Taxi Blog

Hall of Shame II, or Just be Happy Anyone at all Is Buying Your Car

Sometimes I get writer’s block and I sit here and stare at my computer waiting for ideas to hit me.  Sometimes I have an issue that just ticks me off, and the post writes itself. And sometimes, when I have no idea at all what to say, someone does something really stupid and does my work for me.

If Hertz was the company that put you in the driver’s seat, then Toyota is the company that put you in the driver’s seat then pushed the accelerator to the floor until you crashed.  Given the slack sales of automobiles due to the current recession, and the scary proposition it has become to put a key into a Toyota and turn the ignition, one would think that Toyota would be greatful for any sales at all.  One would be wrong.

At the New York Auto Show in 2007 there was an exhibition, albeit relegated to the underground entrance to the Javits Center, called the 100th Anniversary of the Taxicab.  The exhibition was supported by the city and the New York City Taxi and Limousine Commission, which was, and still is, searching for the “Taxi of Tomorrow”. Unfortunately, the search changes direction depending upon which way the wind is blowing. But that is another story. The Taxi show at the Javitz Center included some iconic vehicles of the past, early Checkers, a current Crown Victoria, and some potential taxicabs of the future, including the Standard Taxi (now the MV1), the Kia Rondo , and, if memory serves me, a Toyota Scion taxicab.

Given that background, and the fact that we began to see a few Scion taxicabs in Chicago, we decided to try them for ourselves. We tested about ten Scions as taxicabs with very favorable results. The vehicles were inexpensive to purchase, they were virtually problem free, they were easy to repair after accidents, and they were comfortable for both drivers and passengers. Add to that 20-25 actual mpg as a taxicab. Having finished our testing we found a dealership and enquired about buying the vehicles in bulk. We were initially told that they could possibly find us one vehicle per week (we change about 150 vehicles per year, and we add another 50), but after the markets crashed it became, “How can we help you?”. Now, mind you, this was a local dealership, not Toyota central that we were dealing with. In fact, we have a very solid relationship with the dealership. We are currently purchasing on average four Scions per week, and other fleets have begun purchasing both new and used Scions in Chicago as taxicabs as well.

Now we are up to date. So last week I get a forwarded copy of a memo sent by the Chicago Regional Office to the local Toyota dealers. The memo comments on the “influx in xB sales to Taxi Cab (note the spelling) companies during recent months in the Chicago market.”  It goes on to state that using the Scion as a taxicab “takes potential sales away from our core customers and degrades the brand.” Degrades the brand. How do you degrade the name of a company that is most known for killing owners and passengers with uncontrollable acceleration? And as for taking potential sales away, are they running out of cars to sell? What a good problem to have. According to her letter, “April YTD the median age of the Chicago Region Scion buyer was 36 and 72% of the customers were new to Toyota.” We have been using the vehicles for over two years. It doesn’t sound as if the buyer market has “degraded”. In fact, I would venture to say that the visibility brought to the vehicle by being on the road in plain sight every day has helped sales tremendously.

I am not an expert at vehicle marketing. If I was I would be working for a car company, and I would probably be out of a job right now. But I can’t help but think that if I were in their position, given the push in Toyota commercials to assure the public that they are once again diligent in their design and production, that I would jump on the chance to get affadavits from large and well know taxicab companies that have put hundreds of thousands of miles on these Scion xBs with no mechanical issues. But that’s just me. Instead, the Scion Manager (and I do not release names here because, as she told me on the phone, it’s not personal), “wanted to make it clear that Scion does not support selling vehicles to Taxi Cab (again, cute spelling) companies”, and reminded dealers that “all Scion sales are subject to Covenant compliance review at any time. I don’t know what that means, but it sounds like a threat to me.

Our dealers have assured us that the flow of vehicles will continue unabated, and indeed, the letter from the Tsar of Scionia admits that “Scion cannot dictate who a dealer chooses to sell a vehicle to.” But really. Get a grip.

SO INTO THE HALL OF SHAME GOES TOYOTA AND THE SCION REGIONAL MANAGEMENT.

Never Bring a Knife to a Gunfight

I remember the famous scene in Crocodile Dundee where Paul Hogan is accosted by a bunch of men who pull a knife, and he replies “That’s not a knife, now THIS is a knife!” , whereupon he pulls out a huge Bowie knife. Harrison Ford took it  a step further in Raiders of the Lost Ark. When cornered by a large man in a turban wielding two menacing swords he simply pulled out a gun and shot him.

In my travels between cities the last couple of weeks I have encountered a number of cab companies, some small, some quite large, who were considering moving to some form of computerized dispatching system. I have personal experience with the Mobile Knowledge system, and I know quite a few people who have experience with the DDS system as well. Both are fairly robust, and both have some major flaws. The flaws are not necessarily in the programming itself, but in the ability of the companies to adapt their systems to what your individual company needs. Both also require you to use only their own terminals, which eliminates any bargaining position you might have when it comes to replacing equipment. Be that as it may, what we have found Mobile Knowledge to be quite good at is integrating their systems with the various other technologies out there that we have opted to take advantage of.  Whether we are working on credit card processing solutions, text or iphone app based dispatching, or any other functionality, they have been, albeit sometimes very slooowwwwllllyyy, able to adapt their dispatching systems to meet our needs. In truth, the purveyors of the new technologies generally go to Mobile Knowledge and DDS prior to launching their products, so that they are “pre-integrated”.

There are some very solid operators who have developed their own operating and dispatching systems. As long as you are large enough and savvy enough to have your own programmers on staff, this can be an interesting option. If you have to go outside for programmers, on the other hand, be prepared for a lack of availability and a drain on your funds, as everything will be charged out hourly.

Wireless Edge, and Verifone, among others, have been touting their own dispatching systems in markets where they believe that credit cards will flourish. The compelling feature of their dispatching systems is that they are free, as long as you let them take 5% (or whatever percent you wind up agreeing to) of the credit card totals. I have not seen any of these contracts, and I do not know anyone that has actually used either the Wireless Edge system, or the Verifone system. I therefore cannot discuss the flexibility, robust nature, or accuracy of their dispatching systems. The cautionary tale here is this. Make sure that whatever system you choose can handle all of the peripheral technology that you will be adding to your fleet dispatch in the next couple of years. If not, your competitors will have a huge edge, and the money you save on free dispatching equipment will be lost in revenues.  Your competition will be paying for the proverbial gun while you show up with the “free” knife.

Once again, I will state that I do not know anyone using either of these two systems.  Both companies are experienced in the taxi market, so I would assume that the basic dispatch functionality will work in both cases. Do your homework, speak not only to companies that use the dispatching systems in question, but also to other technology companies to see if their products are compatible.

And when you speak to someone who uses the system make sure that their interest in dispatching is the same as yours. In the case of Veriphone specifically, they won the contract to dispatch all of Philadelphia. The contract was not with a company, however, it was with a city. The city’s interests will be far different from your own.

Happy hunting.

White Rabbit

As I sit here and watch the trailer for the (somewhat) new Johnny Depp  movie Alice in Wonderland, I realize that I too, am late, late, for a very important date, with January (and February, March….) Taxi blog pages. Ah well. Better late than never. For most things.

For a quick update in the world of taxi:

New York – Dateline March 3- NYC Taxis Overcharge Passengers $8.3 Million. According to the Taxi and Limousine Commission (TLC), of the city’s 48,300 cabbies, over 35,000 have overcharged passengers by (the implication is deliberately) pressing the rate 4, which gives time and a half for out of town trips, rather than the regular rate on the meter.

New York-Dateline May 15 – Maybe it was more like 2200. Apparently, the way the system was set up, it was easy to inadvertently switch on the rate 4 at then end of the trip and not change the fare at all. Nonetheless, there are 633 drivers that overcharged (again one would assume deliberately) more than 50 times each, and they face license revocation. There are another 1,671 who overcharged between 10 and 49 times who face a choice of a very stiff fine, or revocation.

I say, GOOD RIDDENCE. Get the cheaters and thieves out of the industry where they give everyone a bad name.  I would rather have my car sit than roll it with a thief. Lost in the sauce, however, was the fact that the TLC, and Mayor Michael Bloomberg , along with the headline hungry news media, was quick to condemn what amounted to almost the entire driving corps without ever truly analyzing the data, which was readily available. It was only after the Taxi Worker’s Alliance, led by Bhairavi Desai, and the Metropolitan Taxicab Board of Trade, an association of taxicab fleet owners, independently met with city officials to point out the flaws in the design of the PIM systems that not only led to the overcharging, but which also led to a miscalculation in the extent of the overcharging after it was discovered, did the TLC backtrack and say that maybe it was not 38,000 drivers deliberately ripping off the riding public.

New York- Dateline  March 12th- David Yassky replaces former TLC Chair Matthew Daus. Just in time to inherit the 38000 accused thieves.  To date, relations with Chairman Yassky have been pleasantly cooperative. Let’s hope we can keep that up. As for Matt Daus, regardless of which side of the fence you were on in local taxicab politics, the former commissioner was a stellar ambassador for the New York City taxicab system wherever he went.  Kind of like Nixon in China, but without the break in.

San Francisco – Dateline – January something or other – San Francisco experiments with medallion sales, albeit in a very controlled environment designed to keep investors (New Yorkers) out. Sorry guys. For years, cab drivers in SF have operated permits that they had no legal right to sell or transfer. The new program will allow permit holders over 70 years of age to sell their permits to parties designated by the city, at a rate designated and guaranteed by the city, and financed by lenders approved by the city. Since fleet owners cannot help direct sales of permits that they operate to new owners who will continue to lease those permits to the same company, this could be devastating to the city’s largest cab operators.

Chicago – Yellow Cab, Checker Cab, and Taxi Medallion Management, a taxicab fleet operator, are working together with Clean Energy, and the City of Chicago to install two natural gas stations for use by taxicabs and other CNG fueled vehicles in the city.  The program was funded by a federal grant that provides for monies for both building the stations, and paying for CNG conversions for vehicles.

More news to come. We are back. We think.

Taxiblog’s Greatest Hits Volume 1 2008-2009

I sat down to see what was taped on the DVR last week and I noticed that there were a gaggle (maybe a group? A pod?) of episodes of  “100 Greatest Songs of the 90’s”, by that broadcasting giant that brought us “100 Greatest One Hit Wonders of the 80’s” and “40 Naughtiest Celebrity Scandals” (Tiger Woods was too late to make the list) VH1. Of course, being the obsessive compulsive vidiot that I am, I was forced to flip through and see every song. Finally, I just went over to the computer, pulled up the list on VH-1’s website, went to I-Tunes and downloaded all of the songs that I didn’t already have on my i-pod. We do’t need to get into the “why” of it, because as musical eras go, the 90’s is one bubble gum pop song and two rap hits away from being the 1962 Mets of music, but suffice it to say that once I get into a project I tend to go overboard.

So now I’m fully downloaded with 90’s, I have my i-pod plugged into my car stereo, and for the last week or so I have been mentally revisiting the previous decade: carpools to Dalton with my elementary school kids, pipe bombs in Atlanta and the blue dress that never went to the cleaners.  The songs, which play in alphabetical order due to my lack of i-pod savvy, reached M and I found myself listening to “Man in the Box” by Alice in Chains.  I reached a red light and turned to see what fascinating info my car screen was going to feed me about “Man in the Box”, and I saw that I had downloaded it off the Greatest Hits album. Now, don’t get me wrong, I have nothing against Alice in Chains, or in fact against grunge music in general, and I understand that, taken literally, if you have eleven songs ten of them would by definition be greater hits than the eleventh, but let’s be honest.  “Them Bones”, “Rooster” and “Angry Chair” would never make it into anyones “gotta have that song on my i-pod when I am stranded on a desert island” list. Even the grungiest of grunge fans.

“How does one get a roster of greatest hits anyway?”, I wondered. Ok, so Michael Jackson, Elton John, the Beatles, Billy Joel and even pop stars like Britney, all have greatest hits, some of them in more than one volume. The songs all made the charts, were played ad nauseum over the airways, and whether you liked them or not you had to agree that they were popular. In some cases you would even agree that they were great. But how many really sub-par groups annointed themselves as “great” by releasing a compendium of mediocre music and calling it “Greatest Hits”? Well, “Ratt”  for one, and “Dexys Midnight Runners“, singers of that 80’s “take of your clothes” anthem, ”Come on Eileen”, which begs the question how can you be a one-hit wonder on one hand and have a greatest hits album on the other? The Boomtown Rats, who had more humanitarian hits with frontman Bob Geldof  than they did musical hits, although “I don’t like Mondays” is a classic, have a greatest hits album. And the list goes on.

This got me to wondering what would be on the list if the rest of us had greatest hits albums. Al Gore would have a the hanging chad, a Nobel Peace Prize for scientific research that he didn’t do and it is questionable whether he understands, and the distinction of being the only person I know who’s married to someone named Tipper. Dan Quayle would have the day he became Vice-President, the day he learned how to spell “potato“, and the day he no longer had to be vice president, and Larry King would have the day he divorced wife number one, the day he divorced wife number two, the day… you get the picture.

To mutilate the metaphor still further in the name of somehow relating this to our basic topic, what if we all had to assemble our list of “greatest hits”? When you think about your business career, would it be more of a one hit wonder, or can you come up with a string of moves you have made and successes you have amassed that led you to where you are? Either way, are you content to rest on your laurels and collect royalties on your one big golden oldie hit, or are you continually striving to adapt, change, come up with new and innovative ideas and projects and find that next great hit? Sort of the U2 of the taxi industry.

For better or worse, in the transportation indsutry today you don’t often have the luxury of resting on your laurels. Technology changes so rapidly today, as do customer loyalties, that status quo is really not a viable option. The tech that we have added in the past ten years alone is mind boggling. Digital dispatch, automated cashiering, electronic credit card acceptance and GPS tracking have all become standard in fleets across the country. If you are in a major marketplace and your competition is dispatching digitally and accepting credit cards easily and quickly, you had better do so as well, or you will have to be twice as good in every other phase of your operation in order to maintain your customer base. With that in mind, let’s take a look at where we might need to go in the next couple of years.

Start with dispatching. The era where your customer will call you from home, or from the phone at the local bar, or the doctor’s office is over. Now they have you plugged into their cell phones, and they call from whatever streetcorner they might be standing on.  This has a couple of ramifications. First, the value of that easily memorizeable phone number has diminished. It’s still important to have a good number, but don’t spend the money to buy (312) TAXICAB when you can better spend your money on new tech. Second,  whoever makes the process the easiest for the iphone savvy thirty something traveler will get the new generation of business riders. These guys and gals all have ADD, they have no interpersonnal skills, so they don’t want to be talking to your dispatchers, and they live in the VERY fast lane, so speed is all. Ride Charge has a downloadable application (there’s an app for that) for i-phone and blackberry that can send calls from a rider’s phone directly into your dispatching system without ever bothering  a call taker. Go Fast Cab has a similar system that is text based, where you text “taxi” to a certain number and that enters you directly into a taxi company’s dipsatch system. These two processes charge a per call fee, but if you can increase call volume without adding dispatchers it may be worth the cost. Unified Dispatch (UDI) has their new Uni-book system online, which routs calls directly to an automated dispatcher, again, bypassing call takers and speeding the phone call in the process. UDI charges a large fee up front for their services, but if you can reduce your call taking staff it soon pays for itself.

We have pretty much beaten the credit card issue to death, but there are a couple of updates. We have begun installation of Creative Mobile Technology’s (CMT) PIMs in the rear seats of our vehicles in Chicago. These units are already in operation in New York and Boston. We have approximately 500 units installed, and results are mixed. The units seem to be working okay, but the influx of credit card riders has yet to materialize. We attribute that mostly to the lack of recognition on the part of riders, and to the fact that only 10% of the city’s vehicles (albeit 20% of ours) have the units installed. We have begun our public relations campaign and we expect solid improvement. CMT has also come up with a far less expensive rear seat unit that works off of our current radio, thereby eliminating the cell phone charges inherent in the more robust unit. The new devices won’t be available for testing until February, and the obvious drawback is that radio transmission is generally less reliable and slower than cell phone technology, but they still get the credit card process into the rear seat where there is no risk of fraud, and less intimidation to your customers. Ride Charge is also currently working on a rear seat device, and Verifone has had one working in New York and Philadelphia for some time now.

The newest enhancement for credit card processing has more to do with drivers than passengers. We are working on a debit card for each driver that will allow us to send processed credit card fares directly to the driver thereby eliminating his need to come to our cashier to get his money, and reducing the need for cash at our locations. I believe that programs of this type are already in operation in San Francisco and San Diego. The issue that we have found is that most card issuers want to charge exhorbitant fees to your drivers to use the money they have already earned. We have found one card so far that has no fees for card usage as a debit card, and only local atm fees if the driver wants to withdraw cash. We are contemplating installing our own atm machines that will not charge fees to our drivers.

So, years from now when we look back do we know what our greatest hits will be? I doubt they will be what we think they are today, but here’s hoping we all make it to Volume II.

Update: A few days after the posting of this page Al Gore proved that he really did not understand the science.

The Latest from NYC

 So what’s new in New York City? Well prior to this weekend, some clever sports pundit had pointed out that the Jets, Giants, Knicks, and Nets together won fewer games in the month of November than did the Yankees. Um, the Yanks only won 2. Michael Bloomberg, who was supposed to be a shoe in for reelection as mayor, had to break the record for campaign dollars spent (held by Michael Bloomberg coincedentally) in order to eke out a win. He spent over $100 Million in the effort. Much of it, according to the article, on pizza and coffee. Hmmm. And the information age has hit the gang set, as Twitter has become the means of choice for trash talking bangers. Columbia University, from whose graduate school of business this blogger did graduate, is once again in the news for all the wrong reasons  (ever since the antisemetic incidents a few years back I told them to consider me a non-alum), and, most importantly, thanks to the financial crisis in Dubai, Barney’s New York may once again be owned by Americans, albeit not New Yorkers (Barneys USA?).

But while all that is more than mildly interesting, what I know you are just itching to hear is what is going on in the New York City taxicab industry? Prices? Hybrids? Sales Tax? Law Suits? We have it all, and rest assured it will be coming to a municipality near you real soon. Here’s the update.

It all started with the hybrid mandates as reported here back in November of 2008. The new regulations were struck down in Federal Court since they were preempted by Federal emissions regulations, so the city then changed the lease cap so that if you did not have a hybrid you lost $15.00 of income per shift. Ouch. The same Federal Court judge shot that down as well. The City is appealing that ruling as we speak.

On a more alarming note, Mayor Bloomberg has convinced New York’s federal lawmakers that the preemption statutes are keeping him from properly running his city. They have taken the fight up in Washington D.C., and there is currently pending legislation to exclude taxicabs from preemption statutes. The Taxi Livery and Paratransit Assn. is closely following this issue in Washington.

In the meantime the Taxi and Limousine Commission suddenly realized that for the last ten years or so the lease cap governing what fleet owners can charge drivers did not include the sales tax (not that it should). In other words, the Monday am lease cap of $105.00 was actually $105.00 of lease money plus sales tax, which was charged separately to the drivers much like every other industry charges sales tax. The TLC wanted the $105.00 to include the sales tax. At the same time the state raised the sales tax by almost a buck and a half per shift. So the TLC restated their lease cap regulations to specifically unclude the sales tax, even the new sales tax, and fleet owners lost four and a half dollars per shift. The industry sued in federal court over this issue as well, saying that it was a punitive measure in response to the city’s defeat in court. In court the general counsel for the TLC compared the lease cap to prices at the gas pump, where the taxes are included. The industry would be perfectly happy with that scenario, since the prices at the pumps are not capped, and gas station owners are free to raise their prices should sales taxes increase.

Anyway, the federal court judge ruled that this was a state matter, and remanded the case to state appelate court. The state judge’s first comment was in the vein of, “Gee, my case load is really huge right now. Wish there were more judges.” Needless to say, she did not take the time to try to understand the actual issues, and we lost.  We are currently appealing this decision. Keep you posted.

So to recap, won the hybrid case, lost the sales tax case, city is appealing hybrid case, we are appealing the sales tax case, and the lawyers are very happy.

Stay tuned.

You Never Get a Second Chance To Make A First Impression

Once again, I open with something that is completely irrelevant to the post, but one of the greatest monologues in Saturday Night Live history was performed by the seemingly multitalented Taylor Swift. Eat your heart out Kanye.

On to business. Lincoln University, a historically black college in Oxford, Pa., is keeping  some obese students from graduating.  It seems there is a requirement, if you are obese, to either lose weight while at school or take a class in weight management. The idea is to improve students’ chances in life. Overweight applicants do worse in the job market, and worse in life expectancy.  Go Lincoln.  The first impression that your potential employer will have, regardless of how perfect you are for the job, just might be, “Geez this guy is big. What happens if he gets sick on the job?”.

For more on first impressions, check this out. No joke, this was probably the worst first impression customer service experience I have ever been involved in. At Mercedes Benz no less. The experience was perfect, because it provided lots of “DONT DO THIS” lessons for future use.

I went shopping for a car the other day. I went to Mercedes Benz of Larchmont. They had a nice website, they were close to our house, and my car was pretty much dying, so I was ready to buy. I pulled into the parking lot and it was full, so we found some room, turned the car off and went over to the valet to see where I should park. He told me there was room in the street. The street is a major thouroughfare, and at that point I was ready to leave. I made it clear that if I got back into my car and drove to the street that I wasn’t parking, I was leaving, so he moved the car and kept the keys. I then went into the showroom, and were greeted by a folding table behind which sat a very pleasant looking young woman. By “greeted” I meant that we couldn’t walk any further without banging our legs, not that someone actually asked what they could do to help me. When I asked about purchasing a car I was told that someone would be with me shortly. Given that there wasn’t much going on in the showroom, I thought that would be fine. Five minutes later I still had no salesman, so I turned to leave. As I got to the car somone finally came out and asked if he could help me. 

The salesman was nicely dressed, and I am sure he is a wonderful human being, but he was certainly less than enthusiastic about the product. You would think that he would be gushing Mercedes, but he sounded more like he was reciting the periodic table than talking about the new Blind Spot Assist. When we returned from the test drive and went about picking options and colors the computer system was interminably slow, and we were forced to wait for statistics sheets that just never came. I finally gave him my email address and asked him to send the sheets when they came through. Two days later I got an email with no attachments. I pointed out the lack of attachments and finally got two sheets. Two. That was all the Mercedes Benzes that he thought I might like. Needless to say we are heading to Mercedes Benz of Greenwich next. Those of you who actually click to see the links will notice that the two Mercedes websites are identical. Smart move by Mercedes. Can you imagine what the Larchmont website might look like left up to their own devices?

Lesson One: If you want people to show up for job interviews, driver applications, etc, make sure they feel welcome. That means adequate transportation and parking assistance among other things. Furthermore, make sure the entry is welcoming. No obstructed door, secret areas into which they cannot see, etc. Whenever possible schedule appointments. You don’t want applicants to have trouble getting in to see you, or to be waiting in a line for service. They will assume that for the rest of their time with your company they will be waiting for everything else: Cashiers, dispatchers, assistance with problems. Not a pretty thought.

 Lesson Two: Make sure the people who are greeting, talking to and helping applicants are smiling and enthusiastic about the product, aka your company. If they don’t sound like they want to be working there, why should applicants feel that THEY would be happy working there?

Lesson Three: Make sure that your personnel department has instant access to all the information about your company that they will need. No one wants to wait around for your computer to spit out information that your personnel department should probably know by heart anyway. If the computers are slow have printouts, or better yet, a live human with information at their fingertips, readily available instead. In worst case, when information is not readily available, don’t make the applicant wait, ask someone else to find the answers to questions while the applicant continues with the process, or get a contact number and send the information as soon as possible. Not the next day, or two days later.

Lesson Four: Follow up. I know it is a great market right now for hiring, but you should still make applicants feel wanted. They will probably call you, but call them anyway, even if you don’t want to hire them right now. You may want them later, or they may have friends who are looking as well, who may be more suited to your needs. Don’t get a bad reputation in the marketplace. If you want them, let them know as soon as you can that the position is theirs, even if it is just for driving a cab. EVERYONE WANTS TO BE WANTED.

Coming Next Week: The Chicago Sun Times declares me Emperor of Chicago (check out the opening line).

Kanye West screws up again (just guessing here)

Politician found in bed with his own wife. Okay. Really a stretch there, but who knows?

Taxiblog Rides Again

After an incredibly long brief hiatus, taxiblog is once again trolling the streets of the internet flagging down misconception, inequity and out and out stupidity on a (hopefully) weekly basis. As you can see, we got a new high tech overhall, and those of you loyal fans who have been waiting paiently he new pages, buckle your seatbelts and get out your credit cards (kidding about the credit card).

So our last post was January of 2009. Since then we have lost a number of  luminaries. It apparently was not a very good year to be famous. The King of Pop  is gone, and yet he has a new movie coming out. Kung Fu was found hanging naked in his hotel closet. Sources say that Carridine, of Kill Bill  fame, was definitely not a victim of the five point expoding heart technique. Billy Mays  will no longer be hawking OxyClean, although his family was actually encouraging people to dress up as Bill for Halloween, and Steve McNair found that getting caught by your wife is not the worst thing that can happen in an affair.

How does this affect the taxicab industry? Well, it doesn’t. Not really. Just puts things in a bit of perspective. And what’s more, I do not intend to open up a movie review section, but I feel compelled to warn you that the new George Clooney movie that came out today, “The Men Who Stare At Goats” is about as entertaining as root canal, and only slightly less painful. Nuff said.

Here’s what’s been going on since January. In New York, some fleet owners and I sued the city to prevent implementation of the new mpg regulations and we got an injunction based on federal preemption statutes. For those of you who don’t know, this means that states or municipalities cannot mandate higher emissions standards than those mandated by the federal government. So, having lost round one, Mayor Bloomberg (now of the third term) and the Taxi and Limousine Commission created a new theory, that they had the right to not only offer incentives to taxi operators who purchased hybrids, but they had the additional right to enforce disincentives, in the form of lowered lease caps, to people who did not operated hybrids. The disincentives would affect not only vehicles purchased after the date of the new regulations, but it would immediately impact all of the vehicles purchased in good faith when no such regulations were on the books. Once again, my two fellow fleet operators and I went to court and the federal court ruled that this was simply a ploy to get around the injunction, and that it was effectively an emissions mandate, which was already under injunction. We are now in negotiations with the city to come up with a plan to get them where they want to be without destroying the industry.

The fallout from this whole affair, however, could be more damaging than the hybrid incident itself. As an additional penalty for suing the city, the Taxi and Limousine Commission decided that their lease cap regulations INCLUDED the sales tax, as opposed to how they have always been, where the sales tax was in addition to the lease cap. So where a fleet could previously charge $105.00 plus $3.21 sales tax on a day shift, or $108.21, which made sense since the driver was the end user and should be paying the tax separately, they could now only charge $105.00.  And the fleet owners would now simply eat the tax. To make matters worse, at the same time the State of New York imposed an additional sales tax of 6% on leased taxicabs, or an additional $1.44 per shift which also had to be absorbed by the fleets. The logic of the counsel to the TLC was that gasoline prices always included the sales tax, so why shouldn’t taxicab lease prices? Well, if you have not looked lately gentlemen of the TLC, gas prices are not capped by statute, so when the tax rate goes up they have the ability to raise their rates. Furthermore, and possibly most damaging of all, is that the New York based politicians have convinced Congress to consider a bill that would specifically exempt taxicabs from federal preemption statutes, thereby allowing all of our municipalities free reign in imposing regulations that are practically impossible, and certainly expensive and dangerous, to comply with.  The is actively pursuing opposition to this bill, and futher updates will be forthcoming.

It is good to be back in the saddle. Those of you who have been patiently awaiting the new TAXIBLOG, thank you all, and you can expect updates on a biweekly basis.  Those of you wishing to submit articles to taxiblog for publication may contact me at 

Oh, and congratulations to the Scarsdale Raider girls volleyball team for an excellent season and a strong showing at sectionals. Go Raiders.

Trust is a Wonderful Thing

2008 was a year filled with scandal. Idols were exposed, heroes turned out to have ordinary frailties, and financial advisors were exposed as frauds. It was a tough year to have faith in anyone in the public eye, whether they were teen idols such as Miley Cyrus posing in racy photos, football heroes with sweat pants issues, or governors selling senate seats I think we would all agree that it has been a disappointing year for idols, albeit a great year for comedians. Maybe the bottom line is that we will all be more wary going forward before putting our faith and trust in anyone.

I have found that people generally assume that others have the same level of honesty as they do. Those who would swindle their own grandmother out of her last pair of underpants tend to assume that others think and act the same way as they do. In negotiations they look for every possible way that the other party might try to take advantage of them, and they write onerous contracts which try to presage every possibility. But that’s what contracts are for right?

Well, actually, no. The purpose of a contract is to delineate the basic terms of a deal. A good contract will also point out possible breaches of those terms, and will provide methodology for correcting those breaches, and penalties for failure to correct. No matter how good a contract is, however, it is only as effective as the intentions of those signing it. Even the best of documents cannot mandate honesty or good faith, and if you find yourself lying in bed at night staring at the ceiling thinking of ways that your new partner might put one over on you, then perhaps the question you should be asking yourself is not, “How can I use the contract to protect myself?”, but rather, “Why am I entering into a contract with someone that I am sure is trying to screw me?”

Assume that you go forward with a proposed deal and you think you have covered every base in your contract, including a noncompete clause. Now your new acquisition is yours, and four months later the guy you bought the company from starts up a new company doing the same thing in relatively the same neighborhood as you. Are you going to be able to sue him? Is it going to be worth it? At the end of the day if you spend $100,000.00 in legal fees and you get him to stop, can you prevent him from serruptitiously working with your competition anyway, and then moving in full time when his noncompete is up? Many states don’t even recognize noncompete clauses, or they offer very limited protection for them.

Assume the same deal, and the company you are buying is purported to have seventy five vehicles in operation, and they are answering one thousand five hundred calls per day. Given that the former owner was probably not reporting all of his income can you have any certainty that the cash flows he professed to have were at all realistic? Can you afford to pay him at all based on anything not on the books? Due diligence is notoriously inaccurate in this business because very few companies have certified or even audited records, and unless you already know the neighborhood you are buying in very well it is difficult to estimate earnings per vehicle. Add to that the fact that some companies are still on commission, and estimates get even more murky. So the deal is now done, you have kept $100,000.00 in escrow to guarantee earnings for the first year, and it turns out that earnings are $50,000.00 less than your contract guarantee. The seller assumed he was getting none of the escrow, so he has nothing to lose. He sues to get the money, you lose $15,000.00 defending, and he winds up with half the escrow anyway.

We live in interesting times. If you have cash on hand there are many deals to be made, companies to buy, cash flows to add. Take the time to research not only the company you are looking to buy, but the person you are buying from. Talk to some of the drivers and staff. Ask them about calls, accounts, and the boss. Anyone who will not let you speak to at least the key staff, to see if they will stay on, is probably hiding a thing or two. Ask for lists of accounts, and go with the owner to meet the contacts to make sure things are going smoothly, and that they are comfortable with new ownership going forward. Speak to the bank that the company does business with. Bankers will know cash flows better than anyone else. Most importantly, how do you feel about the seller when you sit with him? If you don’t get a good feeling from him then maybe you shouldn’t be at the table. If it turns out that the deal is not the right one don’t be afraid to cut the anchor loose and move on. There’s always another deal. Especially right now.

Happy New Year.

Everything Old is New Again. More Lessons From Facebook

I went through a week or so as a Facebook-a-holic. I don’t know how it happened, it just did. I think it started when I downloaded the application to my Blackberry, so no matter where I was I knew what was happening on my home page. As more and more of my high school peers hopped on the FB (that’s what the regulars call it) bandwagon a pattern seemed to emerge in peoples’ behaviors, including my own. People who did not like each other back then would not “friend” each other now, (I know. The word FRIEND was never intended to be a verb, but it is now on the internet). People who did not know each other well at all back when Tawny Kitane was” hitching a ride on White Snakes’s car had no problems being online pals now though. People were willing to give the benefit of the doubt to people they did not know, but they seemed to be saying en masse that people they knew and didn’t like 25 years ago would never change and were still probably jerks now. Does that make any sense? Didn’t all of us grow up just a bit after high school?

I can’t really distance myself from this phenomenon. I saw the name of a girl who broke my heart at a party in 6th grade when she completely ignored me after I asked her to dance. I’m sure she’s a wonderful person now and a mother of three who would be crushed if someone did this to her son. She probably doesn’t remember the incident at all, and maybe she was just really shy. I never found out because I never spoke to her again. The point is, I know who she is, she knows who I am, we know a lot of the same people online, but I never clicked to add her as a friend because I have this image of her as a stuck up 6th grader. On the other hand, one of my best buds online is someone I never even met. I was willing to take a chance with her but not with someone who dissed me in middle school.

Just as people tend to have long memories for personal trauma and tragedy, companies and industries tend to have extended institutional memories of past failures. In both cases it is a mistake to assume that what was once painful or embarrassing, or in the case of operations what was once unsuccessful or a loser, will still be so today. 6th grade crush and I today might be fast friends and have lots in common. Or she could still be full of herself. There is no way of knowing until you try. Similarly, just because natural gas taxicabs were a failure in New York City a decade ago, or rollups of taxicab companies from the 90’s were operational disasters, it doesn’t necessarily follow that such things would not be more successful today.

Institutional memories are valuable commodities. They give you background as to why procedures were put into effect, why regulations were enacted, and why certain employees, customers and competitors behave the way they do. In certain situations institutional memory can be of great value. When we were in negotiations with Creative Mobile Technologies to place point of sale equipment with advertising capabilities in the rear seats of our taxicabs in Chicago we had the benefit of two previous attempts that had already failed. The first system went bust due to poor technology and inadequate funding. The second fell victim both to overly expensive equipment, and to complicated contracts with multiple parties that hindered our flexibility. Our new endeavor was designed with simple, elegant and relatively inexpensive technology that has capabilities far beyond those of either of the previous two attempts. Just as importantly, however, the contracts are simple two party agreements that enable CMT and us to quickly react to market forces without having to deal with the bureaucracy of two additional large corporations.

Institutional memory becomes a liability, however, when it irrationally prevents corporations from proceeding with potentially profitable ventures. Consider again the case of the rear seat devices. Many companies after living through two failed ventures would simply assume that the project was not meant to be. Such companies would see the idea of “taxi tv” as a failure, rather than the technology and methodology used to attempt the project in the past. By doing so they would eliminate the possibility of correcting the problems of the past and creating profits for the future.

Remembering the past is never a negative in and of itself. Misinterpreting the lessons of the past, however, can be stifling and counterproductive. After writing this page and considering the issues of analysis of the past I decided that I would attempt to befriend my middle school nemesis. I will let you know when I get up the nerve.

Pink Opens Up (again) ClearChannel Clams Up (again) More Hall of Shame

Katy Perry kissed a girl and she liked it. Pink had a problem with Katy Perry, not that she kissed a girl, or that she liked it, but that she decided that she would sing about it. According to Pink, and regular readers know how much Pink’s opinion means to me, when she polled her gay girlfriends they thought that the song trivialized being gay. I wonder if she polled her divorced friends to see if her song So What trivializes divorce, or if her depressed friends think that Don’t Let Me Get Me trivializes low self esteem. I think it may have more to do with the fact that So What is currently #2 on the charts and Katy Perry (remember her?) has the #1 spot with Hot N Cold.

While Pink seems to have no shortage of things to say, not unlike myself I might admit, some people never have anything to say when you really need information. Witness Clearchannel Taxi Media, a company that was private, then went public, then was taken private again, and now, I think, it’s a public entity. Their lawyers probably have whiplash. As any of you who deal with CTM know, they are effusive, confident and very communicative when they want to get into your market. As we also know, they are less so as soon as you sign your contract. It’s like CEO Bill Kurr turns into a pumpkin as soon as ink hits paper. His phone and email still work, because you can leave messages, but he never seems to get back to you. If you hear from anyone it’s an underling with no authority to deal with your issue.

Winess the lastest insult. I, and I am sure many of you, received an email last week from Nick Witkowich, who works for ClearChannel Taxi Media. Nick is a great guy who works hard and understands the industry. Unfortunately for Nick, CTM makes him give out all the bad news even though he has no say in policy. The email bemoaned the state of the economy, and informed me that it is a distinct possiblilty that we would no longer receive advertising money for all of our cars in Chicago. Many New York fleets received similar notes, and the Metropolitan Taxicab Board of Trade, which has an almost 3000 car contract with ClearChannel, was asked if they would consider taking less money to help out. Uh, and why would we do that again? The reduction was not the insult, however, it was the fact that we did not even get the courtesy of a phone call, and moreover, the person who sent the email has no authority to discuss the issue whatsoever. It was gutless. INTO THE TAXIBLOG HALL OF SHAME YOU GO!!!

When ClearChannel Taxi Media moved into the Chicago market they were very enthusiastic and we made enormous efforts to help them, for both our own benefit and theirs. When the ordinance was eventually passed allowing advertising, and we had the choice of going with a local company or Clearchannel, we chose ClearChannel. Our decision was based in part due to my past experience with ClearChannel, and in part because we felt that they, more than others, would be upstanding citizens and pay what they said they were going to pay regardless of circumstances. It soon became clear that CTM Chicago was the poor stepchild, and that they were not going to get the staffing and support that they needed to succeed. The sales staff they hired was inexperienced, they did not understand the taxicab industry at all, and apparently they were not very good. Turnover has been high, and sales have been struggling in Chicago from the outset. When they later wanted to switch from a revenue sharing system to a flat fee payment system we agreed.

UPDATE: Met with Bill Kurr and Nick Witkowich and they apologized profusely for corresponding via email. The meeting was cordial, and we discussed ongoing business. They, to their credit, did not ask me to edit or remove my blog page. Where are we now? We are not quite sure. I spoke with Nick Witkowich who was supposed to call Bill Kurr and let him know that we are not pleased, but lo and behold, not only does Mr. Kurr not return my phone calls, he doesn’t return Nick’s either. For now we are still getting paid in full.

While we are on the subject of ClearChannel and contracts, let’s talk a little bit about vendor contracts in general, or more specifically, about how to review said contracts before signing. When we got our original contract from ClearChannel there were some ridiculous clauses which basically gave them the rights to do anything they wanted. They would have had the right to reduce payments, they would have had the right not to pay us for vehicles if they had no advertising for the car that month (but we would not have had the right to get advertising for our empty incomeless vehicles elsewhere), and they would have had the right of first refusal for a new contract after the current one had expired. There were clauses giving them the unrestricted right to call in our vehicles for inspections without compensation, and god knows what else. I cannot even remember at this point.

What we need to remember as operators is that we know our business better than our lawyers do. It is important to give contracts to our lawyers for inspection before signing them, but it is more important that we first review the contracts ourselves, or that we at least confer with our lawyer to let them know what our understanding of the deal is, so that they can ensure that the contract matches that understanding. Lawyers will not know what rate of inspections will constitute a nuisance or a financial burden, they will not know whether you are better off with a revenue share or a flat fee, and they will not be able to judge what ads will annoy your drivers. Read your contracts, discuss them with your lawyers, and don’t be afraid to send them back with changes. If you cannot get everything you want try to reduce the term of the contract, say from five years to two or three, so that you can look for other suppliers and get the terms you want sooner.

And let’s talk about the “right of first refusal”. This is something you never want to give up unless you absolutely have to. What it means is that at the end of your contract the other party has the right to keep you as a client whether you want to go somewhere else or not. You might have issues with their service, or their staff, you might have a better offer somewhere else, but they have the right to keep you as a client for the next contract. You, on the other hand, have no rights at all. A “right to match” clause, as opposed to “right of first refusal”, puts you in a somewhat better place. With the right to match you can negotiate with other companies, get the best deal you can, and then the current company will have to specifically match every facet of your new deal or you will be free to go with a new company. You are best off, however, with a contract that terminates when it terminates leaving you to negotiate freely.

Our new Taxiblog contract review service is now available. Simply of the proposed contract (please keep it to 10 pages or less) in an editable format. I will review it and send it back with my suggestions. If I think it needs further legal review I will let you know that as well. The service is absolutely free to anyone with a vowel in their name. All others please add a vowel before you send me the file and it will be free for you as well.