Uber (formerly UberCab), an iPhone application that helps users find rides from limos and town cars, got into some legal trouble this week — city and state agencies from both San Francisco and California sent the company cease-and-desist letters. But when I talked to chief executive Ryan Graves last night, he sounded optimistic that the issues can be resolved.
“Uber’s doors are open, and we plan to keep it that way,” he said, adding that the company is talking to the relevant agencies — the California Public Utilities Commission and the San Francisco Municipal Transportation Agency — about how to address their concerns without shutting down the app. “We’re taking a very cooperative approach to how we deal with these agencies. From the beginning, they’ve said that they’re not here to shut down business, they’re just enforcing the rules as they’re written.”
The company has already made one concession as a result of the complaints — it changed its name from UberCab to Uber, addressing concerns that the company was falsely advertising itself as a taxi service. (The letters from both agencies are embedded below.) The decision wasn’t difficult, Graves said, because it clarifies Uber’s mission.
Here’s how Uber works: Users enter their credit card information in the app. Then when they open the app, they see a map showing the location of available drivers. You can call for a pickup by just pressing a button. Users pay within the app (there’s a set fee for distance traveled), and both the driver and the passenger can rate each other when the experience is over.
Graves argued that most of the other legal complaints stem from a misunderstanding of what Uber does and who its drivers are. I’ve emailed the SFMTA for comment, and I’ll update this post if I hear back, but the letters’ main concerns include the fact that Uber is operating without a carrier permit, that it charges per mile (rather than charging a flat or hourly rate), and that it collects a fee at all (which is passed on to the drivers).
So what’s the misunderstanding? The big point that Graves emphasized is that Uber drivers have already been licensed by the state as livery service providers.
“These are not like rogue guys, these are legit professionals,” he said.
And Uber itself is not a limo company, Graves added — it’s just “facilitating a connection” between limo drivers and passengers.
Meanwhile, Uber investor Chris Sacca tweeted that the news “excites” him. The case has already attracted some positive attention for the company. For example, a reader who hadn’t heard of Uber posted a question on Q&A site Quora about why someone would use it, when calling a cab is cheaper. That question prompted an impassioned answer outlining the horrors of calling a cab in San Francisco (something I’ve experienced myself).
Uber only operates in San Francisco right now. Graves said that livery services (which include limo drivers) are regulated on a statewide level, so if the current issues are resolved, Uber should be able to open in other California cities without further legal problems. And since California’s regulations are stricter than most other states, expansion beyond the state shouldn’t present big hurdles either, he said.
The company recently raised $1.25 million in funding from First Round Capital, Sacca’s firm Lowercase Capital, and the Founder Collective.
How startups are scaling communication: The pandemic is making startups take a close look at ramping up their communication solutions. Learn how