It's always surprised me that we haven't seem more attempts at co-op like models in spaces like this, and I'm happy to see it.
Uber/Lyft strike me as thin businesses in the value that they actually provide both to riders and drivers. Yes, they were responsible for some initial innovation, but now the cat is out of the bag, and the concept could absolutely be applied in a business structure that is more profitable and friendly to the people actually delivering the services.
Getting initial traction with riders, and adequately investing in trust & safety strike me as the two hardest parts up front. On the flip-side, they should benefit from less regulatory scrutiny, and less pressure from investors vs. the heavily funded players like Uber & Lyft.
I'm rooting for them and hope to see this go somewhere.
Cooperatives can expand by cooperating with other cooperatives -- a bunch of local cooperatives might nest to form a regional one, etc. Those regional ones could form a federation with a single identity for global operations.
So, this problem can be addressed by cooperatives, it's just a different kind of structure that distributes power locally -- with centralized power deriving from the bottom up, by the membership of localized cooperatives. The organizational challenge for expansion is how to avoid administrative capture: how to keep centralized infrastructure controlled by localized entities.
I don't think this "franchise" challenge has been worked out with platform cooperatives. However, if this NY based cooperative becomes profitable, it could expand to other cities not by getting bigger, but by forking off the operational aspects into a cooperative-of-cooperatives, then, a Chicago driver's cooperative could be a member of this shared operational entity.
I've noticed credit unions in the US are like this. They are generally locally operated, but they have formed networks so that you can e.g. go into a branch in Maryland and perform transactions on your account held in Georgia. They have also banded together to develop credit union apps, since banking apps are essentially universal in function. Reaching critical mass for these ride hailing apps would be a challenge, but it is possible.
Many U.S. credit unions are members of CO-OP Financial Services [0], a cooperative of cooperatives, which provides shared ATM and branch services. Effectively making it one of the largest networks in the USA. There are other similar organizations that provide various backend and federation services.
The entire US payments system is a co-op payment network[1]. The Federal Reserve is owned by its member banks and they handle clearing for some absurdly large number of transactions. They use a slightly different nomenclature, but pragmatically it's a member owned co-op.
I don't think a global association of lyft, uber, didi, grab, doordash etc is exactly the kind of 'coop' that these people are going for. Your describing a coop of large organizations. This is a 'by the people for the people' type of organization, which the closest thing I can think for is a credit union.
Fraud from either side of the transaction is the primary issue payment networks deal with and that makes them a poor fit for coops. Ride sharing apps are very different beasts.
Which suggests non-coop payment networks are more successful in the market. It does not tell us anything about whether they are actually better for anyone.
One of the key advantages a large corporate model has over a small, local cooperative is the ability to effectively harness resources for shared infrastructure.
In the case of Uber and Lyft, that's all the technological infrastructure that goes into making the platforms work. This isn't a trivial amount of work that can be easily replicated by taxi companies or scrappy driver-owned coops, as attempts to do so have shown. As we're all familiar with, maintaining this infrastructure is also far from free or trivial.
Credit unions are an instructive example. Many offer membership in interoperative networks, but few are able to effectively compete with the customer-friendly offerings of big banks with centralized power structures. The ability to satisfy customers isn't some side-effect, it's a key goal. A localized organization that can't compete is worth nothing except as a cautionary tale.
With that in mind, I would say the organizational challenge of coops is thus: how to keep centralized infrastructure controlled by localized entities while being competitive with non-local entities.
The "big 4" accounting firms are structured similarly: a single global identity, but each country's org is independent, with local partners in charge and having partial ownership.
>> You can get off an airplane just about anywhere in the world and get an Uber. That’s huge value.
I wonder what percentage of people driving on roads are actually the old "jet set", people who travel internationally more than once a year. I'd bet that is actually less than 1% of western populations. I think the real market is locals, people who need rides home when drunk, rather than 1%ers going to and from airports.
(I love the irony of people who use uber because "owning a car is evil" and then hop on 1st class airline seats to fly to remote islands. I wonder how often people take ubers to get them to their private jets;)
The vast majority of people travelling aren’t jet-set or 1% flying in first - they’re just normal hard-working people flying in economy who happen to have a job that requires them to travel and don't have any choice in that matter if they want to put food on their tables and feed buying their children new shoes.
The vast majority of people travelling for work aren’t doing so by plane. From the perspective of overland transport, people going to/from airports are the 1%. The 99% are all the people who's jobs don't involve them flying anywhere.
A local coop doesn't have to go worldwide to be meaningful.
Not all businesses shall grow indefinitely. If they can get a core customer base and hold it steady, it'd be much more valuable and impressive over time.
They try to make a living, not to dominate the world for money.
If you're competing in a winner-take-all market, it is very difficult to compete without shooting for domination. I don't know if digital ride hailing is a winner-take-all market, but there's pretty compelling evidence it could be.
But I also don't think that commenter is disagreeing with you - when they say huge value, they're probably gesturing towards the fact that consumers will generally use whatever the most convenient and recognizable brand is. It will be hard for the coop to achieve a core customer base which allows them to survive if everyone gets off the plane and uses Uber instead of looking for the local coop.
Winner take all can be regional, though, with different winners in every city. Look at the phone companies, for example.
For taxis, drivers already use multiple apps. What could happen here is that drivers keep driving for uber, but advertise for the better paying app with everyone who gets into their car. Then all the local riders switch over to the coop app, and the drivers still driver uber a bit for the it of towners
I still can't quite grasp why local governments haven't taken the hint and reworked their local bus systems. Uber&Lyft have shown how much better app and on demand service is. But we're still circulating buses and spending billions on heavy rail.
On-demand service is drastically less efficient than fixed-route service. That's the main reason Uber/Lyft is already several times more expensive than bus or train service for the same route, and it would be even more expensive if Uber/Lyft drivers made the same total comp per hour as bus drivers including benefits, fuel, vehicle depreciation/wear and tear, insurance, etc. Not to mention the additional congestion and pollution you'd get if you replaced every bus during rush hour with 25 cars or whatever.
It does not really come out to be that much more. As an example, each unlinked trip costs $5 for my local system. Most trips will take a transfer so a realistic estimate of the per trip cost is $8-10. Looking back at my Lyft history most of my trips cost $8-15 so very comparable.
It looks dramatically different because buses are subsidized while Uber/Lyft is taxed and for profit. To continue using my city as an example, farebox recovery rate is ~30% and that doesn't include capital expenses. The difference is made up by tax revenue. On the other hand out of my fare, ~10% is sales tax, Uber/Lyft take another 20-40%, leaving 50-70% to go to paying the driver for the ride.
The problem ultimately is coverage. If you want to provide frequent service to all parts of the city you end up running a bunch of near empty buses. That kills the efficiency benefits of the buses and when you look at the system as a whole it ends up being about the same as on demand.
I don't think buses and rail systems should be phased out in cities. In every city I've seen, buses and rail carry a lot of people in a much more cleaner and efficient manner.
Most, if not all rail is electric. Buses are transitioning to electric in Europe. Geneva has a very nice battery-less (supercap based) bus fleet which carry a lot of people continuously.
No car based transportation can reach the same density.
Taxi has its uses (speed, precise location, etc.), but is no replacement for mass transportation.
Few places need the theoretical density that buses provide and even less need the level that rail provides. Most of the time they're running at 10-20% capacity. Or at least that's what happens in my city.
I'm not talking about taxis. Something shuttle bus or van sized. We don't need to put 200 cars worth of people in trains to solve traffic issues. Putting 200 cars of people into 30 shuttle buses is good enough.
> Most of the time they're running at 10-20% capacity.
That's not what I've seen in Amsterdam, Geneva, Stockholm, Barcelona, Istanbul and my hometown. They work at least 30% capacity all day long, and when the demand is low, the bus numbers drop in all lines, but you never wait more than ~15 minutes for a new one, in most lines. They also reduce the number of trains on rail systems when the demand is low.
> Something shuttle bus or van sized. We don't need to put 200 cars worth of people in trains to solve traffic issues.
It's not a traffic issue. In modern Europe, it's not about solving the traffic. The governments focus on providing ways people to reach where they want. When you enable it, people doesn't crave for their cars, they use the cheapest and most practical way. In Barcelona, you're almost always walking distance from a underground station so, you don't need a car most of the time.
In my city, due to its geography, it's not possible to have an underground network that dense (at least where I live) and my office is not on a easy to reach place via public transport. If it was the opposite, I'd happily leave my car at home, but I can't.
OTOH, all the public transit lines are working at least 50% capacity all day long, carrying people around the city, and in some places you can literally go from door-to-door using public transit only.
> Few places need the theoretical density that buses provide and even less need the level that rail provides.
Almost every major urban city and metropolitan area needs buses and rail service to function effectively, the population density requires it, and it is the proven, mature, and scalable solution to providing high capacity transport. Massive roads used by primarily single occupant vehicles, is the non-scalable, inefficient solution.
> Most of the time they're running at 10-20% capacity. Or at least that's what happens in my city.
Just because you see <i>a bus</i>, at <i>some</i> time of the day being underutilized, is not indicative of much. That same bus on the same day/shift could be at or near capacity, earlier or later in day carrying commuters, or students that got out of class, etc. making it worthwhile.
Capacity planning for a transportation network/system means it has to be sized for its maximum or peak demand (typically during commute hours), so it also makes sense to use its excess capacity during off-peak hours given it is largely paid for to meet peak demand (buses and trains sitting around midday depreciating, and operators being paid a full shift to do nothing, is a poor use of high value assets and resources). This is similar to other systems like energy, telecom, etc.
> I'm not talking about taxis. Something shuttle bus or van sized. We don't need to put 200 cars worth of people in trains to solve traffic issues. Putting 200 cars of people into 30 shuttle buses is good enough.
Same point above about sizing for peak. Additionally this does not match modern fleet management best practices, which would strive to minimize the number of vehicle types in the fleet. Typically this is a standard ~40 foot single level bus. Possibly with additional types (longer articulated or double decker) for lines with higher demand/passenger loads, if needed. A common fleet type minimizes driver and mechanic training, makes buses and personnel more interchangeable and operable across the entire route network, creating efficiencies and economies of scale. These are the same reasons why Southwest Airlines and Ryanair exclusively fly B737s.
Upwards of 80% of the cost structure of providing bus or train service (the marginal cost of running an additional bus/train) is dominated by labor costs in the USA and other developed countries, where labor is expensive and capital, broadly defined, is cheap; so capital replaces labor where possible (developing countries tend to be the opposite). Or to put it another way, 20-40% of the cost structure is the cost of the vehicle. Using smaller, cheaper, low capacity vehicles does not significantly reduce the underlying cost structure, and in fact will increase inefficiencies and costs elsewhere in the system.
An excessive number of small vehicles instead of a reasonable number of large vehicles, where each vehicle requires a driver, will maximize inefficiencies and create diseconomies of scale, resulting in higher overall system costs, lower transport capacity, and higher congestion and pollution in space constrained urban areas. Efficient use of space in constrained urban areas is key attribute of transportation systems [0][1][2].
You're arguing theory and not what's happening in the real world. As an example, your cite says that rail has a theoretic density of 60-90 thousand an hour. But in my city we're spending several billion dollars to build a new rail line that is expected to carry 20,000 people a day.
Theory and practice are different. And in most places in the US your theory doesn't translate into practice.
> You can get off an airplane just about anywhere in the world and get an Uber. That’s huge value.
You can get off an airplane just about anywhere and get a taxi at the taxi stand, but that never enabled a global company.
Airports with local unlicensed taxi services generally have advertising in the airport for arrivals. Installing a new app in each city, and putting in payment information is more hassle (especially if payment options aren't geared towards international visitors), but you do it once per trip, just like the in flight entertainment app.
>You can get off an airplane just about anywhere and get a taxi at the taxi stand, but that never enabled a global company.
Because it didn't streamline the process as much as Uber/Lyft (and the use of internet). It's a big difference when you don't even need to talk to anyone.
>but you do it once per trip, just like the in flight entertainment app.
And that is enough friction to make Uber/Lyft worth it. The in flight entertainment app has a monopoly. If there was sufficient broadband access on the plane, no one would get the in flight entertainment app either.
However, I might download a new local app if I found out the local app's fare were sufficiently cheaper, since the friction of downloading a new app is relatively low.
> The single benefit of Uber having a global presence likely already outweighs the value of these local coops.
That and a willingness to subsidize rides to the tune of billions of dollars per year. A coop is going to struggle to provide rides at a "competitive" rate when the competition is paying people to use their services.
What is causing Uber's losses? The customers are paying money, the drivers are getting only a fraction of it.
Are the drivers actually getting more money than the customers are paying? Are Uber's data center and transaction costs really high? Or is it the armies of lawyers and business development people?
The basic value proposition of ride share seems viable. If Uber's losses are overhead, maybe somebody can compete.
Yes, the the customers pay more money than the drivers get, but from that difference Uber must pay the salaries of all their software developers, they must pay for infrastructure, they must pay for app development, product managers, hr, etc.
If you look at Uber financial reports, you’ll see that they earn profit on rides, and their losses are due to their attempts at expansion in other segments.
Uber used to subsidize rides a lot, and it still does in some foreign markets where it is trying to get a foothold, but this is not really happening in US anymore.
There's no reason why we can't have a coop based version of a WeChat like super app with all of these services on a single shared platform.
Most people don't get on planes that often so the value of global scale is not something that would prevent them from getting disrupted in a place like NYC. I'd be willing to pay a large premium for gig work if I knew that 95% of it went to the worker and they weren't being exploited by a bunch of clowns in SV.
I'd argue that standardization at the protocol level benefits almost everyone more than the current paradigms. Any app works with any taxi network.
I want to use Lyft as my client, great. I land in a city, and I can ping drivers working for any pool, co-op, or team.
WeChat just replaced the AppStore/OS. If each service is its own entity inside WeChat, youve just nested the problem one level down. The client browser should be completely divorced from the rest of the network. There should be an IMAP/HTTP level hailing protocol. You want gmail but I want outlook, great we can still talk to each other.
A single global brand can be an advantage, but I wouldn't be so sure that's the case with a rideshare app, in a city with a strong identity like NYC. In terms of brand positivity, I can see New Yorkers proudly switching to this. (And if Uber retains the "just got off the plane at JFK for the first time" market, so what.) The real question is whether they can compete on price and UX.
The thing you describe as valuable... isn't. The idea of someone who spends Monday in Madrid, Tuesday in NYC, Wednesday in Moscow and can't be bothered with too many apps is just an idea. That person doesn't actually exist. There is zero value to you for Uber serving other random cities around the world that you will never visit.
Serving NYC is easily a large enough market to be successful. Serving a borough would be.
A huge value for a relatively small amount of people and uber customers.
It's also not really very true. Its been a year since I traveled outside of the USA but on my last two international trips Uber was not available in those countries.
But then Uber also has to setup the meta-structure operationally to actually legally and financially operate in all those jurisdictions and that incurs a higher cost overhead than a local coop.
“Juno initially had an equity structure that planned to give drivers fifty percent of the founder's equity by 2026, but this program was discontinued in 2017 when Juno was acquired by Gett.”
So I doubt much equity was in the hands of drivers at the time of the sale. Certainly doesn’t sound like it was first and foremost a co-op model.
Agreed. Their technological moat is practically nonexistent. I honestly think things like this are the future of ridehailing, and uber and lyft will be left in the dustbin after this economic cycle of free debt ends.
Their moat thus far has been in their enormous runway to burn VC cash and sell rides at a loss while they waste energy on useless side projects paid for by their drivers who are given absolutely no cushion.
I haven't really used lyft in a couple years but back then it seemed like most drivers were using both apps and preferred taking rides from lyft. Adding a third might not be hard.
Drivers can suggest riders download the co-op app (keep a QR code taped to the back of your headrests) and try to use it first, falling back to uber/lyft if there are no drivers nearby.
I've been considering unconventional business models for software development teams, and something like this has crossed my mind a few times.
What I ultimately dream of doing is assembling something like what seal team 6 is to the US armed forces. How do you build an organization around that model? It takes many layers to filter the talent appropriately and protect the most capable players throughout. How do you achieve a similar effect on a small scale? Coding interviews are clearly not the most fantastic way to judge the capabilities of a software developer. I would have to find some new thing that is virtually failsafe, or I would have to find outside investors which ruins the whole thing. If I bootstrap with my own money, no one can stop me from doing what I want and then bestowing that same freedom upon other team members over time.
Maybe I could write a "game" and release it to the steam store. It could be a thinly-veiled programming challenge spanning many hundreds of hours of "gameplay", which tests for the exact qualities I would be looking for. This game would be the equivalent of enrolling in BUD/S training. The first 10 people to complete it with a perfect ending get a number directly to my cellphone with monetary offer & NDA presented on-screen.
I agree with you. Another reason this really couldn't have started with co-ops in the first place is co-ops wouldn't have been able to muscle their way into local markets like Uber did when they first launched.
This is doubly ironic and amusing if you think about how Uber/Lyft were "disrupting" the existing markets. Well, market forces are at work: if Uber/Lyft provide no additional value over drivers' work (and treat drivers as disposable assets), they themselves will get "disrupted" and the drivers will get rid of them :-)
Happy to see this happening, and I wonder how this will develop.
I applaud the effort, but the problem with a collective is that they are, legally speaking, a soft target. Uber can afford to break laws, run at a local loss, and generally throw its weight around a new market. Cooperatives don't have such deep pockets. They will leave town as soon as a some local interest resists. They aren't going to survive multi-year fights with cities or organizations like the London cabs.
Part of the design of Coops is that they are the local interest. It’s much less likely that they will encounter local resistance than a VC-backed Silicon Valley overlord.
But can’t they just ride the coattails of the big players? Once they’ve lobbied their way in, shouldn’t it be pretty easy for the coop to just say they should be treated the same?
For that matter, I always wonder why Airbnb still exists. Now that they’ve bulldozed all sorts of local regulations with their VC money, why wouldn’t a coop model work better for the actual landlords? Something akin to the MLS for real estate, for local operators of short term rentals.
Ostensibly yes because landlords would get a larger share of the surplus, but as long as capital writes regulations, entities that extract more surplus will be better able to change the rules. Just look at how much was spent in California to keep gig workers as contractors.
Only for so long. Their stock price will suffer at a certain point. Not to mention the bad PR that come with it. The more of these that we see globally the harder it would be for them to run at a loss. As a CO-OP they can take growth slowly. They don't have the same investor pressure
> Well, market forces are at work: if Uber/Lyft provide no additional value over drivers' work (and treat drivers as disposable assets), they themselves will get "disrupted" and the drivers will get rid of them
We shall see if that ends up being the case. It's an open question to me. I could see this being as effective as Uber. But I could also see an industry association implementing some anti-consumer policies that make it less appealing than Uber.
I'm also interested to see how the compensation model works out. It will be interesting to see if the cooperative pays out for idle/waiting for passenger time. It will also be interesting to see if they offer health coverage, PTO, etc. Or is the idea simply that they will give the drivers a larger slice of the earnings? A pure labor-price play?
I have often wondered what you'd build in the ride-sharing space if you didn't have a profit incentive. One could imagine going full auction nerd and building an app where drivers and passengers are able to bid (automatically?) in an auction to see who gets whose time. Of course you'd lose price predictability. And that might cost you customers, and that might cost you volume, which you absolutely need to have a modicum of success in this space. An app that has only drivers or only passengers is not a useful app.
How sick would it be if we had interoperability laws where the app could fall back to Uber if it couldn't find a better price in-app? I'm sure this would be against Uber's TOS today, but it would be a great pro-consumer feature.
TBH Uber has led to dramatically better consumer outcomes. Without them operating in the market, and given the power the taxi lobby seems to have over local lawmakers, I am skeptical that any taxi-only scenario will be good for consumers.
Global brand definitely provides value. Whenever I'm traveling (or rather, back when travel was possible) I always use Uber because I know that I can pay buy credit card (rather than cash) and if the driver takes a huge detour or some other common taxi scam, I can just contact Uber's customer service, and they'll refund me.
That's true, but most rides are local by wide margin. And 10-20% per ride is too much. Maybe $20 per month/car or so.
It's only question of time until the margins from riding app start to go down.
Someone builds competing app with similar bells and whistles and sells it to locals as a service without branding for example.
I have often found local alternatives to Uber/Lyft, whether it be in Austin or Ireland, and their main value proposition remains: get me a car, quickly, and take my payment digitally. If I have a problem there's always credit card charge backs.
I think competition is the other thing that makes them work. The local options know if they fuck customers over that they'll just jump ship to Uber/Lyft. And same is probably true for Uber/Lyft!
>if the driver takes a huge detour or some other common taxi scam, I can just contact Uber's customer service, and they'll refund me.
This often gets cited as an advantage of Uber but in my person experience I've been driven 3 sides of a square and Uber hasn't refunded me when I've complained.
I think this is what was (pre-pandemic) happening in London. Bolt came in, cheaper than Uber and paying the drivers (slightly) more.
Uber burned a lot of cash creating the market, and to some degree on all the self-driving cab nonsense.
Not necessarily. An extremely low profit margin is a sign of a commodities market, where there isn't really a space for innovation. For example a grocery store, so you are competing on very fine details and logistics.
High margin, COULD be inefficiency, but it could just be a technological or innovation advantage.
It seems ride hailing is transitioning into a commodity since innovation has dried up. The one obvious disruption would be self driving cars
Well, at one time, cash registers, packaged food, and stores were all technological innovations. I'm asking whether 'technological or innovation advantage' can be interpreted as a sign of temporary inefficiency that will eventually get ironed out of the system (unless maintained by force, as another commenter mentions.)
I guess in a world without regulations or laws? The entire economy is predicated on patent and copyright law, as western civilization has deemed it beneficial to protect innovation and reward the innovator.
If your potential competition is stymied by huge costs of startup or catchup, or you've got the government (be it national or local) on side to help you maintain a monopoly or cartel (I'm looking your way, numerous US internet service providers...), then your high margin can exist for a very long time. I don't know if I'd like to say "indefinitely" but with the right moats, yeah, maybe indefinitely.
You could say the same with Just-Eat. In Denmark, I know they have a markup up to 15%, even though they have a lot of competition.
So honestly, I am a bit sceptical if we will see a much lower markup. One might hope though.
In the UK, JustEat takes 30% of the order, same as UberEats, with 0 liability - if something goes wrong with the order, including problems with delivery time, driver taking a nibble, the restaurant just doesn't get paid. Deliveroo is a bit greedier and takes 35%.
It's definitely not the lack of competition... it's just that the competition doesn't behave much better compared to them.
Interesting to hear that Just-Eat acts this way; Takeaway (Thuisbezorgd) has similar practices in NL.
They take no liability on anything (delivery delays, food problems, missing items, etc). They have no customer care number, and take days to respond to emails. If anything goes wrong, they make you call the restaurant, and of course they redirect you back to Tkwy. In the end, you will receive no refund, none of the missing food, and have waited 1-3hrs for an order that should've taken <1hr.
It's a horrible experience, but they get away with it because they have a near-monopoly. Uber Eats & Deliveroo have <25% of the restaurants on Tkwy.
So you expect that whole food delivery business will collapse?
I don't see that coming because it is 2020 and we have: smartphones in every pocket, easy payments from those smartphones, it is super convenient to order via such platform, in the end lock downs basically mandate food delivery.
Huh, where I'm from delivery companies charge by the distance, approximately 0,8 euros per kilometer. But that's definitely due to competition, there's like 6-7 competitors in a city with about 400k people.
This. I never got how Uber was still unprofitable for so long.
Sure you have a bunch of Silicon Valley salaries to pay but realistically speaking, one could build an Uber/Lyft for under $1M and basically can operate with two or so devs fixing issues. Yet, they are blowing hundreds of millions of dollars yearly all over the place while shorting drivers who can’t make a living wage and are basically trading vehicle expenses down the road for payment today.
My numbers were talking app expenses, obviously a company of Uber's scale would need 100+ employees.
I broke down below that if they worked at their current scale and charged just a penny, they could pay their employees an average of $100K per year and still make millions in profit after spending millions on Infrastructure. Uber bills on average more than 100-200 times that and spends insane numbers on unprofitable projects like self driving cars. I've read the whole book, a set of co-ops could easily spend as little as a million dollars, retain devs for work on it, bill a tiny service fee of a penny per ride (plus card processing) and then have local co-ops operate the other half of everything above at a reasonable scale whereas drivers get paid the rest other than management costs. Uber is intentionally using automation to overswamp driver markets to keep prices low and driver pay low to boost ride numbers and eliminate competition.
Nope, your words were clear - you were flat out wrong, and are now trying to save face. I don't have a tendency to call people out, but blindly applying the "two devs in a garage" axiom is not only wrong when it comes to labor marketplaces, but it also unnecessarily spreads discontent to the point that we have to stop this silliness. I don't care one bit about your recalculated math from now on - for me, you're just another armchair quarterback who speaks before he thinks.
Yes, OP was wrong to specifically call out "two devs" and HN, as it always is, was technically correct and called him out on it. Congratulations HN! Bad OP!
I agree with the overall sentiment though: "What are all these people doing?" is a valid question against lots of Silicon Valley companies who are currently growing for the sake of growing. Yes, you need a few lawyers. Do you need 100 lawyers, each with executive assistants, and lawyer managers of other lawyers? Why? What specifically are they all doing? Why can't you do it with 90 lawyers? or 80?
I've worked for companies ranging from 12 people up to 100,000+. I've seen companies that were legitimately understaffed, but also companies where I don't think anyone (including the employees themselves) could articulate why all these people were needed. Outwardly, it's always explained with some nebulous reason like "Oh, what we do is oh-so-complex! We need people to, um, manage the complexity, and uh, create synergies." Yea, and they need exec assistants and interns, and their own staff of sub-complexity-wranglers, who also need assistants, and soon it's complexity-wranglers all the way down, and nobody knows what any of them are actually doing, but they're all sending E-mails to each other!
The unspoken side is that most companies simply measure your importance by how many people are under you, so everyone tries to hire as many people as they can get budget for, and build their empire. But it's an empire of paper, of TPS reports! These people aren't really doing anything, but they make this SVP's org bigger than the other SVP's org, and the CEO can tell everyone how huge (i.e. important) the company is getting, and that's what's important.
> The unspoken side is that most companies simply measure your importance by how many people are under you, so everyone tries to hire as many people as they can get budget for, and build their empire.
If we're throwing around conventional aphorisms, one could just as easily argue that most companies simply optimize for maximizing profits by minimizing labor costs, and therefore have an incentive to eliminate redundant labor. Heaven knows that Uber's primary goal for the next few years is profitability. Why, then, wouldn't Uber just get rid of all of these paper TPS report empires? Should be simple enough, right?
The reality is that it's a lot more complicated. I think GP's comment about armchair quarterbacking is an important one, and I think this comment as a good example of that. A fun joke I've heard is that the mark of a senior engineer is how often they say "Well, It Depends™". It mostly alludes to the general tendency to avoid simple explanations of complex systems the more senior one gets.I think the same applies in the context of organization building.
If you take that, and try to imagine that it's not just engineers, it's also Product Managers, Designers that feed into the raw R&D; and the fact that Uber actually operates in multiple business lines (Eats, Rides, Freight, Bikeshare, Transit) and then the operationalization of all of those features, including customer support, biz ops, product marketing, etc. And then wrap all that up into the core organizational infrastructure necessary to support all that: FP&A, HR, etc. It all adds up! And that's just the current businesses we see, you also have portions of all of that feeding into the numerous exploratory efforts they probably have underway into new business lines.
I think the Uber example is a great read, and kind of makes my point. All that complexity and they are still losing money! All those payment methods, hundreds of megabytes of application binary, hundreds of backend teams, all of them very busy "doing things" but the company is not making money. Maybe they need to hire 60 more bizops ninjas.
Even with this thread, I have to say I'm kind of a hypocrite, since I'm one of these "support role" guys in my own company. I make it a goal every day to try to draw a clear understandable line between my work and the company making money. Some days it's not easy after 8 hours of TPS reports. I've been in roles where to this day I can't figure out how what I did made the company money. It was a lot simpler to explain when I was directly making the product.
No you are wrong. The coop and Uber have different structures. The coop is built from the bottom up and does not need to scale. So a per-msa analysis of costs is an appropriate starting point.
> one could build an Uber/Lyft for under $1M and basically can operate with two or so devs fixing issues
This is fundamentally untrue, although you hear it a lot here. I have to wonder whether the people who think this have actually worked on a system at the scale Uber operates at.
Uber is an incredibly complicated system. The trick is it's presented to the user as a very simplistic one, so people overlook what's actually going on behind the scenes.
Sure, like many well-funded tech companies with a large engineering staff there's a fair amount of fat you could probably cut away (and indeed, Uber have - they've done engineering layoffs in the past). But just to sustain the app in all the territories they currently operate in you're talking hundreds of engineers, not "two or so devs fixing issues". That's how large the problem surface area is.
Undercut competition.
Use borrowed money to sell rides under cost.
Wait for all competitors to die.
Jack up prices.
AFAIK they’re still living on borrowed money.
It reminds me of the airline deregulation of the 90s. New airlines would use borrowed money to sell seats at below cost to attract customers, driving established carriers out of business.
The funny thing is that this smells a lot like “the tragedy of the commons”. Everyone wants to use this amazing infrastructure for flying, but no one wants to pay for it. New firms undermine the stability of the system by charging less than cost in order to starve established competitors whose business model is focused on being profitable.
> The Uber business model is: Undercut competition. Use borrowed money to sell rides under cost. Wait for all competitors to die. Jack up prices.
The interesting thing is that there is more than one startup using this model. The competition isn't the other startup; it's the other startup's investors.
I wonder how long those investors will keep on pumping money into the scheme, hoping their guy will be the last standing. Or will they ride the sunk cost fallacy all the way down?
I'm not sure you realize that a product at that scale can't run with two people. You need lawyers, service support, testers, advertisers... People that hacl the other company to sabotage their launch (if you are not aware, uber did that).
I was referring to Silicon valley salaries, obviously you would need ~ 50-100 people or such. At current scale of Uber, if they charged just a penny (instead of the 20-30% they currently do) They would make 16 million dollars which could pay 100 people an average of 100K per year, they could spend $4M on infrastructure and still make $2M in profit despite being not much more than a payment processor and app provider (like square or shopify)
They bill more than 200X that on average.
I subscribe to an email newsletter called BIG by Matt Stoller. It's all about US monopolies and he's very interested in exactly what you describe. His response is that both ride-hailing and delivery apps are taking a gamble on establishing a monopoly in several years time, at which point the profits will pay off the current losses.
This is evident. We're at such a crazy level of capitalism/neoliberalism that it's a regular occurrence to see large businesses operating at a loss for 5 or 10 years.
This is my analysis too. The app should be open sourced and then subsequent new market entrants enjoy the benefit, lowering costs. I don't think running servers to handle a few transactions per minute per zip code is too expensive
Unfortunately there are two things being a barrier.
One is advertising: for many people Uber is either the only app they know or the one they see as the "standard". " To uber" has even become a verb in many languages. Uber can spend hundreds of millions of dollars per year on ads.
The other thing is operating at a loss. A co-operative, almost by definition, will produce a service at fair prices for both customers and employees (market forces dictate the price to customers as with any company, and the co-operative structure means that profits go to labour -- you know, the people actually doing stuff and creating value). A private company with never-ending billions of cash can simply operate at a loss to out-price their competitors until they close and they have achieved an even more hegemonic monopoly in their space. At some point Uber was burning 300,000,000$ per month to subsidise artificially low prices. Of course, as non-profit seeking enterprises, co-ops are plenty restricted from accessing capital in the current economic system.
Now the really interesting thing to me is how neither of these factors of advantage for private capitalistic enterprises is actually anything useful. Spending billions to drill your brand names into the brains of people is a net loss for society, distorting the market is favour of those with the biggest advertising budget, not those with the best product. In fact nearly all advertising is universally imoral in my opinion, but that's a different story. And burning venture money to artificially lower prices and further skew things is also obviously a negative.
From my experience in many places drivers actually use multiple apps at the same time. This means that there's less and less of a distinction between the safety, ratings etc. of each individual app.
Ratings is an easy to use and game feature (fun fact often harmful to drivers of color) that costs almost nothing to build. The feeling of safety was flatter Uber had a bunch of rapes that forced them to pretend that they cared, spend is very small on it.
I hope this takes off. Ride-hailing apps always seemed like a model that was extremely conducive to a cooperative, worker-owned model. I would gladly (and will try to next time I'm in NYC) use this service over Uber or Lyft. Power to the drivers!
>Ride-hailing apps always seemed like a model that was extremely conducive to a cooperative, worker-owned model.
It's only the surface-level of an ride-hailing app that seems easy for worker-owned cooperatives to create. In reality, the extra expensive programming dollars required to tame the hidden complexity so that the app can present a seamless experience to the customers/passengers is a huge factor that works against co-ops.
Real-life customers don't want to enter their credit-card details into City_X_driver_coop and then re-enter their financial details multiple times again into City_Y_driver_coop. Even if you imagine a hypothetical national co-op to consolidate multiple cities, customers would still then have inconvenience of Country_X_coop and Country-Y_coop.
It takes a lot of capital to pay programmer salaries for desirable features that customers want and since co-ops are capital-constrained (by definition because they can't take millions in investors money), the app will always have less features compared to Uber/Lyft.
That's the financial constraint that causes co-ops to more easily organize in lower complexity businesses such as local grocery co-op or a farming coop. But a high-tech complexity business that's expensive to build is inherently too costly for a pool of drivers' savings to fund.
Whenever you see the phrase "worker-owned", mentally substitute "capital-constrained" -- and it starts to make sense why many businesses domains don't have any coops rising up to compete with VC-fueled startups.
EDIT to reply: >Driver co-ops or smaller operators simply don’t need to worry about half the nonsense in the comment you linked
Sure, the driver co-ops can choose to not spend capital on "useless" features but this leaves out the fact that customers can also choose not to use the co-ops because of the lower quality app experience. Keep in mind the behavior of customers who prioritize conveniences.
Well, one might say RideAustin was hampered by coronavirus lockdowns. That's true, but it also takes capital to get past an economic downturn of low revenue. Uber/Lyft got hurt by COVID as well but they had more capital reserves to deal with it.
The overwhelming vast majority of reasons I've heard people give for preferring Uber/Lyft over regular taxis are (1) regular taxis could not be summoned via an app or web page, instead requiring a phone call or curbside hailing, and (2) their credit card terminals were often broken so that you had to pay cash.
Both of those specific problem are solvable for most rides without going anywhere near the level of complexity described in that post you linked to that details why the Uber app is so complicated.
Most of the Uber app complexity that post gives is because they want one app that works nearly everywhere and does a lot more than just let you summon a ride from A to B and pay via credit card.
For most US cities you could cover the payment needs of most riders with something from Square installed in the car. That gets rid of a huge amount of complexity (or rather, pushes it to someone else).
That should be good enough to make them a viable alternative to Uber/Lyft for probably 95% or more of the rides in a US city.
>For most US cities you could cover the payment needs of most riders with something from Square installed in the car.
That's a good example of driver-centric thinking instead of holistic thinking that considers the paying passengers. Consider: what if the customers/passengers actually prefer the convenience of not having to mess with an extra payment transaction step before exiting the car?!? With service like Uber, passengers can just get out of the car immediately when they arrive at their destination. No whipping out the credit-card to swipe. No exchanging of QR codes.
Always think of game theory and consumer behavior preferences.
Adding "Square payments" as a driver-platform "solution to avoid complexity for the programmers" is adding another reason for customers to avoid using it because you added complexity to the customers -- and therefore you have less revenue. There are always tradeoffs.
Whenever anyone thinks "Problem <X> is trivial, and the solution is just to do <Y>," ... you have to think a few chess moves ahead as to what the actual paying customers will do that may negate your "solution".
I mean, I take your point, but I'd choose a higher friction payment every single time I thought it favored the driver vs Uber or Lyft or whatever. It's the driver providing the valuable part of the the service, not the wholistic user experience in the app.
I think you are overestimating the inconvenience of paying at or near the destination. Most passengers will have smart phones with them, most of which support NFC payments. Double tap the side button on your iPhone (or whatever is equivalent on non-Apple phones), hold it near the reader for two seconds, and you are done.
Heck, a large fraction of the passengers won't even have to reach into their pocket to get their phone because they'll have been doing stuff on it during the ride.
Even for those who have to use an actual physical credit card I don't think it would be enough of a barrier to make a noticeable difference because they are also using that card for nearly everything else. It's so routine that they don't think about it or notice it. I don't think I've ever heard anyone complain about the complexity of paying by credit card at a non-waited restaurant, a grocery store, a hardware store, or any other retail place.
Also, note that with this approach the co-op would not have to make riders create accounts and associate payment information with them. That removes some complexity for the user, and is one less thing to deal with when the user gets a new credit card.
>I think you are overestimating the inconvenience of paying at or near the destination. Most passengers will have smart phones with them, most of which support NFC payments.
And I think you're falling into the same trap of believing other economic actors will happily agree to your proposed "solutions".
Disadvantages of NFC payments:
1) economic friction which lowers supply of drivers: drivers have to buy $50 NFC terminal from Square. $50 is not a lot of but it's extra financial friction which deters potential drivers
2) trust issues which lowers supply of paying customers: NFC payments puts the payment amount in control of the driver which makes potential customers fear getting scammed. In the Uber/Lyft model, this doesn't happen which is a significant psychological advantage because drivers are notorious for playing games with payment (especially with foreigners and travelers). By letting the "service in the cloud" pay the drivers on behalf of the passengers, it adds accountability.
I'm not claiming it's impossible to create a car-on-demand service that uses NFC and/or credit-card swipes. I'm saying it would be a disadvantage to other platforms that work more conveniently. This means less paying customers which leads to less capital to continuously improve the software -- which could then lead to more customers abandoning the co-op rideshare app for the more polished Uber/Lyft apps.
Again, see the failed non-profit RideAustin losing riders as somewhat analogous case study. And see the other comment about the apparent low quality of this thread's app (Drivers.coop): https://news.ycombinator.com/item?id=26592354
The co-op needs capital to improve the app software and you need a virtuous cycle of paying customers that don't avoid (or abandon) the platform to provide that ongoing capital.
>co-op would not have to make riders create accounts and associate payment information with them. That removes some complexity for the user,
This wouldn't be an advantage for commuters that use Uber/Lyft daily.
I'm confused. Who benefits from using a physical credit card terminal instead of an app in the first place? If you don't want to implement all the payment methods Uber does, and you're willing to settle with only credit cards... why not just have in-app payment that only supports credit cards?
The obvious answer would be "so that the user doesn't have to have the app", but if the user doesn't have an app, how is that different from an old fashioned taxi service?
Beyond the fact that the credit card terminal isn't broken... but it's not like the rider would know that ahead of time.
> (1) regular taxis could not be summoned via an app or web page, instead requiring a phone call or curbside hailing
This is partially true. It wasn't just that taxis couldn't be summoned through an app. It was that when you tried to summon one, there was at best even odds of one showing up within 30 minutes. Drivers could and did take curbside hails as they saw fit, and a dispatch often seemed to amount to no more than a polite request.
I've used taxis apps in the years since Uber's debut. Replacing a phonecall that gets ignored with an app's request that gets ignored is not an improvement.
> (2) their credit card terminals were often broken so that you had to pay cash.
They essentially never were. Cabbies just prefer cash. The real issue here is that cabbies had no compunction about lying through their teeth and there were no consequences for this. The whole system was set up so that there was in-theory accountability but no in-reality accountability. Uber took this away entirely by forcing payment to be handled entirely via the app.
> That should be good enough to make them a viable alternative to Uber/Lyft for probably 95% or more of the rides in a US city.
With the above points in mind, things take on a slightly different character. Using Square accomplishes nothing except giving cabbies a slightly different thing to lie about. Without the assurance that your driver won't make random other stops or otherwise not show in a reasonable timeframe, the request app isn't that useful.
There was one more reason: Uber debuted in NYC. NYC has a limited number of taxi medallions and therefore a limited number of taxis which is a problem because demand outpaced supply. Uber provided additional drivers/vehicles. Also initially it paid better while taxi medallions were no longer owned by the drivers but rather by what amounted to wage-slave owners. As a result some people felt it was better to support this nee gig economy as it put more money into the pockets of drivers. Oh and did I mention it was slightly cheaper than equivalent yellow cab rides because it was VC subsidized? Turns out when you sell dollar bills for 90 cents you can get loads of customers.
That Uber eng comment reads like list of features and approaches that are necessitated by an overstaffed engineering department than stuff that necessitates it.
Yeah if you have 40-50 (!!) “product teams” fiddling with the Rider app, it’ll get complex and sure it’s impressive it works. But uh... why are there 40-50 product teams working on the Rider app?
Did we read the same comment? They all look like useful features which deal with the complexity of things external to Uber (like regional payment regulations).
>present a seamless experience to the customers/passengers
There does exist a segment of users who are willing to navigate a less-than-seamless experience if that lets them avoid dealing with a less-than-ethical business. (And probably there's at least some PR effort involved in making their voices not count.)
Besides, the Uber/Lyft experience is far from "seamless", and developing a ride-sharing app that does _not_ aim to work on a global scale has different challenges from those outlined in that post.
>But a high-tech complexity business that's expensive to build is inherently too costly for a pool of drivers' savings to fund.
>Whenever you see "worker-owned", mentally substitute "capital-constrained" -- and it starts to make sense why many businesses domains don't have any coops rising up to compete with VC-fueled startups.
My favorite conspiracy theory is that VC is poured into software not to produce meaningful innovation, but chiefly to hypercomplicate the field in a sort of Cambrian explosion, so that the "capital-constrained" can't get anything done with the baroque frameworks and out-of-touch developers that the ecosystem produces.
Thankfully, people who understand how a computer works (and what it's good for) do exist outside of SV. Sometimes (shhh!) they're even motivated by other things besides short-term capital accumulation!
And better ethics can mean better efficiency - fewer politically driven kludges in software, less staff turnover, even the fact that people can and do accept to get paid a more average salary in exchange for working at a place that isn't screwing people over at industrial fucking scale.
That's how a cooperative can compete with a megacorpo, although realistically a more reasonable first goal would be to coexist in the same markets, or operate in markets that have demand but are deemed insufficiently profitable for the corp.
> less-than-seamless experience if that lets them avoid dealing with a less-than-ethical business.
True; this is why I started using Uber: to avoid the “oh the credit card machine is broken, you need to pay cash” only to find out it did work AND I’d paid cash.
Yeah, it works both ways. Otherwise we wouldn't have competing alternatives to discuss (Uber, cooperatives, taxi companies, solo cabbies... I hear that in Russia it's customary to hail any car on the street and pay for a ride, with obvious safety drawbacks of course)
What you're describing can happen anywhere there is a PoS terminal. I guess a sketchy cabbie has the benefit of being able to drive away before you realize what happened (and it could be harder to see the card machine when sitting in a car as opposed to e.g. paying at a desk in a shop?)
Nevertheless, "we let users order and pay for rides with an app" is a part of the business model which is totally distinct from "we'll make sure users never get screwed by fucking with the workers". Which does have an obvious advantage in terms of customer retention though - especially if your customers are petty bourgeois knowledge workers who want to benefit from an "on-demand" lifestyle and to distance themselves from the people doing the actual gig.
Not to mention, Uber probably has more data on your ass than what a single fraudulent transaction entails (for which you can at least issue request chargeback). It's up to them to handle it responsibly, and they have failed to do so at least once (the 2017 hack). Just like every SV company that keeps screwing up but people still love them because all those beautiful apps make their expensive smartphones a little less pointless.
> That's how a cooperative can compete with a megacorpo
Hum... I guess you forgot about the main competitive force of cooperatives. On service based industries, they let the service providers capture most of the value, what should attract better service. (But some times it doesn't, those things are complex.)
Parent post explicitly referenced "a high-tech complexity business". Agreed that "high-tech complexity" is not essential to providing a service, indeed it's often antithetical to that goal. Does help with market capture though.
These are real challenges, nice outline of the capital issue.
Coops generally have to get money by borrowing rather than equity investment.
I'm for increasing federal programs for offering and subsidiziing loans to worker-owned coops -- like we do student loans -- not that that's a model, I realize, student loans don't work well, but just a demonstration that the federal government can subsidize loans in the public interest if it chooses to.
There are also hybrid models possible where workers own some % of the company -- over 50% if you want to consider it worker-controlled -- but investors also own a portion. Investors invest in companies where the founders have a controlling stake, it's not unheard of. there could be federal tax or other subsidy incentives too.
>There are also hybrid models possible where workers own some % of the company -- over 50% if you want to consider it worker-controlled -- but investors also own a portion.
but why would investors invest in a company that gives them half as much stake (because the other half goes to the workers)?
Why do investors invest in a founder-controlled company, where the founders have more than 50% stake? To make money, I would assume, is why they do it?
I'm sure it's a barrier, but it apparently isn't one that rules out all investment, since investors do it with founder-controlled companies, right? There is even entirely non-voting stock, which people invest in.
If it were decided through political processes that worker-owned cooperatives were a public good to be encouraged, there could be additional incentive/subsidy through the tax code or other means for investing in minority stakes in them. (As the government subsidizes/incentivizes homeownership or higher ed tuition. Or for that matter, ESOP's for another route to minority employee ownership).
>To make money, I would assume, is why they do it?
If the only option were a drivers cooperative, then yes they might go for it (although they're still going to be competing against other forms of investment, eg. other stocks). However that's rarely the case, because there's going to be non-cooperatives which don't have workers taking up 50% of the stake.
>since investors do it with founder-controlled companies, right? There is even entirely non-voting stock, which people invest in.
They only do that because they think the founders are valuable. I don't see how the same dynamic exists with mostly replaceable drivers.
They can still believe in the leadership of the project. After all, many investors invest without themselves having a majority stake. If you own 3% of a company, the other 97% might be other investors, or might be some other investors and some worker-owners, you still only own 3%. Not everyone thinks worker-owners are any less capable of making good decisions towards the success of the endeavor than investors, although I gather you do.
Sometimes worker-owned businesses do well in fact because the worker-owners are willing to put in more energy and sacrifice for their business than typical employees, worker-ownership can be a plus. (Obviously plenty fail too, not saying it's some kind of magic invulnerability).
Look, all I can say is this is an actual thing that happens, there are hybrid ownership worker coops taht also have investors, it literally exists in reality.
As I keep saying, I agree there are reasons some investors rae reluctant to invest, and the government could provide subsidy or incentives to change that calculus somewhat, the same way the government does for all sorts of economic activity that is considered socially desirable. It's true that worker coops have barriers to raising capital, but this really is one way some have done it, despite the challenges, it literally happens in reality, so if you're trying to argue that it doesn't, that's a weird argument.
>After all, many investors invest without themselves having a majority stake. If you own 3% of a company, the other 97% might be other investors, or might be some other investors and some worker-owners, you still only own 3%.
That's not exactly the same. If you invest in a regular company, the other 97% of investors contributed capital, making the company worth more. On the other hand, in a owner coop the 50% (or whatever % share allocated to the workers) is essentially dead weight. There might be some value that the workers add (increased loyalty?), but I doubt whether that has actual value in the context of a ridesharing platform where turnover is high and the workers are more-or-less replaceable.
>Look, all I can say is this is an actual thing that happens, there are hybrid ownership worker coops taht also have investors, it literally exists in reality.
It's hard to infer motivations here, because what they're doing is blending rational investing (eg. maximizing risk adjusted returns) with philanthropy. While it's technically true that worker coops can find "investors", having to rely on the generosity of others isn't exactly a sound business strategy.
Buddy, I don't know what you are trying to argue for.
Worker-owned coops exist, thousands of them. Some of them have investors. Some of them fail, some of them have been in business for decades. Yes, raising capital can be challenging for worker-owned coops, my first post on the topic literally said that. But there are ways it can be done, that have actually been done.
I gather you think worker-owned coops are a terrible idea, that's fine you're entitled to your opinion.
You're making some assumptions. Why can't programmers be workers in the coop and be part of the equation? Why can't forms of capital available to other startups be available to coops?
> Why can't forms of capital available to other startups be available to coops?
... because then it wouldn't be a co-op. The whole point of a co-op is that it is owned by the workers/producers/consumers instead of equity investors.
Hmm, they probably could be. But it may be difficult to recruit and retain good ones. Coops tend to have a compressed salary spectrum, which is good for lower wage workers like taco drivers, and bad for higher wage workers like programmers.
Actually, there are a lot of high wage workers like programmers who opt to work in co-ops because the ownership model aligns with their values and they find the work both financially and also intellectually and emotionally fulfilling. You need look no further than Ampled.com, which has a robust team of "contributors" who are all working to build and improve the platform on a volunteer basis. Ampled has built a system to track everyone's contributions which will be honored down the road once the co-op has more $ in the bank. And these are top notch folks who have come from Kickstarter and other related platforms (and who also clearly have a lot of economic privilege to be able to work in this arrangement for the time-being).
Agreed, people who believe it ideologically will be attracted. It just seems like that would still make it hard to recruit if the money is much worse, though -- there are only so many people willing to take a huge pay cut.
I would personally give up half of my income to work at a cooperative. Weirdly enough, I don't see many cooperatives hiring software engineers specifically.
You're in luck! Driver's Seat Co-op is currently hiring for a software engineer and UX/UI designer. The founders are smart and committed and also just really thoughtful and kind guys. https://www.driversseat.co/careers
Why would a VC invest in a co-op? What would be the exit strategy that would allow them to be paid off at the multiple needed to compensate for the risk? In a worker-owned co-op, there is none, so they won’t have access to venture capital as Uber could raise.
They can get different types of financing perhaps.
Unless they use revenue-based financing, a VC wouldn't invest in co-ops. As you point out, their need for an exit strategy that revolves around an increase in the price of equity doesn't align well with co-ops striving for building longer-term wealth for their community. That's why we see co-ops funded through loan funds, angel investment, and a new breed of equity funds trying to fill the gap, like The Equitable Economy Fund (https://www.equitablefund.net/)
> Real-life customers don't want to enter their credit-card details into City_X_driver_coop and then re-enter their financial details multiple times again into City_Y_driver_coop. Even if you imagine a hypothetical national co-op to consolidate multiple cities, customers would still then have inconvenience of Country_X_coop and Country-Y_coop.
I strongly suspect city level coops would consolidate easily and naturally once they would develop a strong base in their respective cities. Besides, consolidation isn't the only way this might go: a lot of the software work can easily be ported from one city to another - if for example the current NY coop catches on, I think it would be quite easy to spin off a Boston coop for example.
Regarding international travel you should ask how often does that need actually occur. Quite few people travel internationally so much that having a couple of different apps on their phone is a real inconvenience.
> That's the financial constraint that causes co-ops to more easily organize in lower complexity businesses such as local grocery co-op or a farming coop. But a high-tech complexity business that's expensive to build is inherently too costly for a pool of drivers' savings to fund.
Farming cooperatives can be very capital intensive.
In contrast, technology platforms are relatively inexpensive to build these days. The value of a platform is proportional to the number of users (drivers) it has: hence, this is a particularly good application of a cooperative structure.
> It takes a lot of capital to pay programmer salaries for desirable features that customers want and since co-ops are capital-constrained (by definition because they can't take millions in investors money), the app will always have less features compared to Uber/Lyft.
There's nothing saying the cooperative cannot have revenue bonds, notes payable as a percentage of revenue. Savvy.coop received funds from https://indie.vc under these terms. Moreover, technologists could contribute well below their market rates in exchange for revenue bonds. https://start.coop is working on these sorts of legal details.
>Farming cooperatives can be very capital intensive.
The farms are capital intensive but the separate entity that forms the cooperative is less capital intensive. E.g. building the local co-op grain storage bin that farmers contribute to will cost less than the millions it takes to build a polished app like Uber/Lyft.
Or did you have something else in mind when you meant farm co-ops are capital intensive?
>There's nothing saying the cooperative cannot have revenue bonds, notes payable as a percentage of revenue.
True but bonds don't exist in a vacuum and must compete with other alternative investments including other bonds by other businesses/governments.
Certain financial aspects of the co-op bond (regional business is lower revenue than national Uber, higher risk premium than Apple/Microsoft bonds, lower Moody's credit rating, etc) ... are less appealing to bond buyers which then lowers the amount of capital to the co-op. Just because a company has a "bond offering" doesn't automatically mean investors will line up to buy them.
E.g. and using the failed RideAustin example above... if they hypothetically offered bonds in 2017, your coupon payment would be $0 right now.
Whatever financial "solution" one comes up with for co-ops, one still has to account for behaviors of all the other economic actors in the system.
> Or did you have something else in mind when you meant farm co-ops are capital intensive?
I disagree with your characterization: it's the potential sharing of capital expenditures (for storage, processing, distribution and advertising) that drives cooperation. In many cases these costs are far more than software-based services. Cooperatives of this nature often have significant capital contributions required for membership.
> True but bonds don't exist in a vacuum and must compete with other alternative investments including other bonds by other businesses/governments.
Agreed. I would note our current legal environment makes it challenging for cooperatives to raise capital since most of their potential contributors, who see the community "main street" value, are effectively prevented from becoming investors, even if they are willing to do so. Retail investors have their arms twisted (401k) to put their savings into the stock market... rather than into main street. Moreover, since they are not often SEC qualified investors, they are prevented from investing even if they wish to do so. There are some limited exceptions for local organizations, but these rules are hard to navigate. These barriers to capital should be addressed.
Let’s not pretend back-end taxi/private hire vehicle dispatch is either a complex problem, or one that Uber solved themselves.
They added a glossy mobile app to the equation. Many others have since done the same.
Driver co-ops or smaller operators simply don’t need to worry about half the nonsense in the comment you linked (support for dozens of languages and payment methods, integration with other first or third party services, etc.)
The commenter is not saying literal taxi dispatch is complicated. But that's an extremely reductive view of what Uber is.
Their actual point is 1) that it's a complex problem to make it a programmatic market which functions nationally (even internationally) and 2) that such a product will naturally have a feature and convenience advantage over regional-specific, capital-constrained alternatives.
If the app was open source/free in some way, and coops forked some of the money into development, maintenance, infrastructure, etc, then maybe it could really undercut the big guys, have quality, innovate fast and etc and also distribute capital fairly. So instead of having a big guy owning everything and dealing all the cards, the development people would get paid for the service provided to the coops, who in turn provide service for consumers. I've actually had conversations with a friend on doing this exact kind of thing.
>It's only the surface-level of an ride-hailing app that seems easy for worker-owned cooperatives to create. In reality, the extra expensive programming dollars required to tame the hidden complexity so that the app can present a seamless experience to the customers/passengers is a huge factor that works against co-ops.
This "seamless" experience is actually not required by most people. While it's amazing that I can land it a random major city around the world, pull out my Uber and hitch a ride, it's not a requirement for most people. Most people travel a few times a year, and those who travel for work are used to the context switch anyway. Very rarely do they land in a brand new city every time. Usually its a rotation of the same set of cities, for which they can use the corollary set of apps. The friction is only in the beginning. Besides, in the post covid world, I'd imagine business travel is going to take a huge hit, so this is less of a concern. Also, Uber has retreated from a lot of countries over the past few years, so this benefit is not true anymore.
> Real-life customers don't want to enter their credit-card details into City_X_driver_coop and then re-enter their financial details multiple times again into City_Y_driver_coop. Even if you imagine a hypothetical national co-op to consolidate multiple cities, customers would still then have inconvenience of Country_X_coop and Country-Y_coop.
This such a minor inconvenience. It's like saying, "I wish Amazon was dominant all over the world. It's so annoying that when I go to America I need to use Amazon but in Brazil I need to use Mercado!" If there is a trusted an app in a country that everyone uses, I don't mind entering in my details. Signing up takes 2 mins.
> That's the financial constraint that causes co-ops to more easily organize in lower complexity businesses such as local grocery co-op or a farming coop. But a high-tech complexity business that's expensive to build is inherently too costly for a pool of drivers' savings to fund
Ride hailing is not technically complex. There are many open source repos that do it. What makes it very complex in Uber's case is because they need to handle every single scenario. If they had only one country, or even one state, the tech because so much more straight forward and even scaling becomes much easier. The complexity is entirely self inflicted because of their single app model. Amazon for example has it's own India app. I can't imagine the headache and complexity they'd have if they tried to do an India + US app.
> Sure, the driver co-ops can choose to not spend capital on "useless" features but this leaves out the fact that customers can also choose not to use the co-ops because of the lower quality app experience. Keep in mind the behavior of customers who prioritize conveniences.
I agree poor user experience could be the downfall of such apps. I think it's only a matter of time before someone creates the model of a rider cooperative. Technically it's possible and contrary to what you say doesn't require as much capital. It does require amazing execution which is where I think most of these upstarts are failing. As a customer I am happy to support the local upstarts even if it means a minor app switch.
Your comment is a perfect illustration of problems with the capitalist model of private ownership of capital. Notice what you're saying: one person starting a for-profit enterprise can get access to the capital they need to start their business, but a group of thousands of people starting a co-operative enterprise are unable to get a similar credit even in a collective name! This highlights the deep injustices people face in access to capital which hamper their ability, among other things, to start competing businesses.
I'd say it's not the capitalist model per se but particular preferences of the investors. The same way as investors preferred young white male founders (maybe until recently) to all the other combinations of the three parameters. Similarly they prefer entrepreneur-owned companies to collectively owned ones for whatever reasons they have in mind.
In fact it's perfectly possible to raise money for a coop, or a steward company [1], i.e. not owned by anyone, or owned by the employees but via non-economical shares. You issue special class of shares for the investors - could be redeemable for example - and make a commitment as an elected executive of the company.
One of the most amazing things to me is that a couple of large hotel chains can't come up with a hotel reservation coop that would compete/throw out with bookin.com et al. If you worry about competition, just found two or three competing coops and be member of them all. SEO? If most hotels are nowhere but in the coop platforms, how can google not display them at top?
This is a really good question with a frustratingly simple answer: OTAs like Booking.com have "rate parity" contracts guaranteeing them equal rates to the hotels' direct booking sites and any other channels they use: https://businessblog.trivago.com/rate-parity-hotel-industry-... - and these have de facto been upheld in the US court system.
So if you're a hotel deciding whether to invest resources into your own branding and marketing, vs. investing it into a brand new coop that itself can't undercut the household-name OTAs that are spending vast amounts of marketing dollars and years of SEO work to make household names, you'll invest in yourself.
Well, in my opinion rate parity agreements should be illegal in the first place, as they foster rent seeking behaviour as opposed to fair competition.
And if a few large chains drop out of these household names and welcome all small hotels to their coop with fair terms, I fail to see how that would be NPV negative move even if it took a couple of months to readjust for SEO. Price fixing? Just found a couple of competing coops with different seed chains.
Having worked for a company with a similar model, the problem with not having rate parity is that companies will then use your site for lead generation but encourage people to book directly. Also, the industry I was in had more transparent pricing than is typical in hotels so the client would often realise they had been made to pay extra for using the intermediary and leave bad reviews about the price discrepancy.
So long as there is sufficient competition in the industry then I don't think it's in the consumer interest to ban rate parity.
> companies will then use your site for lead generation but encourage people to book directly
Of course. That would be the whole point. In that case the OTAs would need to start figuring out how to actually produce value to both end customers and hotels instead of just rent seeking.
I for one consider that being able to compare prices and availability across a large segment of the market to be consumer friendly behaviour. Additional fees for the privilege, not so much.
Hotels are of course free to decline a business relationship with the various OTAs and traditional travel agencies for that matter. So long as no one OTA has a monopoly I don't think there is a problem.
But you understand that as the end customer, you end up paying the fees anyway, even if they are not visible in the bill? If your customers were unhappy about the extra cost, maybe you were not open enough about them or maybe the customer did not think your service worth the extra fee? After all, if the end customer is the one paying the fee, hotel has no incentive to try to get the customer past the OTA. They get the same money anyway.
You could say that for any marketing activity. You don't expect a hotel to add an additional fee for the fact that you seen an advert in a glossy magazine, or for providing their own website for that matter.
I'm sure you are aware that the entire travel industry, predating the advent of OTA, works on a commission basis.
This mirrors the clauses VISA/MasterCard have that say that shops can't charge different prices for credit cards and cash which also solidifies rent seeking behavior.
I wonder if you could create a similar law for both.
This one is very frustrating.
If anything it should be obligatory to make payment processor fee to be a separate item. This way we would have fair competition with consumers choosing the cheapest/most convenient option.
One of the regulations that airlines in europe are required to adhere to is that they're not allowed to advertise up-front prices that come with additional non-optional fees. So the ticket price advertised up front has to include all mandatory fees and taxes. Optional fees (hand luggage now being the latest, priority boarding, checked luggage) can be extra.
Payment processor fees cannot be extra. At least one needs to be free. So in reality, it's not necessarily the cheapest processor that's free, but it's the least popular one that's free. That way, for all the common ones, you can now charge a fee and tick the regulatory box, while still screwing your customers out of more money.
E.g. Visa Electron is free, Visa Debit/Credit, Mastercard debit/credit and Amex all come with fees to use.
Funniest is that nowadays card payments are likely cheaper to process for merchants than cash - if you account properly for all costs. So credit card companies should start lobbying to allow different pricing based on payment methods.
If you're a large retailer and have been able to negotiate good rates with a payment processor and are in a country where interchange fees are capped (e.g., EU countries), then I can see it. But I doubt that it's the case in the US where those fees have to fund 2% cashback programmes etc.
Even for a small retailer, (i)zettle costs 1.75%[1] per transaction. No monthly fees. I honestly can't see how cash can compete with that. You need to spend time managing your change. You need to have some kind of register. You need to take your cash to the bank (which is far from free, and takes time). You need to manage your operations so that nobody steals or loses your money. Only "benefit" in cash is that tax avoidance may be easier, if you are into such things.
If I'd start a small business, I would flat out refuse to take cash. (in Europe)
I think it's totally doable if you can avoid cash completely, but for most of the costs of handling it, they hit when you take your first dollar. If you're already buying a cash register, counting, making change, stocking cash/change, making a trip to the bank, etc., the incremental costs of additional cash transactions are minimal. Even with steps up for things like time-locked safes or pickups by armored cars.
I agree with the sentiment, though. I guess realistically if it were my business, I'd need some significant evidence that I wouldn't be losing money by not accepting cash. That's the extraordinary claim, after all, with the vast majority of businesses doing it.
I think I've seen a few food trucks in my area that don't take cash.
Charge a $1/month membership billed annually to the coop site, and offer a $25 rebate to any coop members when they book a room.
Make it very easy to become a member while booking the room... $100/night + $12 coop fee, and after you check-in you get a $25 rebate. The OTAs would still get the $100 price, but hotel would effectively charging $87.
Mariott Bonvoy chain has member rates for a reason, and they are great, although they could be more predictable so that I could search on booking.com and know the member pricing.
I never saw any "great" member rates via Bonvoy, they are typically just 5% lower than the street price. And in exchange I should surround my ability to choose from all other competitors. Also, they will not allow mw to reclaim any points/benefits for stays booked via agents. It's understandable, but looks extremely cheap.
Sure, I understand it, I also first look at the hotels to go, but I go to a lot of reserves, and the best ones are quite often Ritz Carlton or Four Seaons. Four Seasons don't have member rates though.
If you use their site, they give you some money that you can use to eat at their pricey, but amazing restaurants (also 2 of the hotel's restaurants has Michelin star, but I haven't tried those yet).
Their swimming pool / jacuzzi is bad, but the nature, the castle and the room is great.
They used to have roomkey.com and it would show you all the hotel chains' options. Was actually a very nice site, and you could quickly compare all the lowest rewards member pricing (lower than expedia or priceline offerings, since there was no commission to be paid).
They didn't advertise it for years and then and killed it for some reason.
It's also possible that certain markets (especially with expiring goods like hotels and airlines) earn sufficiently more money via price segmentation that it makes sense to pay middlemen. For example, if you have 100 rooms in a hotel, and you can sell 20 of the rooms for $x, the next 20 for 1.1$x, the next 20 for 1.3$x, the next 20 for 1.5$x, and the last 20 for 2$x, then the ability to price discriminate might be worth it.
Airlines are literally among the most capital intensive industry out there. Where are some pilots getting their first billion for aircraft, flight scheduling, landing slots, fuel, maintenance contracts, etc...
Notice how most employee co-ops such as law firms have essentially zero capex requirements. They don't need startup capital that necessitates shareholders.
I tried downloading and signing up for the driver app on iOS. The quality of the apps are very very low. There are some grammar mistakes in the labels that makes me think the app is made by non English speakers. The phone number placeholder was specially weird. It was using a phone number from Iran in the placeholder!
I hope this works out but as all of us in the software industry know, making good software is time consuming and expensive. I'm not sure with low ride volume and not VC money they can afford building a good iPhone app.
I really admire these kind of experiments, and hopefully it'll work out for them.
However it seems that people vastly underestimate how hard it is to run a business like Uber. You have to take care of handling a complex demand/supply ratio, geolocation, fraud management, a seamless payment system, tax rates, etc. etc.
Hopefully these initiatives will produce meaningful value locally all around the world, contributing to a more decentralized Internet.
I had a handful of go-to car services in NYC prior to Uber/Lyft. Just put their numbers in speed dial, talk to a dispatcher and the car is there in 10 minutes or less. And they were doing this with a handful of people who barely speak English out of a garage in central Brooklyn. Running a global business is hard, but providing services to 1000 local businesses isn't.
In Germany we have some really large organizations that are organized as cooperatives (Genossenschaften), e.g. banks (Volksbanken/Raiffeisenbanken) but also tech companies like DATEV eG that build software for their members (tax accountants in that case) and make close to 1 BN€ in revenue. So it can work.
DATEV feels like a government apparatus straight from the 80ies though, I don't think that's a good example. It's slow and expensive, feels very bureaucratic.
A good example are housing coops though. They work rather efficiently, have not turned into bureaucratic monsters, and provide housing to their members at sub-market rates (at least in the larger cities), while still being profitable and usually paying ~4% as a dividend.
> While Uber and Lyft make their money for Wall Street and Silicon Valley investors, we will be a co-operative. So any profits will go back to the drivers.
Can't they set it up as a non-profit? What almost always happens in these cases is that most of shares are owned by the first few workers, and ultimately a small group will control the whole business (at which point they will obviously won't drive for the app anymore). So it will inevitably turn into another Uber/Lyft this way.
I've read several books on cooperatives including case studies on how fail and I've never heard this. Do you have some examples of where this was an issue?
One common issue I have heard about is early members acquiring disproportionate social capital, but that's a different problem with different solutions.
You don't issue permanent shares, working for the company gives you shares. I don't think registering as a nonprofit is necessary to stop that problem, though I wouldn't be surprised if they did end up registering as a nonprofit.
> What almost always happens in these cases is that most of shares are owned by the first few worker
I've not seen this to be the common case. It depends upon the organizational structure. At one extreme, a cooperative can be seen as a limited partnership; but at the other, membership is open to those who meet reasonable criteria.
In cooperatives, there is often a difference between investor shares (if any) and voting shares. Early owners might have some investor shares (notes to cover capital investment) but, their voting shares are often on-par with new members.
In some states, cooperatives are kinds of non-profits; others, such as Colorado, have their own statutory basis that permit investor shares (rather than only allowing notes at a fixed, say, 5% interest rate). The new Illinois worker-cooperative statute permits up-to 50% investor shares, for example -- just short of controlling interest.
Also, it's a bit of semantics here: I'd call this a platform cooperative rather than a worker cooperative.
Aren't COOP supposed to grow to accommodate newcomers? You have to pay to get in so you end up with same shares as others. At least that's how I thought it works. Am I wrong?
Accomplishments on their page include:
* Purchased ridehailing app code and completed customizations for NYC launch
I wonder who sold them the code and who did the customizations. Do they have software engineers on staff? Do they own and operate their own servers? Or is there someone out there selling/renting a white-label rideshare app/service?
There are a number of companies selling white labelled uber-ish apps. My local taxi company uses this one: https://riide.co/fleetsignup/
It makes sense that there's a big market for this stuff and as much sense that a cooperative would form eventually. Uber didn't invent the taxi, after all.
This makes a lot of sense and there’s past precedent to indicate they can be successful.
Ocean Spray (juice company) is exactly this, a coop. Farmers about a 100 years ago came together to form their own juice company to share in the profits.
Coops make a ton of sense if you’re providing a commodity good or service. Eg cranberries are essentially the same and are not differentiated by definition. You could argue being a driver is similar.
The thing is that it shouldn’t have to cost more unless Uber is massively subsidizing rides. Once the platform is built the incremental cost of adding a driver or customer should be very low and, by cutting out an unnecessary rent seeking middle man, you have better margins.
It’s encouraging that initiatives like this seem to be popping up more often - co-operatives of workers looking to cut out corporate middlemen. It will be an uphill climb, but I hope this is the future. The technical moats of a lot of recently minted tech companies don’t seem to be so great that they can’t be overcome with time and open source work. The inertia and efficiency that comes with scale will be harder to compete with.
Do others have better experiences with co-ops than I do?
I know people love REI, but whenever I go in there to buy anything that requires someone (ski boots, skis, work on skis) - it sucks. There's never anyone available, it often takes up to an hour or more to get helped or waiting in line. Sometimes I have to leave and come back later. Last time I gave up and ordered everything online.
It's not like it's crazy packed in there either, it's pretty empty - there's just nobody working there.
Co-ops are supposed to be better about aligning incentives, but at least for me I've often had worse experiences as a customer.
Uber and Lyft work pretty well (for the most part, except for when drivers cancel on you) - I'd be surprised if a co-op could pull off a similarly good experience for riders.
REI is a consumers' cooperative, not a workers' cooperative. The people who work at REI don't own the business, and they would basically have the same role in any other company (which is one of the criticisms of why they're not actually good for labor).
In fact, in a consumers' cooperative would probably be better in this case since you would have more direct control over the business than with a regular corporation.
I've not had any trouble finding help at REI, but it sounds like perhaps you go more often than I do.
The point of the co-op is that it is much better for the worker. There's no inherent reason why a co-op would need to have any different level of customer service than a corporation. My personal worst customer service experience is at Home Depot for example. I had to wait 45 minutes to get a 4 foot length of hose cut, something that would have been under 5 minutes at my local hardware store (and so I go to the local shop now).
Ideally many stores would be co-ops and they could compete on price, quality, customer service etc like any other business.
Perhaps you're satisfied with the customer experience at Uber, but the situation for drivers seems pretty exploitative. If I can get similar service and the workers get a fair deal, I'd be much happier choosing that.
If co-ops have a problem with human customer service (which I can totally imagine, although I've never heard of REI), then wouldn't that mean that the gig econonmy is exactly where co-ops could potentially compete anyway? Rideshare and food delivery apps do almost zero human customer service, it's nearly all automated (and in the rare cases it's not, it takes hours or days to get a refund).
That would probably be competition. A monopolist corporation has no incentive to improve its capital if it gets its profit anyway (c.f. the dismal state of DSL and cable). But if it's not a monopolist, it might be forced to anyway.
It's the same thing at a worker cooperative, or for that matter at a heavily unionized workplace: the workers have no incentive to automate themselves out of a job, but may collectively understand that if they don't, the business will go under and they'll all be left without jobs.
Drivers don't have an incentive, but car manufacturers do. The dream for Uber was a robofleet of driverless cars, which can still happen; it'll be General Motors getting into the taxi trade if such a thing ever became feasible.
Because you own part of the co-op, and it's value would go up if that research succeeds?
I think co-ops can actually be a good way of handling technology replacing manual labor. The profits made from the technological advancements can be put in a dedicated trust of the co-op that is focused on retraining the workers for new positions. With that you could handle inevitable technological progress.
> Because you own part of the co-op, and it's value would go up if that research succeeds?
That ownership is contingent on you working for the co-op, which doesn't seem very likely if a robot took your job.
That said, there are a couple ways to work around this:
1. Flip the ownership model to a customer cooperative (or a customer/worker hybrid cooperative), thus moving the decisionmaking - and the incentives as a result - from workers to customers (which can and often do overlap). Customer cooperatives are a proven model here in the US (credit unions are probably the most widely known example).
2. Use automation to multiply labor rather than replace it. Replacing a drivers with cars at a 1:1 ratio obviously doesn't leave much room for drivers, but replacing them at a 1:10 ratio (or somesuch) can mean converting drivers into owner-operators of "squads" of cars. This depends on there being enough of a customer base to warrant this multiplication; for this to work, it's best paired with a massive expansion of that customer base (adding a bunch more cities, for example, or extending service areas, or slashing fares).
competition and because if you own a share of a future technology you're still standing to gain financially. It's not like tech companies not routinely also innovate away their own tech.
Software developers also work on tools that make software development easier.
I’ve been considering starting a software coop to build open source versions of these middleman gig work services for a while. Would anyone on here be interested in joining one?
With so many well paid engineers I’m also surprised that there’s not more coop based tech startups in the states.
> I’ve been considering starting a software coop to build open source versions of these middleman gig work services for a while. Would anyone on here be interested in joining one?
i’ve been idly considering the same thing for a while now. i’d be down to chat about it, [my username]@gmail.com
Give us a shout over at Start.coop if you decide to go this direction. We have lots of resources and supports available to help you get off the ground.
Developers are well paid in the US because of VC and monopoly backed business models. To go coop is to abandon those options, one explicitly and one implicitly.
What I meant by well paid was that most engineers who spent a few years at FAANGs have 6 figures in savings and can use some of that capital to kickstart a cooperative without needing venture funding.
A coop could absolutely become a monopoly in a market. The reason developers in the US make so much is because they live in a large wealthy English speaking country that’s the launching point for most ventures before global expansion.
Yeah, a lot of the constraints around software services are a function of market size and legal changes. It's intensely profitable to have a large market with the same regulation, and one would imagine that software professionals would be paid a lot in such a place.
And interestingly enough, in both China and the US, software professionals make a lot of money.
US also benefitted from being isolated from any threats by huge bodies of water, having a ton of cheap land, speaking english and being welcoming to immigrants. Thanks to this the whole global economy is tied to the dollar and runs through wall street.
perhaps California developers talk a big game but don't put their money where their mouth is? I would expect the same bootstrapping of cooperatives but it doesn't really happen.
I think cooperatives would struggle to gain a monopoly holding because they're not as ruthless as investor-driven companies. They tend to treat their workers fairly and focus on quality of life, over relentlessly pursuing high quarterly growth targets. That's a very good thing for the employees and probably the customers too, but makes the company less competitive.
> The reason developers in the US make so much is because they live in a large wealthy country that’s the launching point for most ventures before global expansion.
If that were the case then developers all over the US would make bank. They don't; only in startup-focused areas like the Bay Area and NYC. It's the same here in the UK, you can make a ton of money if you work in London for hyper-capitalist companies, but outside of London most developers are making 40-60k max. Which is still good for the UK, but not the 6 figure incomes that even shit-tier developers can make in California.
> perhaps California developers talk a big game but don't put their money where their mouth is? I would expect the same bootstrapping of cooperatives but it doesn't really happen.
I suspect a big factor in that is a lack of a safety net in the US. FAANG engineers with enough mileage to have some savings have families and mortgages that make it hard to give up their employee provided healthcare and risk their own savings on a new venture.
I was foolish enough to go into startups as a new grad with huge student loans and though I have enjoyed it, it has not been good for my physical nor financial health.
> I think cooperatives would struggle to gain a monopoly holding because they're not as ruthless as investor-driven companies. They tend to treat their workers fairly and focus on quality of life, over relentlessly pursuing high quarterly growth targets. That's a very good thing for the employees and probably the customers too, but makes the company less competitive.
Biggest obstacle is not being able to burn billions of dollars on growth and expansion with no clear path to profitability like the Ubers and WeWorks of the world.
A coop could probably get to monopoly scale through mergers with other coops in adjacent industries. In the case of gig work, there's no reason why a NYC based drivers coop couldn't slowly expand to food delivery, logistics, car rentals and etc, then jump to other major cities in through mergers with smaller coops in those markets. There would be a lot of benefits to having a single middleman platform with some sort of a social credit system (reviews) baked in and a large user base to launch new offerings to.
> If that were the case then developers all over the US would make bank. They don't; only in startup-focused areas like the Bay Area and NYC. It's the same here in the UK, you can make a ton of money if you work in London for hyper-capitalist companies, but outside of London most developers are making 40-60k max. Which is still good for the UK, but not the 6 figure incomes that even shit-tier developers can make in California.
I'm an immigrant who grew up in NYC and up until this year I would have never considered moving to a small town in middle america due to a lack of jobs and a shitty walmart and car centric lifestyle. In New York I can quit my job on Monday and have a choice of 4-5 job offers by Friday. Now that companies have been forced to be more open to remote work I can imagine people in the middle of nowhere having the same options and I anticipate that it will lead to a major repeat of the white flight, sending a ton of white collar workers out of the cities and into suburbia.
Starting a tech company used to be a very expensive venture that required knocking on doors of VCs and racking servers. Now that we're starting to have the infrastructure in place to work remotely and can spin up machines on the fly for under $100/month things will probably change. The pandemic will accelerate this trend.
People are paying for a service to go from A to B, whether that's a driver bringing them or a robocar, it doesn't really matter. As long as the service is good.
Money being made on the service should go back in making the service better. These cooperatives often miss that point. They are not product centric.
We have a ride hailing app for traditional cabs in Germany. The reason why I still preferred Uber is that once you travel around (remember when we still did that?), you don't want an app per location and memorize which app is valid for which geographic region - Uber is virtually global.
A lot of the comments here seem to think this has to become the next Uber, but it really doesn't. It just needs to sustain the cooperative workers and provide a service at whatever scale makes sense for them and our community (speaking as a NYC resident) and that will be success. Heck, it doesn't even need to be the only cooperative like this! They could federate this and it still is more ethical and equitable then the current system. Bravo. Let's do food delivery next!
Wow, I wonder how do they manage to cover the expenses of running a tech startup? We know that software business is capital and intellectual property heavy. How do these people do it?
This is such an odd comment. What industries/businesses are you comparing with? Software is one of the least capital intensive industry I can think of. Similar for intellectual property, I mean what important IP is in building a website or a mobile app? That's why the industry is so focused on growing as quick as possible IMO, because everyone could essentially build your service, it's all about building so much momentum/user base that it becomes difficult for anyone to compete.
Everytime I hear this, I have to laugh. Setting up a car workshop, carpenter workshop, a bakery, a hair salon etc. will set you back a few ten if not hundred thousand dollars for equipment and/or inventory alone. Meanwhile you can rent servers for low double digits dollars a month and a decent laptop costs $2,000.
The only thing expensive about software development is labor cost. Hardware is ridiculously cheap compared to any other profession.
If the goal is to run infrastructure like Uber or Lyft (or any other big company), it's going to be in the tens or even hundreds of thousands USD per month at least.
Some things should be cheaper, due to the work already done by existing competitors. They don't need to spend marketing dollars on educating people on ride-hailing in general, do not need to buy lobbyists to make amenable laws, their initial app can be merely a clone of the competitors'.
Now that driver and rider expectations around the service have solidified somewhat the backend systems can be simpler too.
Which is fine, they could probably franchise the tech out to other cities.
In fact, this is how Hailo (an Uber like service headquartered in the UK) used to work, until they were driven out of business by VC backed competitors.
Taxi apps really aren't very complex and expensive pieces of work. The unicorn start-up scaling up model is just what makes them so. There are already plenty of examples of pretty okay taxi-apps. And the industry itself is much more capital-to-revenue intensive and tech...
i'm surprised Blablacar (in Europe) hasn't made it over to the US yet — the most "disruptive" part about it is that people can set their own prices. Also, it's for "long haul" drives, like from the airport into the city, or between cities
I am curious how they tackle safety issues within the coop. Uber, Lyft, and other big players have teams of engineers improving the safety of the platform (e.g. banning duplicate accounts of bad actors, banning people from re-creating accounts, identifying and removing fraud).
I'm skeptical that the team behind the drivers.coop could deliver a fair and scalable safe service for both the riders and drivers.
For example:
1. Uber verifies drivers have face masks before starting shifts with ML.
2. Some/all companies have ML route deviation algorithms to warn the passenger if the driver is not following the correct route.
3. Toxic language detection. Rideshare companies want to flag drivers and passengers that are not communicating nicely.
4. Crash detection. If the phone detects a crash, the ride share company can automatically connect them with emergency operates to ensure everyone is ok.
A coop is just another corporation, just with a different ownership model. This means they will likely have to hire engineers, customer service, business analysts, lobbyists, an executive team, &c. None of your examples is unachievable with a coop. The main blocker is initial capital acquisition.
All of these things are expensive to build, but achievable when you operate in many cities or countries.
I am not seeing how a handful of drivers in NYC could fund the infrastructure and talent required to deliver these types of features that passengers have grown accustomed to.
What keeps Uber competitive is access to a relatively cheap reservoir of labor force. They mediate this process where drivers compete against each other and extract a good rent in the process. The focus should be getting rid of the rent, not the competition.
While I wish these guys all the best and think it's a good paradigm shift, I don't think they will be successful for the same reasons most cooperatives aren't successful: the owner-workers see the business as a means to insulate themselves from market pressures. They stop growing and innovating and simply redistribute the larger than market compensations among each other. If many another drivers are willing to accept a lower pay for the same work, they will simply not accept them in the co-op.
> What keeps Uber competitive is access to a relatively cheap reservoir of labor force.
Cheap labor force means someone is underpaid. If the coop cuts the middlemen out and transfer the extra to drivers then it's a win-win: drivers get more and customers pay the same for a better service because well-paid driver => good service.
Underpaid compared to what? If people are willing to do the work to a high professional standard for a certain wage, than that is the right compensation for that job. When you setup arbitrary fair wages above market, you must also somehow protect them from intruders from other fields willing to change jobs and benefit from the higher wages in your field. This is exactly what a co-op ends up doing most of the time - if they don't succumb to a traditional model where the initial members become the owners and the later employees have regular employment contracts.
It's easy to define 'cheap': relative to the wages market, market prices for driving are relatively low compared to other jobs.
'Underpaid' is a value judgment, you claim that prevailing market wages are unfair so presumably you have a better model to determine and protect higher wages.
I read recently an article that claims the Driver’s Co-op is “fighting Uber’s model” —but, having talked with most TDC’s key players, I believe what’s good for Uber is good for them too.
Fighting Uber’s model means three things: 1) replacing its app and network of contractors, 2) abolishing its third parties selling services to drivers like selling shovels to gold miners, and 3) strengthening state and federal labor laws giving workers wage protections and right to a union.
The Driver’s Coop may do 1, but they have resisted 2 and 3.
At most, I believe they are friendly competition to Uber, not yet the fighter that the labor and cooperative movements need. But/and I think the Driver’s Co-op to do better.
On the Google Play Store, they have app IDs com.driver.coop and com.rider.coop. I figure these should be coop.drivers.driver and coop.drivers.rider. This suggests to me that Google aren’t verifying domain ownership in app IDs, which I find a tad surprising. I had just assumed they would, and thus that you could trust that apps on the Google Play Store with IDs like com.example.foo or io.github.example.foo were actually from whoever ran example.com and example.github.io. That sounds like a mild phishing opportunity (only mild because I doubt most ever notice app IDs).
Play Store IDs use the "domain" style naming scheme, purely as a relic of Android apps being written in Java. Neither Java nor Play Store have ever mandated domain checking, and the IDs are up to the developer.
Part of the problem is that developing and maintaining these applications is expensive. Not just the technical part, but also all the operations (all the customer care and lawyers and mapping and...)
Uber and Lyft are still losing money, VCs are pumping capital there daily. How can driver coop survive? Where do they take the money for all that?
Sure they don’t need to go all Uber and scale into 500 microservices, but still it’s not easy...
I wish them good luck, but I also don’t think they will succeed against Masa Son deep pockets.
Hi all, I have been toying this very idea for consulting. Several people with niche experience can come together and from a global consulting co-op. I wonder what you think.
It’s a nice idea, can’t imagine they can match the UX polish lyft and Uber deliver, which is what users expect now. What other examples are there of do-it-for-the-cause tech plays working out?
Interestingly i imagine a not insignificant amount of effort from Uber etc goes into combating drivers “bad” behaviors, the co-op model might align incentives to reduce this cost.
Cool. One trap worker-owned companies often fall into is to neglect investing into risky/long-term projects and as a result fall behind the industry. When the choice is 2x salary for 3 years or some R&D investment one does not fully grasp, many individual members choose the former.
> While Uber and Lyft make their money for Wall Street and Silicon Valley investors, we will be a co-operative. So any profits will go back to the drivers.
I'm not sure this is true. Neither Uber or Lyft makes any money. They lose money for Wall Street.
I don't know about the US, but in Germany coops have pretty strict auditing guidelines. Since Hollywood accounting would divert money to the coop, which is also owned by the drivers, you would by diverting money from the drivers to the drivers, which obviously doesn't make any sense.
Of course there are also concerns that the coop administration might be too fat and lining their own pockets, but through the auditing combined with the fact that the board is normally elected by the members, the members have quite some control measures to keep the administration honest.
How does it work in terms of ownership? Can anyone buy a stake? Do you need to drive to earn shares? Can someone drive for a bit, then generate passive income from the shares? Will drivers get bought out by financial interests over time?
I hope this is successful. For a couple of years I’ve been telling people how bad demand aggregation platforms are because of the way they commoditize supply for important things like labor providers and small businesses.
A supply side coop is the only way to defeat demand aggregation IMO. Hopefully we see more of this because I think the economy is a lot healthier with a lost of fair value, mutually beneficial relationships instead of the current trend of exploiting everyone and everything within sight.
wow, this is wonderful, SaaS for the people and not exploiting or selling their information! I'm in awe.
It feels like open source, what other industries can be disrupted, in this with help from devs?
Efforts like this validate the observations that ride hailing has no moat.
Eventually, we'll have white labeled ride hailing hosting companies. So you're a specialty transport group in Cincinnati, eg for elderly and wheelchair bound customers. You get your own branded and slightly customized version for your niche. The hosting companies do all the tech.
I wonder how this would influence autonomous taxi services.
Maybe there is a financial possibility to finance retraining of drivers while the industry shifts to autonomous rides in the future. This would ease adoption while not discarding drivers as disposable resources.
Should I bring drinks? Or should I bring my C manual signed by Dennis Richie for some fun party discussion?...never mind I'll bring both. I can't wait for an engaging discussion on the pros and cons of ANSI C!!!!
Well now I'm obligated to make a cross-country flight just to crash the party and point out how C is objectively inferior to PL/1 and how the world would be a utopia if Multics caught on.
Is it just me or does this sound like purely a marketing strategy hiding the actions of a few opportunists who will receive outsized rewards? At least Uber and Lyft are honest about being greedy capitalists.
I would rather be dead in a ditch than set foot in one of their cars. Because I expect it would be basically the same thing.
Their website has thousands of words about how horrible Uber and Lyft are, but not one word about how they are going to approach trust and safety. I really hope there's an experienced labor marketplace executive in the room who knows anything about this business, rather than a bunch of drivers who decided to run one of the riskiest operations for personal safety that one can imagine (there's a reason why parents don't allow their kids to get into cars with strangers).
The world is not so dangerous as you imagine it to be. A stranger approaching a child and offering a ride is a dangerous situation. Adults hailing a car through an advertised driving service is not. You might as well be scared to walk out your front door as well.
While it is great to see drivers disrupting the space, one particular aspect is might be missing. Uber/Lyft or any ride hailing company kind of acts as an mediator between driver and rider. If there is any issue between driver and rider, ride hailing apps provide certain "guarantees" for both in terms of experience and financials which might be more biased towards drivers in this initiative.
This website is very scant on details like their bylaws and financial statements.
What often happens with these kinds of things is that there's a co-operative or charity that is worker/member owned / tax exempt and stuff, and they have an agreement with a "management company" or license some white label product from a separate, privately owned, for-profit company.
There's not necessarily anything wrong with that, but depending on the relative size and negotiating power of the co-op vs the vendor(s), at some point the co-op ends up being a front for some for-profit entity.
Uber/Lyft strike me as thin businesses in the value that they actually provide both to riders and drivers. Yes, they were responsible for some initial innovation, but now the cat is out of the bag, and the concept could absolutely be applied in a business structure that is more profitable and friendly to the people actually delivering the services.
Getting initial traction with riders, and adequately investing in trust & safety strike me as the two hardest parts up front. On the flip-side, they should benefit from less regulatory scrutiny, and less pressure from investors vs. the heavily funded players like Uber & Lyft.
I'm rooting for them and hope to see this go somewhere.