Uber, Lyft Return to Austin With Tech Edge, But Upstarts Grew Roots

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communicating with dispatchers over walkie-talkies, Evdakov says. By about 2008, apps began replacing the radios and people began requesting rides through the apps, instead of calling dispatchers, he says. Evdakov ran a marketing company in Russia and Saturn was a client, which led him to start Fasten in the U.S. with Lvov. Fasten’s $10.5 million in funding has so far come from Lvov.

Even with Fasten’s experience, Uber and Lyft have operated in the U.S. longer and have far more funding. That lets them offer subsidies to both drivers and riders, something that Evdakov expects to face in Austin when the companies return. That has happened in Boston, and Fasten has tried to compete by also offering subsidies, he says.

“We’ll have to do it at some point,” he says of providing subsidies in Austin.

Evdakov says Fasten has been able to achieve profitability in Austin and Boston with its current business model, and it plans to target new cities soon, particularly ones where Uber and Lyft already exist. Fasten believes it can attract the other companies’ drivers, who want to take home a larger portion of the fare at Fasten. That will subsequently attract more riders, he says. The company is in the process of raising $20 million in new funding to expand, Evdakov says.

“When the drivers are happy and support the service, riders feel it in their experience,” he says. “We are making sure that drivers are taken care of, and they will take care of our riders.”

One other way Fasten is trying to do that is by opening a lounge for drivers. The company leased a former gas station in East Austin earlier this month, which it plans to refurbish as office space for employees and a place where drivers can use the restroom or get refreshments.

Uber’s public troublesincluding various sexual assault and harassment allegations and its so-called upfront pricing offering, which stirred some recent controversy for seemingly earning Uber a larger percentage of the total fare—only adds to drivers’ discontent with the service, Evdakov contends. Meanwhile Lyft, which has tried to take advantage of Uber’s public opinion problems, isn’t actually much better, Evdakov says. Afterall, Lyft worked with Uber to get state legislators to repeal rules that citizens of Austin voted to keep, he says. (To play devil’s advocate, 44 percent of Austin voters voted in the referendum to not keep the rules, too.)

Both RideAustin and Fasten are more focused on their daily operations than the future of the industry. Neither currently has a plan, or use, for diving into fields that Uber has dipped its toes, such as autonomous cars—a business strategy that has still yet to be borne out as a profitable one, as Xconomy has previously reported. Evdakov says he can envision a way that self-driving cars could work for the industry if owners of driverless cars used apps like Fasten or Uber to lease their autonomous cars out to users for rides—similar to renting a room on Airbnb.

Despite both Fasten and RideAustin’s positive outlooks, there are only a few certainties right now. First, the city of Austin will no longer be getting 1 percent of each fare, something that the new state legislation outlawed. The bill, however, will allow the state of Texas to implement fees. Since May of 2016, the city of Austin says it collected $915,732 in fees from Fasten, RideAustin, Fare, Wingz, GetMe, and the few other smaller operators.

Next, new drivers that only plan to use Uber and Lyft won’t necessarily be fingerprinted. Since the Austin began requiring fingerprints as a part of background checks, the companies have checked 9,728 drivers. Both RideAustin and Fasten say they plan to continue to fingerprint any new drivers, however, a sign they say shows that their operations are ensuring passenger safety.

Finally, each of the rideshare companies will certainly lose some market share to Uber and Lyft, which offer consumers bigger discounts, sometimes lower prices, better technology, more engineers, and boast more money. In January, Austinites took about 480,000 rides. But will it be enough to run out Fasten and RideAustin, which each say they account for about 50 percent of the Austin market currently?

RideAustin may have a shorter fuse. The group says it can’t continue to operate if it drops below 20,000 weekly riders. RideAustin gives about 60,000 to 70,000 each week currently, Goldenberg says, an estimate that would indeed give it about half of the current market. Goldenberg says she has been happy to see so many companies use Austin as a test bed for transportation, and is excited about what RideAustin has been able to do.

“The folks that use RideAustin are taking it because of the charity angle, the nonprofit angle—we pay drivers more,” she says. “A lot of those attributes will help maintain that market share going forward.”

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David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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