Dead End: Regulators Blocked a Car-Share App That Aims to Empower Drivers

In the ride-share economy dominated by Uber and Lyft, it's hard not to see worker exploitation as the norm. The two ride-share giants set low prices for drivers, take heavy commissions, successfully lobby against government regulation, employ behavioral science to manipulate drivers into working more, fight unionization, and offer workers zero benefits. Drivers struggle to make ends meet, and often barely make enough to cover the costs of gas, car payments and insurance. It's a grim landscape for workers, but Uber and Lyft have been largely uncontested in the ride-share space—but new options are emerging. Take RydenGo, a new ride-share service from founder Michael Pappas, that promises to put the control back in the hands of the drivers.

"RydenGo came out of an advocacy for drivers to receive better treatment and more freedom to run their businesses as they see fit," Pappas says. "It's about workers' rights. I come from a pro-union family, and I always knew that workers needed to be protected no matter what."

The ethos of Pappas's start up, which plans to launch its Beta test this fall, is based on an unfortunately radical concept: a ride-share service doesn't need to exploit its drivers for profit. RydenGo's drivers will be allowed to set their own prices, and keep 100% of their earnings and tips. RydenGo's profit will come solely from a modest $20/month subscription fee, that drivers will pay in order to participate in the service. Thanks to its simple, yet potentially revolutionary model, RydenGo places power back in the hands of the workers.

Of course, this all sounds nice on paper—but RydenGo will likely face considerable challenges in its quest to carve out an Uber-sized space for itself in the market. There are many alternative ride-share apps, and all have failed to emerge as significant competitors to Uber and Lyft. But RydenGo differs from these apps in one crucial area—where other ride-share startups have essentially copied the Uber model (with minor variations), RydenGo wants to shift the entire paradigm.

"RydenGo is ride-share version 2.0," Pappas states. "To make a change happen within the industry, it needs to be completely overhauled and revised to benefit everyone—especially the workers. Because let's face it: they're doing the hard work, they're on the streets, they're the ones who are driving at two in the morning. And they have to work at very shallow prices that benefit the corporation but don't benefit them."

By appealing to an overworked, underpaid and disillusioned workforce, RydenGo has the potential to hit Uber and Lyft where it hurts the most: labor.

With RydenGo, Pappas plans to offer workers actual autonomy, where other rideshare apps only offer the illusion of it. Uber and Lyft share a core position that their drivers are not, in fact, employees—instead, these companies insist drivers are independent business owners. This regulatory loophole boosts the corporation's profits by significantly cutting labor costs, and Pappas views this as the root of exploitation in the so-called 'share-economy.'

"This industry claims you're an 'entrepreneur,' but you're not able to determine your worth. Drivers are told, 'You're self employed. But this is what you have to charge.' And that's a contradiction, is it not? Calling an independent contractor self employed, and then not allowing them to control their business—it's basically like telling somebody in a prison cell that they have freedom."

But fixing an entire industry does not happen overnight, and taking on giant corporations is not an easy task. On April 13, 2017, Pappas hit his first major roadblock: a letter from the California Public Utilities Commission, citing RydenGo's lack of proper permits to conduct business in California and demanding that RydenGo cease and desist operations. Pappas was shocked: how could he cease operations, if his company was not operating to begin with? There is no app available to download, no drivers on the streets, and no advertising.

"They only have jurisdiction over companies that are actually in operation," Pappas asserts. "The government's authority is to protect the public. If you're not in operation, you're not interacting with the public and [the government] has no authority over you. This would essentially shut down 90 percent of Silicon Valley [startups]. I couldn't believe it."

Pappas called the CPUC in an attempt to get clarity on the issue. Instead, the mystery only deepened. In the phone call, Pappas says that the representative repeated the letter's verbiage, demanding that RydenGo cease and desist operation. When Pappas explained that the company was still in development and not in operation, the representative changed tactics and demanded Pappas take down his website. "I told [the CPUC agent], 'We're not taking down any website. It's a freedom of speech situation now.' Can you imagine the government actually dictating you: 'you need to take down a website?'"

When reached for comment, Christopher Chao, Public Information Officer for the CPUC, sent the following via email:

"Regarding commenting on the Rydengo matter beyond the cease and desist letter, we cannot comment on active investigations. In general terms, most private companies that transport passengers must apply for and receive a permit from the CPUC. In the case of a carrier planning to operate as a TNC [Transportation Network Company], part of the CPUC application process is that the carrier must demonstrate the app to the CPUC in a form that is close to completion to ensure that the carrier is actually a TNC. A carrier first needs a permit and insurance prior to beta testing an app with passengers. Also, a passenger carrier may not advertise without an active permit. An app and/or website is advertising. A carrier must obtain insurance and a CPUC permit before it can advertise."

I pressed Chao for further clarification—noting that RydenGo has not yet started beta testing with passengers, the app is still being developed (and not in a form close to completion), and that Pappas asserts that his website is designed to attract potential investors, not consumers—but Chao only addressed my query regarding the website. "To be sure, a passenger carrier may not advertise without an active permit. An app and/or website is advertising," Chao stated in a follow up email. "A carrier must obtain insurance and a CPUC permit before it can advertise."

As of this date, Pappas and the CPUC are in a standoff—Pappas refuses to take down his website (which he insists is not an advertisement) and the CPUC has not fulfilled its threat of criminal prosecution. Pappas remains confused by the CPUC's actions, and wonders how he emerged as a target. "I couldn't understand, where did these people come from? If they'd taken five minutes to look at the website, they would have realized we're not operating, we're in development," Pappas asserts. "But the bigger question is, who does this really bother in the state of California? Who is really behind trying to shut down a company that has an offering for the world that could point the ride share industry in the right direction?"

If Pappas can meet his ambitious aims remains to be seen. RydenGo is still in development, and its launch is contingent upon ongoing investor negotiations. The app's pro-worker interface sounds ideal in theory, but RydenGo's Beta test this fall will be the true measure of whether or not the company's model will be successful in practice. According to Pappas, driver interest is strong, but RydenGo will face significant challenges as it attempts to assemble a fleet that can compete with Uber and Lyft. And as Uber's PR nightmares continue, Pappas can be sure to encounter competition from other apps that attempt to offer a better driver experience and a superior company ethos. Recently launched ride-share app Juno also claims to "treat riders better." Though it does not attempt to overturn the current ride-share system in the way RydenGo does (it essentially copies the Uber model), it does offer drivers equity in the company.

Of course, Pappas is aware of all the challenges he faces in his attempt to bring "ride-share 2.0" to the world, but he is optimistic. For this idealistic CEO, it all comes down to two simple questions, which he believes every entrepreneur should answer: "What's the moral core of your company?" He says. "How do you want to help the world, not oppress it?"