Empower founder and CEO Joshua Sear is the kind of ride-share passenger who likes to talk to his drivers.
It was through those casual conversations that he came up with an idea in 2018 for an app that would offer a viable alternative to the country’s top ride-hailing services — Uber and Lyft — by letting drivers keep all the money they make in exchange for a subscription fee.
“Consistently, they were saying how they weren’t able to make a living, particularly full-time or near full-time drivers, and then, also…they felt voiceless, like they weren’t heard, that they didn’t feel like they were a customer,” Sear told FFXnow in a recent interview. “…The rider is the customer for Uber and Lyft, and the more I thought about, I started to wonder, ‘Well, what would it look like if drivers were customers?’”
Since launching service in the D.C. region two years ago, the McLean-based startup has supported over 2.5 million rides given by about 10,000 drivers, who have collectively earned more than $40 million, Sear says.
Once touted as better-paying options than taxis, both Uber and Lyft have been dogged by questions about driver pay for years, even after the former paid $20 million to settle federal claims that it was misleading drivers in 2017.
Reports indicate that drivers only receive about half of what riders pay and that the companies take a bigger chunk of fares than the 20 to 25% advertised, discrepancies that have persisted despite soaring prices and led drivers in Denver to strike last month.
Where those ride-sharing companies take a portion of each fare, which is calculated based on trip length and duration, demand and other factors, Empower charges drivers a flat subscription rate for use of its app and other services, including customer support for both driver and rider complaints, according to Sear.
Though the company provides recommended rates, drivers set their own fares and keep everything that riders pay, an approach that Sear says has proven appealing to both parties.
“We do a lot of surveys and get feedback from both riders and drivers, and our surveys as to why do you use Empower for riders, the second most prevalent answer is because drivers get 100% of the fare,” Sear said, adding that the top answer is that the rides are generally less expensive.
He says Empower also aims to provide more transparency to drivers, who can see pick-up and drop-off locations and the rate for each ride before they choose to accept it, and more options for riders, who can “favorite” drivers and limit matches to drivers of the same gender.
A former lawyer with experience in both business and politics, Sear has been a longtime resident of the D.C. area, but he decided to introduce Empower first in Winston-Salem, North Carolina, seeking a mid-sized city with a college that could provide a reliable base for riders.
One week later, though, COVID-19 arrived, and the target audience of college students left the city. Still, the platform found some customers in frontline workers unable to stay at home, and those initial months provided enough data to suggest the concept could work in a larger market.
“We kind of figured, hey, maybe the dynamic is flipped, and it may actually now make more sense to be in a city that has a bunch of public transportation, but that isn’t going to be used as much because of Covid,” Sear said.
Empower launched in the D.C. area in October 2020, and its drivers are now providing about 4,000 to 5,000 rides a day, according to Sear. While demand has been heaviest in downtown D.C., the company is seeing growth in the Virginia and Maryland suburbs, including Silver Springs, Arlington and Alexandria.
Sear says they’re starting to see more demand in the Tysons area and hope to also get more traction in Reston.
The startup’s rise hasn’t been obstacle-free, however. According to a press release, a woman filed a class action lawsuit against Empower earlier this month alleging that the business is violating D.C. law by not providing or requiring insurance for its drivers and not conducting background checks.
Noting that the company hasn’t been served any legal papers yet, Sear told FFXnow that Empower does require background checks for drivers and confirms that they have up-to-date auto insurance, though it doesn’t provide any coverage.
Because the business model means Empower is selling its software to drivers, rather than the actual ride-sharing services, the risk in crashes falls on the individual drivers, not the company, he argues.
“It’s without merit, it’s defamatory,” Sear said of the lawsuit. “We intend not to sue the complainant, but to sue the law firm frankly for defamation, for publishing something in a press release that any reasonable diligence would’ve determined is just absolutely false and is defamatory.”
While Empower currently refers drivers to brokers if they’re looking to expand or change their coverage, it could potentially provide insurance and other services, such as tax or accounting assistance, directly in the future. It’s also working to expand into new areas and in its established markets, including New York, where it launched last year.
“We want to be able to provide a comprehensive suite of support and services that helps [drivers] be independent, sole proprietors that have control of their own financial future,” Sear said.
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