Harrison Amit, founder and CEO of HOVR stands in the taxi line in front on Union Station, in Toronto, Oct. 10.Christopher Katsarov/The Globe and Mail
Harrison Amit is attempting to do the improbable: build a viable rival to ridesharing giants Uber and Lyft by appealing to consumers’ sense of justice around how little, he claims, their drivers are getting paid.
In May, Mr. Amit launched Hovr in Toronto – a ridesharing app that functions almost exactly like Uber and Lyft do – except that drivers who sign up for Hovr get paid the entirety of the rider fare, much like the traditional taxi model. “We do not use algorithms to determine a driver’s wage. When they sign up for Hovr they have full transparency on how they will get paid which is a combination of a base fare plus time and distance travelled,” said Mr. Amit, in a recent interview with The Globe and Mail.
It’s not that the company doesn’t turn to AI technology at all. Mr. Amit says that they use algorithms to run the app, but the algorithms have “nothing to do with how we treat our drivers.”
The rise of digital platform apps such as Uber, Lyft and DoorDash has coincided with the ascent of digitalized pay practices, where an algorithm formulated by the employer can dictate a wage awarded to a worker depending on a variety of factors unknown to the worker. A delivery courier using one of these apps could, for example, perform the same delivery at the same time on a different day and get paid a different amount, making it impossible for workers to predict their wages.
Labour policy experts have criticized this practice, saying that it undermines the spirit of equal pay for equal work, a fundamental tenet of labour law. But attempts at legislating what has come to be known as “algorithmic wage discrimination” are slow, at best – only a handful of jurisdictions across North America have successfully established and enforced minimum wage standards for digital platform workers.
Amit says that Taxi drivers have received HOVR well in the marketplace because of their rate policies.Christopher Katsarov/The Globe and Mail
Hovr is still in its infancy, available only in Toronto, but Mr. Amit, 28, says more than 40,000 drivers and 30,000 riders have downloaded the app. For each ride, Hovr drivers get paid a fixed base fare and an amount that varies based on time and distance. The app itself collects a “platform fee” of $1 per trip from a rider.
Mr. Amit had the idea of starting a ridesharing business during the pandemic, when he started using Uber to get around Toronto and noticed the extent to which the company’s drivers were complaining about how their earnings per ride had started to decrease. In particular, he said, they all seemed to face significant variability in pay rates, despite driving similar routes each day.
He started actively connecting with the driver community through unions and online forums like The Rideshare Guy – one of the most popular sites for drivers in the rideshare industry.
“I can tell you that they absolutely hate the existing apps that dominate this space. Most said they would switch to a competitor who paid them a fair and predictable rate,” he said.
In his first round of fundraising, which he says came mostly from family and friends, Hovr managed to raise $385,000, which allowed the business to launch last spring. The startup has grown to 38 employees from 10 over the past six months.
Hovr managed to raise $385,000 in its first round of fundraising, which allowed the business to launch last spring. The startup has grown to 38 employees from 10 over the past six months.Christopher Katsarov/The Globe and Mail
Hovr’s main source of revenue is a membership fee of $20 per month, which it charges drivers. In September, it launched a crowdfunding campaign using the equity crowdfunding platform FrontFundr. Hovr has raised $220,000 so far, with a goal of raising $800,000 by mid-December.
The Globe attempted to use Hovr on multiple occasions and found that while there were many Hovr drivers available in different parts of downtown Toronto, it was difficult to get a driver to a location in less than 10 minutes. Critically, the cost of a short trip exceeded what Uber usually quotes customers.
Mr. Amit admits that the cost of using Hovr in Toronto for short trips currently exceeds what a passenger would pay Uber or Lyft, but his sell to the public is that they pay a little extra knowing that their driver gets paid much more than on other rideshare apps.
Almost all of Hovr’s drivers, according to Mr. Amit, also use Uber and Lyft. As more drivers use the platform and more customers come on board, he believes that wait times and costs will start decreasing.
“We do not charge ‘surge’ pricing like our competitors do,” Mr. Amit said, referring to an extra charge levied by Uber and Lyft when operating during peak hours or in congested areas. “But we also do not give out discounts to riders like the other apps because we would have to recoup it after on the backs of our drivers who perform the labour.”
It is an uphill battle to break into a space dominated by Silicon Valley tech behemoths, says Robin Shaban, an economist and researcher at the non-profit think tank Public Policy Forum.
“Hovr is banking on the idea that people want drivers to be paid well, which is noble, but risky,” Mx. Shaban said. “Monopolies themselves are barriers to entry. If you’re going to go toe-to-toe against a market incumbent, you better have a pretty disruptive business strategy that is going to shoot at the legs of the incumbent.”
One of the biggest problems Mr. Amit says he’s facing is the anti-competitive structure of the city’s vehicle-for-hire licensing system. Every driver using an app like Uber or Lyft needs a licence from the city. But a single licence is linked to a single company meaning that if a driver wanted to drive for both Uber and Lyft they would have to own two licences. It can cost hundreds of dollars to obtain a licence.
“This is the only industry where an independent contractor’s licence and ability to work is controlled by the platform. I disagree with this model. There should be one licence owned by the driver to work for any company,” said Mr. Amit.
Mr. Amit says that Hovr’s ridership is still low and he intends to use the money raised on FrontFundr to market Hovr more aggressively. “We’re a Canadian company and we care about Canadian workers. I really do believe people who care about workers’ rights will come to us.”