Uber, Lyft Competitors Share One Strategy: Perks for Drivers

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By Carmen Castro-Pagan

Ride-hailing startups seem to be singing the same tune when it comes to their strategy to compete against Uber Technologies Inc. and Lyft Inc. and it all has to do with how they treat their drivers.

Newcomers, including Juno, Safr, Via and Gett, have launched their ride-sharing services in major U.S. cities and are luring in drivers with low commission rates, sign-up bonuses and company stock. By offering these kinds of benefits in the gig economy, these startups are distancing themselves from the business model that has brought millions of dollars in profits and lots of headaches to Uber and Lyft.

It may be too soon to tell whether this business strategy will work, Lissa P. Thomson, senior vice president and chief consultant of employee benefits for Lockton Cos., told Bloomberg BNA.

Social Responsibility

Juno, a ride-hailing company that launched in New York in 2016, was built “around the belief that when people are treated better, they provide better service.” The company reserved 50 percent of its founding shares for drivers. Juno also charges drivers a 10 percent commission rate, which according to the company is 60 to 65 percent lower than the competition. This lower rate is set up until April 2018, at which time it may go up.

Why do this? Because it is “socially responsible,” Juno’s Chief Executive Officer Talmon Marco told Bloomberg BNA. “We wanted to build something meaningful in terms of society,” he added. By reserving its stock for drivers, Juno offers them an opportunity to share the potential economic benefits of the company, Marco said.

That strategy appears to be paying off. Since Juno launched, 20,000 drivers have signed up and the company is working on a project to hire drivers as full-time employees, Marco said.

Ride-Sharing for Women, by Women?

Currently serving Boston, Safr is a ride-hailing company “exclusively for women.” The company seeks to build a community of diverse women that come together to make ride-sharing safe for women, Joanna Humphrey Flynn, Safr’s marketing and public relations manager, told Bloomberg BNA.

“Women currently account for only 14 percent of ride-share drivers, and make on average 34 percent less than men in ride-sharing,” Flynn said.

Like Juno, Safr has also reserved 50 percent of its common stock to be awarded to drivers. Each quarter Safr will concede 1.25 percent of its common stock to drivers.

Safr is also awarding its first 1,000 drivers an “unprecedented” 10 percent commission rate for life, Flynn said. The company’s goal is to create a space where women can take advantage of the benefits afforded by ride-sharing, including flexible hours, control of their own schedule, earning potential and reliable safe transportation whenever is needed, Flynn said.

Safr launched its services earlier this year and so far has “nearly 100 drivers on the road, with another thousand or more” in the pipeline going through the screening and approval process, Flynn said.

Incentives, Bonuses & More

Via is a ride-sharing, on-demand transit system currently in New York, Chicago and Washington. The approach of the company is to create an environment in which drivers want to partner with it. “Our drivers are our customers, and we designed the whole driver support experience around making sure that drivers feel valued and their needs are met,” Gabrielle McCaig, Via’s vice president of communications, told Bloomberg BNA.

The company offers a variety of incentives for new and existing Via drivers, including a signing bonus of up to $1,000 that may vary over time based on other factors, including vehicle type, McCaig said. Via also offers a referral incentive of up to $500 for drivers who successfully refer a friend to drive with Via, she added. Drivers also have the option to get guaranteed hourly earnings on the Via platform, she said.

Gett, also an on-demand, ride-sharing company, boasts of providing drivers “better pay than Uber,” according to its website. The company, which operates in more than 100 cities across the world, offers drivers a 10 percent commission rate and up to $600 in sign up bonuses. Gett also allows drivers to keep 100 percent of the tips paid by riders.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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