When the future of Uber and Lyft in Minnesota was still uncertain, a plethora of rideshare alternative companies and one co-op looked to launch in the Twin Cities.
Only two prevailed. St. Paul-based startup MyWeels and Austin-based rideshare chain Wridz launched in Minneapolis in May. More might still launch later in the year. This month, a steering committee for a Twin Cities-based rideshare co-op announced plans to launch, though details remain sparse at this time.
Uber and Lyft threatened to leave the state on July 1 if driver pay rates rose to what a Minneapolis ordinance would have required. But negotiations and a new state law signed by Gov. Walz prevented their departure, though minimum pay rates will rise in the state starting in December.
Despite the country’s two major rideshare players remaining, the alternative companies don’t plan on going anywhere.
MyWeels: finding a market niche
MyWeels is the only true Minnesota startup rideshare company to come out of Uber and Lyft’s threat to leave the state. While MyWheels saw an uptick in app downloads and driver applications during the uncertainty, the company didn’t experience the tremendous growth they might have if Uber and Lyft had left, said MyWeels founder Elam Baer.
Baer prepared for the possibility that Uber and Lyft would stay, however, and is confident that MyWeels will find its own niche in the market.
“We kind of suspected that they would stay,” Baer said.
Rather than trying to directly compete with Uber and Lyft, Baer said MyWeels is looking to specifically cater to customers who cannot drive or don’t have a driver’s license.
“In other words, people for whom transportation is more of a necessity than convenience,” he said. “There are an awful lot of people in the state who do not have driver’s licenses, and they don’t for a whole variety of reasons.”
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The company is building audience by including services Uber and Lyft don’t typically provide. For example, a MyWeels rider can request a round-trip service where a driver will bring a passenger to a location and be ready to return that same passenger to their original location.
The company is also working to build a “driver-centric” platform that allows each driver to build their own customer-base. Riders can name drivers as their “favorites” and get first pick on whether or not they’ll accept a ride from that customer when one is requested.
Moving forward, Baer is looking to introduce a lower-cost service that includes multiple passenger pickup. He said this would look similar to a quasi-bus service but with door-to-door pickup instead of passengers needing to walk to a bus stop.
“We can’t realistically take on Uber and Lyft to develop the kind of name ID that they have developed over the years,” Baer said. “We think we can develop a service offering for certain market niches.”
MyWeels has about 250 drivers. Baer says the trick is “finding the sweet spot” in the driver to customer ratio.
“What we really don’t want to happen is to have a whole bunch of riders and no customers for them,” he said.
Most drivers for MyWeels are also Uber and Lyft drivers. But Baer said MyWeels is already paying drivers more than what the increased rate will be come December.
“It’s worthwhile for them to keep the app going and to keep working for MyWeels, because it’s an incremental benefit to them with really no out of pocket costs,” Baer said.
Wridz: an alternative business model
Unlike MyWeels, Wridz was already a well-established rideshare alternative to Uber and Lyft before launching in the Twin Cities market in May.
Where MyWeels is working to differentiate itself through its services rendered, Wridz has prevailed as a nation-wide alternative because of its unique business model. Instead of Wridz taking a percentage of a driver’s fare, the driver pays a monthly $100 subscription fee for the app and gets to keep all of the money earned after completing a ride.
Minneapolis was Wridz’s 22nd market and co-founder and CEO Steve Wright said the company is still onboarding new drivers each day.
“What we’ve learned is the drivers who are truly independent contractors and are more of the entrepreneur, really excel in rides,” Wright said. “You can build a clientele with Wridz. You can get repeat requests. We found the drivers who do the best are the ones who are recruiting and actually getting their own clientele and doing repeat trips.”
Wright said his goal in the Twin Cities is to prove his company is really working for drivers first. He said the main thing that stuck out from his experience in the Twin Cities was that people were very friendly, which Wright believes is good for business.
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“I think the main thing is that passengers need to realize that what they pay for the trip – very, very, very little of that eventually makes it into the driver (with other models),” he said “I think once passengers realize that all the other rideshare companies are going to excel.”
A possible co-op
A rideshare co-op remains in the works and tentatively plans to launch later this year, though specifics on what this will look like are limited. A steering committee made up of four drivers and a community organizer is currently working out the details of the endeavor.
The group is working on its business plan with the help of Nexus Community Partners and the Metropolitan Consortium of Community Developers. It has also received a grant from the Bush Foundation. The group declined to comment on the amount of the grant.
Drivers began talking about launching their own company under a cooperative model in March when Uber and Lyft were still threatening departure from at least Minneapolis. At the time, Erik Forman, a co-founder of the Drivers Cooperative in New York came to Minnesota to speak about launching a rideshare co-op. He said drivers would need to raise at least around $200,000 to get a co-op off the ground.
Despite these hurdles, many drivers remain determined to create a rideshare network that’s self-run. No drivers working with the co-op were available to speak for this story, but they did provide comments in a recent news release. Layla Ibrahim, a driver on the Co-op Formation Committee said in the statement, “We own the cars, we serve the customers, we do the work. Why shouldn’t we own the business and make the decisions about it?”
Driver Ahmed Ismail worked as a certified public accountant for decades. He wrote that he is excited to bring his skills to a co-op business model.
“We have so many drivers in this community with expertise in finance, app development, or small businesses,” Ismail said. “We don’t need to rely on companies that don’t care about us, and don’t care about riders. We’re creating a business that uses democracy, where drivers share responsibility and share any profits that we make together.”
Winter Keefer
Winter Keefer is MinnPost’s Metro reporter. Follow her on Twitter or email her at wkeefer@minnpost.com.
