It’s late August, and for the past two weeks, Marvin Aleman has been fielding questions from the 275 livery car drivers who accept jobs from his stepfather’s dispatching base, Eastern Car Service. Aleman is the general manager at the company, which has been operating in south Brooklyn for a quarter century. But he is also the senior programmer, an unlikely job title at a neighborhood car service like Eastern, and he is busy ironing out the kinks in a new app he helped develop for his fleet.
“Why did you press cancel?” he asks a driver in a green button-down shirt and khakis who has just shuffled into his basement office to demonstrate a difficulty with a transaction. “It’s not a problem,” Marvin tells him. He can just write up a receipt like he would otherwise. “But be careful next time.”
Aleman’s stepfather, who he refers to as his father, started Eastern about 25 years ago. Aleman got into the family business about 10 years ago, with the intention of building a website to keep the company relevant. Having studied graphic design in school and picked up some programming skills through other jobs, he built a system that allowed customers to book rides online, including specifying a car seat or a special vehicle. Web bookings have never accounted for much of Eastern Car Service’s business—about five or 10%—but within five years, the business doubled from 100 drivers to more than 200—and Aleman stayed on.
Though he had long suspected that apps were the next frontier for car services, he only started working on his about a year ago. Eastern Car Service’s primary marketing strategy before that was simple—based mostly on peppering the neighborhood with business cards—but it more or less worked. He couldn’t convince his parents to accept the risk of developing something new for a system that wasn’t broken. “They were okay with status quo,” he says.
Then came Uber.
It wasn’t so much that Eastern was losing customers as that it was harder to retain drivers. Uber campaigned hard to win over drivers by offering, for instance, $500 cash bonuses after 20 rides. “Uber’s disruption is much more than just taking our drivers,” Aleman says. “Drivers sometimes abandon our customers due to the fact that they may have gotten another job from Uber at the same time.” According to one report, the service now provides almost half of the paid rides in major markets.
Driver cooperation is important because car services have different business models than Uber’s 25% to 30% commissions on fares. Drivers at Eastern pay a flat fee at the beginning of the week for access to a pipeline of jobs, which means that drivers are just as much customers of dispatchers as are riders. That partly explains the constant filtering of drivers through Eastern’s office. “They have a voice here,” Aleman says.
Taxis, for their part, have reacted to Uber by adopting apps of their own. Arro, a ride-hailing app for yellow taxis, launched in early September. Verifone’s Way2Ride app rolled out a ride-hailing feature for New York and Philadelphia. Hailo made a failed attempt at getting New York City taxi drivers to download its hailing app. Washington, D.C., is making its own city-built, mandatory app. And cities like Chicago and Los Angeles have mandated taxis to use a universal ride-sharing app.
In 2013, the number of community car base licenses issued by the New York City TLC was 498; in 2014, it was 507. Uber has not yet been disastrous to the neighborhood car services, but it’s squeezed them enough so that they feel it. Small neighborhood car services like Eastern are neither venture-capital-infused tech startups nor taxi conglomerates. As Uber rolls further from city centers and into the boroughs, they have fewer resources with which to compete. But they are still putting up a defense. One service launched an advertising campaign for its app that coyly poked fun at Uber’s surge pricing and safety problems (“a woman should be able to be picked up without being picked up“). “They are moving with the technologies because they see there is only one way to succeed,” says Pedro Gonzales, the founder of a software company called Visual Dispatch that designs products for neighborhood car services. “If they don’t have what is required, they will disappear.”
Though Eastern might be one of the only neighborhood car services that has developed its own app, many others have signed on to white-label solutions offered by companies like Visual Dispatch. The small businesses, many of whom have been operating in neighborhoods for decades, aren’t always eager to adopt the new technology. “You have to understand,” Gonzales says. “Not all drivers like the idea. The younger the driver it is, the easier it is to introduce this.”
Uber reports that about 20% of Uber’s drivers are younger than 29, and 30% of them are younger than 39. The average age of a for-hire driver in New York City is 47. That can make introducing new technology tricky. “A lot of our drivers are old school,” Aleman says. “Now they’re looking at the screen, so they kind of feel like, ‘What is going on?’ With the radio, it was more noisy.”
Even after bringing on drivers, convincing customers to download an app for making reservations is an entirely different and even more daunting task.
Arecibo, a 26-year-old neighborhood car service just blocks away from Eastern, recently launched an app using Visual Dispatch’s software. About a month after it launched, I asked a manager how many customers had used it.
“About 10,” she told me.
“No, we have about 10 people who use the app.”
The basement office of the Eastern Car Services is decorated with photographs of soccer teams. The company has a team every year, made up of drivers and dispatchers, and it plays against teams from other neighborhood car services.
The friendly rivalry extends beyond soccer. Car services–and their drivers—have a long history of competing against each other. When Aleman invited 10 drivers to pilot Eastern’s new app in August, about 30 showed up, having heard about the app through the grapevine. “They were excited to see something new,” Aleman says. “They want to get their hands on it and see if they can get an edge over other drivers.”
One of Uber’s most convenient qualities is that it can be used anywhere. Customers don’t need to download a separate app when they move from Queens to the Bronx. This, too, is what makes a concept like Arro work. Because the app partners with a company called Creative Mobile Technologies, which provides payment systems in New York City taxis, it is able to provide blanket coverage with about 8,500 of the city’s taxis.
Online booking services like Flitways (formerly called OnCabs) have brought this one-stop convenience to car services by working with drivers directly. Though they pay drivers through car services if they have a contract with those drivers, there’s not much preventing them from cutting them out of the equation entirely in the future.
To an outsider, the obvious solution is for car services to collaborate, and Gonzales is developing a feature that might help them work together. If a base opts in, customers who use its app to request a car in an area that its dispatch service doesn’t cover will be referred to another dispatcher in the area. But combining forces is not that simple. “That would become one base,” says Johanna Espinoza, a manager at Arecibo, when I ask her about the idea. “The owner wants to be independent, they want to have their own customers. They wouldn’t do that.”
About a month in, Aleman has onboarded all of his drivers to the platform. The app allows them to accept jobs nearest to them, which is more efficient for everybody, and uses Square integration to allow easy credit card payments. Unlike Uber, they can also still accept cash and tips. Eventually, there will be a customer-facing component that will allow users to hail cars as well.
There’s still a stream of drivers walking through Aleman’s office, but it’s thinning. Now he’s working with his partner development firm, Re#, on the customer side of the app, which he plans to launch at the end of October.
In his ideal world, he would make an app that worked with car services in other boroughs. When the customer called for pickup, they wouldn’t necessarily know the name of the local car service that would fulfill their request. They’d just know that they could open Aleman’s app and a car would come (the app would let them know from where after it designated a driver). That won’t necessarily fly in the world of decades-long competition. “The base owners are paranoid, and they’re worried about losing drivers to next-door competitors,” Aleman says. But when he talks about how it might work for customers when they’re, say, in New Jersey or another part of Brooklyn, his stepfather is more willing to listen.
The game has changed, Aleman tells him: “The real competitor is Uber.”