New York’s Driver-Owned Ride-Hailing App Is Putting Its Foot On The Accelerator

The Drivers Cooperative has a new app and a promising new financial forecast. Here’s how the city’s largest co-op is putting its network of independent drivers first.

An independent rideshare driver

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Sometimes the money’s good, sometimes not so good. Either way, Shaun Beckles loves the human aspect of working as a for-hire vehicle driver — getting to know fares even just a little in passing, gaining a glimpse into so many different lives over the course of a single shift.

“I’ve always liked driving for the mere fact that you get to meet some interesting people who can connect with your passion, you’d be surprised,” says Beckles, now operations manager at The Drivers Cooperative. The driver-owned ride-hailing platform, which launched in 2021, is hitting some major milestones this year: It has a new app, it’s the official transportation partner for Juneteenth NY, and – per new revenue data provided exclusively to Next City – it’s nearly breaking even financially. The co-op expects to see its first profits this year.

Beckles moved to New York from Guyana as a teen in the ‘80s, and quickly took to driving as a way to help make ends meet. He’d sit in his Dodge Shadow outside the popular Ess-a-Bagel shop in Manhattan’s posh Gramercy Park neighborhood, waiting for a call on the radio from dispatch.

Though Beckles eventually moved into the telecommunications industry, he later took up driving part-time for a ride-hailing platform as an opportunity to do something he loved while earning some income to help cover the ever-rising cost of living.

“You couldn’t pass a billboard without the enticing $5,000 a month or make this crazy amount of money and in such little time,” Beckles says. “So I got caught by that –and then quickly realized it was also an exploiting situation.”

It wasn’t just the failed promise of $5,000 a month. There was also the impersonal nature of working for a company that seemed more concerned with its investors than its drivers.

Now, as one of the top executives at The Drivers Cooperative, Beckles relishes the opportunity to run a ride-hailing company where he interfaces with drivers regularly. Some sit on the co-op’s board of directors. Many others participate regularly in meetings as part of running the fast-growing startup: meetings about the company’s recently overhauled app, “Co-Op Ride,” meetings about setting the co-op’s minimum hourly wage, or meetings to discuss setting up a $1 surcharge on each trip to help other co-op members purchase electric vehicles. And sometimes it’s just conversations between peers, colleagues and friends.

“There is no other company where drivers can connect with an operations leader or finance leader and have a one-on-one conversation about either struggles on the road or their expectations for the week,” Beckles says. “That for me is a big differentiator for why members are here, regardless of the growing pains, because they’re not going to be able to have someone listen and adapt to what they’re trying to accomplish for themselves.”

In 2022, its first full year of operation, The Driver’s Cooperative earned $5.9 million in revenue from 162,294 successful trips — and $5.2 million of that went directly to driver wages. That 2022 revenue is 12 times what the co-op took in for 2021, though it didn’t launch until the end of May 2021.

Even with its minimum hourly wage of $30 an hour, the co-op is nearly breaking even, recording a net loss of just $318,000 in 2022.

With the growth it’s already seeing in 2023, The Drivers Cooperative expects to earn its first annual profit — some of which will be distributed back out as dividends to drivers. Currently there are 9,000 drivers who are or will soon be members of the co-op — an estimated 15% percent of the total ride-hailing platform driver workforce in New York City.

The co-op’s leadership team now consists entirely of former drivers, all of whom are people of color, including Beckles, driver engagement manager David Alexis and finance manager Cynette Wilson.

Born and raised in Chicago, Wilson started out in ride-hailing in New York as a driver with one of the co-op’s behemoth rivals back in 2018. She recently had the opportunity to walk her fellow driver-owners through all the good financial news in their annual membership meeting, which she followed up with an internal fireside chat about the co-op’s finances. She plans to make the fireside chats a quarterly event for member-owners of the Drivers Cooperative.

“I went through the [profit and loss statement] with the membership, took any questions they had about any particular line items and painted the picture of what profitability looks like, what it’s going to take for us to get there and how close we are,” Wilson says.

Taking on the competition

The Drivers Cooperative got to where it is by mapping out a phased growth path for its business model.

The co-op realized early on that it couldn’t initially compete on the same terms with Uber or Lyft because it didn’t have access to the same pool of deep-pocketed venture capital investors. It didn’t have what those kinds of investors eventually want — the chance to go public and get listed on a stock exchange, allowing early investors to cash out their shares for five times, ten times or some other crazy multiple of their startup investment. Those are the investors that can fund a massive marketing blitz to riders (and drivers) and an army of software engineers working out bugs in the app almost in real time.

The Drivers Cooperative does have outside investors: It raised $1.6 million from more than 1,100 individuals through the crowdfund investment platform WeFunder last year. But those investors are limited to earning back 2.5 times what they invested, as opposed to typical venture capital investors seeking five, 10 or 100 times what they invest in a company. Limiting returns to early stage investors gives the co-op the financial flexibility to do things like set its $30 an hour minimum wage or create an internal fund to help drivers purchase electric vehicles. Not only that, venture capital investors typically take a strong role on the board of a company, so the probability that an investor-oriented company proactively does those things for drivers is much lower.

The market entry bar is also higher now that the ride-hailing giants are so established. Riders expect a certain level of functionality – and the shortest possible wait times for a ride. That means any business in this space somehow needs to have a critical mass of drivers signed up behind the scenes before gaining any real traction from ride-hailing.

So The Drivers Cooperative instead focused first on prescheduled trips: primarily government-funded paratransit, non-emergency medical transportation, and staff transportation for larger businesses. The Drivers Cooperative estimates the overall market for prescheduled trips to be about 30,000 total trips per day across New York City, representing $300 million in revenue.

Focusing on prescheduled trips allowed the co-op to establish its $30-an-hour minimum wage. It works by asking drivers to sign up for a four-, six- or eight-hour shift for the next day. As long as The Drivers Cooperative can calculate at least one day in advance how many drivers it will have for the next day, it can calculate how many prescheduled trip appointments it can schedule based on pick up and drop off locations and estimated drive times.

Scheduling trips is a tricky calculation, and it all comes down to routing — you want drivers to spend as much of their shift as they can actually driving clients around, but you have to leave enough time in-between trips so the driver isn’t late for their next client. So far, the only way to do this successfully has been by using a team of human dispatchers, though the co-op is working on an automated solution using artificial intelligence.

Thanks to the predictability of the overall market for prescheduled trips, The Drivers Cooperative was able to set its $30-an-hour minimum wage. Most of the time, the revenues from each driver’s prescheduled trips on a shift net the driver at least that amount, sometimes more.

There are some rare occasions when a driver’s prescheduled trips don’t net enough to cover the minimum. When that happens, the co-op has an automated mechanism to pay however much is necessary to ensure the promised minimum hourly wage for the driver. In 2022, the co-op made about $70,000 in extra payouts to make up for prescheduled shifts that didn’t bring in enough revenue to cover the $30-an-hour minimum wage.

“We have a driver-centric focus because we were drivers,” Wilson says. “So even now with the design of how we improve our pay flows, or with the new app, all these little tweaks and minute differences, that makes such a big difference in the experience of the driver.”

The Drivers Cooperative is now banking on that $30-an-hour minimum wage as one of the pillars of its driver recruiting efforts, key to getting its ride-hailing wait times down to the point where it can compete with the incumbent ride-hailing apps.

There are an estimated 600,000 ride-hailing trips per day in New York City, representing $4.4 billion in revenue. As part of its early marketing shift to the broader ride-hailing market, the co-op was just announced as the official transportation partner for Juneteeth NY’s upcoming weekend of festivities — offering 5% discounts on rides to events and also free trips for Juneteenth NY festival staff.

Other recruiting pillars include the Drivers Cooperative’s various programs for drivers, like the fund to help purchase electric vehicles, which includes low-interest or zero-interest vehicle loans through partnerships with the Lower East Side People’s Federal Credit Union and the Hebrew Free Loan Society. Members of the Drivers Cooperative can also refinance any existing high-interest predatory vehicle loans with a lower-interest loan from one of the lending partners.

And of course, there’s also the opportunity to join a cooperative and participate in it as a member-owner, meeting face-to-face with top executives on a regular basis to help shape the company. As part of the board of directors and other committees, drivers got to be part of interviewing and choosing Wilson to manage the co-op’s finances.

She still likes to take a driving shift every now and then – just this month, she took on a Wednesday shift.

“Being cooperative, everyone does have a voice and their voice is important,” Wilson says. “Especially in finance, to actually open the door and invite people in and create a space where they’re comfortable to come visit at least once a quarter is important. These are those things where we keep a finger on the pulse…keep the humanity in the face of all the technology.”

Reporting for this story was made possible with funding from the Mastercard Impact Fund in partnership with the Mastercard Center for Inclusive Growth.

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Oscar is Next City's senior economic justice correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha and Fast Company.

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Tags: new york cityuberworker cooperativestaxisride-hailinglyftcooperativesmastercard

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