monday, 3 october of 2016

An Uber Rival’s Play for Drivers

When Kathleen Boylan walked into an orientation meeting last spring for a new ride-hailing company called Juno, held at its 1 World Trade Center office, she liked what she heard. Ms. Boylan, a New Jersey mother of two teenagers, had been driving for Uber and Lyft since last year, and while she appreciated the flexibility of the work, she wanted to earn more money.

So when she learned that Juno would take only a 10 percent commission on her fares, as opposed to the at least 20 percent collected by Uber and Lyft, and that she would be able to receive tips through the Juno app, she signed right up. (Currently, Lyft allows for tipping through its app, and Uber, which says tipping is optional, does not.)

Another big draw for Ms. Boylan was Juno’s promise of equity ownership. Its founders have set aside a pool of restricted stock for drivers that they say is equal to their own shares.

This means that the more fares Ms. Boylan picks up, the more Juno shares she might be able to earn. Bonus shares go to drivers who pull in the most in fares.

Juno is the latest start-up trying to loosen Uber’s grip on the country’s ride-hailing industry. It has arrived on the heels of Curb, Gett, Lyft and the now-defunct Sidecar, each of which has tried in its own way to compete against Uber.

Gett came out against surge pricing, an Uber practice in which fares rise during periods of high demand. Curb lets riders hail taxis either by hand or via its app, and then pay for them with the app. Lyft is perceived as a less corporate option, using the tagline “Lyft is your friend with a car, whenever you need one.” And Juno’s approach is to promise drivers a supportive corporate culture and a larger cut of its business.

Juno was founded in May 2015 by an Israeli tech entrepreneur named Talmon Marco and several business partners who together had started Viber, a phone and instant messaging app that they sold in 2014 for $900 million. Juno so far operates only in New York City.

The founders had conducted informal research, hitting the streets of New York to talk to Uber drivers about their experiences. They said they detected a morale problem. “If somebody can treat them better, they’ll jump ship,” Mr. Marco concluded.

Their next step was to ask riders whether they, too, would be amenable to hopping over to a new company. The answer was yes, Mr. Marco said. “As long as the ride-sharing company can provide a quality of service, there’s no problem,” Mr. Marco said he and his Juno co-founders discovered.

Then they spent a month devising what he refers to as a “mini constitution,” a philosophy and a set of principles the company would apply to its drivers. These include respect, kindness, fairness and transparency. Their theory was that happy drivers would make for satisfied customers.

Broad equity employee ownership is exceedingly rare within the sharing economy, according to Arun Sundararajan, a professor at the New York University Stern School of Business who studies the sharing economy. (The stock photography website recently became one of few such businesses offering equity to contributors.)

Mr. Sundararajan sees Juno’s equity offer as a message of inclusiveness to its drivers. It’s a way of saying, “You are one of us. You’re a part of us,” he says.

Every quarter, Juno allocates restricted stock units to its drivers. The first allocation was in July, and the company announced on its Facebook page that its top-rated driver earned 29,673 stock units. (“Finally drivers are getting some respect,” one commenter wrote.)

The stock units vest when drivers accept fares for 120 hours a month for 24 out of 30 months. They can cash in the units if the company is sold or goes public.

So far, many drivers have been intrigued by Juno’s ethos and the equity ownership factor. Mr. Marco says more than 15,000 New York drivers have flocked to Juno. According to Harry Campbell, a Los Angeles driver with Uber and Lyft who has a blog and podcast called the Rideshare Guy, drivers in other cities are also interested.

“Thousands of drivers are asking me, ‘When is Juno coming to my city?’” Mr. Campbell said.

But the equity possibility aside, Juno’s strategy may not be drastically different from that of Lyft, which has always been driver-focused, according to Alexandra LaManna, a Lyft spokeswoman.

“When we launched it was all about the driver because normal everyday people were driving,” Ms. LaManna said. “We try to treat people better. It’s not something we’re doing to respond to another company. It’s just what we do.”

Lyft drivers have long been able to retain their full fares if they pick up a certain number of rides a week, in that way increasing their earnings. One new Lyft initiative, instituted at its drivers’ behest, is an instant-pay option that lets drivers cash out their earnings at any time rather than waiting a week for payment.

Uber, which says it is committed to its drivers, introduced a similar program a few months later.

“Competition means that we have to demonstrate Uber offers more stable, reliable opportunities to earn money than the alternatives,” Michael Amodeo, an Uber spokesman, wrote in an email. “And that’s what we are focused on: ensuring that Uber is the best experience for drivers across the world.” (The company would not comment further on the record.)

Uber and Lyft recently opened help centers in some cities where drivers can ask questions of company representatives. At Lyft, they can also use the restroom and congregate during breaks.

And last month Uber started a retirement savings account program for its drivers.

One of Uber’s major advantages is its huge corps of drivers. In New York alone, Uber has 35,000; worldwide, there are 1.5 million. More drivers means shorter wait times for riders, stoking a cycle of demand for Uber cars.

Yet some drivers remain optimistic that Juno can compete. Even though Ms. Boylan is frustrated that the company doesn’t yet do airport pickups and wonders what the value of the stock units will actually be, she is willing to be patient because she thinks drivers eventually will get paid more than they are now.

Until Juno ridership increases, Ms. Boylan says she will often need to travel long distances to pick up passengers, typically an undesirable prospect for drivers. But she can live with that.

“I’ll say, ‘O.K., this is my business,’” she says. “My ability to suck it up is going to make this business work better.”

(Published by The New York Times - October 1, 2016)

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