DC: Uber Right or Uber Wrong?

07/10/2012 08:39 am ET Updated Sep 09, 2012

"All tyranny needs to gain a foothold is for people of good conscience to remain silent." -Thomas Jefferson

"If a policy is wrongheaded, feckless and corrupt, I take it personally and consider it a moral obligation to sound off and not shut up until it's fixed."- David Hackworth

I am a child of the DC region. I grew up in Silver Spring, MD right on the border of DC by 16th Street. My father went to Catholic University for his Masters and got his PhD at Howard University in DC while driving a DC taxi cab for over a decade. I was the kid who grew up being driven around to school and activities in a black and orange DC taxi cab. DC taxis and their drivers are very familiar to me. DC is in my blood and I consider it to this day my hometown -- the place that gave me my particular and multicultural worldview. This is why what has transpired in the last 24 hours has left me heartbroken and upset. I am speaking here personally and not officially on behalf of Uber. Any mistakes or opinions I own completely. Full disclosure: I am a Managing Director of Menlo Ventures where we invested $20 million in Uber in its Series B round last October 2011.

When consumers are given the freedom to choose and competition is encouraged, the result is innovation, efficiency, and more convenient, lower cost options. Inefficiency is turned into profit and economic growth is fostered; everyone wins. Instead, as in the case of DC, it is as if 19th and 20th century crony city politics has risen its ugly head. What is evidenced is a power struggle where one company is guarding its turf -- currying favor with local officials -- at the expense of DC residents.

In the last 24 hours, DC Councilwoman Marie Cheh submitted a bill that is up for a vote today, Tuesday, July 10th. While she says she made a good will effort to "negotiate" with Uber, in actuality, she never shared the language of this bill with the company. Travis Kalanick, Uber's CEO and co-founder, has publicly said on his twitter account "We didn't get any language on the amendment until late yesterday afternoon after it was almost too late to oppose the amendment."

I have also received a copy of an email from Marie Cheh to the DC City Council sent last night. In the interest of space I am quoting from that email below. Keep in mind that Travis Kalanick has said that he has never supported any legislation and that Uber believes that it is operating legally under the laws of DC currently.

From: Cheh, Mary (COUNCIL) Sent: Monday, July 09, 2012 10:34 PM To: Members and Staff (COUNCIL) Subject: Uber

Dear Members and Staff,

The amendment that I am proposing tomorrow would allow services such as Uber to operate legally in the District. Companies like Uber would be exempt from regulation by the Taxicab Commission so long as they provide an estimated fare, disclose rates, provide a receipt, and use sedans licensed by the Commission to operate in the District. The amendment would maintain the status quo by requiring sedans to have a $15 minimum fare and time and distance rates that are higher than taxicabs (currently, Uber has a $15 minimum fare and rates that are higher than taxicabs, so my amendment will not change these figures. See: https://www.uber.com/cities/washington-dc ). After 1 year, the amendment would allow Uber or anyone else to petition the Commission to adjust these rates as necessary. Establishing a minimum fare is important to distinguish premium sedan service from traditional taxicab service and to prevent sedans from directly competing with or undercuting taxicabs. Taxi companies want minimum fares that are much higher than what I am proposing in my amendment. However, I believe that simply preserving the status quo is appropriate and reasonable.

I am deeply disappointed that Uber has decided that it no longer supports this amendment that we negotiated in good faith. The taxi industry is one that has been regulated for a very long time. If Uber wishes to operate taxis, then it is free to do so, but it should then be subject to the same regulations and requirements of taxis.

Regards,
Mary

This is not the time for maintaining the status quo. Innovation is not about status quo. Her last line is particularly troubling in tone and spirit: "If Uber wishes to operate taxis, then it is free to do so, but it should then be subject to the same regulations and requirements of taxis." Uber is not a taxi service and she knows it. In other words, that statement is a blanket threat to outlaw Uber outright if it does not agree to a minimum fare price that is 500% that of taxis in DC. She continues to say that Uber currently has a $15 minimum price and that the 500% requirement is matching Uber's current minimum price. Uber's $15 minimum is a free market choice that the company has made in the past and it should have the right to reduce its prices lower to benefit consumers. Otherwise, Uber and the citizens of DC are becoming victims of a price fixing scheme. Councilwoman Cheh knows full well of Uber's new UberX service which will roll out much lower prices for consumers with environmentally friendly hybrid cars in DC and worldwide across all Uber's current 13 cities. In other words, while she claims she is only locking in the current $15 minimum for Uber Sedans (black town cars), she knows full well that her legislation is blocking a completely new consumer option that will democratize clean, efficient and affordable transportation options for the citizens of DC.

Inherent to liberty is the freedom to contract. That is why our founding fathers found it fit to expressly provide for such a freedom in our Constitution. It is in the very fibers of our republic. It is essential to our existence and survival. It is axiomatic that competition is good for the consumer. It is the lifeblood of a healthy economy. If one business wishes to advance and innovate an industry that is in dire need for improvement and it wants to do so by providing a better service for a lower price, then it is nothing but corrupt for the government to step in and outlaw such innovation. Such government is neither of the people nor by the people, but is an obscene exaggeration and the very definition of tyranny and dysfunction.

What we need is not a minimum fare law. We need a minimum modicum of courage. In the era when political power corrupts, social and crowdsourced power cleanses. We must stir the hornet's nest to build immunity to the sting of corruption. And Paul Graham is right. Uber is a litmus test for corruption and honesty in city governments. Paul recently tweeted:

@paulg: Uber is so obviously a good thing that you can measure how corrupt cities are by how hard they try to suppress it.

There are moments in politicians' lives when there is a chance to show the true meaning of the word Candidate. It stems from the Latin root Candidus which means pure and sincere. This is the time to stand up and take a stand for what is right, true and good for DC and for DC citizens. In this day and age of crowd-sourced support those politicians who show true and sincere leadership right here and now will be vaulted and revered and not forgotten for their courage. This is the time to look deep within and do what you know is right and true. The Citizens of Washington, DC are watching and waiting for your courage. We will meet you at the shores of truth.