Local taxi-license owners and dispatch companies have controlled for decades a powerful economic asset in Seattle, where 688 taxis collected more than $97 million in the 2011-2012 fiscal year and taxi licenses have changed hands for more than $200,000 each.
Now the power dynamic of Seattle’s ride-service industry is gradually shifting as city laws change to accommodate uberX, Lyft and Sidecar, which use smartphone apps to dispatch drivers using their personal vehicles.
Although the numbers aren’t in on how much taxis took in last year with the entrance of the three popular rideshare operations, it’s clear the San Francisco-based companies are already biting off a chunk of that revenue.
And their investors have made them fearsome competitors.
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Sidecar recently received $10 million in funding led by Union Square Ventures, the same firm that helped back online sites Twitter, Etsy and Kickstarter. Lyft has received at least $83 million in funding within the last year, partly from a firm co-founded by eBay board director Marc Andreessen.
Last year, Securities and Exchange Commission documents showed Uber raised more than $257 million and The Wall Street Journal reported it was valued at $3.5 billion. A year earlier, Uber raised $37 million, in part from Goldman Sachs and Amazon CEO Jeff Bezos.
Lyft and Uber have said they will shut down in Seattle if the City Council approves a proposal Monday that would limit each transportation network company (TNC) to a maximum of 150 drivers on the road at any given time. But that doesn’t necessarily mean the companies’ fight to maintain a foothold in Seattle would end, especially given what they have done in other cities.
Lyft is trying so hard to maintain a presence in Minneapolis — where officials want the company to meet taxi requirements — that it’s been offering free rides of up to $25 in value. Minneapolis officials reportedly planned to ticket and tow any of Lyft’s drivers when it launched there last month, but now have said they’ll back off as long as no customers pay the drivers.
In the last week of February, the St. Paul Pioneer Press reported that Lyft texted customers a message saying, “Help us build the community and enjoy 50 free rides in Minneapolis-Saint Paul (up to $25 each) over the next 15 days.”
Lyft, uberX and Sidecar have invested in similar promotions in Seattle over the past year with coupon codes and free rides. On Dec. 23 and 24, Uber, uberX’s parent company, and Alaska Airlines sponsored free rides to Seattle-Tacoma International Airport.
Licenses mean a living
But taxi owners have made their own investments under the current ride-service rules, which they say keep business dollars more local and, for decades now, have given refugees and immigrants a path out of poverty.
Several single owners and those who split the cost of a license with friends and family have taken out loans to finance the purchase of a license.
The city of Seattle has not increased the number of these 688 licenses in 23 years. An additional 240 taxis are licensed to work in King County, but not within Seattle city limits.
Most taxi-license owners drive their own cabs for work, and when they aren’t using them can lease them to relatives and friends as a sort of family business, said Yohannes Sium, lawyer for the Seattle-King County Taxi Owners Alliance.
He says that’s what his father, 63-year-old Kahsai Sium, did. After escaping Eritrea on political asylum to the United States in the 1980s, his father supported a wife and two children on taxi-driver income in Portland.
In the early ’90s, Kahsai Sium decided to move to Seattle to invest in his own taxi business, buying one licensed vehicle for $10,000 in 1993 and another for $15,000 in 1996. With what he made, his family moved up from low-income public housing to a middle-class life in the Seattle suburbs.
In addition to being able to pay for college for two sons, Yohannes Sium said, Kahsai Sium was able to house at least 12 other refugees from East Africa until they could make it on their own in a new country.
“When these guys sell a $200,000 license, they don’t go out and have a party,” Yohannes Sium said. “They invest that back into their community and family.”
Sium blames the decreasing value of his father’s licenses on the TNCs’ arrival in the Seattle market. Taxis aren’t being leased out to other drivers for as much as they used to be, he added.
Meanwhile, hundreds of taxi drivers have started working with companies such as uberX, with some purchasing new Toyota Priuses for the job. UberX says at least half of its drivers formerly drove cabs.
Samatar Guled, manager of Eastside for Hire, says uberX drivers could run into trouble because the company can drop drivers whenever it wants, leaving a driver who just bought a new car for the job with a failed investment.
Now, many uberX drivers are worried they’ll be cut because of the city’s proposal and the company’s threat to shut down altogether here unless regulations work in the company’s favor.
Concern for drivers
City Councilmembers Mike O’Brien and Kshama Sawant have said they will continue looking at possible regulations to give more power to drivers now at the mercy of the out-of-state corporations. They argue that if there is a glut of available drivers to fill limited positions with the three companies, it’s easier for the companies to treat drivers however they like.
O’Brien initially had proposed TNC vehicle endorsements be given directly to drivers. That way, companies would compete to work with drivers, not the other way around.
“Without any controls, there’s nothing keeping Uber from acting like taxi owners,” said O’Brien, whose proposal was supported by Councilmembers Bruce Harrell, Nick Licata and Sawant.
UberX takes varying percentages of drivers’ fares.
“Right now they’re playing nice in Seattle because the City Council is discussing it,” Sawant said at last month’s taxi committee meeting. “But what will we do if they turn around and tell the drivers that instead they’ve decided to take much more than 20 percent — maybe 50 percent?”
The companies’ fight to stay in the city under more relaxed regulations has gone beyond the City Council and is probably far from over.
UberX Seattle manager Brooke Steger said her company was working in Olympia in hopes of making itself legal statewide, just as TNCs are throughout California. Arizona, Colorado and Maryland are exploring similar statewide policies.
In a message emailed to Seattle Lyft drivers and users earlier this month, Lyft President John Zimmer said that despite challenges the company has faced in cities and states nationwide, “we have always continued operations uninterrupted.”
“We want you to know that we will continue to fight this proposal both before and after the final vote, and we will not let regulators destroy the community you’ve helped us build.”
Alexa Vaughn: 206-464-2515 or firstname.lastname@example.org On Twitter @AlexaVaughn