Moves, a Toronto-based gig economy fintech startup, wants to reward gig workers with stocks from the companies for which they drive. The first version of the Moves Collective, as the startup’s new service is called, launches on Thursday with Uber stocks available and then quickly offer Lyft, DoorDash and Grubhub shares, says CEO of Moves, Matt Spoke.
Moves’s thesis is this: If gig workers become shareholders, they might feel more economic alignment to the platforms they work for. Furthermore, if enough workers own stocks in these companies through the Moves Collective, they might be able to form a voting bloc in the future and actually influence company decisions. Moves says it already owns a “significant and growing stake” in these companies, all of which are common shares with voting rights.
Over the past year, poor working conditions for gig economy workers have led to worker protests and attempts by states like California, Illinois, Massachusetts, New Jersey and New York to reclassify gig workers as employees, worthy of all the basic rights that status affords, such as health care, vacation pay and paid sick leave. Companies like Uber, Lyft, DoorDash and Instacart have fought back against the ongoing debacle in California over Prop 22 and have formed a coalition in Massachusetts to get a proposal on the November 2022 ballot that would classify gig workers as independent contractors.
“Gig workers contribute a huge amount of value to the gig economy, but they don’t get any of the economic returns as a result of the value they’re contributing, and that’s what we’re trying to solve for is effectively making them feel like they have an economic stake in the success of the companies that they work for,” Matt Spoke, CEO of Moves, told TechCrunch.
Workers who are already a part of the Moves platform – which enables gig workers to track and manage their money from different companies, have access to a monthly spending account and instant business cash advances up to $1,000 – are eligible to sign up for the Collective and receive rewards in the form of stocks. Moves will give workers a series of “tasks” to complete, like refer three friends or participate in a user survey, in order to receive free stocks, or fractions of stocks, which then go into the user’s own brokerage account that Moves has opened for them.
In the long run, the Moves Collective, aptly named, is meant to bring gig workers together and leverage the power in numbers to create a voice that can be used in corporate governance decisions. Moves would propose proxy material submissions at annual general shareholder meetings of the major platforms in order to ensure the interests of gig workers are heard, says Spoke.
Moves’s primary business relies on interchange rates that it is accumulated every time a gig worker uses their Moves card to make a purchase, and it’s that revenue which funds the shares Moves gives back to the workers.
“We’re effectively trading off revenue to acquire new customers and hold on to them, if you want to think of it that way,” said Spoke. “So the revenues we earn off the use of your checking account are being put back into the product to finance these rewards that are effectively denominated in stocks.”
At the moment, the program is invite-only and shares are accumulated via a partnership with Bumped Financial, a stock rewards program. Spoke says Moves will also keep an eye out for Instacart’s IPO to purchase stock for its platform, and is even considering supporting Amazon stock for Flex delivery people or Target stock for Shipt workers.
All of the app-based gig economy companies “suffer from the same problem,” says Spoke, “which is a massively high percentage of driver and worker churn rates. Their workers just don’t stick around. They either leave to go to another gig app or they leave the gig economy altogether. So these companies are spending tens if not hundreds of millions of dollars replacing workers all the time.”
(See: Uber spends $250 million to incentivize drivers back to the app, which then results in crushing Q2 losses.)
Before their IPOs Uber and Lyft considered issuing stock to drivers as a mechanism to increase retention and create worker loyalty, but there are different regulatory issues that got in the way of a sincere effort on the companies’ parts. In the end, the two companies decided to reward some more active drivers with a one-time cash award that gave them the option to buy stock. Uber, for example, set aside 5.4 million shares, which was 3% of total shares, of its common stock for drivers, but said it would offer those to the public if drivers didn’t scoop them up.
For reference, former Uber founder and CEO Travis Kalanick, who owned 8.6% of Uber at the time of public filing, made about $5 billion on his stake, and Alphabet, which owned 5.2% of the company, took home around $3.2 billion. U.S.-based drivers at the time had the option of using cash bonuses which could be used to purchase up to $10,000 worth of company stock.
Companies that rely on the gig economy do have a harder regulatory time giving out stock options to workers. SEC Rule 701 allows companies to issue stock to employees, consultants and advisors as compensation without having to submit detailed financial records, but gig companies don’t fit neatly into that current exemption. In 2018, the SEC called for comment on possible ways to expand the rule to adjust to the changing nature of work relationships. Uber responded, albeit past the deadline, but with a request that the SEC revise the rule in order to allow “partners to share in the growth of the company which could lead to enhanced earning and saving opportunities for the partner and for the generations ahead.”
As the laws currently stand, if Uber or Lyft were so inclined to incentivize drivers themselves with stocks, it would encroach dangerously on employer territory. However, the company’s past stance signals it might makes sense to one day outsource this kind of service.
“Uber, Lyft, DoorDash and Instacart have come together on topics like Prop 22, they’re lobbying together against new regulations, and so I don’t think it’s inconceivable that they would see this as being generally positive for the industry,” said Spoke. “Eventually I think we’re going to end up wanting to find some way to share the economics with them. Fast forward a year or two years, I definitely see us talking to Uber about the tangible benefits that we are able to demonstrate and say, ‘A driver that was issued Uber stock is X% more likely to stick around longer, so you should be partially participating in funding this.'”
Moves says it currently has about 10,000 users on its platform across all 50 states. The company was founded in February 2020, right before ride-hailing took a massive pandemic-sized dip, and has been in the markets since April 2021. The plan is to begin fundraising again in the first half of next year, but Spoke said Moves doesn’t want to do that until it refines the unit economics in the narrative of the business and creates a use case for Moves Collective.
“It’s not that Uber doesn’t care about their drivers but that their drivers are not their primary stakeholder,” said Spoke. “Their primary stakeholder is their consumer. They do everything they can to innovate value for the consumer side of their markets, and often the workers are sort of an afterthought.”