Should Uber Be Worried About Juno?

There’s been a lot of buzz lately among drivers over a new ridesharing company in New York City (NYC) called Juno.  If you haven’t heard of them, they are the new self-proclaimed “driver friendly alternative” to Uber, and they’re not shy about that fact either.

We’ve known about Juno since January of 2016, but despite still being in beta, they’ve recently completed 1 million trips in NYC and opened up pre-registration to drivers all across the country.  It appears as though they’re getting ready to do some big things.

But how big can Juno get, and should Uber be worried about them?

Juno may be coming soon to a city near you, but is all the hype surrounding Juno enough to knock Uber off its rideshare throne?

Juno Timeline

May 2015 – Juno is “launched” in secret in Tel Aviv, Israel by Talmon Marco.

January 2016 – Juno starts paying NYC Uber and Lyft drivers to gather data on rides.

February 2016 – The media starts writing about Juno (here’s our first post about Juno).

May 2016 – Juno celebrates its one year anniversary.

June 2016 – Juno launches in beta in NYC.

August 2016 – Juno hits 1 million trips in NYC.

October 2016 – Juno opens up pre-registration to all drivers outside of NYC.

What’s Different About Juno?

I think the average person vastly underestimates the time, energy and money required to start a rideshare company.  I get a lot of cold pitches about the next “Uber-killer”, and I often work with the more serious ones but rarely do these ideas actually become companies.

Anyone can put up a landing page and call it a company, but not many people can take things to the next level.  However, Juno has two of the most important things I look for with new rideshare companies.

#1: They understand drivers’ pain points

I’ve always felt there’s a large disconnect between what it’s like to be an actual driver and employees at rideshare companies.  Lyft is better than Uber in this regard, but the shortcomings with Uber are clear to me in their messaging, policies and communication with drivers – they just don’t have a great handle on what it’s like to be a driver and what matters most to drivers.  Or maybe they do and just can’t do much about it.

Either way, Juno seems to really get what matters to drivers, and they’ve built a company around it.  Anyone can say they want to build a driver-friendly product, but Juno plans to address many of the top pain points for Uber drivers:

  • Higher pay
  • Lower commission taken on each ride
  • Equity in the company
  • 24/7 customer support via phone
  • In-app tipping

You can read more about Juno’s proposed offerings to drivers here.

#2: They have an experienced founder and a solid team

I think a big reason why Juno got so much attention when they first launched was because their founder, Talmon Marco, was an experienced entrepreneur best known for co-founding the messaging app Viber.  And considering his last company sold to Rakuten for $900 million, he seems like a pretty qualified person to take on a company like Uber.  One thing I’ve learned in my career is that while ideas are important, the team and the execution are what matter most.

If you look back at the history of rideshare, it was actually Sidecar and then Lyft that pioneered the “UberX” ridesharing model we all know and love today.  Uber started out in 2009 as a black car only service, but once they saw how well the other two were doing, they shifted toward UberX in 2012 and the rest is history.  So while being first is important, I’d argue that having a great team that can out execute others is even more important.

I don’t know if Juno has that team, but they’re off to a good start.

Driver-centric vs Passenger-centric Model

With Uber, there’s little doubt the passenger comes first.  Whether it’s a minor fare dispute or a more serious accusation, Uber’s policies and the way they treat drivers clearly favor passengers.  I’ve definitely noticed Uber releasing more driver-friendly features over the years, but to me, the passenger-centric model is deeply ingrained into Uber’s culture, and that’s at the root of a lot of the problems between Uber and its drivers.  Even if Uber were to completely change course and put drivers first, the company has gotten so big so fast, it may be too late.

This problem isn’t unique to Uber though.  Lots of large corporations struggle with this as they grow, since it’s harder to adapt and change to the marketplace.  But it’s also the reason why start-ups are born.  They recognize an opportunity or a hole in the market and exploit it to their advantage before the bigger player realizes what’s happened.  Uber’s shown their model works and, although I’m biased, I think there’s real opportunity to build a company that drivers actually want to be a part of and not just work for.

How Is Juno’s Strategy Working So Far?

David vs Goliath stories are always appealing to the public, so as you could imagine Juno is off to a hot start with the media.  But they’ve also garnered a lot of attention from existing drivers.  In NYC, Juno has actually relied mainly on word of mouth marketing in order to attract new drivers, and they’re up to 10,000 drivers and doing over 100,000 rides a week.

(They did pay drivers $25/week at the start just to gather data and 500 shares of stock for driver referrals until recently).

Those numbers sound impressive and, despite Uber having around 35,000 drivers in New York City, it highlights the fact that signing up lots of drivers on the cheap is going to be the easy part for Juno.  Uber has already done all of the heavy lifting here, especially in a place like NYC where there are much higher barriers to entry for drivers (extra insurance and licensing requirements).

As Juno looks to expand and sign up drivers outside of NYC, they’re offering 0.5% of the earnings of every driver that you refer.  I like this strategy because it gets drivers and people like me talking about them, but how do you keep those drivers engaged after you sign them up?


What Do Drivers Care Most About?

Whenever people ask me what drivers care most about, my answer is pretty simple: they care about their pay.  In fact, all of the top trafficked articles on my site have to do with things like: how much can you make as a driver?, how to make more as a driver, etc.  And a lot of the complaints I get have to do with fares being too low or drivers not making enough money.

So while Uber may tout the flexibility of being a driver as a top reason why people sign up, pay is probably the most important factor.  But Uber’s pay has been steadily decreasing over the past three years and, in New York specifically, Uber cut driver pay by 15% in early 2016.

Juno’s messaging has made it seem like they are going to pay drivers more than Uber, but I don’t see how that’s going to be possible – the businesses are just too similar.  The more likely scenario is that Juno will pay drivers about the same amount as Uber but try to differentiate themselves with their ancillary offerings (the equity, 24/7 support line, etc).

Driver equity is a smart move, but it’s just as important to solve all of those micro pain points that Uber drivers face on a daily basis and cause a lot of them to quit.  This is one area I think Uber has struggled mightily in because I’ve been hearing the same complaints from drivers for years.  Uber may never budge on higher pay and a tip option, but there are a whole host of mutually beneficial low-hanging fruits out there for the taking.

One example of this would be customer service for drivers.  This is one area where Uber just can’t seem to figure things out, and it almost seems like things are getting worse rather than better.  While customer service is a tough job, it’s not impossible.  I love dealing with customer service agents from companies like Amex and Amazon, so I’m not sure what Uber’s excuse is.  Juno’s 24/7 phone support line is already striking a chord with drivers because they can actually get good help, and it provides the opposite experience from what they get with Uber.

Juno has already successfully identified most of Uber’s top weaknesses, and if they can provide a halfway decent experience, they come out looking way better than Uber in several key areas.

Where Juno May Struggle

I think the biggest question mark for Juno is whether or not they’ll be able to get passengers over to their service.  During the initial beta launch, new Juno passengers could only sign up through existing Juno drivers, and they were enticed with ’20-25% off Uber fares’ promotions.  Juno drivers also received $15 for every Juno passenger they signed up, so you could imagine there was a big incentive there.

If we look at Lyft’s strategy over the past year, we see that despite the same drivers and a nearly identical app as Uber, Lyft has been able to steadily gain market share in a lot of Uber’s top markets by offering heavy ride discounts.  That strategy may work well for both Lyft and Juno in the short term, but I just don’t think it makes sense to try and undercut the pricing of a company with significantly more money than you over the long term.

Juno has tested some interesting messaging like what’s above, but since passengers are so price sensitive, word of mouth marketing isn’t as viable a strategy with Juno passengers.  And to be honest, most Uber passengers are pretty satisfied with the service.  In fact, a lot of riders I talk to LOVE Uber. When Uber disrupted taxis, their growth was spearheaded by the fact that no one liked actually taking a taxi – it was a horrible experience.  But the Uber app today has inherent features built in, like the ability to call a ride with an app, credit card payment and ratings for drivers that make it a great product.  So how will Juno convince a happy passenger to switch from Uber to Juno without offering a discount?

I think Juno needs to target the Uber riders who are most dissatisfied with the service and build from there.  Juno has started doing this by only accepting 4.X rated or higher Uber drivers but it’s going to have to go much further than that.  We’re going to need to see some creative marketing that targets the weakest areas of the Uber passenger experience.  That could include figuring out a better way to do surge pricing, actual loyalty programs for riders and highlighting Uber’s safety issues with female passengers.

Ultimately, I think Juno’s messaging that “we treat drivers better” just doesn’t move the needle for passengers, and I haven’t seen much other than discounts that tell me how they plan to build long term passenger growth.

Juno Was Right About Drivers Though

The one thing we know for sure is that Juno has correctly identified that drivers don’t have any loyalty to Uber.  Juno has been one of the hottest topics in my inbox this year, and it seems like drivers are just waiting for the service to come to their city.  So despite all the investment Uber has made in sign-up bonuses, incentives and more, drivers are still signing up for Juno en masse.  And since the number of drivers is always the limiting growth factor for these businesses, this should be a worrisome development for Uber.

I don’t see a scenario in which Juno becomes the dominant market player, since the product the consumer sees is so similar to Uber, but I do see the potential for a more balanced market share.  New York is the perfect place for Juno to test things out, too, since you have much higher percentages of full-time drivers, and those are really the drivers that tend to be the unhappiest with Uber.

Uber’s smart though, and you can be sure they’re carefully watching what Juno is doing.  I think it’s a little late for Uber to completely change course, but it wouldn’t surprise me to see them come out with a few of the exact same features that Juno is offering to drivers.  So if you’re an Uber driver, don’t be surprised if there’s an Uber hotline you can call in the future.

Drivers, what do you think about Juno?  Are they a company that Uber should be worried about or is it just too late?  How do you think Juno should grow its passenger base in order to have enough rides for drivers?

-Harry @ RSG