In the wake of Uber and Lyft pulling out of Austin in May, residents have waited anxiously for new ride-sharing services to fill the void. One of the new services, Arcade City, began as a Facebook page where drivers and riders could connect to arrange rides.
“We are going to get really cemented here,” Arcade City CEO and founder Christopher David told Austin Inno. “Whoever wins the battle for Austin is going to be the next big ride-sharing organization.”
While the majority of Arcade City activity is currently happening via Facebook, some drivers began testing the app over the weekend; and in the coming months, Ethereum blockchain technology will be integrated component by component, according to David. Ethereum is a decentralized platform intended to run as programmed without the possibility of fraud or interference.
In theory, Ethereum operates using tech similar to the network that makes bitcoin transactions possible, using a distributed verification system that authenticates users while minimizing the risk of fraud or hacks aimed at a centralized target. The system is a work in progress, however, and David has attracted criticism from skeptics.
“This process will begin with requiring drivers to create a OneName.com account over the next few weeks so they can connect to this unique blockchain,” David said. “The idea is for this to be a completely peer-to-peer unstoppable network.”
Components of Ethereum functionality will add security to the application and allow drivers to prove that they are who they say they are, according to David. The first component that will be integrated is a smart contract that will allow drivers to prove their physical address.
David said drivers on the app will be required to have three references from existing drivers. Some drivers will have additional credentials, including fingerprinting background checks. The goal is to provide the driver and rider with as much information about the person on the other side and allow them to make up their own minds, he indicated.
“Whenever you bring in the element of human choice, there will always be some level of risk,” David explained. “We want to build a culture of safety and looking out for each other, but Arcade City is not your daddy. We don’t claim it is appropriate for every person, but we are obviously doing something right.”
David, a former Uber driver and political activist, launched Arcade City as a Facebook page on New Year’s Eve in Portsmouth, New Hampshire.
“The largest taxi company was threatening to boycott to prove a point and Uber surge prices were like 9.9 times the normal rate,” David said. “I had been thinking of building a more decentralized ride-sharing organization, so I was like, ‘Hey, let’s just give donation-based free rides to people.’ We used New Year’s Eve as a test.”
David said the initial 10 drivers he recruited gave approximately 100 rides that night in Portsmouth. He created a Facebook page named Arcade City to coordinate the rides, which continued to grow in the following weeks.
“We realized we were onto something,” he recalled. “Uber wasn’t playing well with cities, and neither were the taxis.”
Soon after, Uber pulled out of Midland, Texas and Arcade City created a Facebook “request a ride” page there as well.
“We had this whole peer-to-peer thing going on in Midland. We are about building the relationship with the driver so they can build a relationship with the rider,” Christopher David said. “We love it, they love it.”
Arcade City launched an app, which they pulled down after deciding it needed to be rebuilt on a stronger platform as interest grew.
When Uber and Lyft suspended services in Austin in May following the failure of Prop 1, Arcade City created a Facebook page for Austin riders to request rides and connect with drivers, as they had in Midland, Texas, David said.
“I lost my main mode of transportation [when Uber and Lyft suspended services in Austin],” Starbucks barista Madison Irby explained. “I literally used Uber every morning, so I didn’t have a ride to work. I found out about this peer-to-peer thing when it showed up on my [Facebook] news feed.”
On the Facebook “request a ride” page, riders post their location and destination. Drivers comment on the post if they are nearby and available, and will often include a screenshot of their Uber or Lyft profile so the prospective rider can see their rating. The rider and driver usually take to messenger to negotiate fare and coordinate other logistics from there. Riders pay in cash, via PayPal, or with Bitcoin, which David refers to as “magic Internet money”—a trusted, secure and decentralized way to pay.
“[The Facebook page] grew and grew and grew and grew,” David said. “The amount of energy showed us that we needed to physically be in Austin and we needed to dig into Austin and prove our model.”
Shannon Liss-Riordan, an attorney who sued Uber for $100 million in an employment misclassification class-action lawsuit, said the independence that the negotiation-based model gives drivers sets Arcade City apart from other ride-sharing options.
“If drivers are about to negotiate their own rates, I would say that gives the drivers more independence. Also, if they have the option to take a ride [or refuse it] … I think drivers will appreciate that more,” Liss-Riordan said. “Whether they are totally off the hook for labor issues, I can’t say at this point.”
“The Achilles Heel of Uber and Lyft is that they change rates, so their drivers aren’t entrepreneurs because they have no say over how much they are making.”
Irby said while she prefers Arcade City over Uber and Lyft because she can form relationships with the drivers, she hopes that Uber and Lyft return so that there are more options.
“When Uber and Lyft left Austin, they left riders high and dry,” said Colette Cashwell, a driver for Arcade City. “My daughter worked late and couldn’t hail a cab. I was concerned about her safety.”
Cashwell, who has a full-time job, said she started driving since Uber and Lyft left because she wanted to help people get home safely. She is now one of the driver pod leaders that will help test the Arcade City mobile app in the coming weeks. She also created a Facebook page called “See Jane Go” that caters to women seeking peer-to-peer rides.
David said it has been humbling to watch the Facebook page take on a life of its own with the emergence of driver pods. As the page grew, drivers formed teams that work together to give rides. The seven driver pods that have established themselves will work with their regular drivers to test out the new Arcade City app in the coming weeks, he said.
“As driver pods, we work really hard to help people if they need rides—we make sure someone in the pod can take care of them,” Cashwell stated. “[Peer-to-peer ride-sharing] has started something—it’s amazing to see Austinites jumping in feet-first.”
Arcade City will take a 10 percent cut of payment made through the app, David said. However, even once the app is widely available, Arcade City plans to keep the Facebook page live and riders and drivers will be able to negotiate payment peer-to-peer, he said. Arcade City will launch the “Arcade Tokin” later this year, which will allow drivers to cash out while avoiding credit card transaction fees.
Cashwell said that the barter system works well the majority of the time, as most riders are former Uber and Lyft riders that have an idea of what is fair to pay. She will give suggestions for fare if people are unfamiliar with ridesharing, she said.
“The Achilles Heel of Uber and Lyft is that they change rates, so their drivers aren’t entrepreneurs because they have no say over how much they are making,” David said. “We allow people to build their own following, so they can have more control over how much money they make.”
Cashwell said she protects her privacy and safety by using Talkatone, which replaces her native phone number while communicating with potential riders. She said often has conversations about personal safety issues with riders.
“I don’t know what this will look like,” Liss-Riordan said. “In theory, [the peer-to-peer model] has the potential to make a difference in the drivers lives. Will it? We will have to see how that plays out in practice.”