Cooperative Rideshare Platforms Aim to Free Drivers From Uber and Lyft

Experimental, community-based rideshare alternatives reflect the potential and promise of a more equitable gig economy.

An illustration showing drivers waving to one another from behind the wheel of vehicles that are breaking into pixels as they hurtle through space.
Jackie Ferrentino

In recent years, drivers, activists, and entrepreneurs have envisioned what a fairer rideshare platform than Uber and Lyft might look like. The aim is to empower the individuals who sustain such services by creating an alternative that can deliver the convenience and benefits of peer-to-peer ridesharing without the exploitation that has become emblematic of the industry.

Some observers wonder if Uber and Lyft are digging their own grave, with or without competition — or rather, that they’re doomed because of market forces and the venture-capital model that both companies are locked into. Uber lost $8.5 billion in 2019, the year it went public in an offering that was widely deemed a flop. Although the companies have diversified their businesses, branching out into services like urban bike rentals and restaurant delivery, they remain unprofitable, and with the self-driving cars that threaten to replace drivers nowhere near ready for market, it’s unclear how that will change.

“It’s just a model that’s ripe for collapse,” said Trebor Scholz, an associate professor at the New School who chronicled gig workers’ travails in his 2016 book, Uberworked and Underpaid. “It’s not because somebody else outcompetes them. It’s just because you can’t run a business that loses that much money without having a clear perspective, and they don’t have that.”

Meanwhile, many rideshare drivers are fed up with years of plummeting pay and being treated like commodities. A study published last July found that Seattle drivers were averaging less than $10 an hour after expenses — below minimum wage. But successful alternative rideshare experiments remain “pretty few and far between,” according to transportation researcher Adam Stocker. He spent over a year studying one such organization: Arcade City, a rideshare project whose flagship network in Austin, Texas, has become one of the most successful local alternative services in the US.

Among those drawn to the challenge of creating a “decentralized Uber” are blockchain enthusiasts who imagine that distributed ledger technology can replace opaque corporate algorithms and empower drivers. The idea has been floated in crypto-enthusiast circles as a use case for blockchain since at least the early days of Ethereum, and has cropped up in driver forums. Though Christopher David, Arcade City’s founder, was initially bullish about the idea of establishing a rideshare service on something like Ethereum, the reality of the service ended up being quite different, and he acknowledges that decentralized technologies aren’t necessarily a silver bullet for the rideshare industry’s problems.

“There’s this fantasy that riders and drivers are going to be connecting and a blockchain is going to be the only thing mediating their interactions, and I think that’s unrealistic,” he said. “That may happen at some point, but there’s a real need and desire for community, for people to feel that they are supported in this type of activity, which is inherently risky.”

Arcade City launched in Austin in 2016, after Uber and Lyft lost an expensive battle against a local law requiring their drivers in the area to be fingerprinted. Complaining that such rules needlessly complicated the onboarding of new drivers, the companies had followed through on a threat to withdraw from the city. Thousands of drivers were suddenly unemployed, and riders were left stranded.

A former Uber driver, David moved to Austin from Portsmouth, New Hampshire, after hearing about what was happening there. (“Horror stories of drunk people banging on windows waving cash, trying to get rides home,” he recalled. “It was that bad.”) While others eager to capitalize on Uber and Lyft’s Austin exit were still scrambling, he launched Arcade City as a Facebook group with a driver who had previously run a small rideshare message board elsewhere, and their venture attracted thousands of members in the first few weeks. The technology was rudimentary — riders posted requests that drivers would respond to — but it worked well.

Apart from devising rideshare technology and attracting riders and drivers away from the rideshare giants, the challenge of building equitable alternatives to Uber and Lyft involves determining how to structure a sustainable business model.

Although Uber and Lyft returned to Austin in 2017 after Texas passed a law overriding the local regulation of “transportation network companies” (following a regulatory model that the companies have successfully advocated for in most other states), Arcade City is the only alternative service remaining from Austin’s Uber-less period. “I think the fact that they’re the only service that survived the return of Uber and Lyft speaks volumes to the sustainability of a potential decentralized model for rideshare that’s not necessarily 100 percent profit-driven,” Stocker said.

Arcade City fares in Austin ($2-3 per mile, $10 minimum) are typically more expensive than Uber or Lyft, which heavily subsidize rides, have larger driver networks, and rely on highly efficient algorithms. Still, the service has developed a loyal clientele, particularly among local service workers, many of whom like having the option to pay cash. It also has a loyal core of drivers; though many of them also drive for Uber, Stocker found that most prioritize Arcade City rides because they keep all of those fares versus only a fraction of Uber fares. And it includes a feature highly popular among riders and drivers alike: the option for riders to rebook a preferred driver, which gives drivers the ability to develop “regulars.”

This feature, which Arcade City isn’t the only aspiring Uber competitor to offer, highlights the sometimes contradictory demands of customer satisfaction and Uber’s business model. Stocker notes that no technical barrier prevents Uber and Lyft from incorporating it, but doing so would chafe against their aim for maximum efficiency while complicating their position as privileged intermediaries. “The more you make truly peer-to-peer connections, the less transactions go directly through the platform,” he explained. “If you’re not trying to extract as much profit from every ride transaction as possible, you don’t necessarily need every transaction to go through your platform.”

Today, Arcade City’s Austin network is still entirely operated by its drivers as a Facebook group. David is no longer involved in its day-to-day management, but he has tried experimenting with ways to adapt its model to decentralized technology and expand it elsewhere. A longtime cryptocurrency enthusiast, he did an Arcade City token sale in 2017 and has been working on a corresponding app incorporating token functionality — projects that have elicited controversy online. But the enduring success of the Austin operation shows how community-based initiatives can take root.

Last year, advocates of rideshare alternatives had hoped that California’s recent move to force Uber and Lyft to classify their workers as employees rather than independent contractors would lead the companies to withdraw from the state as they had from Austin, giving them a statewide opening that they could seize. The prospect of defeating Prop 22, a ballot initiative supported by the companies that would exempt them from the new law, looked like a potential watershed for the movement. Voters ultimately approved the measure, so this golden opportunity didn’t pan out, but the setback hasn’t dampened enthusiasm for developing rideshare alternatives. For many drivers, Uber and Lyft’s threat to leave California highlighted the precariousness of their livelihoods like never before. 

Apart from devising rideshare technology and attracting riders and drivers away from the rideshare giants, the challenge of building equitable alternatives to Uber and Lyft involves determining how to structure a sustainable business model. The longest-lived Austin experiment after Arcade City, a service called Ride Austin, attempted a nonprofit structure before shutting down last summer. But Boston College sociologist Juliet Schor, whose recent book After the Gig reflects a decade of researching various “sharing economy” platforms, thinks another model is better: a cooperative. This basically refers to a democratically governed, worker-owned business as an alternative to shareholder-controlled companies. Under a cooperative, the operation of the business is dictated by the people who depend on it most.

Arcade City is more of a peer-to-peer network than a proper co-op. While it seems to have done something right, Stocker realized in the course of his research that its weak point was its lack of effective governance; tensions among drivers ran high, and drivers complained that the service’s moderators sometimes deleted messages, picked favorites, or claimed rides for themselves. “Honestly, if someone was running the driver side who had a basic understanding of how to govern a company or a cooperative, I think that this group could be at a much larger scale than they are currently and just be operating much more smoothly,” Stocker said.

Even if you can get a cooperative up and running locally, how do you scale up? The founders of Eva, a Montreal-based rideshare service conceived as an organization of member-owned cooperatives, think that they’ve found a solution: Let cooperatives handle their own local governance, but give them standardized technology and a brand name linking them together.

“The whole goal of Eva is to create an empire of co-ops by drivers,” said co-founder Dardan Isufi, who prefers to describe Eva as a movement rather than a company. Launched in May 2019, Eva is currently the second-biggest rideshare app in Québec City and Montreal after Uber, with more than a thousand drivers and counting. To compensate for the slowdown in rides during the pandemic, Eva has expanded into making deliveries from hundreds of local restaurants. Rather than seeking venture capital, which is typically off-limits to cooperatives, Eva has raised $830,000 CAD from non-venture sources, primarily Canadian co-ops, credit unions, and nonprofits. It has also received some government funding.

To get started, Isufi explained that a local cooperative (or a group of drivers interested in forming one) presents Eva with a solid business plan, and if the partnership is agreeable to both sides after Eva does its due diligence, Isufi and his colleagues will help the co-op get Eva up and running, including training the local team on how to use administrator functions in the app.

Eva currently works with two cooperatives — a multi-city cooperative in the province of Québec, where Montreal and Québec City are located, and another in Alberta that is onboarding drivers ahead of an official launch, which remains on hold because of the pandemic. A New York co-op is in a preliminary stage — the logistics of operating a ridesharing business in the city are complicated — but “obviously we want to expand in the US,” Isufi said. Eva is also in talks with a South African cooperative that had unsuccessfully attempted to develop its own app.

Eva has found a workaround for the chicken-and-egg problem that has stymied other would-be rideshare entrepreneurs: How do you get drivers to switch until you have riders, and how do you get riders to switch until you have drivers? Its solution is to encourage drivers, many of whom work for Uber as well as Eva, to evangelize the alternative service to their Uber passengers. 

“The best overall [advertising] strategy is an Uber driver telling an Uber customer, ‘Hey, want to pay less and want me to gain more? Use Eva,’” Isufi said. “Drivers are incentivized, since they’re basically owners of the business, to convince every Uber customer they have to switch apps. Every opportunity drivers have to promote Eva, they do.” During the pandemic, Eva saw its download numbers spike after drivers installed partition dividers bearing a QR code to download the app and get a discount.

Although replacing Uber remains a lofty goal, co-ops have some reason for optimism. Now that Uber and Lyft are public companies, Schor pointed out, they may have to stop subsidizing rides so heavily. “There’s going to be some point at which they are no longer willing to sustain the levels of losses that they currently do in ride-hail,” she said. “They’re going to make some changes, I suspect — most likely raising the prices, which then makes it more feasible for co-ops [to compete].”

For Isufi and many supporters of the cooperative rideshare movement, the ultimate goal is to create sustainable, human-centered operations. Isufi contrasted Uber, where drivers are isolated in their cars and left to organize their own communication networks, with the everyday actions Eva takes to bring them together — not only engaging with them in Telegram and Facebook groups, but also organizing real-life gatherings.

“Before the pandemic, we used to do Christmas dinner, football games — whatever with drivers. And general assemblies, obviously, so that people can meet and create friendships,” he said. “At the end of the day, we’re all social creatures and want to have friends, want to be working in an environment in which we feel respected. That’s the point of the cooperative structure.”

Follow The Reboot

Join a growing community that’s examining the state of the internet and exploring its future. Subscribe to our newsletter.

An illustration showing drivers waving to one another from behind the wheel of vehicles that are breaking into pixels as they hurtle through space.

Artwork By

Jackie Ferrentino

Contact Us

Have an idea for a story or illustration? Interested in discussing partnerships? We want to hear from you. Send us a note at info(at)thereboot(dot)com.

Recommended Reading