Juno Update: New York’s Newest Ride-hail App Is Feeding Off Drivers’ Desperation – And It’s Working.

Harry here. There’s been a lot of talk lately about new rideshare start-ups with what’s going on in Austin but one name that we haven’t mentioned in a while is Juno. Juno has been a driver favorite from the beginning and based off today’s featured article, it seems like they are currying a ton of favor with drivers and passengers alike in New York City. As a driver, I know I’m rooting for them because of their unique driver-friendly approach to rideshare. And you can be sure that Uber is watching..

Today, RSG contributor John Ince takes a look at Juno’s progress, TK’s absurd take on fingerprinting and safety, and some big news for Lyft.

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New York’s newest ride-hail app is feeding off drivers’ desperation – and it’s working

Sum and Substance: New York’s newest ride-hail app is everything drivers have ever wanted: a partner, a good listener and — just maybe — a steady stream of cash. But it’s unclear how long the founders will be able to sustain this Uber-driver-friendly service. 

Juno, which has yet to set its official launch date, may still be in beta mode but has already amassed 9,000 drivers since May, according to the company. Now drivers are aggressively recruiting riders they come across while operating on Uber and Lyft’s platforms. On two occasions in the last week, an Uber and then a Lyft driver asked me to sign up for the service. A coworker who is just in town for a week also came across an Uber driver-turned-Juno-recruiter.

Their spiel was simple: Juno is better for drivers because the company only takes 10 percent commission (compared to Uber and Lyft, which take more than 25 percent); the company actually listens to their suggestions and concerns all while offering riders cheaper fares. It’s a win-win-win. 

Side-by-side comparisons of rides on Juno, Uber and Lyft verify the claim that the fares are cheaper. One ride from Recode’s office in midtown New York to Brooklyn Heights, for example, was estimated to be between $14 and $17 on Juno, while on Uber and Lyft the ride was estimated to cost between $19 and $29. The company also claims hundreds of drivers come into their offices every day, and it engages frequently with drivers on online forums like Uberpeople.net. 

But before even officially launching, Juno has poured considerable resources into its operations. For one, drivers receive $15 the first time any person they referred to the app takes a ride on Juno. It’s a smart tactic and is likely why drivers are being so forward about referring riders. Drivers were also being paid $50 a week simply to be on the app before there were any riders. On top of that, the company has reserved one billion of the company’s shares for drivers and plans to issue 25 million shares per quarter depending on how much each person drives for Juno. The company, founded by Viber co-founder Talmon Marco, who sold the company to Rakuten for $900 million, has also nabbed 10,000 square feet of office space on the 84th floor of One World Trade Center, where Marco is paying at least $750,000 for a year-long lease.

My Take: So yes … Juno is apparently alive and well in New York City.  Though still working out the bugs in its app, it has quietly convinced 9,000 drivers to sign onto its platform, for which they receive $50 a week.  The article pushes a few numbers around and suggests that Juno has to be burning through cash, but apparently a Juno seed round of fundraising is in the works for $30 million. That amount is a drop in the bucket compared to the $6 billion Uber has in the bank.

But that’s not the point.  If Juno can demonstrate they’ve got a better business model than Uber, and rise to a point of being competitive with Uber and Lyft in New York City, how does that line from the song New York, New York go? If I can do it there I can do it anywhere.  What do you think: is Juno a serious threat to Uber and Lyft?

Uber CEO explains why he thinks fingerprinting drivers is ‘unjust’

Sum and Substance: Kalanick sat down with Valerie Jarrett, senior adviser to President Obama, at the seventh annual Global Entrepreneurship Summit in Palo Alto, California.

Kalanick used to opportunity to talk about why Uber doesn’t support fingerprinting. The ride-hailing company has been fighting to hire drivers without fingerprint-based background checks. The checks can be costly and slow, and impact the company’s ability to constantly bring on new drivers. Uber and Lyft recently pulled out of Austin after the city voted to require fingerprinting, leaving thousands of drivers suddenly without a full- or part-time job. 

Kalanick said the reason for not wanting to fingerprint was actually about justice for people who have been unfairly snared in the U.S. criminal justice system. By using other background check methods, Uber gives more people who have been arrested the opportunity to work as drivers. “Imagine a country where people might get arrested who shouldn’t get arrested. Imagine if that country were the U.S.,” said Kalanick. “We have systems in place where if you’re arrested, you literally can’t get work, even if you’re found to be innocent. And it’s unjust.”

My Take:  This is a head scratcher.  For a company that repeatedly says, safety is our top priority, Travis Kalanick’s explanation of why they oppose fingerprinting for drivers makes no sense.  How does letting people charged with crimes drive for Uber make Uber safer for passengers?  Please explain this to the mother who has given her daughter privileges to use Uber (against Uber policy – but still commonplace).

Okay, if Uber was a half-way house for criminals then maybe this argument would make sense.  But it’s not.  Uber’s entire business model relies on the perception of safety.  Why else would people get into cars with complete strangers?  Uber represents that they have vetted their drivers. Uber needs to stop the Orwellian logic and start being honest with people.  The fact that this conversation took place at a Stanford confab headlined by President Obama just makes Travis Kalanick’s statements all the more concerning.

Judge Grants Preliminary Approval To $27 Million Lyft Driver Settlement

Sum and Substance: A federal judge in San Francisco gave preliminary approval Friday to a lawsuit settlement that would give $27 million to 163,000 present and former Lyft drivers in California. The settlement with the ride-booking company must have a fairness hearing before U.S. District Judge Vince Chhabria at a later date before it is finalized. Drivers will have a chance to object to the agreement or to opt out. 

In addition to a monetary award averaging $142 per driver, depending on the length of time worked, drivers would have rights to receive tips and to challenge being fired. But they would remain classified as independent contractors rather than employees for the time being. 

An employee classification was originally one of the main goals of the 2013 lawsuit, because it would bring rights to workers’ compensation, unemployment insurance, overtime pay and reimbursement of expenses. Lyft and its larger ride-booking rival, Uber, both based in San Francisco, have insisted that the drivers are independent contractors. Shannon Liss-Riordan, the Boston lawyer who negotiated the settlement, said earlier this month that she believed the agreement was the best that could be obtained because of the risk of losing the employee claim before a jury or an appeals court. Liss-Riordan and her staff will receive $3.7 million of the settlement amount. 

In April, Chhabria rejected an earlier $12.25 million settlement proposal, saying the financial amount was too small because it didn’t account for a recent expansion in the number of Lyft drivers. In Friday’s decision, Chhabria said the new proposal seemed to be “fair, reasonable and accurate.”

My Take:  While the terms of the settlement disappointed many drivers, it’s good news that the case’s resolution is proceeding.  It shouldn’t be that long now until drivers start getting a check in the mail.  It’s interesting to note that shortly after this news broke, Lyft announced the hiring of Qatalyst Partners to explore options for a potential acquisition.  (See Below)

Lyft Hires M&A Banker Qatalyst Partners

Sum and Substance: Ride-hailing startup Lyft Inc. hired Qatalyst Partners LP, the boutique investment bank best known for helping tech companies find a buyer, according to people familiar with the matter. 

Frank Quattrone, the founder and executive chairman of Qatalyst, has contacted companies including large auto makers about acquiring a stake in Lyft, the people said. It isn’t clear whether Lyft is aiming to sell itself or raise new funding. Lyft has raised about $2 billion in funding, or less than one-sixth the total funds raised by Uber. Lyft was last valued at $5.5 billion by investors including auto maker General Motors Co.

Hiring Qatalyst, one of the most active Silicon Valley deal makers, may signal Lyft is open to a sale. Qatalyst ranks fourth this year among banks advising on U.S. acquisitions, working on deals totaling $33.7 billion, according to data provider Dealogic. Those deals include a coveted role advising LinkedIn Corp. on its $26 billion sale to Microsoft Corp., announced two weeks ago. One potential buyer may be General Motors, which paid $500 million for a 10% stake in Lyft earlier this year and indicated that the ride-hailing service could be crucial to the future of automobiles. The two companies have since agreed to develop self-driving cars and to offer deals on rental cars to Lyft drivers.

My Take:  This is very likely a sign that Lyft sees the writing on the wall.  It comes shortly after Bloomberg reports Lyft is telling investors that the number of rides will level off or go down in June.  With Uber raising $3.7 billion from the Saudis and rumored to be looking to raise up to another $2 billion in leveraged loans, Lyft sees Uber staking out its territory, and takes a different tact – aligning with other deep pocketed, much larger partners.  We don’t know for sure what this means, but it sure points in the direction of a major restructuring of the industry.  Lyft may have recognized that it’s time to cash out, while they’ve still got a viable enterprise.

Uber proves profitable for at least one group — lobbyists

Sum and Substance: When legislation with dramatic implications for the state’s taxi and ride-for-hire industries hits the Senate floor Wednesday, it will have already gone a long way to help the local economy. The bill has become one of the most heavily — and expensively — lobbied proposals of the legislative season, providing an enormous windfall for Beacon Hill lobbyists who scooped up more than $1.4 million in fees last year alone, according to a Globe review of lobbying disclosures. 

Uber, which has resisted efforts to bring its regulations more closely in line with those of traditional taxis, paid more than $300,000 to lobbyists working to shape the bill, and added lobbyists this year. Other industries — from insurers to banks to rental-car agencies — have hired their own advocates to look out for their specific interests. 

“In all my work, on a fairly robust set of issues, I’d never seen this many lobbyists representing one company or one industry,” said Democratic Senator Jamie Eldridge, who helped write the Senate legislation. “You had the most powerful, most wealthy institutions in the country weighing in.” Scott Solombrino, chief executive of Dav El/Boston Coach, who has been doing business in the state since 1978, said he has never undertaken a legislative push of this size in Massachusetts. Solombrino leads a coalition of taxi and limousine industry stakeholders pushing for increased regulation of the newer ride-for-hire firms. “We’ve never needed this kind of lobbying effort because we’ve never been up against anything like this,” he said.

On his coalition’s behalf alone, Solombrino added, “you’ve got four lobbying firms, four PR firms, and a pile of lawyers in the middle. There’s a lot of people doing a lot of stuff.” The bill has drawn a visit from David Plouffe, a former Obama campaign chief who now works for Uber, and hundreds of advocates in color-coded T-shirts who packed a State House auditorium.

Earlier this month, former US attorney general Eric Holder weighed in with a letter supporting Uber’s resistance to fingerprinting requirements. Stakeholders on all sides of the legislation call its fate in the closing weeks of the session unknowable, and say that, after likely passage in the Senate on Wednesday, the measure would face uncertainty in a conference committee.

My Take:  Uber and Lyft’s spending to try to incline public officials towards their worldview is one of the great under-reported issues of this entire industry. The maneuvering in advance of the votes on Beacon Hill in Boston have been a veritable feast for paid lobbyists and lawyers on the Uber / Lyft team.  But remember, Uber / Lyft invested over $7 million in Austin and lost big time.  The line I like best from the story is from one of the lobbyists, “If you weren’t hired to work on this issue, than you need to retake lobbying 101.”

Sign up for Juno

Juno is now accepting pre-registration.  You can sign up here using our referral link or our code: 5335-180

Readers, what do you think of this week’s stories? What do you think is going to happen to Lyft, and are you looking forward to seeing Juno expand?

-John @ RSG