Can a Toronto-based ride-hailing startup compete with Uber and Lyft?
Harrison Amit is leading a small startup with a big idea.
"The vision for the com‐ pany is helping over 10 mil‐ lion drivers," said the 28year-old CEO of Hovr (pro‐ nounced Hover).
The Toronto-based ridehailing company launches to‐ day, and will service the city and surrounding suburbs.
Amit's goal is to make the company a national brand within a year and go way bey‐ ond that.
The question is whether this young entrepreneur compete with the global gi‐ ant Uber, which has a 15year head start and had 150 million active monthly users in Q4 2023 (including Uber Eats customers), or Lyft, which was founded 12 years ago and had 22 million active monthly riders in Q4.
Hovr's yet to provide a single ride, but Amit believes his company's approach could shake up the ride-hail‐ ing industry because of how it will pay drivers.
"Our tagline at Hovr is 100 per cent fare is 100 per cent fair. And what that means is that the drivers take home 100 per cent of the fare from every ride that they receive."
It's a play on words, but also a strategic play, setting Hovr apart from the giants it's up against.
What 100 per cent of the fare means
Amit says Hovr will appeal to drivers because instead of taking a percentage of the to‐ tal fare on every trip to turn a profit like Uber and Lyft do, Hovr will charge a $20 monthly membership fee to work for the service.
That price is an introduc‐ tory rate that Amit says will rise as the business grows, but a fixed cost means dri‐ vers don't pay more for working more.
That's how Hovr lets dri‐ vers keep "100 per cent of the fare."
Hovr says it will make the costs of each ride trans‐ parent, giving riders a bill that shows the fare or dri‐ ver's pay (the base rate, kilo‐ metres and time), and in‐ cludes what the passenger is being charged for insurance, city fees, a transaction fee plus a $1 "platform fee" from
the company.
Amit says the 100 per cent fair slogan has helped sign up 5,000 drivers and 25,000 potential customers, through word of mouth, social media and a few billboards in down‐ town Toronto.
Milton Brady, a former cabbie who's been with Uber for four years, said he could‐ n't wait to sign up for Hovr.
"Hovr is a knight in shin‐ ing armour," he said.
Brady says the industry needs more competition to make things better for dri‐ vers, and that Hovr's pay model would give drivers a "chance to actually build some kind of economical sta‐ bility in their lives."
Ride-hailing ripe for dis‐ ruption?
In Amit's view, the ride-hail‐ ing business is due for a shake-up, like the taxi busi‐ ness was upset by Uber when it arrived.
"We're entering a market that is ripe for disruption," he said, "It's riddled with dissat‐ isfaction, on both sides from the riders and the drivers."
Complaints about surge pricing and service, a tax in‐ vestigation and unionization efforts are all issues the in‐ dustry has faced.
"As an industry, ride hail‐ ing is in need of change," said Kam Phung, an assistant professor with the Beedie School of Business at Simon Fraser University in Vancou‐ ver.
"We know that it is riddled with problems and chal‐ lenges, specifically on the workers' rights fronts."
On Valentine's Day this year, a driver protest and strike was staged in several cities around the world as some gig workers logged off their apps, refusing work to bring attention to their pay and working conditions.
In Toronto, a report from Ridefair Toronto and the Rideshare Drivers Associa‐ tion of Ontario (RDAO) esti‐ mated many drivers were making less than minimum wage after expenses.
More protests were staged this week in several cities to line up with Interna‐ tional Workers' Day on May 1, with Toronto drivers protesting at the city's Union Station and Pearson Airport.
WATCH | More on the Valentine's Day strike:
What Uber and Lyft say about the business and fair pay
Both Uber and Lyft see the ride-hailing industry as thriv‐ ing and report positive trends in their quarterly re‐ ports.
Both have also said they feel competition is good for consumers and drivers.
Uber Canada told CBC News in a statement "the vast majority of drivers are satisfied," and in the Toronto area, for example, "are mak‐ ing $33.35 during engaged time per hour before tips."
The company also said it believes "drivers should earn a guaranteed minimum wage," and it will comply with new laws in Ontario and BC that enforce such a standard.
In an interview with CBC News, Lyft CEO David Risher said roughly speaking, out of every dollar that you as a rider pay, Lyft earns about nine cents.
He said the remaining 91 cents is split between insur‐ ance and other fees, but most of it goes to the driver.
"It's in our best interest that drivers actually get paid more, because it means more people are on the plat‐ form," he said.
A global brand?
Amit says Hovr is "positioning itself for the global stage," but interest from drivers will be the key to the company's growth.
He hopes drivers who are excited about Hovr and work‐ ing for Lyft or Uber will con‐ vince their passengers to switch over, as well.
"I don't believe there's any level of brand loyalty, it's more of a forced relationship with these companies, due to a lack of options."
Phung believes Hovr could grow quickly because there's a demand from some consumers for "gig-economy models that actually allow workers to have a fair wage, and contribute to the cre‐ ation of a just and equitable society."
But, he added, the reality of competing against big multinationals means the company could be in for a bumpy ride.