David R. Henderson  

Travis Vanderbilt Kalanick

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The idea worked. How could Mr. Kalanick tell? Four months after the launch in San Francisco, Uber was served with a "cease and desist" order from the California Public Utility Commission and the San Francisco Municipal Transportation Agency. "Given my background," Mr. Kalanick says, alluding to being sued at Scour.com, "this was like homecoming." He verified with his lawyers that what Uber was doing was indeed legal, then the company took its case to the public through Twitter and email.

"Did you ever cease?" I asked. "No." "Did you ever desist?" "No." "So you basically ignored them?"

As he talks, Mr. Kalanick paces around the conference room carrying a golf putter. The more wound up he becomes, the more he seems likely to break a window than practice his stroke. "The thing is, a cease and desist is something that says, 'Hey, I think you should stop,' and we're saying, 'We don't think we should.' The only way to deal with that is to be taken to court, and we never went to court."


This is from Andy Kessler's "The Transportation Trustbuster," the "Weekend Interview" in the Wall Street Journal, January 26-27, 2013.

The interview is with Travis Kalanick, CEO of Uber, the new company that is revolutionizing limousine service in some major U.S. cities. The whole thing, though, unfortunately, gated, is worth reading.

As might be expected, various local regulatory agencies, generally in the pocket of taxicab companies, tried to come down on Uber. The problem with that strategy? Uber wasn't breaking any laws:

But Uber did have to meet with the San Francisco Municipal Transportation Agency, where the woman in charge of taxis "was upset," Mr. Kalanick says. "Oh man, I've never. . . . She was fire and brimstone, deep anger, screaming. But here's the thing, SFMTA has no jurisdiction on what we do. They regulate taxis. Every single limo company we work with is licensed and regulated by the state of California."

Ultimately, he says, the question boiled down to this: "Are we American Airlines or are we Expedia? It became clear, we are Expedia."


Nor did Kalanick buy into Kessler's characterization of his strategy as "don't ask for permission; beg for forgiveness." The reason, says Kalanick: "We don't have to ask for forgiveness because we are legal."

In his zeal to challenge regulatory agencies that try to keep local limo and taxi service expensive and out of reach of all but the rich, Kalanick reminds me of Cornelius Vanderbilt. Vanderbilt and his boss, Thomas Gibbons, in two separate cases, challenged the monopoly that the New York State legislature had given Robert Fulton and the cases worked their way up to the U.S. Supreme Court. Vanderbilt and his boss wanted to provide low-cost transportation on steamships. Vanderbilt hired Daniel Webster to argue Gibbons's case. The first case decided was Gibbons v. Ogden, which Gibbons won, making Vanderbilt's case moot.

Even better, in a sense, in this case is that Kalanick doesn't have to challenge a legally granted monopoly to make Uber work. He can take the monopoly as given and simply make more off-duty and underused limos available to people who want them.


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COMMENTS (9 to date)
Joe Cushing writes:

Throughout this post, I was not able to figure out what it was he was doing that made people so angry. I get that he found some loophole around the cartel but I don't know what that loophole is.

Joe Cushing writes:

The article was not behind a pay wall for me. Maybe it's because I got to it through your link. So the guy is making a car dispatch service and it has everybody in an uproar.

I find the whole taxi industry and it's gag tactics to be so disgusting.

Joe Cushing writes:

*gang tactics

ThomasH writes:

An inspiration to Carter/Clinton/Obama pro-growth Democrats.

noiselull writes:

Y'know, going to WSJ articles from Google still works to get behind the paywall.

Mark Bahner writes:

Hi,

Uber is important. But it's absolutely nothing compared to the coming driverless car revolution.

The Future of Transportation

More on the future of transportation

Mark

P.S. By "coming revolution," I mean it will start within a decade and be complete within 3 decades.

Joe Cushing writes:

Mark, A company just came out with an airplane that can be driven down the road. I'd think trips over 100 miles might occur in one of them. Also, a train would not be needed to get the effect you are talking about. A row of cars cold simply join up on the road and share drag.

MG writes:

Interesting and telling that all these strategies/technologies aim to use technology to expand transportation freedom/choice, not to curtail it in the name of collective efficiency. Most beautiful is the concept of sharing a car: it hits the "soft spots" of progressives (sharing), traditionalist (car), and freedomders (travel anytime/anywhere). This should meet Arnold Kling's axes theory.

The future has yet arrived in many parts of Western Europe then. I've been using car sharing for one year now, unloading the burden of car ownership while maintaining access to different car and truck models on demand at a low cost. Decent public transportation plus a simple smartphone app enabled the most revolutionary and financially profitable lifestyle change that happened in my life during the last 30 years. It happened under the radar of most futurologists.

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