Boston, Friday night. A lone taxi slowly rolls by Tony Tjan's home as he sits inside with his family. Maybe it's a coincidence, but Tjan can be forgiven for being unnerved. He knows the taxi companies don't like him—their operators have openly booed and hairy-eyeballed his colleagues in meetings. And why not? He's the competition.
In most cities, taxicabs and livery services are steeped in politics and old-world stodginess, as are the drivers themselves. A few years back in Boston, for example, cabbies hauled Mayor Tom Menino into court and successfully blocked his edict that their cabs must be hybrid by 2015. These days, they're fighting a law to make drivers accept credit cards (of all things!). And so, perhaps unsurprisingly, new companies that enter the transportation space tossing around crazy words like green and innovation have found themselves positioned as a 21st-century version of "the Man" to the cabbies' Travis Bickle.
In Boston and San Francisco, eight-year-old eco-livery service PlanetTran—funded by, among others, Tjan, CEO and managing partner of Boston VC firm Cue Ball—attracts customers with its fleet of Wi-Fi-ready hybrids, easy online booking, and customized services (they'll send you drivers you rate favorably, for example). For most of its life, the company existed in moderate harmony with city-run cab services. But then PlanetTran began to hype new technologies, including Tweet-a-Ride, which lets clients tweet their location, destination, and pickup time for instant service. Not far off, according to president Lori van Dam: the ability to sync your PlanetTran account with your digital calendar and Facebook; it'll adjust your pickup time if it knows you're running late or organize ride shares if it finds out that you and the PlanetTran user down the street both have Monday-morning flights.
Hail a cab in the rain? How 2010. But some local cabbies prefer how things were back then.
PlanetTran dispatchers have fielded menacing phone calls, Tjan says. Staffing has been tougher, as potential drivers were pressured by peers to stick with the traditional livery or cab systems. "I worried about people shooting BB guns at our dispatch," says Tjan. "We're talking about using technology and innovation in industries that have had traditional, insularly run, highly protectionist-oriented groups."
Opponents have employed official channels as well. In San Francisco, in 2010, a startup called UberCab offered an online booking agent to connect passengers with nearby livery cars. Users could pay with their phones, and UberCab would take a cut. But last year, the city's transportation agency issued a cease-and-desist order after an outspoken (and well-connected) cabbie questioned the service's legality.
The city charged UberCab with operating taxis without a permit, violating fee requirements, and falsely using the word cab in its name. It threatened fines as steep as $5,000 per violation and jail time for continuing to operate. CEO and cofounder Travis Kalanick dropped the word from his firm's name, then pushed his luck: He simply kept operating, sure that he was in the legal right.
As of now, the newly named Uber has been left alone. "Regulatory bodies like to regulate—I get that," Kalanick says. "But it's like telling Orbitz that they need to get insurance on people's planes even though they don't own them."
Uber opponents argued that the company was skirting the law to gain unfair advantage over hardworking, law-abiding taxi drivers. "Look," says Kalanick, "there are a lot of reasons not to put yourself in opposition to cab drivers, who in certain cities haven't seen a lot of transportation alternatives. Any industry with incumbents that have been around for decades can get used to that situation. But the city is big enough for the both of us." Uber launched service in New York this summer and will soon also enter Boston, Chicago, Seattle, and Washington, D.C.
Similar adventures in red tape have slowed peer-to-peer car-sharing startup RelayRides, which enables people to offer short-term rentals of their own cars. "There aren't regulations that say whether or not you can rent out your car," says founder Shelby Clark. The city of Cambridge, Massachusetts, wouldn't let users park the cars in their own residential parking spots. That led to a lengthy back-and-forth between the city, Clark, and Clark's two lawyers ("not an easy pill to swallow as a tightly funded startup," he says), until the city simply relented. Still, says Clark, "we didn't think we'd have to fight to be welcomed. What we're doing is green, and it keeps money in the neighborhood."
Now these companies are learning from their clashes. For his New York launch, Uber's Kalanick preemptively talked to regulators from the city's Taxi and Limousine Commission—not for permission, he stresses, but as a way of introduction. Regulators were already familiar with Uber, though. "We got put on the map when San Francisco sent us that cease and desist. All of a sudden, everyone knew who we were," he says.
Service in New York has been seamless, he says—so far.
A version of this article appeared in the October 2011 issue of Fast Company magazine.