Uber, France and Protectionism

France moves to ban Uber while homegrown ridesharing service BlaBlaCar continues to grow.

Carsharing service (or unlicensed taxi service, depending on who’s talking) Uber has faced enourmous regulatory hurdles where local taxi cartels try to protect themselves from the popular service. Europe is no exception as several there is a movement in several countries to stop or regulate or extract fees from Uber. However, Europe has lagged the U.S. in startup activity and success and has taken action against many prominent U.S. tech companies, such as the recent antitrust actions against Google and previous antitrust actions against Microsoft that seem so quaint now.

With that backdrop, let’s take a look at France and Uber.

The French government recently declared that some of Uber’s services would be banned in 2015. Like many places, there are some consumer protection rationales.

““Currently, those who use UberPop are not protected in case of an accident,” Mr. Brandet told the French news channel BFM TV, on Monday. “So not only is it illegal to offer the service, but for the consumer, it’s a real danger.””

Anyone anywhere who has ever taken a licensed cab knows this is silly. The real answer? Regulation and protection of a local cartel.

“Critics contend that the service represents unfair competition for other taxi operators, and falls afoul of many licensing rules across Europe. That has led cities across Europe, including Brussels and Berlin, to outlaw the budget car service.”

But what happens if a local company makes good?

“The 28-year-old student is one of a growing number of people across France relying on ride-sharing to travel long distances. Driving the change is a homegrown startup called BlaBlaCar that is challenging state-run railway monopoly SNCF by creating an alternative transport network out of empty car seats.”

Is longer distance safer? What about how everyone loves European trains and how every U.S. city wishing to be considered “world class” wants more trains?

It turns out that when given a choice, people prefer not to take public transportation.

“BlaBlaCar’s ascent has come partly on the back of a deteriorating public-transport system across the continent.”

Even better:

“Its business model responds to the flaws in train travel his association has been complaining about for years: high prices and bad service . . .”

It makes you think that maybe a homegrown company has advantages over a foreign company providing what the local authorities cannot.

Or maybe they simply don’t like it when people make money in an unregulated environment.

“Because it keeps fees so low that drivers are sharing costs rather than making profit, the company argues it is quite different from a company like Uber, which also uses some nonprofessional drivers and bills itself as “ride-sharing.”

“There has been such a hijacking of the word ‘ride-sharing,’ ” said Mr. Brusson. “The key is about the driver not making a profit, and the driver going to his destination anyway.””

And yet, BlaBlaCar has business aspirations, as long as the drivers don’t make money.

“BlaBlaCar was originally called covoiturage.fr—simply the French word for “carpooling”—but its founders changed the name to BlaBlaCar to ease international expansion with a non-French brand they could own.”

Uber
France moves to ban Uber while homegrown ridesharing service BlaBlaCar continues to grow.

Bitcoin Edges Closer to Mainstream As It Attracts Serious Venture Capital

Bitcoin seems to moving away from its seedy reputation as a digital currency for the underworld.

Coinbase, a San Francisco based startup founded in June 2012.  It provides a Bitcoin “wallet and platform where merchants and consumers can transact with the new digital currency bitcoin.”  If you look at their ‘About‘ page, their kitchen looks spiffy.

Coinbase announced a $25 million funding round led by Andreessen Horowitz and including Union Square Ventures and Ribbit Capital, both existing investors.  This brings their funding to $31 million, including the $6 million they announce on their website.  Representatives of Andreessen Horowitz and Union Square will join Coinbase’s board.

According to Bloomberg, other high profile VC firms have invested in Bitcoin companies, such as Tim Draper and Founders Fund.  Otherwise, we have seen novelty acts in this space, such as the Winklevoss Bitcoin ETF.

Much of the trepidation around Bitcoin stems from the regulatory issues.  Basically, many people (me included) expect the U.S. federal government to view Bitcoin with hostility, despite recent noises that they are okay with it.  To that end, Coinbase says that they will be spending a lot of money for licenses with state regulators.

 

 

I Was Quoted In An Article

. . . on the MyCorporation blog regarding LLCs vs. Corporations.  I was one of the experts weighing in on this issue.

While it may seem pedestrian to practitioners, considering the amount of ink spilled over this issue, it is an ongoing item of concern for entrepreneurs.

Here is my excellent contribution:

“7. “The short answer is “it depends.” However, I have found that an LLC will often provide more flexibility in terms of division of rights and responsibilities from the default rules in many business entity statutes. There is more flexibility in terms of pass-through tax treatment with LLCs vs. corporations, even with a Subchapter S election.”

– Doug Berman, Corporate Attorney, Law Office of Douglas M. Berman

Sage advice, indeed.