Lyft launches today in Austin to offer riders more options for getting where they need to go. The design behind some of these new ride sharing apps is that they help reduce the costs of traveling. Taxi drivers, who have been around forever, are required by the city, state, and federal level to comply with a certain compensation level when charging drivers. That is what some of these apps try to side step.
App Creation Stage
App creation is all the rage right now for people, either to hire someone to develop one or learn how to code one for yourself or business. Entrepreneurs need to be aware of the scope in which your app will be used, it’s not enough anymore to think that you just need a great idea and let everyone decide how they should use it. If your app crosses over into another established line of business you must be ready to deal with all the established legal rules in place otherwise you might get shut down. You should also consider if your app takes off in other countries how to deal with the demands and regulations from overseas.
There are app users who are First-Users, these are the individuals who like being the first ones to try out anything new and with apps they are no different. If any of your first time users are influencers in the market then your app needs to be ready to handle heavy traffic, something most first time app developers are less-experienced at.
In the case of ride sharing apps, this has been a booming economy of business because riders want less expensive options, which these programs provide. But if city regulation keeps interfering then how will riders find the best deal when all public transportation options work from the say fee structure?
Lyft has not been approved for operating in Austin but it’s push from corporate headquarters makes it an interesting case because it shows that they are more concerned with expansion and getting their brand recognized than following city and state regulation. There is a good chance that Lyft will come under fire for pushing ahead and ignoring approval because eventually they will need to comply with the rules otherwise face being shutdown. Right now Lyft is free, which allows them to bypass city regulation, and keeps the brand out there more.
As noted by the Austin Police department any “ground transportation vehicle, a compensated driver must carry an operating permit, a chauffer’s permit and commercial insurance. Violating any one of these requirements could result in up to a $500 fine, totaling a possible $1,500 fine if all requirements are violated. Additionally, drivers who do not comply with the law risk having their vehicle impounded.“
Right now compensation in Austin is limited to 56 cents a mile to drivers, a price that is established on a federal level for any ridesharing company. Lyft works on a donation based model and any driver that signs up must go through a background check. Their suggested donation is priced at $1.92 per mile which well over the federal limit. Right now passengers in Austin will not be charged a fee, which makes you wonder how the drivers will be making any money for using their own vehicles in Austin. It might be the case that Lyft will be paying them directly in order to avoid the legal issues in Austin until they get everything worked out. If drivers are paid more than the .56 cents a mile Lfyt could come under scrutiny for their illegal business practices in Austin.
Benefits to Lyft Drivers
The benefits right now for being a Lyft driver is that you can make extra money to help pay for car payments or earn extra money to pay bills. Drivers are also given extra insurance to cover any problems that happen during the drive.
More Ride Sharing Options
Uber is another ride sharing company that has come under a lot of legal pressure for operating in many cities that have tough regulations despite the warnings. Right now UK is fighting Uber but so has Austin, infact during the recent SXSW festival Austin Police Department warned festival goers to not use the service because they were not an approved transportation company in Austin. The point of the festival is to encourage innovation not stifle it, and for one week all kinds of companies are in Austin to showcase what they do and if they need to go through all the terrible bureaucracy that exists just to operate for one week in Austin then Austin’s municipal offices do not really understand the point of SXSW. Technology and innovation rely on their users which is why, services like Uber and Lyft, are taking off so fast despite the legal drawbacks, users want them but government entities want their fare share of the pie even if it means stifling innovation which they are very good at.
This is what spurs innovative companies like them to come about because people don’t like the current options in place so they create new products that fit what people want, that is what business is all about, meeting consumer needs.
Other ride sharing companies trying to come about are Zimride which has the same idea for a ride sharing company but again uses a different model for charging riders. Until government officials understand that there can not be just one model in place, riders will look for the option that best fits their needs, not the needs of municipal office pockets. Another ride sharing program, SideCar, was side tracked because it did not comply with city regulation, another innovative company pushed out because of bureaucracy.