The Twin Cities is on its way to a more competitive rideshare system that should benefit customers in the long run.
Monday would have been the day a Minneapolis minimum wage structure would have gone into play — one that had Uber and Lyft ready to pull out of the city and possibly the state. Gov. Tim Walz signed into law a compromise measure passed by the Legislature a little over a month ago that satisfied the two largest rideshare companies.
But the state law doesn't take effect until December, and that gives some breathing space to several competitors trying to ramp up services in Minnesota, and they plan to stay the course.
"I never really believed that Uber and Lyft leaving was going to happen," said Elam Baer, who launched MyWeels with several partners. "I always had it in the back of my mind that I'd have to build a really solid business plan rather than just believing I'll be lucky" by having the biggest competitors leave.
Uber and Lyft's decision to stay in the Twin Cities after all may have slowed down the "maniacal pace" Baer had been maintaining to launch MyWeels, but the time has allowed the new company to sharpen its focus and direction, he said.
The company now has 250 drivers providing more than 50 passenger rides a day, said Baer, also chief executive of Eden Prairie-based venture capital firm North Central Equity.
That's slower than expected. Undeterred, a month ago, he launched a "preferred driver" program for riders who want the same driver for each trip. Two weeks ago, he started posting MyWeels ads in the cars of drivers who also drive for Uber and Lyft.
This month, he is discussing a possible partnership with the medical transportation service Carepool that last year bought Wisconsin-based Mobility4All. Such a deal would let MyWeels offer a higher grade of customer service for older passengers across the Twin Cities, Baer said.
Right now, MyWeels is adding five to seven new drivers a day but will stop when it reaches 400. Baer doesn't want 400 drivers chasing 100 passengers each day. Instead, he'll let his customer list grow and focus on offering more niche and upscale services, he said.
Steve Wright, who founded Texas-based Wridz, said the company has onboarded hundreds of drivers in Minneapolis and the suburbs. While not yet approved to run his ride share app in St. Paul or at Minneapolis-St. Paul International Airport, those approvals could come any day.
Once that happens, "we'll want to start marketing that we will actually be fully functional in the Twin Cities soon," he said.
Murid Amini, founder of the St. Paul-based startup Moov, said he now has a venture capital partner, so he can finally finance the roughly $250,000 needed to pay for insurance and the transportation network company (TNC) licenses required for Minneapolis, St. Paul and MSP.
In the meantime, more than 700 drivers have signed up, and background checks are started for more than 500 of them, Amini said.
"We're going to be covering the drivers in a lot of services that they will not get with other rideshare companies," he said. "We've already formed partnerships with a lot of different and local service providers that are going to give the drivers significant value outside of just their pay."
Amini has adopted a buy-local mentality by using only Minnesota attorneys, accountants, marketing firms and other service providers. He also has teamed with the Gary S. Holmes Center for Entrepreneurship at the University of Minnesota's Carlson School and plans to offer students management internships.
That local focus is "our differentiator," along with the plan for customers to be able to request a specific Moov driver for any ride, Amini said. It's why "we've got close to 1,000 people in our waiting passenger pool who are like, 'Hey, we're ready to choose you guys as an app as soon as you're up and running.'"
Moov has eight volunteers now but expects to have 20 paid workers in 12 months.
In December, all of the TNC rideshare companies must pay drivers at least $1.28 per mile and 31 cents per minute, an amount that would guarantee a minimum wage and help drivers better cover gas and car maintenance, said long-time Uber driver Mohamed Egal, who lobbied hard for pay changes. Having guaranteed pay minimums and choices besides Uber and Lyft in this market will benefit drivers, he said.
The new pay structure has not deterred other rideshare firms from flocking to the Twin Cities — and neither has having Uber and Lyft stay.
Wright and Amini said they are determined to start something new in Minneapolis and St. Paul regardless of what Uber and Lyft ultimately decide, as do other companies.
"We have had a number of new TNCs join into the market and they are doing pretty good," said Eid Ali, president of the Minnesota Uber/Lyft Drivers Association. "They are already on the road and giving rides to people."
Uber and Lyft have an estimated 10,000 drivers in Minnesota, but many drivers are joining the new companies, too, "seeing if they are going to create some sort of difference" in driver pay and conditions. Driver complaints are what led to the Minneapolis City Council actions.
Six months ago, Mustafa Sheikh moved to Minnesota so he and five others could launch Hich's Minnesota arm from its base in Canada. Now, he said, they are in it for the long haul.
"Uber and Lyft staying will have an impact," he said. "But we told you we will introduce this business and won't leave."
Hich is now licensed in Minneapolis and has signed up 350 potential passengers and 700 drivers without any formal advertising. Sheikh expects to be licensed in St. Paul and at MSP within weeks and start serving the whole metro area.
Hich is garnering attention because drivers can gain ownership shares in the company and will be paid a fair wage, Sheikh said. Hich is giving drivers free access to its subscription app for their first three months. After that, it might charge drivers $199 per month to access the app but would let the drivers keep all passenger fares.
Over time, "we will have a significant impact on this market. We are not quitting. We spent too much time on this," Sheikh said. "If the market says no to us, then we can say, 'Hey, we took a risk and it didn't pay.' But right now, we are taking calculated risks."
