Minneapolis City Council amended the rideshare ordinance Thursday, postponing its start until July 1 to allow more time for emerging rideshare companies to prepare to launch in the city.
The ordinance was passed on March 7 and originally expected to take effect May 1. The effective date was pushed back for emerging companies to recruit drivers and publicize riders, according to a joint statement from the ordinance’s co-authors Robin Wonsley (Ward 2), Jason Chavez (Ward 9) and Jamal Osman (Ward 6).
Currently, around a dozen Minnesota-grown and out-of-state companies are aiming to fill the shoes of Uber and Lyft, who have said they will leave the city if the state does not pass a compensation rate lower than the city’s current rate. The collection of companies includes MOOV, MyWeels and The Driver’s Cooperative.
Founder of new rideshare company MOOV and Cedar-Riverside native Murid Amini said he has been working with drivers since October, but operations to “level the playing field of the rideshare industry” with MOOV were kicked into high gear when the ordinance passed.
“When the vote passed, that’s what really kicked in a sense of urgency to say, ‘Oh, [I’m] not looking to capitalize, but I’m certainly looking to ensure the community isn’t left without a way to get around,’” Amini said.
MOOV is running a GoFundMe page to help cover insurance costs and operating license fees before it is ready to launch operations in the city, according to its website.
Jiao Luo, a professor of strategic management and entrepreneurship at the University of Minnesota, said all startups face similar difficulties when entering a new marketplace.
“There are all kinds of challenges in terms of financial [and] in terms of platform, companies need to invest quite a bit in terms of the infrastructure itself before you’re able to operate,” Luo said. “Then there is the issue of attracting in two-sided platforms, how do you make a name for yourself, both among the drivers [and riders].”
Elam Baer, CEO of MyWeels, said investments from a private equity group differentiate MyWeels from other rideshare startups.
“We have a funding base that has already put a significant amount of money in and is willing to put in a substantial amount more,” Baer said. “At first glance, it looks like a business that can be run on a shoestring, and if you had two years to build it, you probably could, but if we all have 60 days to go from zero to 60, it does take some capital to pull that off.”
Baer added that this financial support makes him confident in MyWeels’ ability to “be there on the day Lyft and Uber pull out of the market.”
Luo said the rise of small rideshare companies will be “a period of experimentation” rather than a profitable venture for the companies to see if fair wages for drivers is a sustainable business model.
Both Amini and Baer said a foundational aspect of their respective companies is a focus on paying drivers the increased compensation rates set by the city.
The Driver’s Cooperative, which launched in New York City in 2020, has a cooperative business model owned by workers instead of investors or individuals, according to Driver’s Co-Op co-founder Erik Forman.
Forman said a major challenge to launching a co-op is that they are less appealing to investors but more appealing to workers and consumers.
“By creating companies owned by workers and consumers, you have the opportunity to create a business that is run in their interest,” Forman said. “For workers, that means making sure the drivers make a living wage. For consumers, that means making sure that people are not being gouged.”
Nearly 2,000 drivers and over 4,000 riders in Minneapolis have signed up with Driver’s Co-op, numbers the business aims to grow in the next month, according to Forman.
Luo said while the economic sustainability of the emerging companies is uncertain, she is primarily concerned with how this transition and increased business regulations will affect the city’s drivers.
“How do we make sure that the drivers who we’re meaning to protect won’t get hurt in this process? That is something that I’m quite concerned about,” Luo said. “It’s not obvious to me [that] every driver will benefit out of this.”
Luo added that while this transition will bring initial confusion for consumers, market competition brings more options and often benefits “the welfare of the customers.”
Amini said the emergence of new rideshare companies like MOOV will take market control from Uber and Lyft and put it back into the hands of drivers and the community.
“It takes away their ability to basically say, ‘We’re not going to pay people fairly or price fairly or anything like that, and there’s nothing you can do about it,’” Amini said. “The truth is, now, there’s something you can do about it. You can go to another rideshare company.”
