Another promising startup, regulated out of business

Form James Pethokoukis of AEI.

"Over at Business Insider,  James Rosenbush writes about the need for startups (a favorite topic of mine):

The private sector economy has a life blood, and it is startups. New businesses are started by inventive entrepreneurs out of economic necessity or because their new ideas won’t wait. Technology has been a boon and a barrier to job creation. In past cycles, startups were more labor intensive — requiring more people to run them. Ford Motor Company, once a startup, is a good example. Technology shies away from jobs and shifts productivity and lifestyle gains to software. We’re going to need many more startup zealots and maniacs to sustain and grow an economy where people can find and keep good jobs with growing wages.

But government often erects barriers and lays down minefields in front of America’s entrepreneurs. Pacific Standard’s Susie Cagle writes about just such a situation, the story of Night School, which “just wanted to provide a modest, low-cost bus service from San Francisco to the East Bay.” It wasn’t complicated. Regular old school buses driven by insured, licensed drivers between two stops every half hour. But it was not to be:

The response to Night School’s speculative press was overwhelmingly positive. But less than two weeks later, the week of its planned launch, Night School was postponed indefinitely while its founders grappled with the [California Public Utilities Commission] which claimed the start-up was not properly licensed as a passenger carrier. If Night School had sought to operate as a service only available to members of a private club, the CPUC wouldn’t have had jurisdiction over the business. But the founders’ vision was decidedly public, from the school buses to the low fares. The CPUC has struggled to codify new rules for “transportation network companies,” shifting and changing regulations over the last three years while those companies continued to operate. Night School never got the chance to open its doors.  After months of back and forth, false starts, and moved goal posts, Night School announced its closure last December.

The CPUC, by the way, is the same regulator which has tried to fine and regulate Uber, Lyft, and other ride-sharing services."