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Insights: How Uber Navigated Regulations and Competition During Startup Days

July 23, 2013 00:00 AM UTC
- Updated May 01, 2020 17:24 PM UTC

Travis Kalanick, CEO of Uber Technologies, Speaks at Brainstorm Tech 2013.

SPEAKER 1: So looking narrowly at transportation alone, Travis, you know, there are a slew of companies, I think Lyft is probably one of the most notable one, who are experimenting in this space. How do you think about them? SPEAKER 2: Well, I think they were pretty interesting took a pretty interesting approach to things that it basically-- the way to think about it, Lyft basically goes into the markets that Uber is in and then gets folks who don't have commercial licenses and don't have commercial insurance and says, bring your own car and provide Uber-like service. And they have a personality that they put along with that sort of fist bumps and the cars have these pink mustaches and things like that. It's regulatory arbitrage like what happened was they did it in California first. And I'm like, holy cow, every trip that's happening-- I'm reading the law-- every trip that's happening is a criminal misdemeanor being committed by the person driving. I don't think that's a good law, but that is the law. And so I'm just like I'm kind of staying out of this one for a little bit and watched it happen for a year. what they were able to do because of no commercial insurance and because of their easy access to supply, the cost was really, really low. So you could see a situation where they each up from the bottom up. and so stay on the sidelines, go with the regulators going to do something about this, they end up doing nothing about it. And then ultimately, after a year saying, you know what? This is OK. This is all right. And we ultimately signed an agreement with the State of California saying that. And so then we basically found a way to get what they call non-TCT license transportation providers onboard in a way that with background checks and insurance and things like this. But ultimately, as they follow us in other cities, we now have a playbook, which is if it's totally just the regulatory risk is just off the charts, we're going to stand back, watch it for 30 days, let the regulators know, look, either enforce the laws that you have in place right now or embrace it. That's fine. But if you have a policy of non-enforcement that goes 30 days, we call it's regulatory ambiguity then we're coming in too because we want to participate in this kind of innovation.