UberCab Cease & Desist Means One Thing: They're Onto Something

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Like most people in Silicon Valley, I’m very intrigued by this UberCab cease & desist situation. My first reaction was “uh oh”. But that quickly switched to a feeling that this is probably the best thing that could ever happen to the young startup. That may sound crazy. But it’s not. And what’s going on here should mean something to people far beyond the Valley.

First of all, while no one likes the threat of legal action, this cease & desist is a huge validation of what UberCab is trying to do. The city of San Francisco (aka San Francisco Metro Transit Authority & the Public Utilities Commission of California) would simply not care if the company wasn’t on to something. Or worse, they probably wouldn’t even know about it if the service was lame.

But that’s not the case. There’s clearly a demand for a service of this nature, and that’s why the city cares. They view it as a threat. Just read what they’re saying, as summarized by our own Lora Kolodny:

  • Ubercab operates much like a cab company but does not have a taxi license.
  • Its cars don’t have insurance equivalent to taxis’ insurance.
  • Ubercab may threaten taxi dispatchers’ way of earning a living.
  • Limos in U.S. cities usually have to prebook an hour in advance, by law, while only licensed taxis can pick someone up right away but Ubercab picks people up right away (again without a taxi license).

It other words: we’re scared shitless of this model.

They’re trying to spin in on the groups that passengers won’t be protected — or something. But that’s ridiculous. I’ve been in an UberCab a few times — each time I’ve felt roughly 100 percent safer than I have in any taxi I’ve ever been in.

Does that give UberCab the right to break laws? Of course not. But the case here seems to be that the laws themselves are broken. This is absolutely a space that needs to be disrupted. And that’s what UberCab is trying to do. They’re not trying to do it by being shady and dick over customers. They’re trying to do it by re-thinking this method of transportation using technology.

The argument that this could threaten taxi dispatchers’ way of earning a living is the best though. Just because you’re an incumbent doesn’t give you the right to rest on your laurels and never be challenged. If the dispatchers feel threatened by UberCab, they should try to compete better, not hide behind some lame legal threat.

The investors in UberCab are already ripping this legal threat apart on Twitter. They’re obviously conflicted here, but that doesn’t mean they’re wrong. Lowercase Capital’s Chris Sacca has some particularly interesting opinions — because he’s been in this situation before. “We invested in @280north after Apple dropped a cease & desist on them and other investors walked away. Sold for 10x our basis,” he writes. Yep. “My old company Speedera was sued by it’s primary competitor a dozen times before they bought us for $140 million. #gameonuber,” he continues.

The fact is that a lot of these types of suits arise when incumbents feel threatened. They often have the capital to legally run the smaller guys out of business or make them bend to their will. But UberCab seems determined to fight here. As we noted in the original post:

Since the orders arrived on October 20th, Ubercab has remained in service under threat of penalties including up to $5,000 fee per instance of Ubercab’s operation, and potentially 90 days in jail per each day the company remains in operation past the orders.

That’s serious stuff. And it’s also going to serve as a rallying call for the company. The outpouring of support from the community will be huge. And given that this model has potential to shake up the industry is all the major metropolitan areas across the country, there’s going to be a ton of interest in this case from all around. And UberCab will bathe in free publicity.

Current towncar servies are inefficient and too expensive. Taxi services, for the most part, are just plain awful. UberCab could at the very least force both of them to get better, or slowly die. That is, if silly backward-thinking laws don’t get in the way.

Even if they ridiculously have to be known as something like “UberCar” going forward, look for UberCab to continue driving forward.

Update: As a few commenters note, this situation has some similarities to the case of PickupPal. Of course, that was in Canada. Thankfully, we’re not Canada here.

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