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MSP's Sharing Economy Hits the Road: The Scoop on Lyft, Uber, Car2Go and HourCar

Amy on the go, photo by Brian Martucci

A Lyft car

Car calling with the Uber app

On the go with Car2Go, photo by Brian Martucci

From CoCo's coworking spaces to NiceRide Minnesota's ubiquitous bikes, the sharing economy is taking the Twin Cities by storm. Nowhere is this more evident than in the exploding ridesharing (or carsharing) phenomenon.

There are two basic ways to share vehicles in the Twin Cities.

Uber and Lyft provide apps that let you hail nearby drivers, who pick you up and drop you off in their own cars. You prepay for your ride (including gratuity) by credit card, eliminating the need for cash. To avoid taxi regulations, neither company allows drivers to accept tips in the car. And neither company actually employs its drivers: Both claim to provide a platform for independent contractors, though all Uber and Lyft drivers are background-checked and insured to $1 million, per state regulations.

Other ridesharing services are more like rental-car companies. Once you're approved as a Car2Go, ZipCar or HourCar member, you can unlock and drive any of their vehicles. You pay by the minute, hour, day and/or mile. Heavy users may want to purchase monthly membership plans. You don't pay for gas or insurance, though you may have to use a company fuel card to refuel. If you take a long trip, you must bring the car back to where it "lives" afterwards—you can't leave it out in the boonies and hitch another ride home.

To find out how ridesharing is changing the urban fabric of the Twin Cities, I reached out to some of its boosters and beneficiaries.

Getting around with Gloria, an Uber driver

"Whoever started this thing is a genius."

That's how Gloria begins our conversation. She cut her teeth driving a cab in Phoenix, where she earned her business management degree. Then she brought her expertise to Minneapolis. But the thought of long winter cabbie shifts left her cold. So she researched Uber and Lyft, traded her 2011 Kia for a spiffy 2014 model, and started memorizing shortcuts and side streets.

She settled on Uber because the company lets drivers keep 80% of their fares, unlike Lyft's "donation-based" tipping model. The minimum fare is $6.70, including a $1.67 base fare plus $.24 per minute and $1.90 per mile. Many of her riders are college students and young adults who can't afford a full-price taxi. "I like working with the younger generation," says the mother of two children.

Gloria likes the Uber app's seamlessness, too. When a rider hails her, she immediately sees who and where they are, so she can arrive within a few minutes. But she values the fact that they can't see her real phone number: "I don't know them and they don't know me."

In a typical week, Gloria works 16 hours and takes home about $250. She makes her own hours, avoiding hectic weekend nights. "I don't want to worry about drunk people in my car or on the road," she says. She devotes weekdays to professional development. Eventually, she'd like to start a car service of her own.

Gloria never goes farther than the airport, so the miles aren't piling up on her new Kia. And while she does complain that Uber drivers are prohibited by local regulations (and territorial cab drivers) from utilizing taxi stands, she's found a handful of side streets on the edge of downtown Minneapolis where she can lurk in wait for airport fares. (No, she's not sharing.)

Car service plans notwithstanding, she seems to be in it for the long haul. "As long as Uber's going strong, I'm staying put," she says, before driving off into the wilds of Whittier to meet her next ride.

Getting a Lyft from Alex

Okay, I'll admit it: I'm a ridesharing evangelist too.

Late one Friday, I stood shoulder-to-shoulder with bar patrons impatiently queuing for suddenly scarce taxis. But within a few minutes of punching my location and destination into the Lyft app, I was face to face with Alex and his pink-mustachioed, early-2000s Audi. Ten minutes and three miles after that, I was home.

Alex is a University of Minnesota engineering student who moonlights with Lyft to earn extra cash and meet interesting people. Unlike Gloria, bar and club patrons are his bread and butter. (He's too busy during the day to give rides anyway.)

He was coy about whether ferrying intoxicated passengers around was his idea of a good time, but—fingers crossed—there haven’t been any messes to clean up yet. And the late-night crowd is generous: Though Lyft drivers are paid via donation, not commission, he estimated that his hourly earnings exceed $20 during peak periods.

Unlike Gloria, though, Alex isn't a career driver. Lyft is a means to an end—a way to offset crushing student loans. When he graduates next year, Alex he expects to find a full-time job. But if the 9-5 grind gets to be too much, there’s always Lyft.

Alex had already gotten a generous "donation" for my ride and he steadfastly refused the cash in my extended hand as I opened the door to leave. He did, however, extend his own hand to deliver a fist bump—another Lyft signature, along with that pink mustache.  

As he carefully merged into traffic, I looked back in the direction we'd come and wondered how many of my fellow bar patrons were still waiting for their cabs. I could get used to this.

Sharing with a side of controversy

Like any disruptive innovation, ridesharing has fomented some controversy. The disputes are complex, but they follow two main threads. First, labor advocates allege that—despite rosy gross income figures—Uber pays less than a living wage, once the cost of gas, insurance and other expenses are factored in. Lawsuits have been filed in several states to challenge its payment model. An unfavorable outcome could force Uber to treat its drivers as traditional (and much more expensive) employees, not independent contractors.

Meanwhile, taxi companies clearly feel threatened by a flexible, low-cost alternative. Minneapolis and St. Paul are considering new regulations for Uber and Lyft, including registration fees and annual inspections for participating cars. The goal is to shift some of the cost of providing rides from drivers to the companies themselves, and to reduce their allegedly unfair advantage over taxi companies. ZipCar, Car2Go and HourCar wouldn't be affected.

Despite the controversy, Uber and Lyft market aggressively—and competitively. When Lyft first came to the Twin Cities in February, it offered free rides for everyone for a two-week period. Uber followed suit with subsidized rides of its own. More recently, both companies released dueling ride credits: Lyft struck first with a $25 discount, then Uber fired back with a $30 credit.

Car-free Amy and Car2Go

Like many ridesharing converts, Amy turned a temporary setback into an empowering change. After totaling her Ford Focus in a parking ramp accident, she tallied up what she'd been spending on car ownership—up to $500 per month, depending on how much she drove and whether she visited the mechanic. She decided not to replace her car.

She lived in the Wedge neighborhood of Minneapolis and worked downtown, so switching to a bus commute was a snap. She could run most errands on foot or bike. But for trips to the grocery store, social events far from high-frequency bus lines, and general time crunches, she needed something. With no ongoing membership fees, Car2Go seemed like the best bet for occasional, irregular use. When she moved south of Lake Calhoun, it became a no-brainer.

"Car2Go gives me some breathing room and peace of mind," she says. "Buses are late. Weather is unpredictable. I primarily rely on the bus and biking, but it's nice to have a third transportation option to fall back on."

Amy's three-pronged transportation mix is much, much cheaper than owning a car. Her employer pays for her monthly bus pass. A typical month's Car2Go expenses rarely exceed $50. During the warm season, Amy avoids getting behind the wheel for weeks at a time.

Going carless hasn't radically shifted Amy's urban experience, but for better or worse it does keep her from venturing too far afield. "I mostly occupy a long rectangle of Minneapolis, from 54th Ave S to maybe 13th Ave NE, [and] from Lake of the Isles to the Midtown Global Market," she says.

"Once I go farther than those areas, I panic a little," though she has plenty of friends with cars. And since Car2Go (and other services) require pets to be confined to a carrier—which Amy doesn't have—she relies on her boyfriend to take her pup to the park or vet.

"Paying per use really makes you think about the necessity of a particular trip," she says. "Is it worth it? Is there another way I could get somewhere, without spending money? It's a nice way to think about things."

A Homegrown Alternative

Uber and Lyft are from San Francisco. ZipCar is based in Boston. Car2Go is owned by a European company. But HourCar, a St. Paul nonprofit, was among the first on the scene.

Founded in 2005 by the Neighborhood Energy Connection, a group that promotes energy efficiency and sustainability, HourCar uses the "rental car" approach to car sharing. The rules are similar to Car2Go, with individual plans starting at $6 or $8 per hour and $.25 per mile. Daily rates are cheaper, starting at just $55. You do have to pay monthly membership fees: $5 per month for the Freedom Plan, which is good for occasional drivers, and $15 per month for the Go Plan, which is good for near-daily users.

Since opening, HourCar has expanded its fleet from about a dozen to 80 cars (by the end of this year). That compares to about 200 Car2Go vehicles in Minneapolis and 185 in St. Paul. But HourCar program manager Christopher Bineham contends that the nonprofit model allows HourCar to serve "neighborhoods that otherwise wouldn't be served and [maintain emphasis on]...the social benefits of car sharing" while remaining affordable.

HourCar's big differentiators include its low daily rates, affordable membership plans and "the most fleet diversity of any car sharing service in the Twin Cities," says Bineham. Unlike Uber and Lyft, which function more like taxis, HourCar is a viable option for car-free individuals who need to make a big shopping trip, as well as "single-car families who occasionally need an extra vehicle."

Bineham allows that Car2Go, ZipCar and taxi-like services represent stiff competition. But he contends that local transit trends are favorable for a locally based, on-demand car rental option.

"The growth of the transit system and continued investment in bicycle infrastructure will make it possible for more residents of the Twin Cities to eliminate or reduce car ownership and use car sharing as one of their tools for getting around," he says.

In other words, there's room for multiple approaches to this booming segment of the sharing economy.

Brian Martucci is The Line’s Innovation and Jobs Editor, and frequently contributes feature stories.
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