Small Step for Ride Sharing, Big Step for the Sharing Economy

John Zimmer, CEO of Lyft, and Sunil Paul, CEO of Sidecar, celebrate CPUC ruling
Logan Green (Lyft co-founder & CEO) and John Zimmer (Lyft co-founder and President) celebrate CPUC ruling.

By Shannon Arvizu

It’s official. As of yesterday, ride-sharing is legit. The State of California passed the first set of rules today to make it safer to operate in the ride-sharing economy.

So what do these new rules actually mean for drivers and passengers? And what issues remain unaddressed for the sharing economy to flourish in the coming years?

New Rules for Ride-Sharing

Last year, ride-sharing companies Lyft and Sidecar received cease and desist orders from the California Public Utilities Commission for operating unchartered unlicensed charter party services (aka “gypsy taxies”). Since then, each company has been working under interim agreements with the CPUC while the regulators devise a new framework for ride-sharing companies to operate.

At the hearing yesterday, the CPUC unanimously approved new regulations that would allow this nascent market to grow. Specifically, the proposal requires ride-share drivers to:

  • obtain a CPUC license,
  • undergo a criminal background check,
  • participate in a driver training program,
  • operate vehicles that pass a 19-point car inspection,
  • agree to a zero-tolerance policy on drugs and alcohol, and
  • hold an insurance policy requiring a minimum of $1 million per-incident coverage for incidents involving vehicles and drivers in transit to or during a trip.

In short, ride-share drivers are now held to higher standards to participate as members of the commercial transportation sector. That’s good news for passengers…and good news for the growing sharing economy.

Greater Safety for Sharing Economy Consumers

Many of us in this emerging movement have grown quite found of collaborative consumption. We love companies like Airbnb, Lyft, and Taskrabbit because we appreciate the community connections, the convenience, and affordability of services-on-demand. We like choice and the ability to be micro-entrepreneurs ourselves.

Natalie Foster, Executive Director of, rallies the sharing community before CPUC meetingWe also identify strongly with collaborative consumption culture. We believe in values of trust, cooperation, and asset-sharing. Many of us have even come to self-identify as “sharers” or “peers.” I myself have joined the new grassroots organization,, to connect with like-minded advocates of the sharing economy and rally around ways to extend these new economic practices.

But without sound regulations for safety, quality, and insurance concerns, we may have been putting ourselves at a bit of risk. As a collaborative consumer, I believe it is important that that the highest safety and insurance standards are implemented. And that is the main concern for the CPUC.  As Mark Ferron, CPUC, commissioner stated at the hearing yesterday:

“Rules and regulations should provide common sense solutions. This does not change because of the sharing economy.”

Public Impacts and Sector Change

Ride sharing is essentially about transforming public transportation. As many people testified yesterday, ride sharing is preferable or complementary to MUNI, BART, or yellow cab services.

CEOs of ride-sharing services have an important opportunity to consider the public impacts of this new business model. While the new set of rules  address safety concerns, environmental, urban planning, and labor concerns remain unaddressed. As a CPUC commissioner noted, these issues need be to also be considered in the near future.

As organizations based on new models of cooperation and trust, ride sharing companies can create a better market environment by working with with those employed by the old model. Several fleet owners and taxi drivers made their voices loud and clear at yesterday’s hearing. They are angry and defensive. These are people whose livelihoods are based on high barriers to entry to their profession. They now perceive those livelihoods to be at risk.

To address this tension, Carla Peterman, CPUC commissioner, stated:

“Please be respectful of each other. Taxis provide a valuable service…and there is room for both in our economy.”

Much Work Ahead for Our New Economic Future 

It is encouraging that legislators are thinking ahead. The CPUC recognizes that markets are changing. Rather than move backwards, the CPUC is helping our transportation sector evolve to better meet public needs. This is a strong signal to the rest of the country and to the world that the sharing economy is here to stay.

There is much work ahead for sharing economy to provide the large-scale public value we need in today’s economic environment. Thankfully, all of us who make up this new movement are committed to creating a sustainable and prosperous economy for all.

Shannon Arvizu, Ph.D., is a sociologist who works at the nexus of technology, generational change, and social impact. Her passion is in helping leaders design inspiring campaigns for collective action. She is trained as a professor and researcher, but you won’t find her in the lecture halls much these days. Instead, she is in the field working alongside fellow change-makers to design solutions to today’s toughest problems. Learn more at:


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2 responses

  1. Good reason 4 people with pink moustache to smile, and expect the ones with yellow to cry.

    This is just the beginning, expect business models based on sharing economy to bypass every traditional business ever know to man.

    Congrats Logan, John, Brian,Sunil, Lisa, Rachel and hundreds of other entrepreneurs who have ventured into businesses linked to sharing economy.

  2. Now that the road has been opened to innovation for tech companies (congrats!), I hope that the rules on ridesharing in California will help improve the vital role of taxis within cities. Being a taxi driver is the only job opportunity for thousands of Americans, who have no access to fancy secondary jobs. It is one of the toughest jobs in NYC and we need to protect people’s jobs while we innovate.

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