Austin found a viable, socially conscious response to Uber and Lyft. Can Philly follow?May 4, 2017 Category: Feature, Featured, Long, Method
Early in 2017, even the most mildly woke millennial found themselves asking: “Isn’t there anything other than Uber?”
The transportation network app found itself in hot water when it came out that CEO Travis Kalanick would serve on President Donald Trump’s Business Advisory Council. Soon after, in late January, Uber lowered surge prices during a taxi workers’ strike at JFK airport, a move seen as effectively turning its drivers into scabs.
The final blow? Competitor Lyft’s timely $1 million donation to the ACLU. The ensuing #DeleteUber episode (a classic hashtag-to-think-piece-to-meme cycle) resulted in over 200,000 users deleting their apps or accounts that week, including Yuval Yarden, program director at Philly Startup Leaders.
“I deleted Uber the day before [the strike] because I was just so fed up with their shit in general,” Yarden said. “My service was almost always fine but everything I was hearing about the way the company was structured, I just started seeing it [and] feeling uncomfortable.”
Lyft saw a spike in app downloads that week, but consumers quickly pointed out that the company had it’s own ties to Trump. Philly users looking for a socially conscious alternative to Uber and Lyft found nothing locally that matched the price and convenience of the country’s two largest transportation network companies (TNCs).
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“It’s really sad that a company that treats people so badly has a monopoly to the level that you end up using them because that’s the best product,” Yarden said.
When it comes to transportation apps, customers and drivers are both looking for the best product. Shelton Henderson is a Lyft driver in Philadelphia — and a self-described “app-trepreneur.” He makes a full-time living driving for Lyft, Uber, Postmates, Grubhub and Caviar — a diverse portfolio.
“All the apps can basically build a job, build a business [for their drivers], because that’s the way things are going now,” Henderson said. “You have to be creative in today’s time. There are a lot of opportunities available because these apps are disrupting a lot of industries. So I’m just here to take advantage of that.”
As Uber puts it in a recent ad: “These days, everyone needs a side hustle.”
Henderson says he currently prefers driving for Lyft because the app takes a slightly lower commission than Uber. Lyft also offers a tipping function (Uber doesn’t) and Lyft offers incentives through which drivers can earn back most of their commission.
But he keeps his Uber account active.
“You’re in partnership with these corporations and the corporations are going to look out for themselves,” Henderson said. “Their main motivation is to keep their name clean basically, so if anything happens, they will deactivate you. So it’s kind of a precarious situation to be in, which is why I have a lot of things that I do.”
The “precarious situation” is largely due to the drivers’ designation as independent contractors, rather than Uber and Lyft employees (a problem that is chronic to the entire gig economy). In some U.S. cities, the situation is a bit less precarious for drivers, yet still convenient and affordable for customers.
Last year, the city council in Austin, Texas, held a public vote on whether Uber and Lyft should be allowed to sidestep existing transportation business regulations. The TNCs inundated homes with mail about how to vote on the proposition.
Austin residents voted by a slim majority that the apps had to follow the law. Uber and Lyft cut their losses and ceased their Austin operations in May 2016, abandoning drivers and customers alike.
In the vacuum, smaller TNC services such as Fare, Fasten and the nonprofit Ride Austin hustled for their share of Austin customers. But the city’s taxi drivers founded ATX Coop Taxi, a driver-owned service with a fleet of zesty, lime green cabs. The City of Austin granted the cooperative more than 500 taxi permits, and ATX Coop Taxi is now the third-largest worker cooperative in the country.
Hassan Aruri is a cofounder, a board director and an interim general manager for ATX Coop Taxi. He also drives a cab for a living.
“We provide services that the TNCs, such as Uber and Lyft, they don’t have, things like wheelchair [access],” Aruri said. “A lot of our citizens might not be privileged to have a smartphone so we do service them as well. At the same time, we’re trying to bring the best customer service possible, and also provide for our drivers, who are our members.
"We’re trying to be socially responsible to everybody. Especially our drivers."
“The TNC and the traditional taxi, honestly, they always oppressed their workers, their drivers,” he went on. “It’s either they overcharge them way too much money, like the traditional taxi. Or like the TNC, they take too much, they control the money that goes into their pockets. … The more Uber and Lyft want to compete with each other, what they do is they lower their rate and at the end that kills their drivers’ income. We’re trying to get away from all of this. We’re trying to be socially responsible to everybody. Especially our drivers.”
The co-op’s taxis can be ordered over the phone, on the co-op’s website and as of recently, through an app. Customers can also hail the bright green cabs on the street — handy if that smartphone goes dead.
Thanks to pressure from taxi drivers, the TNCs were banned locally in 2016 but the Commonwealth of Pennsylvania passed legislation last November allowing them to resume operations in Philly. Uber and Lyft are now required to pay 1.4 percent of their local profits to the PPA, which will turn over two-thirds of that to Philly schools, an estimated $2.5 million annually.
Texas seems poised to make a similar move at the state level, but a return to Austin may not be so favorable to the TNC giants.
“The problem that Uber and Lyft promised was going to be created when they left the market actually never happened,” Aruri said. “Even if the State of Texas decides to give Uber and Lyft what they’re looking for — which is very minimal, nonsense regulations — when they come back, I don’t know if they’re going to find this hunger for their service like they did the very first time.”
According to Aruri, they’ll face a diversified, competitive market with eight independent TNCs and four taxi companies, including the coop. “And don’t forget, a lot of people got pissed off at Uber and Lyft when they just shut down their system, took their toys and left Austin,” Aruri said.
Here in Philadelphia, an independent, local TNC with a social mission might be able to capture a market share of app users and, just as importantly, a market share of drivers. As the #DeleteUber debacle showed, a company’s perceived social values matter.
Philadelphia does have its own co-op taxi service, the Alliance Taxi Coop. Though the Philadelphia Parking Authority approved it in 2015 after a six-year struggle, its impact among millennials remains to be seen — especially without an Uber-identical app. The co-op also had only about 50 members at its forming in March 2015, compared to ATX Coop Taxi’s 548 permits and counting.
According to Ana Martina, a Philly-based membership director for the U.S. Federation of Worker Cooperatives, marketing is at the core of the dynamic between the TNCs, customers and drivers.
“Uber and Lyft function as marketing and take a big portion of the profit from all the workers that decide to sign in to the platform to get work,” Martina said. “The worker gets paid at lower rate, and if you think about it, the apps do minimum work. [It’s] pretty much updating the app, maintaining platform and doing the marketing job, and for that they take the majority of the profit.”
Martina points to Up & Go, a New York City marketing platform that connects customers to cleaning services that are worker-owned and practice fair labor. “Cooperatives that already operate under the model of marketing and referral could potentially develop a platform cooperativism,” Martina said.
Young consumers are looking for feel-good purchases. Transportation businesses are already realizing that by effectively marketing social values, they may be able to wrench open Uber and Lyft’s grip on the target demographic. Juno, an NYC-based rideshare app, markets itself as “the socially responsible way to ride.” According to Juno’s website, it charges a 60 to 65 percent lower commission than the competition, and reserved 50 percent of its founding shares for its drivers.
For some, the diversification of the transportation app industry is refreshing after years of Uber and Lyft dominance.
“I’m all for drivers and people establishing their own and getting the middle man out,” Lyft driver Shelton Henderson said. “There’s plenty of room for innovation and it would be great if and when the smaller [TNC] companies, the local companies, come out. It gives the drivers more options.”