Editor’s note: This article first appeared in MinnPost on July 11, 2024, and is reprinted with permission.
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, Texas-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; 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. Tim 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 in Minnesota, the alternative companies don’t plan on going anywhere.
MyWeels: Catering to Customers
MyWeels is the only true Minnesota startup rideshare company to come out of Uber and Lyft’s threat to leave the state. While MyWeels 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 (“we kind of suspected that they would,” he said), and is confident that MyWeels will find its own niche in the market.
Rather than trying to directly compete with Uber and Lyft, MyWeels wants to cater specifically 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 a convenience,” Baer 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.”
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 drivers then get first pick on whether 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 is to have a whole bunch of drivers 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 nationwide 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 and St. Paul were 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 [entrepreneurial] 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 that his company is working for drivers first. He said what stuck out from his experience in the Twin Cities was that people were very friendly, which Wright believes is good for business.
“Passengers need to realize that what they pay for the trip — very, very little of that eventually makes it to the driver [with other models],” he said. “I think once passengers realize that, all the [alternative] 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 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 to depart 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.”
Thanks to MinnPost!
This article appeared on MinnPost on July 11, 2024, and is republished here under a Creative Commons license.
Photo at top by Paul Hanaoka on Unsplash.