All Commentary
Tuesday, July 31, 2018

Arcade City: The Future of Ridesharing Is Decentralized

Arcade City is proof that the market always finds a way.

When Uber and Lyft first hit the market, the concept of getting a ride was completely revolutionized. And while the ridesharing industry has offered us safe and reliable alternatives to the outdated cab industry, innovation is constant.

As civilization becomes evermore digital, young consumers, who generally flock to the sharing economy, are seeking services that are both peer-to-peer and tokenized. And one burgeoning startup is giving Uber and Lyft some unexpected competition.

Creating Competition in the Ridesharing Sector

Arcade City is proof that the market always finds a way. At the end of 2015, new regulations in Portsmouth, New Hampshire, mandated that each rideshare driver had to register with the city as well as comply with outrageously rigorous screening processes before they could accept payment in exchange for rides. Any driver who failed to comply would have to face the legal ramifications—$2,000 or up to one year in jail. This drastically decreased the availability of ridesharing within the city.

When Uber and Lyft pulled out of Austin after new regulatory laws were passed, Arcade City moved its operations to the city. 

Already dissatisfied with Uber’s treatment of its drivers, as it had just slashed the percentage of take-home pay each driver saw, and unwilling to jump through the new regulatory hoops, a group of former Uber drivers, led by Christopher David, decided to create their own startup.

Launching its services on New Year’s Eve, Arcade City offered free rides within Portsmouth and asked only for donations in exchange for their services. Since the rides were donation-based and no actual fees were charged, the bold new startup was able to operate under the radar. In fact, Arcade City gave over 30 rides that first night.

And after it had gained attention from the locals in New Hampshire, the startup found its home in Austin, Texas. When Uber and Lyft pulled out of Austin after new regulatory laws were passed, Arcade City moved its operations to the city, capitalizing on the new void created in the ridesharing market. And Austin, known for being delightfully eccentric, was the perfect place for the widespread adoption of this “disruptive” ridesharing service.

Arcade City: Ridesharing of the Future

“Drivers are angry and rightfully so. Their take-home pay was just slashed up to 40 percent by some nerds in San Francisco who don’t even drive. Arcade City is here to do things differently,” Christopher David boldly commented when the startup first began. David was committed to using the Ethereum blockchain to help facilitate a better relationship between riders and drivers by eliminating the need for an intermediary, like Uber. In David’s model, this is done by using smart contracts between all parties. This also eliminates any potential contention that may arise between the middleman and the drivers since everything is already agreed upon and facilitated through an algorithm, rather than fallible humans.

David said:

We think Ethereum-based crypto-equity can solve the labor problem facing companies like Uber and Lyft, who are engaged in exploitative relationships with their drivers and face numerous lawsuits about their labor practices. Instead of begrudgingly allowing drivers to organize after a court ordered Uber to do so, a newer rideshare should proactively encourage drivers to self-organize into groups and co-ops.

And while it is debatable whether or not Uber and Lyft have necessarily been exploitative to their drivers, Arcade City is at least offering private means of dispute resolution with its institution of guilds. Guilds are voluntary groups within the app that set certain quality specifications. While anyone is welcome to sign up as a driver with Arcade City, guilds do require certain criteria be met prior to joining. Guilds might have their own charters or even specific policy practices, but membership is completely voluntary. And, if a driver is not meeting the standards set by a guild, they can be asked to leave. Likewise, any dissatisfaction with the company itself can be addressed by these guilds, rather than a court of law.

Arcade City allows its drivers to determine what form of payment they will accept, which could be anything from Venmo, cash, or even Bitcoin.

Additionally, unlike Uber, Arcade City is not responsible for setting fares. Instead, each driver is supplied with information regarding local supply and demand and is free to set their own rates. This puts the driver in control and allows for a closer relationship between consumer and driver. It also prevents disputes that may arise between the driver and the company. Arcade City also allows its drivers to determine what form of payment they will accept, which could be anything from Venmo, cash, or even Bitcoin.

And as far as building the relationship between driver and riders is concerned, Arcade City is utilizing technology to help build relationships between the consumer and the drivers. After the app is downloaded, riders select filters that help connect them with drivers that meet their specifications. If, for example, you wanted a Spanish-speaker who accepts Bitcoin and had a preference for a truck over a sedan, you could arrange to have Arcade City pair you only with drivers who meet your requirements.

But the next step is where the app itself really differs from Uber. Uber and Lyft only require a few taps of the phone before you are matched with a driver. But Arcade City is looking to really build customer loyalty. The startup hopes that you enjoy your driver so much, you will want to keep using them in the future. For this reason, the app lets you arrange future rides as well as on-the-spot rides with one driver consistently, instead of being randomly matched with a driver each time you use the app. But it also gamifies its system to reward drivers who have returning riders with its own token, Arcade Token (ARCD).

Speaking of its unique peer-to-peer payment system and gamification, David commented:

At launch we will offer two payment modes: peer-to-peer and gamified. Peer-to-peer mode will let drivers accept whatever payment methods they want to work out with their customers. They can take cash, credit cards through Square, PayPal, Bitcoin, whatever they feel like supporting—and keep 100 percent of their fare. Or they can use gamification mode, which requires payment through the app and offers perks and prizes for “leveling up” your driver or rider profile. Think Habitica meets Uber.

While some might prefer Uber’s quick matchup between rider and driver, the market thrives on choice. And for some riders, building a relationship with their driver is important.

John is an Austin resident who uses a service dog. Prior to finding Arcade City, he was filled with worry each time he would order an Uber since he did not know whether or not the driver would take issue with his dog. But with Arcade City, there is no need for John to worry since he already knows ahead of time that his driver knows all about his situation. And if there is a driver who is particularly accommodating of John’s situation, he can choose to keep using that same driver, benefitting both John and the driver who now has a returning customer.

This type of model actually builds relationships between the rider and driver. Unlike Uber and Lyft, if you really like your Arcade City driver, you can arrange to use them as often as possible, further guaranteeing a positive experience. It also further incentivizes the drivers to offer you a quality experience. While Uber uses its star ratings to reward drivers with positive track records, it doesn’t necessarily help build a client base. As an Uber customer, the odds of my having the same driver twice are slim. But if I really enjoy a particular driver there is no reason why I shouldn’t be able to continually use their services. With Arcade City, this is possible.

And since Austin prides itself as a haven for all things weird and unique, Arcade City quickly became a popular alternative when Uber and Lyft left. Of course, both ridesharing giants eventually returned to the city. But that doesn’t mean Arcade City has lost any of its momentum.

Can’t Stop, Won’t Stop

Since its creation in 2016, Arcade City has expanded to 27 U.S. cities and over 155 countries. This growth has been nothing short of disruptive given its relatively young status. It has also learned to swoop in and meet consumer demands when Uber pulls out of a region.

Recently, the up and coming ridesharing startup broke into the Southeastern Asia market after Uber suspended its services in Cambodia, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam.

Christopher David said:

Uber is withdrawing from the world stage at an increasing pace. Arcade City is happy to continue filling the void Uber leaves behind. Drivers and riders all over the world are excited for a true alternative.

Competition is an amazing concept; it is what brought us the entire ridesharing sector to begin with. And while Uber and Lyft were the most innovative services on the market years ago, the sector is evolving and as a result, we are getting even more innovative ideas. Where cabs once demanded we have cash, Uber corrected this by allowing users to pay with PayPal or their debit card. Now, thanks to Arcade City, you can pay for your next ride in crypto.

  • Brittany is a writer for the Pacific Legal Foundation. She is a co-host of “The Way The World Works,” a Tuttle Twins podcast for families.