Be Careful What You Vote For

Rarely has a vote had such an immediate effect. On May 7, Austin residents elected not to overturn restrictions on ridesharing companies their city council passed in December. Two days later, both Uber and Lyft ceased operations in the Texas capital. The new rules required transportation network companies (TNCs, as they're known) to expand their background checks on drivers to include fingerprinting, processed through the FBI. Uber and Lyft—which hadn't met government demands to have run fingerprint checks on 25 percent of their drivers by voting day—declared it was now impossible to do business in the city.

The popular ridesharing companies warned they would disable their apps in Austin if voters didn't reject the regulations, but it seems neither the government nor the people believed them. "Nobody wants them to leave and we're not asking them to leave," council member Ann Kitchen, who led the effort to impose the regulations, told KUTX radio. Mayor Steven Adler said both before and after the referendum that he hoped the city could come to some compromise with the TNCs, hinting that the phase-in of fingerprint requirements could be delayed. Residents of the traffic-choked city with few mass-transit alternatives switched not to traditional taxis but to a new, decentralized ridesharing service that launched as soon as Uber and Lyft left. Arcade City, which had been working on its own app, set up a Facebook page to connect residents wanting transportation with residents willing to provide it (for a price). "Need a ride ASAP from riverside area to downtown!" one post reads. "How do I use this to get a ride?? Going to the Walmart on w Anderson ln, I'm off 183 right now thanks," says another. (The city's transportation-department detectives have already starting busting the drivers coming to their rescue.)

So what no one wanted—except Austin's Big Three incumbent taxi companies—is precisely what everyone got. Sadly, this fight is all too typical of what happens when technology companies run head first into the buzzsaw of politics. India's telecommunications regulator decided in February, for example, to ban "Free Basics," a nonprofit Facebook program designed to give low-bandwidth information services to the country's poorest citizens. What should have been an easy sell—offering free Internet to underserved rural poor—opponents successfully painted as a colonialist plot to exploit India's poor economically and reshape its government to the company's advantage. Given that fights like this are liable to keep popping up as technology changes the way people can connect, it's worth considering what lessons both government and business can learn from how Austin's ridesharing experiment unraveled.

Chief among the lessons for companies is that politics is a very different business from business. This is particularly true when it comes to making your case to the public. Tech companies often make the mistake of thinking that their services are so self-evidently valuable that people will automatically flock to their banner. Yet in Austin, many of the voters bombarded with flyers, ads, and text messages weren't familiar with ridesharing services and those who were had concerns the companies didn't address.

Companies are also vulnerable to being pegged "big greedy corporations." That's particularly true when they spend a lot of money advocating their point of view. By the end of the TNCs' campaign backing Austin's Proposition 1, opponents were talking almost entirely about the money the TNCs had spent—$8 million—and hardly at all about the substantive policy issues.