On Uber, Lyft. Taxify and the Ride-Sharing Economy

 Photo by  Joey Kyber  on  Unsplash

Photo by Joey Kyber on Unsplash

  • Last week, as San Francisco City Attorney Dennis Herrera issued subpoenas to Uber and Lyft, he said, "Our laws also guarantee employees basic human benefits ...We are not going to tolerate any company shirking its responsibility ... when drivers without health insurance turn to the emergency room.
  • "If your company is valued at $62 billion, you can afford to give your workers health care."
  • Note: These actions focus on how ride-hailing companies are complying with a California Supreme Court decision (April 30, 2018) that requires firms to prove that a worker is an "independent contractor" before denying wages and benefits such as sick leave, health care contributions and paid parental leave.

 

  • Separately, Taxify, a startup that competes with Uber in Europe and Africa, closed $175 million in new funding - valuing the company at $1 billion.  Last year, in a Bloomberg interview, Taxify’s CEO and co-founder Markus Villig said, “We go into markets where ride-sharing is already a proven concept…
  • "We come in and we improve on that by having just cheaper commissions and giving more back to the riders and drivers. We don’t want to get into this regulatory trouble and be wasting millions in lobby battles.”
  • Note: The funding round was led by Daimler (owner of Mercedes-Benz) and included Didi Chuxing (a Chinese ride-sharing, AI and autonomous technology conglomerate.)
     

OUR TAKE

  • Uber, Lyft and similar ride-sharing services provide a refreshing transportation alternative to consumers, but the economic benefits to drivers are still unclear. 
  • The outcome of the"employee" vs. "independent contractor" debate being pursued by the City of San Francisco and other governments has broad implications for the cost structure and business models of ride-sharing firms around the world.  
  • Taxify's business approach, which seeks to provide value to passengers AND drivers is another factor that may lead to business model changes in the "gig" economy.
FPM Team