The way we talk about taxis is a little like the way the two old women in that famous Woody Allen joke talk about the food at a bad restaurant: We complain about them when we can't get one, and the second we flag one down we start complaining about how terrible it is.

Being able to summon a ride with a mobile phone is one of those innovations so necessary, it's hard to remember how we got by before. That's why Uber has been able to turn itself into a household brand name in just four years. 

But in a week whose events dramatically illustrated the dangers of giving one company too much power, it's worth remembering that there's something comforting about the old-fashioned yellow cab. Uber may get all the press, good and bad, but licensed taxis aren't going away -- now that riders have a better way of hailing them.

Increasingly, Flywheel is that way. The Redwood City-based startup announced Thursday that it has raised $12 million in Series C funding from a group of investors that includes TCW/Craton, Rockport Capital and Shasta Ventures. It also has a new CEO, Rakesh Mathur, who founded Junglee and sold it to Amazon. He replaces founding CEO Steven Humphreys, who will stay on as an advisor.

Mathur isn't shy about going after Uber where it's vulnerable, on its reputation as a corporate bully that strong-arms drivers and competitors and doesn't care about the safety of passengers. "I'm appalled on multiple levels," he says about the report that a senior Uber executive proposed spying on journalists and another Uber officially accessed a reporter's profile to track her whereabouts. "I think they are an assembly line of assholes and that is not part of our culture. We are the hassle- and asshole-free option for the consumer."

Of Travis Kalanick, Uber's combative CEO, Mathur says, "If he was walking out of a bar with a bottle I'd hate to be in front of him." 

But what Mathur really has a problem with is the triumphalism that has allowed Uber to raise multiple billions at a valuation reported to exceed $20 billion. While it's already immensely profitable, that valuation is based on a proposition that Mathur believes is false, the idea that Uber's network gains in utility as it grows. "There is no network effect in transportation," he says. "Taxis don't have a two-sided market. If you have 30 percent of the cabs in a city, you will get 30 percent of the rides."

Flywheel claims to represent 80 percent of the licensed taxis in San Francisco already, and the new funding will allow it to start expanding nationally. In coming months, it will launch in cities including New York, America's biggest taxi market by far. 

One thing Mathur doesn't dispute is the way Uber has changed the game for good. He just think taxis, not privately-owned Uber cars, will continue to be the dominant provider of rides in downtown areas and to airports, now that they have the same technology. "They've done the taxi industry a huge favor, and it's going to be Return of the Jedi," he predicts. 

 

Published on: Nov 20, 2014