Uber CEO Travis Kalanick

Posted by Susanna Negovan on 16 Nov 2012

Over the last year, the phrase “Do you use Uber?” has become something of a litmus test for identifying someone’s level of coolness and connectivity. From late-night partygoers standing outside a nightclub to CEOs rushing to a board meeting, the simple transportation app has transitioned from newcomer into the ultimate status badge at lightning speed.

But the popular service, which allows users to order a black car, SUV or taxi at a moment’s notice using a smart phone, is at risk as the city’s Department of Business Affairs and Consumer Protection decides on proposed regulations that would outlaw the very technology that has made it so attractive.

The company’s CEO, Travis Kalanick, believes that the opposition stems from the city’s large taxi companies, which are suddenly in competition with more than 1,000 independent black car drivers who have signed up to use the service.

“The taxi industry is upset because you have a high-quality alternative to taxis, and they’re not used to competing,” says Kalanick, who first launched Uber in San Francisco in 2010 (the service came to Chicago in September 2011). “Do we make the limo a higher-quality experience with a lower pickup time? Yes. And has that got the taxi industry worried given the low quality of service many of them are providing? Probably. We are an alternative, and I think that’s what they’re nervous about.”

The regulations would outlaw any electronic measurement device outside of licensed taxis (Uber equips drivers with a smart phone) and prohibit the use of time and distance charges, which is how Uber computes its fares. Fares are typically 50-75 percent higher than a taxi, but much lower than normal black car fares, so it’s possible to take a black car to and from destinations within the city for $15 or $20. Uber also recently introduced a taxi service that uses the same technology with independent taxi drivers.

“So, you do a broad reading of [the regulations], and you’re like ‘watches aren’t allowed, speedometers aren’t allowed, odometers’ … they’re basically banning all technology that could be used to determine time or distance,” says Kalanick.

The company has faced similar opposition in other cities, including Washington, D.C., Boston and Seattle. A class-action suit was recently filed in San Francisco claiming that the app takes fares away from taxi drivers. In Chicago, Kalanick says things are different.

“In this situation, we have regulations that don’t get voted on,” he says. “The regulatory body almost by fiat can create these regulations. So you have to engage people.”

In late October when the proposed regulations were first published, there was an avalanche of social media support on Facebook and Twitter, and local users like “Curb Your Enthusiasm” star Jeff Garlin sent #uberlovechi to Mayor Emanuel’s Twitter account, while more than 5,500 signed a petition on the company’s blog.

Jason Fried, 37Signals CEO, is an Uber user who has participated in the Twitter campaign to drop the proposed legislation, and with 96,000 followers and a reputation as a big-idea technologist, he’s one of the movement’s louder voices. The 38-year-old, who heads a software company, started using Uber last year after deciding he could no longer stomach the uncertainty of being able to hail a cab from his Wicker Park home to his downtown office.

“If I need to be downtown by 9:30 am, and I use Uber at 9:10 and I see a car six minutes away, I can trust it’s going to be accurate,” says Fried. “The reason I like it so much is not about the luxury. It’s because it’s predictable. That’s something that cabs are not.”

Fried, a self-described fan of the service, has been intrigued enough to interact with each of his Uber drivers. “Whenever I get into an Uber car I always ask the driver how they like it,” he says. “I’ve not heard a single complaint. They’re all like, ‘This is fantastic, it’s liberated me, I can make some extra money between my other rides,’ or some drivers have quit their other companies and now work for Uber exclusively. They love that the passengers love it. Everyone’s just happy about it.”

And that’s what makes the proposed regulations so perplexing to Kalanick and his supporters in Chicago.

“Most, if not all, sedan companies in Chicago charge by time and distance today,” says Kalanick. “It makes sense because the driver’s time is worth money. He needs to make certain dollars per hour to make a living, and the car goes through wear and tear and you also have to pay for gas, and that’s the distance component. It makes sense when the cost structure is a certain way that you would charge that way. It would be like telling a hotel they can’t charge by night anymore.”

Fried is less circumspect. “It feels like an old entrenched industry gasping for air right now when they’re fighting a newcomer who is clearly onto something and providing a fantastic service,” he says. “You can see that one side is for innovation and customer service, which is Uber. And the other side is for limiting choice, preventing innovation and sticking to the old ways. I think it’d be such a huge shame for the city to side with entrenched interests because it doesn’t serve the people.”

Lifeway Foods CEO Julie Smolyansky agrees. “I love Uber,” she says. “I don’t understand how there could be an effort that stifles business, innovation or pioneering new areas of growth and technology.”

At press time, the decision was still up in the air. An official public comment period ended Nov. 9, and it’s up to the BACP to decide whether to take those comments into account as they finalize their decision.

“We don’t know what they’re going to do,” says Kalanick. “It could be that they’ll strike those regulations from the proposal and then there’s nothing to do except celebrate and have a beer. Or it could be that the call to action is that we’re going to get 5,000 people to go to City Hall.”

A statement released by the mayor’s office stressed a commitment to transportation choices. “Uber, and other companies, are pioneering new ways to access Chicago’s robust transportation offerings, and we continue to work with them and others to ensure we have modern laws that accommodate modern transportation technologies.”

In the meantime, Smolyansky says she’s crossing her fingers Uber doesn’t go away — and so are tens of thousands of other ardent supporters.