San Francisco cab company admits ridesharing defeat, threatens to convert to limo service

By Paul Bradley Carr , written on August 4, 2014

From The News Desk

It seems San Francisco cab companies have realized they’re fighting a losing battle against ridesharing giants like Uber and Lyft.

Hansu Kim, co-owner of the DeSoto cab company, has told SF Weekly that he’s considering converting his entire cab fleet to livery vehicles, using state-regulated TCP licenses rather than city-issued cab medallions.

"I see a driver pool that is shrinking fast. I see the city has a completely deregulated industry. And I see 'limousine' vehicles acting like taxi cabs,” he said.

Kim has long been a critic of ridesharing services, and he acknowledges that the move would make him a “big hypocrite” but to hear him explain the dilemma, it’s hard to see why he — and every other San Fransciso cab company — wouldn’t make the switch.

According to the SF Examiner, DeSoto pays half a million dollars a month to its medallion holders — a cost that would vanish immediately if Kim tore out the taxi meters from his cabs and instead allowed customers to book cars by app, or on the phone.

Instead, he’d only have to pay a one-time $1,500 fee, plus $100 annually for the state-regulated TCP license. Kim told the Examiner that DeSoto gets 2,000 hails a day through Flywheel, which he hopes will adapt to allow cab-turned-livery companies to remain on the platform.

From SF Weekly:

By recasting himself as a limousine sedan service, Kim would also be regulated by the state, rather than the city. His company would be based in San Francisco, but his drivers could pick up fares in surrounding cities -- like Oakland or San Mateo -- with impunity. If they tried that as regular municipal cab drivers, they'd get cited by the SFMTA.

Kim says he'd use the same DeSoto brand name and the same two-toned blue color scheme. He'd gut his fleet of taxi lights and meters. He'd become a livery service that looked like a taxi fleet. The only thing DeSoto would lose is the ability to pick up on the street, a market which Uber and Lyft is obliterating for young users anyway, given they can “hail” a car using their phone.

What the city would lose, however, is far greater.

Most of us who live in San Francisco agree that that cabs in the city are pretty awful. We all have stories about having to explain to a driver where Market street is, or of abusive drivers, or of being taken to completely the wrong side of town due to a misheard address. There’s a reason services like Uber have taken off, and it’s not just because of a shiny app.

But, for all their faults, taxis remain a vital public good: A service for the huge number of San Francisco residents who can’t afford a smartphone, let alone surge pricing — but who need to get to work at odd times or away from useful Muni or BART routes. Those people (and the rest of us) take for granted that, if for some reason they need to get somewhere in a hurry, they’ll always be able to hail a cab without first having to enter a credit card number. That's just how cities work.

For now, it’s only DeSoto that's considering moving its fleet out of reach of large numbers of San Francisco residents. But we’ve seen how quickly ridesharing has grown from the early days when Uber was just a rich kid’s novelty. If DeSoto makes good on its threats, it might not be long before its competitors do the same and the city’s current 2,000-strong taxi fleet dwindles down to almost nothing.

Meanwhile, city officials seem oblivious to the threat they, and we, face. Speaking to the Examiner, SFMTA interim director Kate Toran sounded like every other person in the history of the world who has bet against technology…

That could be a business decision that they undertake and really that's [Kim's] choice," Toran said. "There would be no loss for the SFMTA taxi fleet.”
Yep. There's zero chance those words come back to bite her.