The LaGuardia Plaza Hotel is a four-minute drive from LaGuardia Airport, in Queens, and on a recent August afternoon nearly every car parked in the hotel's lot was black. One after the other, men in shirtsleeves pulled up in Chevy Suburbans and GMC Yukon XLs and gleaming Lexus RS 300s with leather-trimmed seats, got out, then made their way across the marble lobby and up a flight of stairs. A brightly smiling woman approached them as they congregated around a registration desk. "How are you?" she asked each one. "What's your first name?" She jotted the letters onto a yellow sticky note and worked her way down the line. "Do you have an appointment? Awesome!"
The men were black-car drivers, currently working for the ride-summoning companies Uber or Lyft, or both, and they were there, in all likelihood, because another driver had told them that they could get more money, and better treatment, if they signed up to drive for a new rival, Juno. New York City—which has no shortage of ways to get around, from pedicabs to one of the largest public-transportation systems in the world—is just one stage upon which a handful of companies are fighting to dominate the future of personal transportation. Juno has decided that the most effective way to do that is by being extra-nice to the drivers.
After the men registered, they were ushered into a waiting room, where draped café tables had been set up with brochures: "How to Be a 5 Star Juno Driver." Club music was playing. A handful of young Juno employees glided around, speaking in soothing tones.
The drivers were soon called by name—"Khaleed?" "Mamadou?" "Julio?"—and brought into another room, where a Juno manager, Lucas Smith, was waiting for them with a laptop and an overhead projector. "Drive Your Future," the slogan on the screen urged. A pink-skinned forty-year-old in jeans with a bushy red beard and an intense gaze, Smith joined Juno last January. Like several of his colleagues, he was recruited from Apple's retail division, where he conducted training sessions for Apple-store employees, based on Apple's carefully designed protocols. In fact, many details of the drivers' experience had been modelled on the interactions that customers have when they enter an Apple store, from the "concierges" who greeted them to the low driver-to-employee ratio.
At first, Smith was put off by the whiff of exploitation that he detected around rising Silicon Valley enterprises such as Instacart, where people buy your groceries for you, and TaskRabbit, where freelancers can underbid one another to take on errands and other jobs. In middle school, Smith told me, he was assigned a book by Ayn Rand. "I remember finishing it, and realizing that I wanted to be the opposite of everything that was in that book," he said. "Everything about the celebration of selfishness was just anathema."
So he was initially skeptical about Juno. "I'm a super-progressive, and I have incredibly mixed feelings about the 'sharing economy' and companies like Uber," he said. "Rather than creating wealth, they felt extractive. The kind of thing that happens when there's a bad job market and people don't have good choices. I try not to talk about our competitors, particularly, but the contrast for all these drivers is a powerful thing. They feel like they helped build other companies in New York, and, you know, as a reward for that, their rates kept getting lower."
The reference to "other companies in New York"—a.k.a. Uber—isn't incidental. Juno's business model is to take what Uber has created and appropriate it. Most of what Juno does is predicated on the fact that many drivers feel mistreated by Uber. (Lyft, for various reasons, seems to be less of a target of driver resentment, and is also a less powerful competitor.) If Uber seems cold and impersonal, Juno will smother its drivers with attention. If Uber has raised its commission—the part of each fare that the company keeps—Juno will set a much lower one.
From Uber's perspective, Juno must seem like a hermit crab, taking up residence in a home built by others. In many cases, Uber paid drivers a thousand-dollar bonus to sign up, and gave a thousand-dollar bounty to the driver who referred them. It helped the drivers get their taxi licenses. It built an app, trained consumers to download and use it, and battled regulators across the country. All Juno has had to do is come up with an app that looks and functions just like Uber's, and hire people like Lucas Smith to persuade those drivers to defect.
It was shortly after 3 P.M., and five men entered the room and sat down in a semicircle. Their cell phones were tucked away in their pockets; Smith had their full attention. "The fact that you're in this room, well, means that you're a professional," Smith said. To have been invited, in fact, all of them had to have an Uber rating higher than 4.65 (or a Lyft rating higher than 4.7). "So I don't need to talk about the basics. When it comes to what makes Juno different, the biggest thing is our focus. That's behind everything we do. And that's that Juno is for drivers." He paused to fiddle with the lights. "We built this company with the idea that listening to the drivers and building a business that puts drivers first isn't just the right thing to do—although we think it is—and it doesn't just mean that we're nice, although I think we are, but that it's also good business."
Smith moved through his slides and his talking points. The drivers learned that Juno's commission was ten per cent, "guaranteed for our first twenty-four months." (Uber typically charges twenty-five per cent or more.) On a slide titled "Example Fare," a bar chart showed a comparison between an Uber driver and a Juno driver on a thirty-dollar ride: the Uber driver, after commission and taxes and fees, would keep $19.11, while the Juno driver would get $23.61. "For literally the same amount of work, you're taking home four dollars more," Smith said. "And that's on one ride. Think about it on ten, over twenty." Juno was also offering twenty-four-hour support for its drivers, with a promise that you could always reach a real person on the phone, "not a robot." Finally, Juno drivers could earn an ownership stake in the company, in the form of restricted stock units. "I think this is a huge deal," Smith said. "And it's totally unique."
To qualify, a driver had to drive for at least a hundred and twenty hours a month—approximately thirty hours a week—for twenty-four months out of thirty. The twist was that Juno was offering to count toward this goal the hours that its drivers were working for Uber and other companies, all of it clocked on their dashboard phones. Half of the two billion founding shares of the company had been set aside for this purpose, although they weren't going to be worth anything unless Juno was bought out by a larger company or had an I.P.O.
Smith went on, "Now, once Juno goes public? And is traded on the stock exchange? You're an owner. You profit from that. You can sell your shares, you can hang on to them. But you'll profit from the growth of this company." There were some murmurs of approval among the drivers.
After the presentation, the drivers stood up and looked around. In a few moments, they would be collected by Juno staff members and given new Android phones with the Juno app, and then escorted to their cars, prepared to take Juno rides right away.
One of the drivers, a man with gray hair and glasses, told me that he was already driving for Juno. His name was Salim Sarder, and he was there with a friend who was hearing the pitch for the first time. Sarder said that Juno was more attractive on a ride-by-ride basis, but Uber had a lot more volume to offer. It was hard to toggle back and forth between the two while you were driving around, because if you turned down an Uber pickup to take one from Juno your Uber rating might take a hit. One of the many tyrannies of the sharing economy is the need to always keep your rating up."That's the thing right now," Sarder continued. "You get Juno fare, but Uber gets closer—more people available there, you know?"
Successful new technology companies are expected to grow quickly, even as they lose money, and Juno's expansion is almost entirely dependent on how swiftly it can poach drivers from the competition. The more drivers it has online, the shorter the wait times will be for passengers using the service. The shorter the wait times are—the more "liquidity" there is in the system—the more people will be willing to use it. According to Juno, the company has signed up more than fourteen thousand drivers since December. When I spoke to Juno employees in August, they said that they were getting around a hundred and fifty new drivers ready every day.
Later, I asked Smith if he could tell what the biggest attraction was for the new drivers they were seeing. The higher commission was a draw, for sure, but he thought that the stock grants were also a big factor. "Hearing drivers talk about the ownership piece completely changes the equation," Smith said. "I had one guy say—and this might sound made up—but he said he's been in this country, I think it was, for thirty-two years, and this was the first time he felt like an American. Now, that was super powerful, but it also made me feel a little bit sad. Because I would hope that there's more to feeling American than just owning the company."
Juno came about when its four co-founders realized that they had a lot of money and not a lot to do. It was October, 2014, and they had just sold their previous company, Viber, which was a competitor to Skype that allowed people to make calls and send texts by mobile phone for free, to a Japanese Internet company for nine hundred million dollars. The only question was what to embark on next. They were obviously "too young to retire," in the words of Talmon Marco, Juno's C.E.O. "It's going to be really boring," he said to himself at the time, contemplating a future of leisure at the age of forty-one. "We're gonna sit by the beach all day?"
A slender, soft-spoken Israeli with deep-set eyes and thick eyebrows, Marco serves as the public face of Juno, while his three partners run most of the company's operations from Tel Aviv. As he described how Juno was conceived, Marco was sitting in the company's U.S. headquarters, an open-plan space on the forty-seventh floor of 1 World Trade Center, with dazzling views of lower Manhattan and a telescope pointed in the direction of the building next door. Although Polaroids of the staff were pinned up on a wall, implying a goofy, collegial office culture, the place was eerily quiet, which was perhaps appropriate for a company that doesn't actually make anything and has relatively few employees; the drivers are independent contractors. The only real action took place at one end of the room on a large screen. It showed a map of Manhattan and Brooklyn, on which little car icons crawled around the grid like black carpet beetles.
The Juno founders knew that they wanted their new venture to serve consumers directly rather than provide a possibly more urgent but less glamorous behind-the-scenes product. "There's something fun about building something that real people use," Marco said. "Building something that you can talk to a regular person about and they will understand what it is that you do. If you do a resource-management-optimization algorithm for the back end of some sort of storage, O.K., fine. Great. Go explain that. 'Hey, babe, how's it going? I do research optimization.' "
They briefly considered the online-lending business, but there was no obvious hole for them to fill. There was a lot of negative press at the time about Uber. There had been accusations of several hit-and-run accidents involving its drivers; lawsuits had been filed over the company's privacy standards; and Uber and its C.E.O., Travis Kalanick, were fighting with regulators around the world over the company's aggressive approach to entering new markets. There were complaints about Uber's "surge" policy of charging more when demand was higher. What really stood out to Marco and his colleagues, though, was how disaffected the company's drivers seemed to be. After launching, in 2010, and wooing drivers to use its network, Uber started cutting the prices it charged riders in some markets and increasing the commission the company took on each ride. In January, 2014, Uber announced that it was reducing fares in sixteen cities, in some places by as much as thirty-four per cent. Partly, this was an attempt to put taxi companies out of business; even public transportation seemed to be under threat when Uber argued that it could be cheaper for a couple of friends to share an Uber than to ride the bus. The company was also engaged in a price war with Lyft. Many people driving for Uber had acquired new cars and were making car payments out of their Uber earnings; suddenly, their incomes were going down. Uber was increasingly popular, but there was still a sense that the company was at war with its own workforce.
None of this put off Silicon Valley venture capitalists and other investors, who viewed the company as the transportation equivalent of Amazon. By 2014, investors were valuing Uber at seventeen billion dollars. Meanwhile, the company was solidifying its reputation as an uncaring employer that was hastening the decline of job security—the downside of the "gig" economy. "Do we have an angle?" Marco and his partners kept asking themselves as they read story after story featuring complaints from Uber's drivers. "Uber drivers are not happy. Uber drivers are not happy. . . . It was like, hey, you know, there might be an opportunity here. Maybe you can get the drivers to switch to you. At the end of the day, this is a service that's powered by drivers."
Marco and his partners—Igor Magazinik, the company's chief technology officer; Ofer Samocha, who runs the company's servers and infrastructure; and Sunny Marueli, the "chief anarchist" and "super-brilliant guy who can do anything" (Marco's description)—started surveying the driving-people-around market more closely. Most of the drivers working for Uber were also working for Lyft, as well as for any number of smaller competitors. The drivers seemed to have little loyalty to any one company, and the companies—which weren't offering them health insurance, or even the promise of work beyond what they were doing for the next ten minutes—had no leverage to demand exclusivity.
Marco suggests that Juno was an opportunity to counter an injustice in the world: "As the mantra goes, 'I was young and I needed the money.' Well, we weren't as young, and we did not need the money. We were not struggling to make it happen at any cost. We did not struggle to put food on the table. So we had the luxury of choosing to do something that was socially responsible." From another perspective, though, Juno was simply targeting what the partners reckoned was Uber's one vulnerability—what a hacker would call an "exploit."
"Uber has two things," Marco said. "It treats its employees poorly, that's not that unique. I'm sure there are a lot of Fortune 500 companies, and on their Web sites you'll read, 'Our employees are our asset, yada yada,' but they still go on food stamps. But here's the thing. Walmart does not let you build, free of charge, or virtually free of charge, a Walmart next to every one of its Walmarts, and then, as its customers slowly show up, you can start taking Walmart's employees. Walmart still has to pay their salaries. But over time, when you're looking at the independent-contractor model, you can independently take joint custody over these workers. That's a unique, if you wish, weakness, in the sharing economy."
He went on, "Look, the sharing economy is fascinating on one end, but, at the same time, without the proper checks and balances, we're going back to fifteen-year-old textile workers in Brooklyn working eighteen hours a day. The platform controls you, and there's always going to be somebody willing to do the same work for a penny less. And that model just squeezes everything out of you, out of the lower class. At least until the point in time when they come with the pitchforks."
The social mission had its limits. As Marco and his colleagues had done with their previous company, they were saving money by situating the bulk of their operations, or at least most of the white-collar jobs, in the repressive post-Soviet state of Belarus. It's much cheaper to hire computer engineers there than it is in the United States. When I asked Magazinik about this, during a video call to Juno's seventy-person office in Minsk, he was reluctant to say that lower salaries were the reason they were there. He and the other co-founders are based in Tel Aviv, where they all grew up, he said. "In Israel, it's much harder to create such a big tech team in such a small time—the competition for talent is really hard," Magazinik told me. But he also acknowledged that they could hire five engineers in Belarus for the price of one in America.
The tech stuff wasn't Juno's strategic advantage, anyway. "If I was going to compete with Google, I would compete on privacy," Arun Sundararajan, a professor at N.Y.U.'s business school and the author of the book "The Sharing Economy," says. "I can't compete with them on search-engine quality, because they've got all the best algorithms. So I compete on something that they can't respond to easily. With Uber, it's not quite as clear-cut, but if you look at all the different dimensions of their execution the driver relationship is the weakest, and it's not one that they can easily correct."
Driver recruitment, which started last December, proved surprisingly easy. Many drivers congregated online in driver forums and WhatsApp chat rooms, and word of the new company quickly spread. The service launched in April as a "closed beta," which meant that it was still in a controlled-trial stage. In a few weeks, the volume of drivers interested in joining shot up. "We had bookings months out," Jonathan McPhee, who runs Juno's recruitment efforts, said. (He likes the title "people leader.") "We could barely open up enough bookings to satisfy the demand." Initially, the company was paying the drivers two hundred dollars to come in and listen to Juno's presentation, and then fifty dollars a week to keep the app running in their cars. Even though there weren't really any passengers to pick up yet, Juno was able to gather data about the drivers' traffic patterns through the Juno mobile devices that tracked their zigs and zags around the city. In May, the company moved into "open beta," meaning that anyone could download the app and start using it if he or she had been invited by a driver. Since then, the company claims that its wait times in Manhattan have become competitive with Uber's. McPhee says that a driver will often tell him, "I have so much activity, I don't even need to turn on my Uber app."
The question, then, is how long Juno can sustain its driver-defection strategy against a competitor as well fortified as Uber. When I spoke with Uber's head of North American operations, Rachel Holt, she told me that the company's vision is to be "as reliable as running water everywhere and for everyone." As it pursues that goal, Uber is watching Juno with defensiveness and skepticism. "I'd be very surprised if a ten-per-cent commission is going to continue for a long time, if ultimately a business is there to be sustainable," Holt told me, sitting with her arms crossed on a couch in Uber's sleek, fifty-five-thousand-square-foot offices in the Dupont Circle neighborhood of Washington, D.C. The company had thought about the commission a lot, she said, and the economics just didn't work. She added that Uber had tried to get permission from the Securities and Exchange Commission to give stock options to its drivers, and was told that, as long as the drivers were independent contractors rather than employees, it wasn't allowed. Indeed, one legal expert I spoke with said that giving restricted stock options to thousands of contractors might pose regulatory problems. "Look, if there's something we can learn around a different way to approach that, we would love to assess how that works," Holt said. "If there's something very compelling in what they're offering to drivers, we want to continue to learn from that."
Several venture capitalists suggested to me that Uber was now so big and so rich—its estimated worth is close to sixty-eight billion dollars—that it was basically impossible for any new company to dislodge it. In an industry where size and brand recognition are crucial factors, Uber has become a cultural buzzword, conjured by other entrepreneurs pitching their own ideas: the Uber of toothbrush heads, the Uber of car parking, the Uber of pets. Uber is the thing that everyone else wants to emulate, which makes it enormously successful at raising money.
The service is available in seventy-two countries, and has raised more than fifteen billion dollars; it is branching out into auto-lending, food-delivery, and courier services. I was repeatedly told that consumers summoning Ubers want their cars to come quickly, and that they don't really care about the fine print of the drivers' compensation. Uber had created a kind of moat around itself, and that moat was made of a seemingly limitless supply of investor dollars. Money shielded it from many of the pressures and compromises that a business operating under more normal conditions would face.
In the first six months of 2016, Uber sustained $1.2 billion in losses, a stunning amount. (Even Amazon never lost as much in so short a time.) In total, according to Bloomberg, the company has lost four billion dollars, almost a quarter of what it has raised from investors. A good chunk of it went into a costly effort to establish itself in China—an effort it recently abandoned. But the company's ongoing costs are significant. One major expense is bringing drivers into its network, and replacing them when they leave; driving is a "high churn" career. Each time the company goes out to ask for more money, though, investors fight for the opportunity. "With Uber, their disruption was, they really weaponized money," said Simon Rothman, a partner at the venture-capital firm Greylock Partners, who founded eBay Motors and was an early adviser to Lyft. "Now someone else has to do something equally disruptive, and I don't know if being nicer and more fair financially with drivers is enough."
Given Uber's wealth and its backers' patience, it can subsidize its rides indefinitely. Marco has been meeting with investors—in March, TechCrunch reported that Juno was attempting to raise thirty million dollars—but the funders I spoke with told me that they would not give Juno their money, because its challenges sounded too daunting. By the time the far-off future arrives when investors demand that Uber show an over-all profit, its competitors are likely to have gone out of business.
The search for instructive precedents quickly leads to a company called Sidecar, which started in 2011, in San Francisco, as one of the first ride-sharing businesses. Sidecar introduced a number of innovations that were quickly copied by its competitors: having drivers use their own cars; the term "ride-sharing"; giving drivers directions on their smartphones. The company's co-founder, Sunil Paul, has a patent dating back to 2002 for a technology that seems to underpin the whole industry: a method of sending a signal from a passenger's cell phone to a central server and then to the closest available driver for a pickup, and of tracking the subsequent ride. Sidecar raised and burned through thirty-nine million dollars, and shut down in 2015; whatever was left was bought by General Motors.
"We were the inventors and the innovators," Paul told me, ruefully. "But it wasn't enough to overcome the money." The only companies that could possibly compete with Uber now, he thought, were giants such as Apple and Google. "We got run over by the Uber money truck, in lots of different ways," Paul said. "I don't see much hope for a company like Juno, just to be perfectly blunt about it."
After Lucas Smith's presentation, I joined a Juno specialist named Farhan Noor, who was helping a driver complete the on-boarding process. "This is the driver agreement," Noor said. "Before we do that, I want to verify your car. We're driving a 2015?"
"It's a Nissan Pathfinder," the driver, Jaime Bitar, said.
"A Pathfinder, that's a nice car," Noor said.
Bitar was dressed in a black suit and a patterned tie. He stood in front of a white curtain while Noor took his picture with his iPad. "You should see my Uber photo," Bitar joked. "I took it in the car."
Noor then pulled accessories out of the kind of black velvet sachet that one might expect to contain a pearl necklace: a ZTE phone, a charging cable, and a dashboard mount. The phone was programmed to display a promotional ad to the passengers in the back of the car: "Save 25% on your next ride. Ask your driver." This way, while the driver was working for Uber, a customer might ask about the ad, and the driver could send the customer a text message with a link to download the Juno app. (It's against Taxi & Limousine Commission rules for drivers to solicit their passengers.) Once a new customer took his or her first Juno ride, the driver got a fifteen-dollar bonus.
At some point in the future, the likes of Bitar and his Pathfinder may be out of the picture anyway. In 2011, Sebastian Thrun, the founder of the Google X lab, announced at the annual TED conference that self-driving cars would usher in a new world, one where there were no automobile accidents, parking lots, or car-insurance premiums. Since then, a number of major corporations have made serious investments in autonomous vehicles.
Nobody knows when such a future might arrive. (Five years? Fifty years? You hear different things.) But everyone in the personal-transportation business is preoccupied with it. In August, Uber revealed that it was going to introduce a small group of self-driving Volvo XC90 S.U.V.s onto the streets of Pittsburgh, although they will still have drivers in the front seat. "I think the opportunity to totally transform the way people transport themselves and goods is just a massive opportunity," a banking executive who follows Uber closely assured me. "It's a huge segment of the economy, which is very inefficient. That is why Uber has grown so large so quickly." He pointed out that Dublin, California, east of Oakland, would be offering taxpayer-subsidized vouchers to its citizens to use on Uber or Lyft rather than spending government money on maintaining some of its public bus lines.
"It's not a matter of if, it's a matter of when," Marco said of the driverless era. "With Juno or without Juno, this is going to happen." He added that with Uber the drivers would just be "deactivated, and thrown away like a used whatever." Juno might not need them anymore, either, but they'd still have stock ownership in the company. "This is the first time since the industrial revolution when there was a class of workers who are going to have a piece of the future rather than just being laid off," Marco said. He didn't mention the prospect that the piece of the future may have no value.
A world of driverless cars could pose a far greater threat to Uber than Juno's kinder-copycat strategy. It could take any number of forms, from a subscription model, where consumers pay an annual fee to have access to an autonomous car whenever they need it, to a system more like Zipcar, where people pay on a per-use basis. Car sharing or fractional ownership could become widespread. Considering the number of possible arrangements, there's no reason to assume that any of today's ride-summoning firms will be dominant forces in an era without drivers. There was a time when AOL, the leading service provider in the dial-up era, was expected to own the future of the Internet, just as Blockbuster was expected to dominate video rentals for years to come.
When I asked Marco why he was so sure that Juno would still be around, he said, half jokingly, that he had acquired all the wisdom he needed by reading "The Hitchhiker's Guide to the Galaxy," by Douglas Adams. "Oh, my God," he said. "It's the Bible. Everything is there."
In the novel, the main character reflects at one point that the earth was pretty much ruined by all the cars. His name is Arthur Dent. One of his non-terrestrial sidekicks calls himself Ford Prefect, having concluded, after visiting earth, that cars were the planet's dominant life form. But Adams's unflattering view of automotive transport didn't seem to be what Marco had in mind.
I asked Marco to share what he had learned from the book, and he hesitated. "Now you're putting me on the spot," he said. After thinking for a few seconds, he went on, "It claims that the math never works in a restaurant, which explains why the bill never adds up." He wasn't sure if that was still true, because, he said, he stopped looking at restaurant checks a long time ago—preëmptively handing your credit card to the server saves the five minutes it takes to get the bill, look at it, and send it back with the payment.
"It was a very popular book, especially when I was growing up, among geeks in the eighties and nineties," Marco went on. "You have to ask the founders of Snapchat." ♦