CU student startup Rideorama founders gets schooled on state regs

Ben Fredericson | Flickr via Creative Commons

A quartet of young Boulderites won an entrepreneurship award from the University of Colorado’s business school for establishing an inexpensive ride-sharing service between Boulder and Denver International Airport.

They picked up a check for $4,000 from the school’s Deming Center for Entrepreneurship in May by winning its “New Venture Challenge.”

So far, so good. What’s wrong with this story?

It’s way too short, is what. The business lasted only a couple of months. You can’t improvise ride-sharing in Colorado! The Public Utilities Commission exists to make sure that nothing upsets the status quo, especially if changes lead to more competition and lower fares.

Rideorama, as the program was called, made the mistake of promoting its business at the airport. The airport ratted it out to the PUC, which threatened the company with fines for running an unlicensed business. The company decided to heed the advice of its lawyers and shut down earlier this month, at least for now.

Casey George, the CEO, explained the business in a video posted on YouTube. Getting to DIA now is “expensive” (taxis) or “inconvenient” (buses or shuttles that make many stops), he said. Rideorama used a Web site “matching drivers going to and from the airport with passengers.”

Drivers offered seats and and set a time and price range. Passengers said how much they were willing to pay and the time they wanted. Both sides posted their Facebook profiles. Rideorama matched driver and passenger. The latter put his money into the company’s PayPal account. When the ride was complete, Rideorama paid the money to the driver—minus 20 percent.

The Colorado Daily identified the four co-founders as Boulder residents George and Abdoul Gobitaka, plus CU alumnus Kamal Sabi and doctoral student Ogheneovo Dible.

Welcome to the Big Leagues

The PUC didn’t even have to wait for the existing businesses to complain this time, as it often does. It took action, it said, simply on the basis of fliers that Rideorama had left at DIA. The airport found them, queried the PUC, and the PUC started an investigation.

The PUC, after initially concluding the company didn’t require regulation, changed its mind. Upon further review of the company’s activities and Website, said the agency, “it was determined that Rideorama is operating as a motor carrier and subject to regulation by the PUC.”

The letter noted that since attempted negotiations never happened, a “violation warning” was attached. If Rideorama continues to operate in violation of law, it “will be subject to enforcement action up to and including, civil penalties of approximately $13,000 and prosecution.”

The letter was signed by William Schlitter, “criminal investigator.” Close followers of transportation issues will recognize him as the PUC agent who entrapped Phillip Sullivan, the rogue taxi driver in Aspen. Sullivan offered free rides home at night to Aspenites but didn’t spurn tips. Schlitter, prompted by complaints from the monopoly Aspen taxi company, took a ride and left Sullivan a tip.

Sullivan ended up serving two short stints in the Pitkin County jail, in 2010 and early this year, for contempt of court, having continued to operate his unlicensed cab despite a judge’s orders.

So why doesn’t Rideorama just go ahead and get a PUC permit? If they try, they’d better be prepared for a long wait and be willing to pay thousands in attorney’s fees—far more than the $4,000 in prize money.

Taxi wars

Consider the case of Mile High Cab. The only thing it’s operating now is a Web site, which has a clock indicating—as of this writing—that “1412 days, 18 hours, 36 minutes and 16 seconds have gone by since Mile High Cab sought permission to operate in a fair and free market.”

In short, almost four years.

Mile High Cab was refused permission even to try and start its business by the PUC, which ruled that more competition in the taxi market would be ruinous. The decision was upheld by Denver District Court. Currently, the case is on direct appeal to the Colorado Supreme Court, which will soon decide whether to grant oral arguments. A decision is unlikely before year’s end.

The Institute for Justice has taken over the case, arguing that the PUC misinterpreted a 2008 statute that was supposed to make it easier to gain entry into the transportation business.

I was unable to reach any of the principals of Rideorama to see if they’ll try to get authority to operate from the PUC. Like the founders of Mile High Cab, some of them are African immigrants, who have seem to have an instinct for entrepreneurship in public transportation.

Too bad, because there is no more difficult field in which to succeed, thanks to the PUC.

At least Rideorama doesn’t have to return the $4,000 to CU. “That’s just part of the game,” said Jacquelyn Dietrich, coordinator of the entrepreneurship program. “There’s no retroactive punishment for the team.”

[note color="#C3DAE3"]This story was originally published at the and is reposted with permission.[/note]