California’s new ad hoc transportation law has the ride-share community frazzeled on why driver’s should or shouldn’t be more protected with respect to wages and benefits.
Back in 2010, when UberCab just launched in San Francisco, closed a $1.25 million seed funding round, and re-branded to Uber, one person in Dallas was trying to figure out either if it was possible to share a ride with someone who was traveling the same route and at the same time as you were, or if it was possible to find someone who can deliver your package?
But this “someone” isn’t a big corporation–no, it’s your fellow neighbor. What if you could ask anyone in your community for a ride or schedule one in advance?
Failed at finding one, he decided to solve the problem by creating a solution to address how ad hoc transportation services could truly thrive in the age of smartphones, pushing the traditional taxi-cab model out. Born in 2015, RideConnect is a ride-sharing platform with more than 2,000 daily users, growing.
But with companies like Uber, Lyft, Waze CarPool, Curb, Juno/Gett, and even RideAustin, how does another ride-sharing platform like RideConnect play into the space?
Grit Daily spoke with Santosh Krishnan, the founder and CEO of RideConnect. Krishnan calls his platform a “DIY Uber app for drivers,” believing the platform to be safe for its users who can trust it “in a safe and private fashion.”
Krishnan, a member of the Dallas Forbes Council, has consulted with Fortune 500 companies on their SAP projects, helping formulate simple solutions to complex problems and delivering solutions that result in automation, cost savings, and simplicity.
Grit Daily: How did you come up with the idea for a platform such as RideConnect?
Santosh Krishnan: In 2010, the idea was born, as there were no options for ad hoc transportation, besides taxis. Uber had just come onto the scene and at that time, it was reselling waiting time on limousines. However, there was no way to create your own transportation service for your people, whether those people were your own family, neighborhoods, towns, or businesses. I wondered how someone could ride-share with people they trusted in a safe and private fashion. This was a problem with no solution, so I set out to solve it.
The Legal Battle to Protect Ad-Hoc Drivers in California
Earlier this month, a new law went into effect in California, called Assembly Bill 5 (“AB-5”) new law went into effect in California that is supposed to make it harder for companies to hire workers as contractors. Yet, gig companies like Uber, Lyft, DoorDash, Instacart, and other platforms have refused to reclassify their fleet of drivers as employees under AB-5.
Supporters of AB-5 have claimed that companies have continued to exploit contract workers for years because they aren’t considered “employees who receive benefits” such as health coverage and workers’ compensation.
While put into effect with good intentions, the legislation has turned out to be a nightmare for these companies who believe that compliance would ultimately bankrupt them.
And for an app like RideConnect, this seems to be a perfect time, especially because there are no direct competitors to RideConnect, according to the company.
“We are a platform on which any service provider can offer their transportation-related services to their customers. Those providers may compete Uber, Lyft, and the like in some markets, but if we had to pinpoint a competitor, the closest association would be Craigslist, as you could try to do the same thing we offer, but on its ride-sharing classifieds. But, it’s not even close.”
GD: With California’s new AB-5 law, you’ve been very transparent in your fight to help protect drivers. Tell us why this is of such concern and some of the mechanisms by which you are fighting against this?
SK: The law may be well-intentioned, but may place an undue burden on most businesses that it impacts. The real solution here is to enable contractors to actually make money on their own and close the loopholes on both sides of the employment spectrum.
The “Protect App-Based Drivers and Services Act”
Adding to the company’s continued battle to help provide such assurance to independent contractor drivers, RideConnect also recently launched an additional initiative, called “Protect App-Based Drivers and Services Act.”
The purpose of the initiative, according to Section 7450 of the Act, is to “protect the basic legal right of Californians to work as independent contractors with app-based rideshare platforms, or Transportation Network Companies (TNCs) and Delivery Network Companies (DNCs).
The Act also expands on its intent to protect the ability of these app-based rideshare and delivery drivers to have flexible schedules with complete control over when, where, how long, and how they work, all while requiring companies to offer new economic benefits and protections — something that hasn’t been done to this day.
GD: So, how does RideConnect attempt to address such loopholes?
SK: RideConnect is a marketplace. Unlike Uber and Lyft, we provide a software platform for drivers to run their transportation service as they are fit for their customers. While we intend to provide ample safeguards for riders, ultimately the onus is on the riders to ensure that the drivers in their community conform to adequate safety standards. Drivers will have the option to provide those safeguards through our platform at reasonable prices.
The Subscription Model of These Companies Must Change
There’s no question that the pricing infrastructure of rideshare apps like Uber and Lyft have been subject to scrutiny over the years by consumers. In our conversation with Krishnan, understanding the purpose of the transportation and assigning valuation to the purpose is the key differentiator when talking about subscription models.
“With RideConnect’s platform, transportation providers can subscribe to a companion, professional, or commercial plan,” he told us. But the founder did warn us that “these details are subject to change without notice.”
- The companion plan is free and meant for friends and family or other low volume transportation needs within a private community where the general public never gets involved.
- The professional subscription is used mainly by Uber and Lyft drivers to help develop and build out a customer base, allowing drivers to make money without all the fees that are involved in their day-to-day job.
- The commercial tier is for enterprises, fleet operators, and larger dispatch style operations.
Uber Has Something to Say About This Too
In response to California’s new law, Uber has already begun to implement changes to its “price surging” model, beginning with providing all California drivers with estimated earnings and trip destination up front, before accepting a trip.
“As a next step, we’re simplifying our fare structure to further clarify the relationship between you and your riders, and Uber’s role as a technology platform. While time and distance rates have not changed, some of these changes, especially those we’ve made to promotions, may take some time to get used to,” the company announced in a January blog post.
Additionally, Uber’s Service Fee on UberX trips won’t be more than 25% of the trip fare and will be shown ahead on the driver’s offer card. Mirroring what Krishnan said, it seems Uber also recognizes the importance of ad hoc transportation companies to position themselves as technology companies, rather than just a service provider.
This may just be a great solution as SXSW 2020 is approaching.