What happened in Austin after Uber and Lyft got up and left

Uber and Lyft abruptly left Austin, Texas, in early May, angry over a city regulation forcing drivers to be fingerprinted in order to work.

While the two ride-hailing services remain deadlocked with Austin city regulators over the issue, new companies have wasted no time setting up shop to fill the void.

The new services may not yet be as good as Uber or Lyft, but they don't have to be. The two ride-hailing giants left Austin on May 9 after losing an expensive campaign to prevent drivers from being subjected to fingerprint-based criminal background checks.

Austin is an important market for the companies to be in. A rapidly expanding economy and population — plus the fact that it's a major tech hub — mean the greater metropolitan area of Austin punches outside its weight class in terms of growth.

Austin, Texas
David Sucsy | Getty Images

There are 10 licensed services that have filled the void the companies have left. All 10 met an Aug. 1 benchmark of having at least 50 percent of hours or miles driven by drivers who have been fingerprinted, said a city of Austin Transportation Department spokeswoman. (The data is self-reported.) The companies must be in full compliance with the new law by Feb. 1 2017.

On Tuesday, Uber's public affairs lead for Texas met with key Austin City Council staffers and urged them to consider amending the law, while city staffers urged the company to return in compliance. (The meeting was first reported by the Austin Business Journal.)

Despite the ongoing discussions, neither side is budging.

"We have maintained communication with city officials and we are hopeful of being able to return, but nothing at this point is fundamentally different since we have left," a Lyft spokesman said.

Uber and Lyft strongly oppose fingerprint-based criminal background checks, which they have said do nothing to improve safety, unfairly penalize minorities and limit the supply of drivers, degrading the service. Many of the laws developed years ago to regulate incumbent taxi and limousine companies should not be applied to ride-hailing companies, the companies have said.

If anyone thought there would be a transportation apocalypse or an uptick in criminal behavior after the companies left, so far it hasn't happened.

Early data from the Austin Police Department suggests that there's been no significant impact on the number of sexual assaults, something both nonprofit advocates including Austin's The SAFE Alliance and the companies' opponents, including organizations funded by the Taxicab, Limousine & Paratransit Association said increased with the arrival of the ride-hailing giants.

Nor does the data show an increase in drunk driving since the two companies left town, something Uber has said it helps prevent. (Of course, the fact that some 50,900 University of Texas students are out for the summer break might be part of the reason.)

Uber driver
Mark Ralston | AFP | Getty Images

Austin's new transportation network companies are still working out kinks in the system, but they are enabling people to get around, reporters at the Austin American-Statesman found. They road-tested seven apps vying to replace Uber and Lyft and found that they were generally more expensive, harder to use and suffered from a shortage of drivers. That said, the drivers were generally professional and knowledgeable of ride-hailing, many of them having worked for Uber and Lyft in Austin, and continuing to do so outside the city's limits, the reporters found.

Austin's new crop of ride-hailing services — many of which popped up as Uber and Lyft left — say they are more than willing to comply with Austin's new law. They consistently emphasize safety and the fair treatment of drivers.

For example, Wingz is a San Francisco-based start-up backed by Salesforce CEO Marc Benioff. Now in 12 U.S. cities, the company launched in Austin the day Uber and Lyft pulled the plug. Austin has quickly emerged as one its biggest markets, said CEO Chris Brandon.

As of the beginning of August, 75 percent of its drivers are fingerprinted, said Brandon. It handpicks drivers and provides them with $1 million in liability coverage, something some states have started to require of ride-hailing companies.

Another, Fasten, is a Boston-based start-up, with experience servicing college towns. It launched in Austin on June 1. 70 percent of riders who have tried the service become repeat customers and the average wait time is less than five minutes, said CEO Kirill Evdakov.

"The way Uber treats their drivers makes them want to switch to anything just to have an alternative," he said. "That's what accelerates our growth." At least 50 percent of its driver hours or miles are completed by drivers who have been fingerprinted, he said.

At least one non-profit has jumped in to pick up some of the slack. RideAustin, which launched on June 16, sends all of its profits either to drivers or reinvests them in the business. 89 percent of driver hours are performed by a fingerprinted person, said Joe Deshotel, RideAustin community engagement director.

The service has won support from riders and drivers for its community-based approach, said Deshotel.

"We don't think that having rock bottom prices is the key to success," said Deshotel. "We are hearing that from the drivers too — they are starting to drop off some of the other platforms because of that."

Drivers are also finding work via private Facebook groups, not all of which are operating entirely legally. The biggest — Arcade City Austin which has more than 39,000 members — has been subject to fines for failing to obtain a city license, the Statesman has reported. Smaller Austin Underground has more than 8,000 members. Riders post their location, destination and contact information and driver's scoop up rides, often sharing their defunct Uber and Lyft profiles.

The groups have developed their own hashtags with riders sometimes including #needaride and drivers replying #resolved when they have connected. Payments are made in a variety of ways including PayPal, Venmo, Square and cash and vary widely. Of course, there is no middle man to skim off drivers profits, and no one is checking anyone's background on the unregulated networks.

The City Council has worked to help the estimated 10,000 former Uber and Lyft drivers in Austin to find work with these other ride-hailing companies. The City Council also developed a new fingerprinting system called Thumbs Up to make compliance with the new law easier.

Austin is not the only Texas city that has proven unfriendly to the ride-sharing giants. Corpus Christi and Galveston have also passed fingerprinting laws, and neither company operates in those markets. Uber hopes that Austin's Council will look to the 13 other cities in Texas which have enacted rules the company approves of, including San Marcos, Fort Worth, El Paso, New Braunfels and Midland, an Uber spokesperson said.

Both companies would likely prefer lawmakers to adopt statewide ride-hailing regulations, instead of having to battle regulators city by city. Lyft is in talks with Texas regulators in the hopes that it will pass such regulation.

"Thirty-five states and dozens of cities across the country have passed common sense ride-sharing regulations that prioritize public safety and consumer choice," said a Lyft spokesman. "We will continue to work collaboratively with policymakers throughout the country to ensure that Lyft is a safe, affordable transportation option for everyone."

Correction: Uber's public affairs lead for Texas met with Austin City Council staffers. An earlier version misstated the person's title. The Austin City Council passed the Thumbs Up measure. An earlier version said the measure had not passed.