Mar 14, 2024 - News

With Uber and Lyft threatening to leave Minneapolis, these upstart rideshare companies want in

Animated illustration of a phone with 9 rideshare app icons, and car logos driving from one to the next.

Illustration: Brendan Lynch/Axios

As Uber and Lyft threaten to leave Minneapolis over a new ordinance that would increase driver pay, a handful of upstart rideshare companies are considering moves into the city.

Why it matters: Uber and Lyft could be bluffing about leaving — but if they aren't, as many as 8,000 Twin Cities drivers would need work, and hundreds of thousands of passengers would need rides.

What we're watching: Mayor Jacob Frey vetoed the ordinance that prompted Uber and Lyft's threats, but the Minneapolis City Council will hold an override vote on Thursday.

The latest: For Texas-based Wridz — which currently operates in 19 cities, including Chicago, Dallas, and Phoenix — Minneapolis has shot to the top of its list of target expansion markets, CEO Steve Wright tells Axios.

  • Empower, an Uber/Lyft alternative currently offering rides in D.C., New York, and North Carolina, is also "at the ready" to serve Minneapolis, according to a company statement.
  • Pikkapp, a small Minneapolis-based startup, has had "preliminary conversations" with city officials about getting licensed, city spokesperson Casper Hill said.

How it works: Unlike Uber or Lyft, which takes a cut of every ride, Wridz (pronounced: "rides") makes its money by charging drivers a flat subscription rate, often $100 per month.

  • Drivers keep the full fare from each trip — which means Minneapolis' minimum pay ordinance might not cut into the company's bottom line as much.
  • Empower also has a subscription-based model.

The intrigue: A veto override by the council on Thursday would ramp up pressure on state lawmakers to reach a deal on a statewide bill before May.

  • "The city council is certainly making me rethink my thoughts on preemption," Gov. Tim Walz told Axios, adding that he's still hopeful that one member will flip and Frey's veto will stand. "We need to do something here that's workable."

Reality check: If Uber and Lyft do leave, Frey told reporters this week it's "unrealistic" to expect upstart providers would be able to fill the void in less than two months.

By the numbers: Minnesota has 10,335 rideshare drivers, and surveys suggest about one-third of the most active drivers handle nearly 70% of all trips.

  • For comparison, Wridz aims for 1,000 drivers in its larger markets, Wright said.
  • Cab drivers wouldn't be able to pick up the slack. Hill said Minneapolis currently has only 39 licensed cab drivers — down from nearly 2,000 in 2014.

The other side: Wright is more confident, saying he feels scaling up his company in Minneapolis would be straightforward.

Between the lines: Globally, alternative ride-hailers have struggled to differentiate themselves from Uber and Lyft, said James Hodgson of the global tech intelligence firm ABI Research.

  • Pre-COVID, some companies tried undercutting Uber or Lyft's prices or paying drivers extra. Hodgson said these "land grabs" proved unsustainable.
  • The pandemic made ride-sharing companies much more reliant on the delivery arms of their businesses, which adds yet another barrier to entry for a would-be challenger.

What's next: If enacted, the ordinance would take effect on May 1.

Axios' Torey Van Oot contributed to this story.

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