UBER AND ABOVE

Cashing in on choice, change and creativity

There is a dot named Danny on the map on my iPhone. The dot is shaped like a car, and as Danny drives, the little car gets closer to my house. The dot turns onto my street and I look out the window to see a white Hyundai Sonata, driven by Danny Warn, pull up to my house. I decide between sitting in the front seat or the back, and pick the back. I slide into the beige interior, struck by how clean the car is. Though Warn has a pickup and a Harley, this is his main vehicle- but it doesn't feel lived in. His car doesn't have a meter on the dashboard, nor does it display any type of license. It's just Warn and his smartphone. I have never met Warn before, but he's taking me to work. That's his job, but he's not a taxi driver- Warn found a way to turn his new-ish sedan into a paycheck after seven weeks without a job.

"The job I had in IT was outsourced to Lithu- ania," he tells me as we turn onto 27th Street. "Right now I'm just kind of desperate for some employment."

As he navigates the construction uprooting downtown Boise and I ask him questions, Warn and I are partaking in the same thing thousands of other drivers and riders are doing in more than 40 countries and 200 cities. He's an Uber driver, working for an app-powered car service, and as his passenger, I am Ubering. It's an opportunity for folks to make money off their own posses- sions, and a chance for consumers to get a more personal connection tied to their cash.

In the long tail of turmoil following the Great Recession, a combination of technology and frustration is driving the rise of unconventional economic models-from cars on the road, to bar- tering pages on Craigslist, to a unique coffee shop in Eagle, consumers are faced with choices that go beyond swiping their credit card and walking away.

A PARADIGM SHIFT

Thursday, Oct. 2, marked the Boise launch of ride-share company über. For the first time, Boiseans could download the free application on their smartphones, enter credit card information, pick a destination and digitally hail an über driver to pick them up.

über drivers-the company calls them "part- ners"-aren't piloting taxi cabs though. They're driving their own personal cars. They aren't licensed through the city, either. Rather, they've signed onto the mobile platform, undergone a background and driving records check through the company, and subjected their cars to a 19-point inspection. Cars must have four doors and can't be older than 2005. A driving infraction like a DüI in the past seven years ends a driver's career with über before it begins.

Since its worldwide rollout in 2012, the San- Francisco based company has been a phenomenal success. Valued at more than $18 billion as of Oct. 3, Uber offers drivers flexibility and the chance to make money off of their own vehicles. It also gives consumers a faster, cheaper and more personal experience than with traditional taxi ser- vices. Uber's slogan: "Everyone's private driver." Those factors combine to make Uber a symbol of what economists are calling the Sharing Econo- my: a system in which the relationship between consumers and providers is more collaborative than purely market driven.

Samia Islam, who has taught for 10 years at the College of Business and Economics at Boise State University, teaches classes on urban economics and the economics of happiness. She's been following this new economic model of shar- ing for years, and calls it a "paradigm shift."

"Ten years ago, you would have never gotten into a car because of what an online review said," she told Boise Weekly. But a lot of things have happened to warm consumers up to the idea of riding in a car with a complete stranger without a "TAXI" light overhead.

It started with the sharing of information. Programmers shared code, then Napster shared music, then YouTube and Wikipedia shared content. Through the rise of social media, people have gotten comfortable sharing everything from their interests and preferences, to the daily minutia of their lives. Now, we're sharing each other's time, expertise, bikes, cars, even homes.

Basing an economy on disclosure and sharing is tricky to regulate, and leaves cities, states and insurance agencies scratching their heads when conflicts arise.

Boise Weekly readers have heard about Uber before (BW, News, "Where the Uber Meets the Road," June 11, 2014), when the car service started eyeing Boise earlier this summer. With drivers signing on in places ranging from Los Angeles; New York; and San Francisco; to Paris; Mexico City; and Johannesburg, South Africa, controversy has fol- lowed close behind.

Uber has drawn criticism for multiple incidents in which drivers have been accused of kidnapping intoxicated women; committing sexual assault, rape, verbal abuse and battery; and refusing service to the disabled. Uber has been faced with more than a dozen lawsuits, including one stemming from a New Year's Eve incident in San Francisco, where a driver failed to yield to pedes- trians in a crosswalk, hitting a mother and her son, and killing her 6-year-old daughter. Uber claimed it bears no responsibility because the driver was not carrying a passenger, 10 nor using the app at the time.

The service has been banned in Port- land, Ore., and discouraged in St. Louis and Kansas City, Mo., and San Antonio and Austin, Texas. Campaigns such as "Who's Driving You?" launched by the Taxicab, Limousine & Paratransit Association, warn people against downloading the app.

In Spokane, Wash., where Uber launched in May, the city has found itself embroiled in a regu- latory tussle between ride-sharing companies and taxi providers. There, on Sept. 29, Spokane City Council members voted to strike a compromise: Uber and similar service Lyft will be able to oper- ate for nine months, until a permanent regulatory structure can be crafted, and must pay 10 cents per ride to the city. According to the Pacific North- west Inlander, both companies will be held to strict vehicle and background checks, and are barred from soliciting rides or stopping for passengers hailing a cab on the street. Meanwhile, to placate taxi companies, rules were loosened making it easier to hire drivers and get inspections.

The city of Boise hasn't been particularly wor- ried about Uber operating in the city limits, how- ever. In June, Deputy City Clerk Jamie Heinzerling told BW she hopes the company would work with the city "to run a legitimate business."

Uber spokesman Michael Amodeo flew from Los Angeles to Boise last week to prove Uber is doing just that. Amodeo sat down with BW to explain the ride-share service, saying the company decided to launch in Boise after thousands of people downloaded the app, "only to find when they opened it, there were no cars on the road."

CARS ON THE ROAD

Uber hosted a launch party Oct. 2 at Bit- tercreek Ale House, where Amodeo stood in tight khaki slacks, a fitted black button-down shirt and sharp black-framed glasses. He handed out sunglasses and croakies and iPhone 5 cases, all bearing the word UBER stamped in simple, white lettering. At the party, attended by about 40 people, he was surrounded by folks holding out their smartphones.

"The three things I get are 'What is Uber?' 'I've heard of Uber, is it available yet?' and 'Thank God you guys are here,'" Amodeo told BW.

While in town, Amodeo reached out to city officials, too, in order to "educate them on what Uber is."

"Being an innovative company, we don't fit into the neat little box of a lot of these regulations that were made a long time ago," he said. "We don't fit into the traditional model of a transporta- tion company."

Heizerling, at the clerk's office, said Uber drivers would have to follow the same laws as taxi drivers, meaning they would need taxi licenses and install a rooftop "TAXI" light on their cars, as well as run a taxi meter following the city's established mile rates-$2.60 to hire, then $2.40 per mile.

That's not Uber's model. Uber rates run at $2.50 to hire the driver, and then $0.25 cents per minute and $1.75 per mile, with an additional $1.00 "safe rides" fee to cover the $1 million insurance policy on each driver. The rider pays directly through the Uber app, so passenger and driver never exchange any cash. Uber takes 20 per- cent, while the driver keeps 80 percent of the fare.

"This is smartphone 21st century technology," Amodeo said, adding that many states and cities have passed legislation and ordinances that bring those regulations up to speed.

Uber will have to navigate more than city regulations-there is also Boise's rather messy taxi landscape. The city has about 180 licensed taxis on the streets right now, most of which are one-car companies.

On any given day at the Boise airport, 25 or 30 taxi cabs stack up along the curb, vying for a hand- ful of fares each day. How will another ride-share service compete? Amodeo isn't worried about it.

"I did some research on the taxi market here two nights ago on my way from the airport to the hotel," he said. "My first experience was anxiety, because I didn't have any cash. I got to the airport at 10:40 at night and my first thought was, 'Oh man, do these guys accept credit cards?' I was worried I was going to be stranded at the airport."

A recent ordinance directs all taxis in Boise to accept credit cards, but Amodeo stressed that Uber is a different species.

"We're not a cab company. The great thing about Uber is we are providing a different choice. ... When I get into an Uber, it just feels more like a place for conversation," he said. "It's not like a taxicab in New York City where there's a three- inch-thick wall of bulletproof plexiglass. How does that invite me to have a conversation?"

In an interview in June, Boise City Taxi co- owner Scott McCurdy had more than a few things to say about Uber coming into his market. He started with the words "Good luck."

"I don't know how Uber would compete in a market that's so oversaturated," McCurdy said. "But if you can't beat them, play with them. Let's just play the game. ... I personally feel it will be a passing fad."

"I can't imagine that a few people aren't a little scared of competition, scared of choice," said Amodeo. "In 1950, there were 13,500 medallions for cabs on the road in New York City. You know what that number is today? 13,500 medallions. This is an industry that has not been forced to change for a very long time. When given the choice of convenience to use the app to hail a ride, and the affordability as well, people are going with Uber."

'A DROP IN THE OCEAN'

Such adaptability, or the lack thereof, has helped drive the sharing economy. Boise State economist Islam said ride-share companies like Uber-as well as Airbnb, a network that lets people convert their homes into vacation rentals; DogVacay, which connects people with pet sit- ters; TaskRabbit, a web service for odd jobs; and NeighborGoods, a site where people share house- hold items with neighbors-have found their niche at a time when consumers are frustrated.

"You have a level of consumer pain in areas where there's high prices and low quality. Consumers don't have a lot of convenience and they're kind of getting frustrated," Islam said. "Sometimes I put myself in the shoes of the consumer, like when I'm traveling. I'm looking at Airbnb because the alternative is exorbitantly expensive, and then many times these days, I'm not happy with the quality of service I receive, even when I'm paying $200 or $300 a night. It's not a personalized service, it's a commercial enterprise and it's huge. You're just a small drop in the ocean."

Airbnb matches travelers with residents in different cities willing to run their houses like a hostel for some extra cash. Boise alone has 120 such rentals.

"I think when we say sharing, it's a little bit idealistic," said Islam, "but really, it's selling. It's about selling your underutilized assets and resources. You have a spare bedroom and you're thinking, 'It's mostly not used, I could just rent it out to travelers one night at a time.' A great idea, a revolutionary idea, and look where Airbnb is now, it's in 180 or 190 countries."

Amodeo, with Uber, sees the sharing economy as a win-win.

"If you look at statistics, a car spends 75 percent of its time idle," Amodeo said. "It's great because from a rider's standpoint, I don't have to have my own car and pay for my own gas, but from a partner driver's perspective it's like, 'Man, I have this slack resource here, it's not making any money, so why don't I go through this process, use this technology, make some money and enjoy the flexibility that it offers, too.'"

He said Uber drivers come from all different walks of life, from stay-at-home moms waiting for their kids to come home, to school teachers making some extra money after the bell rings, to college students making ends meet, to retired military veterans supplementing their Social Security.

Islam agreed that the poor job market is pushing people to get creative when it comes to earning extra income.

"The recessionary pressures, the job losses, the high unemployment, it had a lot to do with why people were actually trying to use their resources, the underutilized stuff they had laying around," she said. "That kind of innovation happened to an extent because people are trying to figure out how to make a living and survive and ride out the recession."

PERKS

When a mother and daughter walked up to Heather Andrade's counter in her coffee shop in Eagle, the woman held out $2 and asked what she could get for that.

"'You can get whatever you want,'" Andrade responded. "She got a muffin and a hot chocolate for her little girl. That's a pretty awesome feeling to be able to say, yeah, you can get that."

Andrade has used her coffee shop, Perks of Life, to take a radical approach to the traditional money-for-product model. Instead, she calls it "pay what you choose." The goal is two-fold-to get people to think harder about what products are worth to them, and to help folks in tight financial situations still enjoy a healthy, warm meal.

"If you think there are not people like that here in Eagle, yes, there are. There are abso- lutely people who can't afford it," Andrade said. "There's no judgment. It's hard not to have any overall, but you never know what someone's situa- tion is. Even if someone drives up in a nice car."

But Perks of Life is no soup kitchen. Off Idaho State Highway 44 near Eagle, located in a mostly empty office complex, the walls are painted gold and purple, with retro green couches and a cramped collection of rustic tables and chairs. There is a beer and wine list on one chalk board, and a long list of coffee drinks on the other. Miss- ing from the board of fare are prices.

Andrade has owned the coffee shop for seven years, and she's always had a nagging feeling to try something different.

"I started thinking, 'Why am I not doing this?'" Andrade said. "Because I was scared. I had the huge potential to fail."

The more she thought about it, the more determined she became, so she wiped her menu board clean of prices three months ago. No prices at all. Not even a suggested price.

"It takes people really thinking about what they're doing, where they're spending their money, and how much they believe it's really worth," Andrade said.

That's a bigger task than she expected. In fact, many of Andrade's customers don't like it.

"I hear all the time, 'Oh, that's a lot of pres- sure,'" she said. "Is it? Why do people feel so much pressure from this?"

Andrade said she's lost customers who feel confused and uncomfortable by the donation system.

"It's still a constant conversation," she said.

Her customers ask her when she'll be finished with her "social experiment." One told her that she'll "never change the world." Other customers worry she'll run herself out of business, though she said she'll throw prices back up on the menu board before it comes to that.

Andrade keeps her head down and makes ev- erything she can from scratch in her coffee shop, from the pastries to the chocolate syrup to the chai tea. She said she hopes her "pay-what-you- choose" system will make her customers think not only about the product, but the time that goes into making it, the cost of the kitchen to make it in and the support staff to help sell it.

She said about 20 percent of customers will drastically underpay for their coffee or sandwich or bowl of soup, while another 20 percent will drastically overpay-so they balance each other out. The remaining 60 percent of customers seem to have the most trouble coming up with a reasonable price.

"It shocks me," Andrade said. "They'll say, 'That's probably $3-something, that's what I normally pay for my latte so I'll pay $3,' so they don't think about paying $4 instead. They actually round down. My mentality, I just don't think that way. I think, well, what's 50 cents? I'm going to round up."

She said that a difference of 25 cents can add up fast when people underpay over and over again.

Islam said Andrade's pay-what-you-choose structure doesn't fit into the sharing economy, but it certainly doesn't fit into any traditional economic model, either. It's the only place in the Treasure Valley like it.

She said her biggest concern with the model is profitability.

"Are they going to be able to break even? Most likely, yes," she said. "But if your motivation is to maximize your profit, the jury's out. We don't know. It needs a close-knit community. The com- munity aspect of it is key, and the profitability is somewhat unpredictable."

Andrade isn't quite ready to give up. She recounted one instance when a customer ordered her food, struggled with how much to pay and thought about it the whole time she sipped her coffee. The woman later went back to the counter and added a few more dollars to the purchase.

"She told me she had all these questions run- ning through her mind about what it was really worth to her to have this coffee shop here. I thought that was amazing," Andrade said.

Some are drawn to the unstructured payment system, like Lori and Robert Grubb. The couple has been coming to the coffee shop since before the priceless system went into effect.

"We actually came on the first day of the new payment system," Robert said. "It was kind of crazy walking in and reading the menu and saying, 'What's going on?'"

Robert paid $6 for his sandwich, figuring that's what it would cost at other places. The couple agreed that if restaurants didn't list prices for their products, they'd be clueless about how much these items would cost.

The first few months have been rough on the shop, and And Andrade didn't break even, "which was really disappointing and discouraging. Last Monday, I was ready to be like, 'I can't keep doing this.'"

She decided to give it a full quarter and hopes September sales figures penciled out.

SHARED, BOUGHT AND TRADED

Uber driver Danny Warn said he gave nine rides in four hours on his first evening of driving, Oct. 2. That would be a busy stretch for even a seasoned cabbie, but, of course, it was Warns first time ferrying strangers from point A to point B.

Driving me to work on Oct. 3, he looked at the Uber app on his phone, using the map to guide him to BW HQ. He mumbled about it giving advance warning on when to turn, or taking con- struction into consideration. His car idled in Main Street traffic for several minutes, where the Grove is under construction.

Warn is driving more than his vehicle when using the Uber app. He's driving the shift from an impersonal economy, to an economy that he can benefit from.

Examples of these types of transactions are springing up all over Boise, from apps like Uber and Airbnb, to Andrade's pay-what-you-choose model. On the Boise Craigslist Barter page, opportunities abound for turning tattoos into electronics, lawnmowers into Xboxes, carpentry labor into antique cars.

Consumers are gravitating to these less straightforward methods of obtaining goods and services for a multitude of reasons. It comes from having an economy in transition. It comes from living in a world where social media makes us more open with strangers. It comes from consum- ers wanting connection-a personal, one-on-one experience.

Once Warn pulled up to the curb at my office, I thanked him and without directly exchang- ing any money (the ride from the north end to downtown was around $9) and jumped out. He took off, ready for his cellphone to ping him again, when he would become someone else's "private driver."