the city of St Louis. But this issue would have to be decided
        by a court.

        • guest

          Actually this language is pretty routine and it is very unlikely that this would change if county population dropped under a million. legislative intent is pretty clear here; if there was language that said the commission shall disband if the population drops to a certain level then that would be different.

          • dempster holland

            The legislature has long used population classifications
            rather than name specific cities or counties. The reason
            is that naming specific cities or counties would constitute
            “special legislation” and thus be open to constitutional
            challenge. It appears to be seldom contemplated what
            happens when population drops or even increases and
            the cities covered are no longer covered.

        • rgbose

          I’m told it’s what the case was when the law went into affect. Can someone explain why the statute can’t just say St Louis City and St Louis County? Why do they use population size? Why now land area? “Any county with area no less than 523 sq mi and 525 sq mi”

  • Eddie Roth

    Derision is a weak form of argumentation. Pique is a poor starting point for discussion. People who make thoughtful contributions to a debate, such as Umar Lee has here, should be treated respectfully. Their arguments should be presented fairly. I wish nextstl would make a serious run at this issue, one better calculated to advance community understanding, conversation.

    • Adam

      Right. There was no derision in Mr. Lee’s letter. He was very complimentary of hipsters. Er… I mean, don’t be a hypocrite.

      • Adam

        Or rather, those he perceives as being hipsters.

  • guest

    If Lyft removed the goofy mustaches, who would even know?

    • Tom of the Missouri

      Yeah, then they could just ask for a Lyft ride and arrest them when they arrive. Duh!

  • cngrant

    Is it not possible the Lyft purposely declined any invitation to cooperate with the MTC in order to garner publicity? Yes, business models change. And, yes, MTC controls access the taxi market in anti-competitive ways (just as patents hinder the free exchange of ideas and just as the state licenses architects, doctors, and lawyers and such) . But, it is hypocritical for Lyft to argue that it is not subject to regulation, while at the same time its proponents trumpet its virtues as a cheaper or better alternative to taxis.

    I think Lyft was looking for a fight and is getting the publicity it wants. In the long run, the MTC will adapt. But, as Umar Lee notes, don’t think there won’t be adverse social and economic consequences. For instance, what if a Lyft driver refuses to pick up some one in North City because of their race? For that matter, what of a customer who gives a Lyft driver a bad rating because of her race? Or, what of the hundreds of immigrant cab drivers who will seem their incomes fall dramatically?

  • dempster holland

    I would suggest people read Umar Lee’s column referenced above before they
    make up their mind about Lfyt. His column also points out the phenomena of
    people saying they are liberal but really meaning they are social liberals
    but economic conservatives who could care less about the ordinary working
    man. It is the ordinary worker, we should remember, who constitutes the
    great bulk of people living in central cities

    • pat

      The ordinary worker can work for Lyft or Uber. When a business model becomes obsolete, people need to adapt. Not prop up an enterprise that is terribly inefficient. Have you thought about the fact that if those same cab drivers worked for an Uber or Lyft, they might earn more and make a better living?

      • planb247

        These businesses, and AirBnB, are driven by technological advances. The cab companies should improve their service or they’ll go the way of the dodo.

      • http://yastlblog.blogspot.com/ Kevin Barbeau

        Yep. It’d be beneficial for the companies to implement uber’s system for their fleets (or their own proprietary app, i guess, but uber represents a larger pool of potential fares).

        Maybe that’s the solution — allow individual taxi companies to opt in to an uber app service. A service like Lyft’s “donation-based” call-a-ride would no longer be necessary or a threat.

        That way, the MTC protects their licensed drivers livelihoods, riders receive a regulated, insured transport and have a simple and responsive rating system by which to call out exceptional or mediocre cab service. If a company’s fleet consistently rates poorly, they’ll quickly fall out of the game or adjust the quality of their services.

        And those companies that want to stubbornly stick to their own dispatch/wait-and-see system can do so to their own detriment…

  • Joey

    “Although not regulated by the MTC, Lyft isn’t exactly a Libertarian dream. Drivers are required to submit Department of Motor Vehicles and criminal background checks, conduct an in-person interview by Lyft employees, pass vehicle inspections and a two-hour training and safety session, be 23 years of age or older, and have had a driver’s license for more than three years.”

    Uh, yeah. Lyft is a Libertarian’s dream, and to say otherwise is ignorant. The company doing what it has to do to not be sued and to make sure they are hiring competent people is expected and smart.

    “Should it be regulated? Probably” – So the argument here is that since everything ese is so heavily regulated, so too should everything else. How about everything else should be regulated to a lesser degree?

  • Marshall Howell

    I used it and enjoyed the ride, going to San Fran next week as well and might check the ride shares out there. @hamiltonstl tweets are a joke.

    • Frenchy

      I used Uber in San Fran two weeks again and it’s AMAZING! From my understanding, Lyft is very similar to Uber.

  • Monte

    Apparently “hipsters” (whoever they are) are the new great threat to civilization. Seems they have been ordering cabs and making cabbies wait for them to come out of their “high rise” apartments. Who knew? Oh, the inhumanity.

  • Matt Ashby

    Thank you, nice article! As an over 50 Soulardian, I use the term Bohemian over hipster. Becoming a part of the new economics of place is open to all who value life-long learning, community development, and quality of life. I think we do need to spend some time getting more thinking and experimenting under our belts because other innovations, both incremental and disruptive, will be arriving on our doorstep.

  • http://donspoliticalblog.blogspot.com Don

    St. Louis City Health Department Director, Pamela Walker, opined in a
    Tweet, “I’m supposed to get in a car with a pink mustache driven by some
    creepy guy I”ve never met, who is not regulated?

    I’m sorry, but is she describing Lyft or Laclede cab? She’s obviously never ridden in a taxi in St Louis.

    There is nothing about local taxis that would suggest they are regulated. Laclede routinely buys cars that already have 100,000 plus miles on them to use in their fleet. I’ve lost count of the number of times I’ve placed luggage in the trunk of a local cab where the trunk lock was not functioning properly.

    I once had a local taxi driver offer to be my personal body guard while driving me home from the airport.

    The White taxis that work the airport will screw you over if you don’t know better and tell them exactly where to go. One tried to take me from the airport to the CWE via 170 to 64/40. Another I made take me 70 to Kingshighway and slowed down nearly stopping at every intersection to avoid the synched green lights. Another who couldn’t break a $20 at 2AM or take a credit card (this was 5 years ago) so that I was forced to double tip just to get to bed.

    I could go on forever with such stories.

    I would be less sympathetic to Lyft if we actually had well regulated taxi companies with clean, modern cars in good working order and drivers to match. But we don’t. That’s the problem.

    • rgbose

      A female friend of mine was hit on by a Laclede Cab driver. So she stopped using Laclede Cab, a detriment to all the Laclede Cab drivers. If a Lyft driver did this she could pan him in a review and he’d probably not get any more riders. What does the grievance process with the MTC entail? I don’t see anything about it on their website. Or are you supposed to go through the cab company?

    • http://yastlblog.blogspot.com/ Kevin Barbeau

      I feel the local taxi fleet is poorly-trained/knowledgeable on any non-highway-adjacent portion of the City. Anytime I’ve ever taken one, it’s been a process for the driver to either call it in, search his grid-book or set his GPS…and then another process as he tries to figure out where he actually is as he/she gets close.

      And yes, I could just share directions outright; and no, I didn’t, as I feel that knowledge should come with the job. And yes, I will undertip if a driver can’t somewhat assuredly find his way to, say, Victor/McNair (BCD!) from downtown.

  • next314

    City corruption at its finest. I’m glad Lyft and Uber aren’t backing down. Their entire argument is baseless. I used to drive a cab. I can tell you right now these cabs are not as safe as they claim and the so called “regulated” drivers are about as far from regulated as it gets! And i think it says something when apps like Uber and Lyft have an immediate driver review process after each ride? If you want to complain against a cabbie what do you do? Go ahead and try it. You don’t even know their name! Many good points made in the reviews… We do not need more regulation and we need to embrace entrepreneurship. Competition is great. Again, WE DO NOT NEED MORE REGULATIONS!! Innovation will always prevail and competition will always prove best for the people!

    • http://yastlblog.blogspot.com/ Kevin Barbeau

      Not sure of the STL requirements (I barely EVER use them here), but in Chicago all taxis must include their taxi number, medallion number and affiliated cab company. Additionally, each interior is fitted with a large sign that specifically lays out the laws to which the driver must adhere and your rights as a passenger. Fee structures are set annually and displayed on the same signage (including a $50 Vomit Cleanup Fee!). This, I feel, is a great example of effective oversight and transparency.

  • rgbose

    Michael Calhoun @michaelcalhoun

    BREAKING: Judge David Dowd issues temporary restraining order forbidding @Lyft from doing business in #STL. -@KMOXKilleen

  • Joe Papendick

    Why is this even being called “ride sharing”? No one is sharing a ride. They’re calling a taxi. The only difference is that Lyft cabs are dispatched via the internet, not by the old method of telephone and two-way radio. So why cant Lyft just operate as another cab company and play by the same rules as everyone else?

    They can’t because their only real innovation is their ability to avoid the many laws and regulations governing actual licensed taxi companies, mainly by calling their fare a “donation”. As a result of this relatively unimaginative and very questionable attempt at circumventing the law, Lyft drivers pay no fees to the city. Nor are they licensed. Their insurance coverage is questionable. They can decide who to pick up and who not to. They can also apparently choose what to charge for a ride – this somehow despite the fact that the fare is supposed to be a donation.

    Companies like Lyft and Uber haven’t come up with a better business model for all concerned. They’ve merely figured out a way to circumvent the law and skim the cream off the top of public necessity. There’s a big difference between innovation and circumvention. I’m surprised that so many people on a site like NextSTL fail to see that.

    Being able to find a nearby friend to give you a lift in his car would be an innovative new concept. Paying a stranger to do that isn’t. It’s called hiring a taxi. And in St. Louis the Metropolitan Taxi Commission regulates those businesses in the interest of the entire public.

  • moe

    Both articles are interesting and both attempt to drag in unrelated issues. Bottom line is that this “new” is not new, just a taxi with technology. How many Lyft drivers are going to hang in there when one of their patrons (since they are asking for donations) gifts them with the gift of a back seat of booze-laden puke.
    Should the Cab Co modify their business model? Sure, absolutely. Maybe they’ll learn something from competition. But you don’t win by playing around the rules. If you were serious, you would work to change the rules.

    • moe

      This should be: Should the Cab Cos as in cab companies modify their business model. Yes, Laclede, Harris, and the others should adapt and modify.
      Sorry my fingers aren’t as nimble as they should be

  • flyover

    I don’t use cabs much. Last time I called one (I called on the Amtrak from Alton asking for a cab to meet me at the downtown station), it didn’t show up and left me standing in the cold for 45 minutes. However, I am concerned about the insurance. None of the stories I’ve read have said what levels the regular cabs carry, so when I hear this bunch carries $1 million it sounds like a lot, however, I you are in a serious wreck and unable to work for the rest of your life, it is nothing. After paying a lawyer to sue the insurance company, you’d be left with ⅔ of a mil and a lot of medical bills. What is the relationship with the drivers and the company? It sounds too cute to work. Do they claim the drivers are not employees? Could someone injured in a wreck also sue the company directly? I notice their map extends into Madison County and you can bet those lawyers are licking their chops and will test those waters faster than you can spell mesothelioma.

    • moe

      Yup. and many of their drivers are going to be in for a rude awakening when their insurance company denies their claims. “But they were paying passengers”…oh, so you were running a business out of your car on your personal insurance?
      Yup….lawyers are licking their chops indeed.

      • flyover

        None of the stories has been clear about what liability the actual drivers have. Sure, they have insurance, but the fairly modest levels of liability wouldn’t cover much, even if it did apply, which, as you mention, it probably doesn’t. So, if a driver got into a wreck while performing this service, either as an employee or independent contractor, I’m still unclear which it is, they would possibly not be covered for the damage to their car, the damage to the other car, assuming it was their fault, or the passenger(s). The way I read the story the company provides a $1 mil “liability” policy. Liability does not cover the driver or his car, only damage for which he is liable. Nothing would stop any aggrieved parties form suing the driver, however, if someone is driving a cab, you’d have to wonder how successful recovery would be? One thing is for sure, like all new ventures, the lawyers are always the first ones to make money.

      • http://yastlblog.blogspot.com/ Kevin Barbeau

        Lyft attorney response: “Not a business. Your client voluntarily gave an electronic transfer for an amount of his own choosing to my client.” Blah, blah, blah. On and on and on…

        That’s one reason I prefer the Uber model (note: NOT uberX) to Lyft (well, two if you count the absence of that ridiculous pink mustache!). The licensed taxi drivers aren’t doing anything that they normally wouldn’t be doing; they just have another tool at their disposal to find fares.

        The only issue with uber is that the taxi company has to give a portion of its piece of the fare to uber. And that’s an issue I could care less about if it improves the quality/timeliness of the fleets.

        • moe

          I agree Kevin….they can call it a gift, donation, transfer or a carrot if they want to. Insurance companies and lawyers don’t care…they’ll find a way to tie it in and deny the claim.

    • guest
      • flyover

        excellent points

  • rgbose

    Can anyone elaborate on this?

    KMOX- Lyft: No Notice Received to Appear in Court

    http://stlouis.cbslocal.com/2014/04/22/lyft-no-notice-received-to-appear-in-court/#.U1aJmYGPS1k.twitter

    “Thelen says that Lyft provides $1 million liability insurance coverage for every ride—five times the $200,000 requirement of St. Louis taxis.”

  • http://www.preservationresearch.com Michael R. Allen

    The city government would gain some credibility if it applied the same strict enforcement of regulations on Northside Regeneration (missing a mandatory payment of legal fees, allowing buildings to violate city codes despite requirements of a redevelopment agreement) as it does to Lyft. The semblance of inconsistent regulatory shakedown taints the city’s perhaps very reasonable effort to enforce taxi rules.

    That point made, Lyft’s business model is innovative mainly insofar operational risk is fully transferred to the drivers and consumers. As a consumer, I am very wary of that model. Also, the dumping of drivers based on complaints from people who ride (who very often can be drunk or unruly) is far from progressive or admirable. Progressive employers protect their employees from customer abuse.

    • http://yastlblog.blogspot.com/ Kevin Barbeau

      No kidding. Can’t call in the cavalry for one trespass and let others go unenforced for 1-3-10-etc years…

  • Tom of the Missouri
  • rgbose

    Last night KSDK reported that A Lyft driver had an outstanding felony warrant.
    http://www.ksdk.com/story/news/local/2014/04/22/lyft-court-restraining-order/8024313/

    This morning KMOX reports that the SLMPD told them that no one was arrested. I guess if your arguments aren’t gaining traction, start making things up to support them.

    Reminds me of the anti-merger people.

  • Joe Papendick

    I’m working on a new iPhone app called BarKeep that will allow anyone to turn a spare room in their house or apartment into a “pop up” saloon and take-out liquor store.

    What’s that? Users will need a liquor license, occupancy permit, health department certificate, fire safety inspection, tax ID… and more?

    What a bunch of backwards thinking luddites. This is an entirely new business model. Clearly St. Louis is incapable of recognizing and welcoming any real innovation.

    • dempster holland

      Actually, people have been having parties for pay in their apartments
      for years, and have sometimes (but not often) been chased down by
      the authorities.

      • Joe Papendick

        Right! And people have been driving ‘Gypsy Cabs’ for about as long as there have been taxi licensing requirements. How an iPhone app can suddenly turn an unlicensed taxi, or an after hours club, into a revolutionary new business model is way beyond my level of reasoning.