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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Dear Uber and Lyft – Get Your Shit Together

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Let’s start out by saying that I’m a big fan of both Uber and Lyft. I’m indirectly an investor in both companies as I’m an investor in three VC funds that are investors Uber and one VC fund that is an investor in Lyft. I have no idea how much actual equity I have in either company, but based on current valuations the dollar value of my indirect ownership is non-trivial. And Foundry Group came close to investing in Zimride (the predecessor to Lyft) but we ended up withdrawing from what we thought was an inappropriately high priced round, which, in hindsight, was clearly a miss on our part.

Regardless of my support and enthusiasm for these two companies, I’m bummed at the mud they are slinging at each other. I get that this is an intensely competitive market. I get that the stakes are huge. I get that all the reporting I’m reading is second hand and might be fiction. But the ad hominem attacks are escalating rapidly and the behavior they are surfacing isn’t pretty.

Techcrunch summarized this pretty well yesterday, after multiple articles from a variety of places including the NY Times and WSJ. The headline sets the tone: Uber Strikes Back, Claiming Lyft Drivers And Employees Canceled Nearly 13,000 Rides. The NYT article is Accusations Fly Between Uber and Lyft and the WSJ article is Uber and Lyft Rivalry Turns Nasty in War of Words.

I have no idea what, if any of what is being said is true. The tactic being asserted that is most disturbing is this one:

Accused Lyft behavior: “Lyft employees, drivers and one of its founders ordered 12,900 trips on Uber’s app and then canceled them with the goal of slowing down drivers who would otherwise be picking up actual, paying passengers.”

Accused Uber behavior: “177 Uber employees have requested and quickly canceled more than 5,000 rides from Lyft drivers over the past 10 months, Lyft said, in an effort to frustrate Lyft’s customers and drivers.”

As a customer, this sucks. If I was a driver for either service, this sucks. I think this ultimately backfires against each company equally.

Guys – both of you are trying to disrupt a massive market dominated by incumbents and government regulation. I’m sure these incumbents are now laughing their asses off at y’all are acting like petulant children, as they wait patiently for you to chew up capital, value, partners, customers, while generating additional scrutiny from the government forces in the incumbents’ pockets trying to slow you down.

I get that you believe price is a weapon – how you use it for you and your investors to decide. But by messing with each other’s service, especially in a way that negatively impacts your two key constituents, consumers and drivers, you are opening yourself up to a ridiculous amount of scrutiny and quickly playing a no-win, zero-sum game. There is no need at all for this given the massive size of the market opportunity before you.

One, or both of you, should rise above the fray. Keep on competing aggressively. But recognize that you are radically disrupting a market desperately in need of disruption and doing it beautifully. Don’t shit all over it, and yourself in the process.

Save UberDenver Rally On Monday

Comments (3)

UberDenver and Uber CEO Travis Kalanick are hosting a rally at Galvanize after the Colorado Public Utilities Commission holds a public hearing on proposed rules changes that could shut UberDenver down.

I’ve had a number of private conversations since I wrote my post The Colorado PUC Trying to Shut Down UberDenverI continue to think the whole situation is insane especially given our state government’s strong position on advancing innovation in Colorado. The PUC’s behavior is clearly protectionist, anti-innovation, and undermines many of the efforts of entrepreneurs in Colorado to advance and amplify innovation here.

Apparently, the FTC agrees. I just read the FTC comments on the proposed rule changes and they do a very direct job of addressing 6001(ff), 6301(a), and 6309(d) which are the things I called out in my original blog post on 1/30/13. The punch line from the FTC memo is “FTC staff is concerned that these three proposed changes may significantly impair competition in passenger vehicle transportation services, including innovative methods of competition enabled by new software applications (“applications”) that allow consumers to arrange and pay for services in new ways that they might prefer, and thus harm consumers.”

Given that the PUC’s stated mission (on their website) is to “serve the public interest by effectively regulating utilities and facilities so that the people of Colorado receive safe, reliable, and reasonably-priced services consistent with the economic, environmental and social values of our state” I’m hopeful the PUC comes to its senses and serves the public interest in this case, rather than try to create new rules that protect entrenched and incubent companies.

I’ve been told in the private conversations that I’ve had that this will be resolved soon in a way that makes sense. Until then, I continue to encourage anyone in Colorado who is pro-innovation to support Uber’s efforts here and, if you are around Monday, head down to Galvanize between 6pm and 9pm for an UberRally.

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The Colorado PUC Trying to Shut Down UberDenver

Comments (100)

In yet another insane move by government against entrepreneurs and job creators, the Colorado PUC is proposing a new set of rules that would shut down Uber in Colorado. This is protectionism and misuse of power in an egregious form. Government supporting powerful incubants (the taxi industry) that are threatened by disruptive innovators through regulation. Yuck.

As a Colorado entrepreneurial community, we shouldn’t stand for this. As citizens and tax payers in Colorado, we shouldn’t stand for this. And as innovators, looking forward, we shouldn’t stand for this. My call to action is at the end of this email – if you do nothing else, go sign the petition right now. And tell everyone you know.

I think our governor, John Hickenlooper, is awesome. I hope he focuses on this quickly and demonstrates his own background as an entrepreneur, as an innovator, and as a proponent of innovation. Given the launch of his new effort to rebrand Colorado for the next 20 years, I hope he focuses his brandCO effort on innovation, entrepreneurship, and the future, rather than protecting incumbents in regulated industries through the misuse of power, especially in areas – such as the taxi industry – where the service, at least in Colorado, is uniformly poor. Colorado’s new brand shouldn’t be “backwater protectionist state” – yeah – that doesn’t sound very good to me.

The Uber story has already played out in a number of other states. The regulators quickly back down from the powerful lobby / industry groups that are influencing the new regulations. In some cases, it’s a simple misuse of power. In others, it’s a lack of understanding of what is going on. And in others, it has been a backward looking regulator, or government, that momentarily forgets that it serves its citizens, not a small constituent of incumbents.

The PUC rule changes are extensive, but there are several cleverly woven in that effectively shut down Uber if implemented. Read the following examples and be appalled.

- Section 6301: Uber’s pricing model will be made illegal: Sedan companies will no longer be able to charge by distance (section 6301): This is akin to telling a hotel it is illegal to charge by the night.

- Section 6309: Uber’s partner-drivers will effectively be banned from Downtown — by making it illegal for an Uber car to be within 200 feet of a restaurant, bar, or hotel. This is TAXI protectionism at its finest. The intent is to make sure that only a TAXI can provide a quick pickup in Denver’s city center.

- Section 6001 (ff): Uber’s partner-drivers will be forced out of business — partnering with local sedan companies will be prohibited.

These rules are not designed to promote safety, nor improve quality of service. They are intended to stop innovation, protect incumbents, hurt independent drivers, and shut down Uber in Denver.

There are several things you can do right now.

1) Contact Gov. Hickenlooper and tell him, “Save Uber in Colorado! Withdraw PUC Rules Changes to sections 6001, 6301, & 6309.”

Email Gov. Hickenlooper

Write on Gov. Hickenlooper’s Facebook Wall

2)  Contact the Colorado PUC Directly:

Email Joshua Epel, Chairman

Email Doug Dean, Director

3)  Sign the petition that shows the PUC your #UberDENVERLove.

Disclosure: I am NOT a direct investor in Uber, although I have personal investments in several VC funds that are invested in Uber. However, my ownership is tiny and the amount I’ve spent on Uber services since they launched several years in the bay area dwarfs the amount of money I’d ever expect to see from my indirect investment. I’ve written this because I love the service, love the company, and love their innovation. Society improves when innovators like Uber are able to do their thing – it’s a deeply held belief of mine – that’s why I’ve written this post.

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