Not great for its reputation
One odd upside to Austin’s Prop 1 saga is that the newly-opened marketplace gave several startups the opportunity to fill the functional void and drum up some brand loyalty from the citizens of Austin. Sadly, one of the companies is being targeted by police operations.
What happened to Arcade City?
City police cited and impounded a member of the Arcade City rideshare group over the weekend. In a statement, The city said “companies and individuals providing transportation services and charging more than the federal reimbursement rate without appropriate documentation are illegal in the City of Austin” (for the record, that rate is 54 cents per mile).
Arcade City claims these regulations shouldn’t apply to them because they don’t employ anybody, contract or otherwise. Instead of creating an app that coordinates all rides, this organization started a Facebook group where riders and drivers could negotiate services without the middleman taking a cut.
Instead of a centralized organization, this group simply serves as a decentralized, peer-to-peer platform. Technically, all rides are free, but tips are welcome.
Because of this, in a response video, founder Christopher David pledged to pursue legal action against the City of Austin for this and any forthcoming citations against community members.
Cutting out the middleman
Legality aside, this certainly doesn’t look good for the city’s current characterization as anti-technology. While Arcade’s City concept is still in its infancy, it potential has great perks. Critics scold Uber and Lyft for not paying their drivers much money while reaping millions of dollars in profits.
Without the middleman setting prices and taking their cut of the transactions, drivers in a true peer-to-peer system stand to make more money, even when it costs the riders less money.
To choose to target them through police action, rather than bring them to the table for a discussion about how to move forward, is terrible for the city’s image.
Opportunity for bounce back
At the same time, there’s still plenty to be skeptical of with Arcade City. The CEO has made questionable choices in past ventures. The response video doesn’t help his image; his anger comes off as childish and rooted in a fixation to “stick it to the man.” Plenty of other disrupters do so with level heads, and there’s a reason for that; it’s a better look. There’s also the question of how such a system will actually generate revenue to keep it going. Apps don’t get built for free.
How the Arcade City team chooses to monetize this venture remains to be seen; it’s hard to see any option that wouldn’t void their use of their legal loophole.
All that being said, it appears Austin’s government is bent on dismantling the operation before we get to find out. For that, they should be ashamed of themselves.
July 3, 2016 at 10:35 am
It’s interesting to note that none of the Austin drivers who were in fact contract drivers for Uber/Lyft, we’re not and had not contracted with Arcade City. They were merely granted access to a group of highly motivated passengers in desperate need of services. The vetting process for access was providing a Uber /Lyft profile. By doing so this would, in AC’s founder’s mind, sustanciate the drivers validity of passing the security check. The problem with tat was two fold. 1) it was the similar type of check which wasn’t sufficient enough for Uber/Lyft. 2) It created an even bigger potential for creed, and a method of circumventing AC’s vetting process. In fact there were individuals doctoring up uber/Lyft profiles just so they could gain access to the ever growing passenger pool.
This created an even bigger mess. Why, because of the lack of oversight and governing of the hive by CD. Many times during the, let’s call it, “The Arcade City Takeover” campaign, CD mentioned the app would be out. 1st it was 2 weeks, next it would be beta tested by select deivers, and as of yet, still hasn’t been released. For me it gives rise to his mis-management style and given his questionable pass makes it abundantly clear that this go around isn’t be any different.
Myself and many others from the original 1811, the core group of AC drivers, had mentioned numerous times of the importance of meeting the commercial and security compliance of any of the cities we’d planned on operating in. CD choose to take a different approach thus putting drivers and passengers safety and lively hood at jeopardy. This is what put the cross-hairs on the “non-contracted” driver. Of course ignorantly accepting the inticement of money for a commercially related activity without meeting those commercial requirements of that city is irresponsible. To be fare The City of Austin had every right to do what they did. Ignorance of the law is no excuse. Put another way in commerce there are rules that must be abided by and ignoring them is no excuse to do as thy will. Arcade City usefulness without a viable platform will continue to put all parties involved in jeopardy.
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