A taxi medallion is required to accept rides from people that hail you from the street. That's it. Companies that schedule rides via phone do not require medallions, and never have. These have existed for decades, I remember my family using them to get to the airport when I was a kid in the 90s. Uber and Lyft just found a way to schedule rides via phone much, much quicker.

> Do rideshare companies have lower operational costs? Taxi's have presumably been profitable seeing as they dont have funding backing and have been around for years. while the two biggest rideshare companies dont make a profit

Taxi companies have been profitable, yes, but a large portion of their profitability comes from the artificially constrained supply of taxis. The medallion system constrains supply, thus inflating the cost of the service. Taxi companies' profitability was due to government interference, which let taxis grow complacent and offer non-competitive services. And now that they have competition from ride sharing, taxis are struggling. Taxis apparently aren't profitable when they actually have to compete.