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After Uber and Lyft exit, local ride-hailing options stumble during first SXSW

Tuesday, March 14, 2017 by Audrey McGlinchy, KUT

Mel Roe was eating dinner Saturday night at Manuel’s Mexican Restaurant in downtown Austin when she nearly threw her phone at the wall. Roe says the app of one of Austin’s six fledgling ride-hailing companies, Fasten, would not let her request a ride.

So, she relied on a technique used by many who’ve been stranded before her.

“We ended up having to stand on the street like it was 1995 to get a frickin’ cab,” said Roe, who is visiting from San Francisco for South by Southwest. “It drove us absolutely insane.”

A Saturday crash

After less than a year of operating in Austin, new ride-hailing companies faced their toughest test yet: the crowds and pouring rain that characterized the first weekend of SXSW. Ride-hailing companies Uber and Lyft left the city in May, after voters upheld City Council rules mandating fingerprint-based background checks for drivers.

At least two of the new six companies’ apps crashed Saturday night – Fasten and RideAustin. Fasten, with its official festival sponsorship, and RideAustin, with its homegrown inception, are considered top local contenders.

Early Sunday, RideAustin posted to its Facebook a description of its outage: “We were sporadic from 7:15pm to midnight due to a previously undiscovered database issue that did not emerge during our scale testing.” The post goes on to say that RideAustin has now fixed the issue.

Fasten Chief Operating Officer Vlad Christoff confirmed that his company too had problems Saturday night, starting a little after 8 p.m. According to complaints on social media and several interviewed riders, Fasten was also plagued by rising prices throughout the weekend, which the company uses to incentivize more drivers to get on the road. One rider, Daniel Zen, who was visiting from New York City, was charged $105.93 to go 4.7 miles Friday morning.

Christoff ticked off four elements that created what he called a “perfect storm.”

“The busiest time of the week in general, South by Southwest, pouring rain and our competitors crashed,” said Christoff. He said the company saw their ride requests multiply by 12.

Both RideAustin and Fasten say their crashes were spurred by the other company going down and having to absorb riders resorting to a Plan B.

Missed opportunity?

SXSW provides local companies, like Fasten and RideAustin, with an international stage.

“South by Southwest is an incredible platform to launch anything new. (That) could mean to relaunch or go national where you might have been regional or local previously,” said Harlan Beverly, assistant director of the University of Texas Venture Labs.

But Beverly said in order to capture an international audience already familiar with ride-hailing companies Uber and Lyft, these local companies would have to prove they have something different to offer.

“These companies that are operating in Austin are operating because there’s no Uber and Lyft, and if Uber and Lyft were here, they’d have a real problem competing,” said Beverly. “(That) means they’re going to have a real problem competing on a national stage unless they can be different and tackle more of the transportation industry than Uber and Lyft are currently doing.”

But Art Olbert, a local tech investor, said the companies have demonstrated one important difference – compared to the biggest players, they’re friendlier to local regulation.

“Austin’s not the only city who resisted some of the terms and conditions of the established players,” said Olbert. “So that in itself could be a value proposition that the local players could use.” Both New York City and Houston have passed regulations that companies Uber and Lyft have found onerous. Both Uber and Lyft still operate in New York City, while only Uber operates in Houston.

Olbert and Beverly emphasized that in order for Austin’s ride-hailing companies to harness SXSW’s audience to expand to other cities, they would have to perform well during the festival.

But a representative for RideAustin downplayed their desire to leverage SXSW as an opportunity to expand beyond Austin. (Fasten also operates in Boston.)

“We’re very much focused on Austin right now,” said Joe Deshotel, community engagement director for RideAustin.

Fasten, on the other hand, seemed more open to taking advantage of potential business prospects created by SXSW.

“We want to essentially show the world that there’s more than just the two main players when it comes to ridesharing in the United States, and especially in Austin,” said Christoff of Fasten, who said the company is planning to expand to a third city – an announcement not expected for at least a couple more months. “We would like to share our story and our success with the world.”

Both companies said the problems that customers experienced Saturday night have been resolved.

This story was produced as part of the Austin Monitor’s reporting partnership with KUT.

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