San Francisco start-up SideCar brought its smart-phone-based ride-sharing service to Seattle on Friday. It's got a cool app, and an environmental spin. Says the company's


SideCar Sidesteps Regulations and Raises City Concerns with New Ride-Sharing Business

San Francisco start-up SideCarbrought its smart-phone-based ride-sharing service to Seattle on Friday. It's got a cool app, and an environmental spin. Says the company's website: "SideCar is moving transportation in a big sustainable, community-driven direction."

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Whether it's a legal direction, given the company's sidestepping of a host of regulations pertaining to taxis and for-hire cars, is another question.

Craig Leisy, manager of Seattle's Consumer Affairs Unit, which regulates commercial vehicles, says the business raises concerns about public safety, and he's asked the city's legal department to investigate whether his department's regulations apply to SideCar and several similar companies that have recently started in Seattle.

California's Public Utilities Commission has already determined that SideCar, and like start-ups, should be following commercial regulations, and the agency in the last few months has issued cease-and desist notices to them.

SideCar has kept on going regardless. Transportation regulations "were created when the the big innovative technology was the telephone," SideCar CEO Sunil Paul tells SW, by way of explanation. He's part of a new world, he contends, and those old-school regulations don't apply. Moreover, he asserts, "we are not a transportation company and we don't operate a transportation service. All we're doing is providing the means for passengers and drivers to connect with one another."

Here's how it works. Ordinary people who want to offer rides register with SideCar. In this respect, the company is different from Uber, which also uses smart-phone technology to provide rides, but relies upon professional, regulated limo drivers (though the city has other questions about Uber's compliance with regulations related to fares.) When SideCar's drivers are available to give rides, their whereabouts are plugged into the company's app. Would-be passengers use the app to find drivers near them.

Technically, no fare is required. But SideCar's app suggests a "donation" based upon what previous passengers have given for similar trips.

Here's the rub. Leisy says that any time compensation is involved, regulations kick in. And he's not buying the notion that fares are strictly voluntary. SideCar's app includes a way for drivers to rate passengers, just as passengers can rate drivers, Leisy notes. "I'm not sure any driver would ever take you again if you don't pay."

Paul insists passengers really are free to pay nothing, but says that in San Francisco only about 1 percent of them have done so. He chalks that up to people's generosity. We're not talking nominal amounts: A short ride might entail an $8 or $10 payment, about the same as it would in a taxi, Paul says, although he adds that long rides tend to be cheaper than a taxi fare. SideCar takes a 20 percent cut, he confirms.

Despite its utopian language, SideCar is a business, a point emphasized last month when the company raised $10 million in financing from firms including Google Ventures. "That's something that sparked our interest," Leisy says. "It doesn't sound like a bunch of people just sharing rides."

If SideCar is judged to be a commercial operation, the regulations it must meet are extensive, most aimed at protecting passenger safety, according to Leisy. Drivers are fingerprinted and subject to annual criminal background checks and examinations of their driving record. They undergo a physical exam, several days of training and a written test. They need to carry expensive commercial insurance, and their cars, which are inspected, can only be seven years old.

Then, there's the license they need to pay for, which costs $600 in Seattle, if they can get one that is. The city caps the number of licenses it hands out, and none are now available.

Frank Dowgwilla, general manager for the dispatch operation that serves Yellow Cab, says it wouldn't be fair for SideCar's drivers to get to skip all that. "We need a level playing field," he says.

Paul argues that SideCar's drivers give only a ride to two a day, and can't be compared to taxi drivers. Even so, SideCar says its offers its own "10-point safety system," which includes verification of a driver's license and a criminal background check. Paul is hazy on the details, however, saying he thinks that the company uses LexisNexis for background checks but isn't sure. Nor is he sure whether LexisNexis' checks are as comprehensive as the law enforcement checks that local regulators do.

Paul also says the company does only "random" checks of driving records, and doesn't know how that's handled in Seattle. In San Francisco, he says, drivers submit their own records retrieved from the Department of Motor Vehicles.

Whether that's good enough for Seattleites who just want to get home, or to a bar, or to a friend's house, remains to be seen. In SideCar's inaugural weekend in Seattle, offering rides between the hours of 6 p.m. and 2 a.m., dozens of drivers signed up, according to Paul. "We're expecting that will grow every weekend," he says.

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