As we have previously reported, an increasing number of startups are exploring cooperative business models where workers (and sometimes users) are owners in the company. Driver’s Seat, which participated in the first batch of the Start.coop accelerator, is one such example.
Driver’s Seat is designed to help gig workers own and use their data so they can maximize their income. It works by requiring ride-hail drivers to install an app that educates them about how the co-op collects and uses their data. In exchange, the app gives them insights about their real hourly wages after expenses and how those wages relate to different driving strategies.
For example, Driver’s Seat helps drivers determine when and where they should drive when it’s slow and can calculate the odds of making driver bonuses via Uber, Lyft and other ride-hail platforms. Driver’s Seat then aggregates all of the data to market it to cities, municipalities and state governments that require this information for planning purposes.
“These folks are hungry to support ride-hail drivers and make ride-hailing work better in their cities,” Driver’s Seat founder and CEO Hays Witt tells TechCrunch.
City agencies can use this data to make better decisions about transportation planning as it relates to congestion, pollution, curb allocation and affordable transit. The proceeds from those contracts then go back to the drivers via dividends.
“The key point is that a ride-hail driver is doing a lot of things that are part of their job — besides just driving,” Witt says. “Today, they don’t get to participate in any of the value of that. Driver’s Seat gives them a way to participate.”
Tonya Bingham, who drives part-time for Uber and Lyft in Milwaukee, has been using Driver’s Seat for the last six months.
“The big thing for me, because I am a huge numbers person and like to maximize my time, is where can I get the biggest bang for my buck,” Bingham tells TechCrunch. “I like how it told me how out of my five- or 10-hour day, only 10 percent was paid time. That was more of a ‘wow’ moment. I could’ve been at home that day instead of driving around for hours.”
Since joining Driver’s Seat, Bingham says she has learned Mondays are not good days to drive. One Monday, she says, she drove for three or four hours and only made $14.
“And then I spent a bunch of money on gas,” she says. “On a weekend, I could go out for literally half that time.”
The huge piece for Bingham, she says, is the fact that Driver’s Seat calculates her take-home pay. On some days, she can see if she’s in the red based on the costs of gas, insurance and other expenses.
[gallery ids="1942365,1942366,1942367"]
While this is Bingham’s first time in a co-op, she said she’s excited about it.
“I’m all about the small business and giving back to the people who make it profitable,” she says. “Uber has all this information but they are so stingy with it. They don’t want to share it. So this is my opportunity to finally be part of it and take control.”
Driver’s Seat is still in its early days, but it is already working with an agency in San Francisco around a pilot project involving driver data. The company has yet to fully work out what percentage of the dividends will go back to drivers, but part of the requirement of operating as a limited cooperative association (LCA) means at least 51% of its surplus profits must go to patron member-owners.
“We incorporated as a cooperative because we want to commit to a business model where a majority of profits go back to drivers and the majority of governance is held by drivers,” Witt says. “We legally committed ourselves to that. That means we seek investors who are on board with that mission.”
Cooperatives generally distribute dividends among the member-owners based on how much they contribute. In this case, it would be how much data drivers contribute.
“The variables are what’s the data worth, how many drivers are using the app and contributing and then how do you divide that pie,” Witt says. “And there’s a lot of different ways to cut it and questions about how much you need to contribute to be a member of the co-op. So those are decisions that we need to work out with drivers as we bring drivers onto the app and as we form our governance structure. Drivers make those decisions with us.”
Along with other traditional co-ops, LCAs are voluntary and open to all, implement a one-member-one-vote policy and are fully autonomous.
“I think we have found investors who are really excited about that,” Witt says. “There is a pool of investors and there is a tide turning that sees that shared ownership is really important, not just from a values perspective, but from making a business sustainable in the long term. Being a cooperative is our strategic advantage.”
In addition to the $15,000 in funding via Start.coop, Driver’s Seat has raised funding from CCA Global Partners, which itself is a cooperative that has a number of divisions, including The Bike Cooperative. Lindsay Gaskins, president of The Bike Cooperative, said they were attracted to Driver’s Seat because of the company’s focus on data.
“I had been thinking a lot about who owns the data,” Gaskins says. “And how do we make data have value for people providing the data. I thought they were looking at a gig economy problem of how do we solve for taking some ownership back. Data is one of the most powerful things all of these tech companies have, and if you can give power back to the workers because they own their data, it can change the winner-takes-all model.”
Co-ops are an advantage that hasn’t been figured out yet, Gaskins says. It’s where people come together to build sustainable business models that end up being lucrative. This is part of what Gaskins calls the revenue-royalty model.
“Then, investors are more aligned with the business and not as extractive in their approach,” Gaskins says, “I want to see a more equal world, so I’m looking at co-ops as a way to challenge the winner-takes-all idea, and I also think if you can get it right and find those right stakeholders and get them excited about what they might have if they join, I think the scalability is really cheap and interesting. It’s the business model that is underused from an entrepreneurial perspective.”