Rideshare App Bandwagon Gets Around Legally in the NYC Battleground

1/24/14Follow @jpruth

Getting a taxi in a busy city is a problem plenty of startups have been trying to solve.

There are potholes, though, that developers of ridesharing and car-hailing apps may run into, trouble that has nothing to do with technology.

So far, New York’s Bandwagon has avoided much of the courtroom drama that has plagued Uber, SideCar Technologies, and similar companies, including local taxi regulations and disputes over driver compensation.

Rather than try to skirt the rules of the cities Bandwagon operates in, David Mahfouda, CEO, says his company took a straightforward approach: “We didn’t break the law.”

That sounds overly simple given the complexities of the issues. But Mahfouda has made it clear he is not trying to go around the NYC Taxi and Limousine Commission, which regulates yellow cabs and other vehicles for hire such as black cars and some types of limousines. In addition to New York, the app is also cleared for use in Montreal.

Bandwagon’s app matches up passengers headed in the same direction, if not to the same destination—such as the airport. “LaGuardia [Airport] is a prime example,” Mahfouda says. “It’s a place a lot of people need to get to on a regular basis, but the mass transit connections just are not there.”

Rides with Bandwagon are booked through the companies that operate the taxi and car fleets, he says, who pass along the info to their drivers. In some cases, drivers with the app may also receive alerts about rides. Part of the sales pitch for the app is passengers can save money by splitting the fare, but Mahfouda says drivers can make more money when trips are sold on a seat-by-seat basis.

The goal of Bandwagon, Mahfouda says, is to move people around more efficiently with fewer vehicles. He says Bandwagon’s server analyzes users’ travel itineraries and combines them to give car fleet operators info on where to allocate drivers.

At airports and train stations, for example, lines of passengers who need cabs can grow very lengthy. If users of Bandwagon who are waiting tell the app they are willing to share a ride, the service alerts the taxi line manager (assuming they also have the app). That can prioritize rides for cabs picking up groups of people, moving the line more briskly.

Though the Bandwagon app launched just last summer, the company picked up a $700,000 award from Verizon this month at the International CES expo. Mahfouda says Bandwagon previously raised some funding through friends and family and has received more than $200,000 in grant funding from the state.

The Bandwagon service also got put to work during CES, pairing up conference goers, who checked in at kiosks, with complementary destinations.

Despite the promises of efficiency, ride-hailing app developers can be persona non grata in some circles.

New York has been in a tug-of-war with many ropes pulled by drivers, incumbent taxi and limo companies, regulators, and some hailing or car-booking app services. A temporary restraining order and other legal wrangling halted the use of most taxi apps in the city for while. When the dust settled last year, Hailo got cleared to connect its users with yellow cab drivers in New York.

Meanwhile San Francisco’s Uber can be used to get a taxi in New York with some restrictions. For instance, fares are collected by drivers rather than through the company’s app. Users in New York can still order and pay for rides in Uber black luxury cars, SUVs, and sedans with the app.

The hubbub in New York is not the only battleground for car-booking apps. Uber has run into legal trouble, especially in Boston, with competitors from the taxi industry and drivers angry about the fees the company collects.

Mahfouda says some startups trying to disrupt this market were not prepared for the concerted resistance of the deeply entrenched taxi and limousine industry in New York. The conflict with the regulations largely comes down to pricey taxi licenses, or lack thereof for some drivers who pick up fares through car-booking apps. Drivers and companies who have paid for such licenses are not likely to ever embrace newcomers who want to sidestep those laws.

Last year, SideCar Technologies suspended its service in New York after losing legal fight over such regulations on its drivers.

San Francisco’s Lyft does not offer service in New York and faces a similar quandary if it wants into this market. “They make it easy for people who aren’t licensed taxi drivers to become taxi drivers,” Mahfouda says. Lyft developed an eponymous ridesharing app that puts riders in touch with drivers who are dubbed “your friend with a car.” The company says it does background checks and vets the driving records of its drivers—yet they are not necessarily certified by local taxi regulators.

By comparison, Mahfouda says Bandwagon was developed while having an open dialogue with New York’s TLC and paying attention to the interests of the industry’s stakeholders.

Prior to Bandwagon, Mahfouda dabbled with startups while pursuing his bachelor’s in visual and environmental studies at Harvard. In 2011, Bandwagon was accepted into the New York City Accelerator for a Clean and Renewable Economy (NYC ACRE) incubator. Mahfouda says, with encouragement from the folks at NYC ACRE, his company applied for a development grant from the New York State Energy Research and Development Authority to help make transit hubs more efficient.

Bandwagon wants to hire, he says, in engineering, sales, and business development. That would about double the current staff of five. The startup is also looking to expand its service to more transit hubs.

Mahfouda says he believes there are more ways for technology to make road travel more efficient. “We see ourselves as the future of auto transportation,” he says. “There is an opportunity to make transit responsive.”

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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  • AllieB

    There’s been a lot of conversation about this recently. It’s interesting to see how Bandwagon is dealing with these issues that companies such as Lyft and I know Uber especially has since battled. California gave Lyft, Sidecar, and Uber problems as well, but in court Uber won stating they were only acting as a medium between driver and customer, and are not an actual driving service. Since then these companies have been reclassified by California as “Transportation Network Companies”, thus allowing them to operate legally. I know there are a lot more Taxi services in New York, but I don’t see why it should be any different. Until then, I know RideScout is a great app to use for locating taxis- and other services- near your location. You enter your location and destination into the app and it pulls up every available ground option in your general area with rate and time comparison (like the ground version of Kayak. Otherwise just run to the corner and throw up a thumb- thought even with all the taxis in NY, I remember once running up the streets of SOHO for 30 minutes in 20 degree weather before a cab stopped for me.