In a special election held last Saturday (5/7/2016) in Austin, Texas, voters rejected a proposition (Proposition 1) that would have prevented the city from requiring the ride-sharing, on-demand economy companies Uber and Lyft to do background checks on their drivers. Immediately, both companies announced they would carry out their pre-election promises and cease operations in Austin today (5/9/2016). According to observers of the race, the ride-sharing companies lost the proposition vote because they spent too much money pushing the wrong messages while avoiding mention of their main cause: a nationwide effort to prevent the definition of a driver to be characterized as an employee, a definition that will (as we’ve shared before) threaten a foundational assumption of the app-enabled on-demand economy.

The ride-sharing companies, their drivers and other supporters poured more than $8 million into the efforts to pass Proposition 1. The successful opponents spent less than $200,000, to according to the Austin American-Statesman.

Austin voters, who pride themselves on a type of self-labeled “weirdness” that embraces the uniqueness of local Austin businesses and the city’s music and “hip” personality, rejected the “carpet-bombing” approach the California-based ride-sharing companies used to campaign for Proposition 1.

Why did Uber and Lyft lose?

Ironically (and admittedly, from an outsider’s perspective) the “Keep Austin Weird” culture of Austin should have worked in Proposition 1’s favor. However, the commercials run by its backers did not focus on the 10,000 Austin residents who have signed up to become Uber drivers, but focused rather on attacking the motives of those who were against the proposition.

According to the Statesman’s Ben Wear, the ubiquitous advertising run by backers of the proposition seemed more like bullying than campaigning.

Quote:

“Lyft and Uber told Austin, essentially, “pass our regulations or we’ll kill your dog.” (Evoking the famous National Lampoon cover image of 1973). The dog, in this case, was both the drivers and the customers. The companies claimed to have 10,000 to 15,000 drivers here and to have given 2.5 million rides in their first year here. Surely that would translate into more than enough terrified terriers and petrified poodles to win an election in which just 87,000 people turned out to vote. Prop 1 got 38,539 “for” votes versus 48,673 saying, “Go ahead — fire away.”

What do Uber and Lyft do now?

Austin voters won. However, next Saturday night, some hard-partying Austin voters out enjoying the city’s music scene may be wondering if the proposition’s outcome was just a little too weird. Perhaps that will lead to a compromise at the city level.

Some analysts and political pundits have predicted that the free-market leanings of the state legislature, along with the size of Uber and Lyft’s lobbying war chests, could see this battle head down the street to the state capitol of Texas.