Why Uber and Lyft Wouldn't Have Succeeded If They'd Tried to Follow the Law

If you can fly a school bus in space, why can't you drive it from Oakland to San Francisco?

Over at Pacific Standard there's a really interesting story about Night School, a San Francisco-based company that tried to improve evening transportation in the region by making use of school buses during after-school hours. It sounds like a great idea: on the one hand we'd be making more efficient use of our infrastructure and equipment, and on the other hand we'd be making life easier on people who want (or need) to get around without a car. And who knows, maybe the extra revenue for the school bus operator would have meant cheaper lease rates for school districts, too.

But as it turns out, we'll never know because the California Public Utilities Commission decided to step in and make life a living hell for the hopeful business owners. After trying to push their way through the bureaucratic morass for nearly a year, the founders threw in the towel and abandoned their innovative business idea. Call it a transportation own-goal on the part of California government.

As I read this, I kept thinking that this is exactly why Uber and Lyft probably wouldn't have been successful if they'd waited to work things out with the myriad regulatory regimes that might claim some authority over their operations. They'd have probably ended up in a similar position to Night School, beating their head against the wall for a few months or years, all the while giving regulators the time they need to prepare effective roadblocks to the new service model. Some people might dislike the way these businesses went about establishing themselves, but I suspect that most of them would prefer a little lawlessness to continued reliance on the old model of traditional taxi service. (And make no mistake, we'd still be stuck with 1980s-era taxi service if e-hailing companies hadn't entered the market.)

Although there are plenty of forward-looking governmental organizations out there, most are not looking to shake things up, especially groups like public utilities commissions which have little to gain personally from things like new transportation services. Uber and Lyft were successful because they built their support base first, by providing a service that consumers found useful and a source of income for a lot of drivers — then they leveraged that support to secure regulatory and political cover. Night School tried to address the regulatory issues up front, and they found that without a proven base of support, the utilities commission had little incentive to work with them in an accommodating, expedient manner. And here we are.