The secret history of the taxi wars
Setting: Evening. San Francisco. 1889. A businessman named F.S. Chadbourne disembarks from a ferry and grabs a ride from one of the horse-drawn taxis — or hacks — that hover around the Ferry Building, much as they do around the airport today. The hack he chooses turns out to be driven by one James “Nosey” Brown.
Nosey is of an entrepreneurial bent. He drives Chadbourne to an out-of-the-way location and tells him that now that they’re both alone here together in the dark, Nosey has decided that he needs a lot more money in exchange for taking Chadbourne to his destination safely. Chadbourne refuses. Nosey kicks him out of the cab and trots away, leaving Chadbourne to figure out his own way home.
This was not an uncommon occurrence. In San Francisco, as in many cities, the darker it got, the more likely it was that an innocent taxi-hailer was hitching a ride from a “nighthawk” — an unlicensed driver who worked after dark to avoid the police. While not all of them took advantage of the golden opportunity for extortion that arises when one person is riding in an enclosed box driven by another person, nighthawks had a reputation, and that reputation was lousy.
Chadbourne, however, was not a guy to mess with. He had money and contacts in city government, and saw to it that San Francisco drew up new, strict regulations for the city’s cab industry. From then on, all hacks and hack drivers had to be licensed, and driver’s badge had to match the vehicle’s. As a final flourish, Chadbourne named the new ordinance after himself.
When I started writing about Lyft and Uber — and Hailo and Sidecar and Curb and Flywheel and all of the other unruly progeny of this most recent, location-based-app taxi boom — I wondered just how new all our taxi drama was. The app-driven car services have taken flight on the wings of novelty. But all these fights between cab companies and the cities they work in and between their customers and the drivers they employ (or whom they go to great effort to deny employing) — are they a byproduct of innovation or a fact of industry life?
I have come to this conclusion: The problem of getting a taxi has been a colossal hairball since the dawn of time. Other than that, none of the rules around it are fixed. Taxis have been at the forefront of technology — many of the first cars on the road were taxis — and they have been at the very back. One of the reasons that city taxis got so sideswiped by Lyft and Uber was an industry-wide reluctance to take credit card payment, install GPS systems, and to collaborate with each other on citywide dispatch instead of having a separate dispatch for each private company.
Chadbourne’s rules lasted about a year before someone tried to change them. In 1890, a local businessman named Theodore Gurney challenged the Chadbourne Ordinance. Gurney was a classic startup-libertarian type who undercut the competition on price — and he felt that the new municipal rules were getting in the way. He vowed to take the case to the Supreme Court, but before that happened, Gurney Cab folded, largely because, the rumor went, it lured customers in with low prices and then added hidden fees. In an announcement of the impending auction of all the worldly goods of Gurney Cab in 1892, the San Francisco Call wrote:
What at first promised to be a relief from the high prices of the regular hackman proved on trial to be a delusion and a snare. With that discovery the early patrons soon returned to their old drivers and left the Gurneys to practice their overcharges on unsuspecting strangers.
The only thing that remained from the company was the word “gurney” — which, the story went, had been adopted by local medical students as slang for a hospital stretcher. I looked for what happened to the Chadbourne ordinance after that, but was unsuccessful — though the general idea behind it persists in the taxicab medallion system that until recently dominated the business of driving people around in cars.
Once you look into it, the taxicab is behind a lot of firsts. The first person killed by a car in America was killed by a taxi: It was in 1899, near Central Park, and some pedestrian advocates installed a marker commemorating the spot in the late 1990s. The first motorist arrested for speeding in New York was a taxi driver, though he couldn’t have been going that fast — most motorized cabs in New York at the time were powered by lead batteries and couldn’t go much faster than 15 mph. (The batteries were so heavy that they wore down the car tires and had to be lifted out of the cars with a winch.) Theoretically, motorized taxis seemed clean and high-tech — this was a time when horse manure was shoveled into hills by the side of the road for wagons to come by and take away — but the batteries were almost certainly charged by coal-generated electricity.
The first fleet of gasoline-powered taxis arrived in New York in 1907, shipped over from France by a 30-year-old businessman named Henry N. Allen, who decided to start his own cab company after being charged $5 for a three-quarter-mile trip in Manhattan. “I got to brooding over this nighthawk,” Allen later said. “I made up my mind to start a service.” Allen’s company was a raging success, partly due to being heavily backed by his stockbroker dad and the newspaper magnate William Randolph Hearst, but a year later, the drivers went on strike. They argued that while Allen talked a good game about setting up a pension plan and handing out gold watches to loyal employees, the reality was that they were being nickel-and-dimed the whole way — charged a 25-cent-a-day uniform fee, a 10-cent-a-day brass polishing fee, plus 80 cents a day to buy their own gasoline.
Each new iteration of the taxi industry seems to be inspired by a grudge against the old one. The origin story of Uber is not so different from Allen’s — at least if you’re listening to co-founder Garret Camp, who traces the company’s birth to his being charged $800 for three taxicab rides one New Year’s Eve. The other co-founder, Travis Kalanick, has a slightly different version of Camp’s inspiration.
In the Wall Street Journal, Kalanick recalled a 2009 conversation between the two in Paris.
“We were jammin’ on ideas. What’s next, what’s the next thing, and Garrett said, ‘I just want to push a button and get a ride.’ And I’m like, ‘That’s pretty good.’ He said ‘Travis, let’s go buy 10 Mercedes S-Classes, let’s go hire 20 drivers, let’s get parking garages and let’s make it so us and a hundred friends could push a button and an S-Class would roll up, for only us, in the city of San Francisco, where you cannot get a ride.’ This wasn’t about building a huge company, this was about us and our hundred friends.”
In early 2010, Kalanick had a better idea. Why buy the cars? Allen hadn’t had any choice — in his time, cars were still a relatively new, cutting-edge technology. For Uber, the cars aren’t the edge; it’s the app that uses smartphone location data to introduce passengers and drivers.
Uber wasn’t the first company to have this idea. When Apple launched the App Store in the summer of 2008, a group of developers modified some existing travel booking software and turned it into an app called Taxi Magic, which allowed people to hail cabs and pay for them with their smartphones. The “magic” part proved more popular than the taxi part. Taxi drivers could be hailed by the app and then never show up because they had picked up another fare along the way. This is because taxi drivers have a history of taking the “independent” part of their “independent contractor” status seriously.
Taxi drivers don’t make wages; they just drive to pay back the $100-odd they’re charged in gate fees to check out a car and medallion at the beginning of their shift, plus whatever else they can get. Who would drive past a street hail in search of a dispatch call that might not even be there? As San Francisco taxi driver John Han put it in a blog post:
You don’t have to respond to a radio call if you don’t want to. Remember – dispatch service, we are told, is just an, ‘informational referral service.’ (This is due to complications that have arisen from independent contractor status.) I guess what that means is that dispatch service doesn’t legally entitle any public passenger in any way to a taxicab that they’ve just ordered by phone. They can call, but they’re not guaranteed to get one. It only guarantees that their information will be dispatched to us drivers so that their request will be made known to us.
You can service radio orders if you’d like. I do, I like them. But I guess you could also just as well take one and then leave the passenger hanging on the phone for fun as a prank, so long as you see another fare on the street that could be better anyway, (I don’t actually do this, but I suppose in theory I could. I’m making a point).
Companies like Uber and Lyft have altered this equation by taking a percentage of each fare, instead of charging a flat fee upfront — and by placing drivers (and, by extension, passengers) under a web of surveillance that would have been impossible 10 years ago. In the olden days, if you passed out in a taxi and the driver took you on a joyride halfway across town before taking you home, there would be no record. Today, it’s all stored on your phone. But in those same olden days — say, around 2000 — there would also have been no cab company whose execs bragged about being able to examine the travel records of critics or that observed it could track one-night stands.
In this way, Uber and Lyft are perfect examples of this particular tech boom. Like most apps of their generation, they’ve made money by using personal data to connect people. Like others — such as SilkRoad, Airbnb, and Taskrabbit — they’ve made this happen by creating private versions of the reputation networks that always exist in communities, on and off the internet.
What remains to be seen is how they’ll be integrated into our larger society. Trying to classify the people who work for you as independent contractors is not new technology, and neither is underpaying them. FedEx, for example, now has to classify its California drivers as employees, and similar cases concerning Uber and Lyft are working their way through the court system.
Similarly, there’s no new technology involved in hiring lobbyists and lawyers so you can ignore laws that you don’t feel like following. Uber has come to dominate the taxi market in part because Kalanick has as much experience in getting sued as he does in tech. His previous company, Scour, Inc., was one long media piracy lawsuit. “Given my background,” Kalanick said, after being served with a “cease and desist” order from the California Public Utility Commission and the San Francisco Municipal Transportation Agency four months after Uber’s launch in San Francisco, “this was like homecoming.”
The important thing to remember is that the rules of society can change as quickly as technology does. Sometimes taxi drivers have been independent contractors; sometimes they have been salaried employees with benefits and retirement funds. There’s not much stopping us today from having a taxi system like San Francisco had in the 1890s. There’s not much stopping us from having a taxi system like San Francisco had (or at least Yellow Cab did) in the 1970s, when drivers had health and welfare benefits, and four weeks of paid vacation.
The technology is going to change all the time. It’s our collective willingness to make rules and follow through on them that is going to determine how that change plays out.
Next: The littlest gayest taxi service, and how it could be a sign of things to come.