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    Arcade City Is the ‘Black Market’ Uber that Runs on Facebook

    Written by

    Carlos Perez

    Photo Source: Arcade City/Facebook

    On May 9, both Uber and Lyft shut down their on-demand ride-hailing services in Austin, Texas, after a dispute with the city. But there’s one ride-hailing startup that’s still in town: the blockchain-facilitated, currently-Facebook-based “black market” solution, Arcade City.

    Arcade City was founded by former Uber driver Christopher David after fares dropped in his town of Portsmouth, New Hampshire. “Uber and Lyft are run by nerds in San Francisco. To them, drivers are just numbers,” he told the Coin Telegraph. “The fares that determine drivers' livelihood are just levers to push and pull to maximize profit.” Instead, he believes, riders and drivers should directly negotiate trips, cutting out middlemen from Silicon Valley or the city council. And he’s moving the company’s headquarters to downtown Austin.

    “We are beyond excited to relocate the Arcade City headquarters to Austin effective immediately,” David said in an email to Motherboard. “This week we’re opening our Austin office and holding our first two meetups for drivers and riders, where we’ll collect feedback on how best to solve Austin’s transportation needs. With our peer-to-peer ridesharing service structured more like a movement than a traditional startup, we look forward to making Austin weirder.”

    Arcade City creates an open marketplace between drivers and riders. It takes 10 percent of the rides paid through the app, which confirms transactions using the blockchain, the digital payment technology also used for bitcoin, but also allow drivers to establish their own forms of financial transaction. It plans to eventually offer ridesharing insurance and payment processing.

    "We are beyond excited to relocate the Arcade City headquarters to Austin effective immediately."

    Arcade City had a proof-of-concept app, but pulled it down shortly before Uber pulled out of Austin, citing scaling issues. David says it will relaunch in two weeks.

    So instead, for now, ride requests take place on Facebook.

    Arcade City has Facebook groups in several cities in Texas, including Midland, Corpus Christi, and Austin.

    The invite-only Facebook Group “Arcade City Austin / Request A Ride” has over 26,000 group members. (A competing Facebook group, called Austin Underground Rideshare Community and unrelated to Arcade City, has just over 6,000 members.) Every several minutes, a person will post their pickup information. Drivers will comment with their availability, making arrangements in private messages.

    Drivers and riders are encouraged to set a predetermined rate before agreeing to a ride. Arcade City drivers are quick to respond to ride requests. Since there is no established reviewing system, many drivers post screenshots of their Uber ratings and reviews. Right now drivers and riders are encouraged to negotiate a price and method of payment before pickup. When the app eventually relaunches, blockchain payments will allow payments to be processed directly between the interested parties. No third party encryption service will be required to play the matchmaker and validation of data.

    In David’s long-term vision of Arcade City, the app will have its own rating system and community features. It will also allow riders to build relationships with preferred drivers, as opposed to the matchmaking black box that assigns Uber drivers and riders.

    On the spectrum of Uber alternatives, Arcade City has been labeled as the black market solution. Other, more Uber-esque ridesharing apps like GetMe, Dryver, Ride Austin, Wingz, and Fare are trying to fill in the void left by Uber’s exodus from Austin, and the city is even looking to allocate taxpayer dollars to fund a homegrown ridesharing service.

    The phrase “black market” simplifies the mission of Arcade City, however, because it really seeks to build an infrastructure to disrupt any centralized ridesharing intermediator. In fact, the City of Austin has confirmed that Arcade City is legal, as long as the ride doesn’t exceed the federal reimbursement rate of 54 cents per mile.

    The other reason the startup may have negative implications is that David has been accused of exploiting online movements to function as a startup grifter. Ivan Chen-O'Neill, who worked on David's 2012 campaign for Congress, said his former boss has a pattern of ripping off his partners for cash. When asked about the accusations, David said, "The disgruntled former political staffer with an axe to grind is a sad cliché. I dare you to fact-check his diatribe of hyperbole and half-truths."

    Despite the accusations against him floating around on the internet, David says he is a firm believer that blockchain technology and swarm organizational principles provide the roadmap to killing Uber. He believes Arcade City will be the best solution for communities that want drivers and riders to have an open marketplace.

    Drivers and riders who coordinate a pickup over the Facebook page choose their own method of payment. Group members usually comment with preferred payment options like cash, VenMo, or Square. The relaunched Arcade City app will be run on a platform called the Ethereum blockchain. A blockchain is a building block of disruption that is commonly associated with cryptocurrencies. Blockchain is a disruptive server architecture, where every user can run an instance that replicates all of the necessary data to reach an agreement. All of the necessary parties will be rewarded and a transaction can take place. This operates in the traditional server architecture that seeks to restrict the sharing of data, forcing all applications to run code through a privately held server.

    What Arcade City does is turn Uber into an unnecessary tollbooth. As the company describes in its report on the disruption of Uber, “Wherever a middleman stands astride a market of service providers and consumers taking a cut for matchmaking and managing data, there is huge potential for disruption.” The public discourse on ridesharing usually focuses on the physical safety of riders, but Arcade City could be on the verge of disruption with a ridesharing solution that has the publicly possessed codebase to make ridesharing feel like it is empowering community members.

    Uber and Lyft leaving "is the rideshare version of an Enron."

    Austin Underground Ridesharing Community functions in much the same way as Arcade City does—its users ask for rides on Facebook and would-be drivers contact them directly—but that community doesn’t seek to disrupt Uber or have any grand visions of migrating to other cities. Its founder, Michael Humphreys, says he’s not even sure if he wants the community to have an app.

    "I didn’t create a company, I created a Facebook page because I’m a normal guy," Humphreys said, alluding to David and Arcade City. “If we made an app, it would have to benefit the riders, it would have to benefit the drivers."

    Uber and Lyft leaving "is the rideshare version of an Enron, and I don’t want this to ever happen to these drivers again," he said. "These drivers are regular people just like me and I don’t think they should ever be put in a position again where they can become dependent on a specific income and then just be abandoned.”

    Ridesharing apps in Austin have until February 1, 2017 to achieve 99 percent compliance with rules for fingerprinting drivers, the new requirement that prompted Uber and Lyft to leave town. But Arcade City isn’t just replicating Uber and adding a fingerprinting solution. It is opening up the discourse on the problems with the accepted standards of the ridesharing industry. Communities will finally have a decentralized ridesharing option that attempts to preserve the interests of every individual.

    Jason Koebler contributed reporting.

    Uber Earth is Motherboard’s exploration of the ways Uber has already changed the world and how it stands to do so in the future. Follow along here.