To beat Uber and Lyft, this startup vows to give its drivers the full fare:
it takes 25% of every ride, and while Lyft is more coy about its cut, the rates are estimated to be comparable. However, factors such as ride distance can cause the commission to balloon above 40%—a major reason why drivers for both companies organized a strike in May. When asked in 2015 why Uber was raising its commission rates, a then-executiveOne startup with backing from Silicon Valley accelerator Y Combinator wants to challenge the duopoly by eliminating the commission.
Jones and cofounder Michael McHugh, the company’s chief financial officer, have big ambitions. Sporting matching mint polos, they concluded the pitch to a roar of laughter after Jones asked if the audience was “interested in helping us kill Uber and Lyft.”that he and Jones see Nomad Rides as a software company rather than an Uber-esque ride-hailing app.
Unlike Uber and Lyft, which provide supplemental car insurance when drivers are on the apps, Nomad requires drivers to pay for their own insurance. Drivers can purchase a commercial insurance policy through Nomad at a cheaper price than they would get on their own. “We’re basically leveraging the amount of drivers we have to be able to get those drivers really affordable rates,” McHugh said. “Now, we can open [Nomad] up to a whole new driver pool.
Ride Austin—a nonprofit ride-hailing service that emerged amid a 2016 dispute that temporarily knocked Uber and Lyft out of Austin, Texas—charges a flat 99-cent-per-ride fee to the driver. CEO and cofounder Andy Tryba toldhe learned rider acquisition is a far greater challenge than driver acquisition. Nomad faces a long, expensive climb out of anonymity, Ramsey concurred.
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