How did we get here? A brief history of rideshare apps in Minneapolis

Before Lyft, before Uber, Minneapolis had Taxi Magic.

The app launched in Minneapolis in 2009, just two years after the iPhone, and worked by connecting riders with some local taxi companies. In the late 2000s, Minneapolis had more cabs than ever, and the early days of the smartphone meant more ways to summon one. One taxi company president told the Star Tribune in 2013 that the app accounted for about 10% of all fares. Taxi Magic still exists under the name Curb, but does not operate in the Twin Cities anymore.

Taxis proliferated after a Richfield man sued to lift the cap on taxi medallions Minneapolis had in place at the time so that he could start a cab company. Despite an outcry from medallion-holders, many of whom paid thousands on the secondary market for the then-limited supply of medallions, the council voted to gradually raise the number of medallions and eliminate the cap altogether in 2011. The number of cabs more than doubled between 2007 and 2012.

Then in the fall of 2012, Uber announced it would come to Minneapolis with a post on the social network then known as Twitter. Lyft followed with its own announcement a few months later.

Both apps came to St. Paul in the summer of 2013 — yes, before Minneapolis. St. Paul’s rules at the time only applied to cars with fare meters, so they did not consider Ubers to be unlicensed taxis.

Uber and Lyft started operating unlicensed and unregulated in Minneapolis the next year.

Uber came first, offering rides in Minneapolis in January 2014. Almost immediately, the city started impounding drivers’ cars for operating as unlicensed taxis. When Lyft entered the market in March, the company offered two weeks of free rides to get around existing taxi rules, which included cars “for hire,” and not just those with meters like in St. Paul.

Minneapolis scrambled to pass regulations to let the companies in.

Then a first-term council member, Jacob Frey led the effort to craft an ordinance for the companies, while at the same time looking to relax rules for taxis.

Frey’s proposal, introduced in April 2014, required the new “transportation network companies” to background-check drivers, train and insure them, and make sure their cars pass inspection.

“This is in every way what progress looks like,” Frey said the day the regulations passed in July 2014. “This ordinance takes some excellent steps to adding to the cornucopia of transportation options we have.”

Taxi owners slammed the rules for being less burdensome than the ones for medallioned taxis. Fees for rideshare drivers were lower than for taxis, and only taxi companies had to provide wheelchair-accessible cars.

Frey said at the time he was “not necessarily psyched” about the way Uber and Lyft came to town, but said he thought it was fair that taxis and rideshare services would be regulated differently.

The companies were in charge of their own background checks and car inspections for drivers, while taxis were city-inspected. In the early days of Uber and Lyft, safety was a bigger concern than driver pay, with regulatory efforts around the country focused on implementing background check and fingerprinting requirements for drivers.

A 2019 Star Tribune review found Minneapolis had the most permissive rules of 25 large American cities reviewed — and that more than 150 drivers with problems in their background checks had slipped through the companies’ controls. Several Minnesota drivers had been convicted of assault, or had multiple DWIs.

Frey told the Star Tribune at the time he was convinced the city’s hiring standards were adequate to protect the public.

“I believe people can make big mistakes, serve their time and rehabilitate,” he said.

The Legislature’s only major effort to regulate rideshare companies came in 2015, when legislators started requiring the companies to carry insurance for drivers.

Competing apps, like New Hope-based iHail and Curb, ebbed and flowed in the middle 2010s, and local transit agencies including SouthWest Transit experimented with apps for their paratransit vans. Even as the number of taxi companies and licensed cab drivers proliferated in the 2010s, after the medallion cap was lifted, cabs lost ground to the apps. Uber and Lyft became the two dominant players, especially after they won the ability to pick up passengers at the Minneapolis-St. Paul International Airport in 2016.

The airports commission, Minneapolis and St. Paul relaxed some regulations for taxis, but the cabs lost ground to the rideshare apps. Drivers also opted for the less-stringent and less-expensive licensing process of driving for an app, rather than for a cab company, and the number of licensed taxi drivers plummeted.

Today, as the city stares down the possibility of an Uber- and Lyft-less future, just 39 licensed cab drivers remain in Minneapolis.

The lone dissenter in Minneapolis’ 12-1 council vote in 2014 was former Council Member Blong Yang. Looking back today, Yang said, he almost wants to say, “I told you so.”

“Uber and Lyft had this mentality they could go anywhere and get anything they want,” Yang said. Now that the City Council has passed pay minimums for drivers, Yang said, he sees the same tendency in the companies’ announcement that they will leave the city.

“They’re not getting what they want. They’re just going to take their ball and go,” Yang said.