The Minneapolis City Council on Thursday amended its rideshare ordinance, delaying its launch until July 1 to give upstart rideshare companies more time to prepare to begin service in the city.
The ordinance was passed on March 7th and was originally scheduled to go into effect on May 1st. A joint statement from the ordinance’s co-author, Robin Wonsley (Ward 2), said the effective date was delayed to allow startup companies to recruit drivers and advertise for riders. Jason Chavez (9th Ward) and Jamal Osman (6th Ward).
Currently, about a dozen companies in and out of Minnesota are looking to replace Uber and Lyft. will leave town If the state does not pass a lower compensation rate than the city’s current compensation rate.Corporate collection includes: move, my wheels and driver cooperative.
Cedar-Riverside native Murid Amini, founder of the new rideshare company MOOV, has been working with drivers since October and said his work with MOOV to “level the playing field in the rideshare industry” He said the work began in earnest after the ordinance was passed.
“When the vote passed, it really created a sense of urgency and I said, ‘Oh my God.’ [I’m] “We don’t plan on using it, but we want to make sure the community doesn’t lose their transportation,” Amini said.
According to MOOV’s website, MOOV is running a GoFundMe page to help cover insurance costs and business license fees before it is ready to open operations in the city.
Zhao Luo, a professor of strategic management and entrepreneurship at the University of Minnesota, said all startups face similar challenges when entering new markets.
“There are all kinds of challenges on the financial side.” [and] “When it comes to platforms, companies need to make significant investments in the infrastructure itself before they can operate,” Luo said. “Then there’s the question of attracting a two-sided platform, how can we gain prestige among both drivers?” [and riders]”
Elam Baer, CEO of MyWeels, said the investment from a private equity group differentiates MyWeels from other ride-sharing startups.
“We’ve already invested a lot of money and we have a capital base that we’re willing to put a lot more into,” Baer said. “At first glance, it looks like a business that can be run on a shoestring, and you might be able to do it in two years. But if it takes everyone 60 days to go from zero to 60 days, then you have a certain It takes time and capital to get it done.”
Baer added that with this financial support, he is confident in MyWheels’ ability to “be there the day Lyft and Uber leave the market.”
Luo said the rise of small rideshare companies is not a profitable venture for companies, but a “period of experimentation” to see if paying drivers a fair wage is a sustainable business model. said it would be.
Both Amini and Baer said fundamental aspects of their respective companies are focused on paying drivers the increased compensation rates set by the city.
The Driver’s Co-Op, which launched in New York City in 2020, uses a cooperative business model that is owned by workers rather than investors or individuals, said Eric Forman, co-founder of Driver’s Co-Op. .
Forman said the big challenge in starting a co-op is that it’s not attractive to investors, but attractive to workers and consumers.
“By creating a company that is owned by workers and consumers, we have the opportunity to create a business that is run for their benefit,” Forman said. “For workers, that means making sure drivers earn a living wage. For consumers, it means making sure people don’t get gouged.”
Forman said about 2,000 drivers and more than 4,000 passengers in Minneapolis have signed up for Drivers Co-op, and the company aims to grow the business in the next month.
Luo said the economic sustainability of startups is uncertain, but he is primarily concerned about how this transition and tighter business regulations will affect the city’s momentum.
“How do we make sure that the drivers we’re meant to protect don’t get hurt in this process? That’s something I’m very concerned about,” Luo said. “It’s not clear to me [that] All drivers will benefit from this. ”
Luo added that while the transition will bring initial confusion to consumers, market competition will bring more choice and often benefit “customer welfare.”
Amini said the emergence of new ride-sharing companies like MOOV will take market power away from Uber and Lyft and put it back in the hands of drivers and communities.
“This basically says, ‘We’re not going to pay people fairly, we’re not going to set prices fairly, or anything like that, and there’s nothing we can do about it.’ It basically takes away the ability to say,” Amini said. “The truth is, there is something you can do about it now. You can go to another rideshare company.”
