Inside the fight between D.C. and rideshare app Empower
Add Axios as your preferred source to
see more of our stories on Google.
Joshua Sear is taking on the District with his rideshare app Empower. Photo: Courtesy of Maryland Photo Video, via Empower
Empower, an upstart rideshare app founded by Joshua Sear, is facing a lawsuit from D.C.'s attorney general, an investigation from an irate council member and about $100 million in fines from regulators. He's not backing down.
The big picture: Not unlike Uber a decade ago, Empower insists it is in the software business, not transportation; so much so that it is defying D.C.'s demands it register as a rideshare company.
Why it matters: The result has been one of the wildest clashes between a brazen upstart and city hall. Caught in the middle: Washingtonians who might wonder whether to download the app.
During a recent interview in his small McLean office, Sear sat unfazed, talking up how "drivers make considerably more money using our software" and that riders get cheaper fares.
- He shrugged at the $100 million-and-counting in fines from the D.C. Department of For-Hire Vehicles, which has dropped two cease-and-desist orders on Empower.
- "They've sent us a subsequent email saying, 'Maybe that number is too high,'" he said, adding that they offered to settle the matter for much less. (DFHV did not comment.)
Zoom in: Sear, a 41-year-old first-time entrepreneur, founded Empower in 2019 after working as a lawyer in the local tech world. His business model, to the extent that it tries to out-Uber Uber, has no direct relationship with the rider. Instead, its only customers are the drivers, who pay a subscription fee to use and appear on the Empower app.
- Drivers set their own fares. Empower doesn't take a cut from rides. It makes money on recurring subscriptions from the driver.
- In Sear's ideal world, rideshare drivers function like, say, plumbers or freelancers who start their own business and advertise their services on an app.
D.C. isn't buying it. Attorney General Brian Schwalb is suing the company for ignoring a cease-and-desist order.
- That order from April alleges "the lack of compliance by Empower ... poses a significant risk to public safety."
Last month, Council member Brianne Nadeau's committee launched an investigation into the company and allegations of "stalking, harassment, and impaired driving" among its drivers.
- The added scrutiny comes after the app invited its supporters to sign up en masse to a D.C. Council meeting to hit back at the DFHV director.
- Over 1,300 people enlisted, overwhelming Nadeau and leading her to cancel the hearing.
"The owner of Empower really makes this seem like this is a game," Nadeau tells Axios. "This is very serious to me."
Behind the scenes: Empower recently proposed a bill to the D.C. Council to allow for drivers to be licensed and registered to work for themselves.
- Drivers would need to pay gross receipt taxes to the city and be responsible for insurance to cover crashes or other issues that could arise during a ride. But Empower's proposal hasn't gone anywhere.
Sear says Empower is profitable, with 80,000 rides hailed a week. Subscription revenues were $1.34 million in the second quarter of this year.
- "We are looking to raise more capital," Sear says. "We want to be in every city in the United States."
Meanwhile, Schwalb's office expects a judge to side with D.C. by the end of the year — enforcing the shutdown order.
💠Town Talker is a weekly column about money and power in Washington. Send your news and driving tips to [email protected]