When Cory Savary signed up to drive for ridesharing upstart Juno, the staff gave him an Android phone to use as he made his way around New York City. “Basically, they tell you they don’t have an advertising budget,” he explained in a phone call with the Observer. Juno recruited the best drivers from Uber (UBER) and Lyft, and the company had no desire for them to quit doing so, at least at first. The company told him to mount the phone in his car, and if people asked him about it, he should give them the pitch.
“We were going to tell their story, that they were listening to the grievances of Uber drivers,” he said. They also sold him on the idea that driving would earn him a stake in the company. So when Juno’s ridesharing app first started picking up customers, he did as much driving for Juno as he could because he wanted to earn that stake.
“I wasn’t thinking I would retire on these shares,” he said. Today, he learned that Juno is selling to Gett and he can earn $100 for his old shares, if he signs up with the newly merged company.
Ridesharing do-gooder Juno launched right around this time last year in New York City. It was the second act by a team of Israeli entrepreneurs who believed that better human resource management could prove its competitive edge against Uber and Lyft, the two biggest companies in the space. Today, it announced a sale to Gett for $200 million, as Techcrunch previously reported. New York City is Gett’s only American city, but it has a strong presence in Israel, Russia and parts of Europe.
It came with a compelling story. The team behind messaging app Viber had nothing to do after selling it for $900 million in 2014. Uber, they realized, had already created a new market, but it had a weakness: drivers hated the company. So the team founded Juno based on the theory that drivers are a ridesharing company’s killer app. If Juno could master customer service to drivers, the paying customers would follow.
Talmon Marco, whose companies Viber and Juno have sold for a combined total of more than $1 billion, as of today.
The Observer was there last May to watch CEO Talmon Marco explain at Techcrunch Disrupt his plan to dominate industry.
“In a nutshell, we’re going to be nice. We’re going to be ethical. We’re going to be respectful of our drivers,” he said. In that talk, Marco said his partners planned to give drivers a stake in the company. In fact, it had suggested it would set aside 50 percent of the company’s founding shares for drivers, as we previously reported. The legal logistics of equity proved complicated, as The New Yorker explained in October (it also mentions drivers getting phones as they signed up, incidentally).
Still, drivers have been building up restricted shares (called RSUs). Initial reports on the deal indicated that all shares accumulated by drivers would be nullified in the acquisition, but drivers would receive some kind of payment for shares accumulated so far. In a copy of one email sent to a Juno driver, forwarded to the Observer by the Independent Drivers Guild, it explains that the payment is conditioned upon signing up for a new agreement with “Juno by Gett.”
“Eligibility to receive this additional payment shall be conditioned on your waiver of any and all related claims under the Juno RSU program,” the letter explains. The report in Techcrunch indicates some kind of long term incentive program under Gett, but details have not yet been announced.
The letter we saw squared with Savary’s experience. It showed about 3600 shares offered $100 on condition of signing up for a new plan under Gett. We sent the letter to Juno to see if the value corresponded to a specific valuation.
“There is indeed an internal price per share, but many drivers had it rounded up,” Keren Kessel, a spokesperson, wrote in an email. “This driver is one such case. Other drivers have received more than $100.”
Another driver forwarded us a letter that offered $251 for 14,173 restricted shares, a value of roughly $0.02 per share. This post, shared on the UberPeople forum, shows an estimated value for restricted shares at $0.20 each, last July.
Liam McCabe is a Brooklyn driver who told the Observer he does 60 to 70 hours a week of driving, but he has Uber, Lyft and Juno open all the time. He described the process to acquire RSUs as “sort of convoluted and complicated.” He hadn’t recently checked his account when we spoke. While he liked Juno, he found the benefits of all the companies mostly washed out. “You got more rides with Uber,” he said. “It’s kind of half-a-dozen of the one, six of the other.”
“A lot of people were looking to Juno to change the game,” Harry Campbell, a Los Angeles driver who blogs about ridesharing as The Rideshare Guy, told the Observer in a phone call. “Being acquired by another company doesn’t fit the message to the drivers.”
Sam Abuelsamid, an analyst at Navigant Research, expects to see more consolidation. “More of the deals we are likely to see,” he told the Observer in a phone call, “will be automakers investing in or acquiring these types of companies.” Ridesharing companies will help them get autonomous vehicles in front of consumers as that market takes shape, he explained.
“This latest bait-and-switch underscores the need for industry-wide protections to ensure a living wage for drivers in the face of deceptive tactics, empty promises and manipulation from ride-hail apps,” Ryan Price, executive director of the Independent Drivers Guild, said in a statement.
Savary put it more succinctly. “It’s terrible,” he said. “There’s a lot of hours I put in for them,” he said, adding that even driving for Uber, he was working for Juno by mounting its phone on his dashboard. When he gave riders of other apps the pitch. He put himself at risk with Uber.
Savary plans to walk away from his $100 payout. “It’s blood, sweat and tears out there. You work longer and make less money,” he said. “It’s not fair.”
“What’s important is that drivers are not just driving, they also own the business,” Marco said last year. This year, not so much.