Can Alto succeed in employee-driven ride-hail? – MovieUpdates

Ride-hail startup Alto thinks the current gig worker-based market is inherently broken. Driver salaries are under pressure from the cost of owning and maintaining a vehicle; riders are not guaranteed a quality service; cities have had to deal with angry taxi drivers; and the app-based companies themselves that have underpaid users to expand into new markets are still not seeing the benefits of a growth mindset at all costs.

Alto’s founders started the company in 2018 to solve those problems by taking greater control of the entire ride-hail experience. The startup actually leases its own fleet of ride-hail vehicles, employs drivers, and is regulated as a transportation company. Yes, that means it’s more expensive to drive than your average Lyft or Uber, but CEO Will Coleman says Alto isn’t for everyone; it’s for customers who have a greater willingness to both pay and wait for something good.

Hence the name – “Alto” means tall, high, lofty or superior in Spanish.

Earlier this month, Alto launched its service in San Francisco, the sixth-largest market in the US. The startup also operates in Dallas, Houston, Miami, Washington, DC and Los Angeles, and says it continues to expand its model. To date, Alto has approximately 2,000 drivers on its platform operating 400 vehicles and is waiting for an additional 600 vehicles to be dispatched.

Alto is just one of many new ride-hail startups hoping to fix the gig worker model’s many flaws. For example, Revel has a fleet of Teslas powered solely by employees in New York, and Earth is doing something similar in Texas. Meanwhile, employee-owned apps like the Co-Op Ride app are jointly owned by the drivers, with the company saying drivers can earn 8% to 10% more than those who work for Uber or Lyft.

Alto, which last raised a $45 million Series B in the summer of 2021, says it grew 420% year-over-year (though the company hasn’t said from where), and attributes this growth to a differentiated service level .

map of Alto's ride-hail service in San Francisco

Map of Alto’s ride-hail service in San Francisco. Image Credits: alt

“We needed to employ our drivers so we could not only select and vet them, but more importantly train and manage them to deliver a consistent, high-quality experience for our passengers,” Coleman told MovieUpdates. “We own the vehicles so we can clean them, maintain them, keep them safe and make sure our customer gets the experience they expect with every ride.”

The vehicles in Alto’s fleet are all luxury, mid-sized SUVs — currently Buick Enclaves and VW Atlases — with leather interiors, Plexiglas dividers and in-vehicle Wi-Fi, the company said. The goal is to transition to a full EV fleet early next year, subject to vehicle availability.

To ensure a smooth transition to electric vehicles, Alto is building electric infrastructure charging stations for its future fleet in all the cities where the company currently operates, plus Silicon Valley.

Riders can only access Alto’s service through a $12.95 per month or $99 per year membership, which Coleman says creates a higher barrier to acquisition, but one that ensures Alto acquires customers over the course of the year. time are more profitable because they drive more often.

“We don’t have to build to the same peaks as our competitors,” Coleman said.

While the membership model can be successful in the long run, how you sell it is what matters. Multiple app reviews in the Google Play Store and Apple’s App Store show that customers dissatisfied with being asked to enter their credit card information immediately upon opening the app, rather than giving them time to play , assess the prices for rides or even determine whether Alto serves the passenger area.

In fact, based on reviews, the app seems to have some issues that put users off. Over the past year, customers have had issues with pre-booked rides not showing up, app freezing, failing to authenticate, difficult user interface, no way to contact drivers, and more.

“Downloaded, signed up, and paid my monthly fee assuming that with employees and the like, I was paying a premium for a more reliable service,” wrote one app reviewer. “Booked a car for the first time, two days in advance for an airport trip. They didn’t show up and we called and they have no idea why the car isn’t on its way. Ordered a Lyft and it was here before Alto could even figure out what had happened. Do not recommend.”

Many reviewers said their rides were clean and smooth and enjoyed the “vibe” of the service, but were put off by issues with poor customer service and a non-ideal app experience.

In response, Alto said capacity is inherently limited because it owns and operates its own fleet.

“The future of ridesharing lies in fleets – first electric, then autonomous. In that scenario, the supply will always be more limited than in a gig model,” Coleman said in a follow-up email. “You have to believe that in order to build a fleet-based, profitable ridesharing business, customers will eventually be willing to call ahead about a 10-minute ride (for a better, safer experience) instead of three minutes.” Please expect pick-up times.”

Coleman went on to say that Alto is constantly working to improve the app experience and expand its fleet to best serve its members.

Employees today, robots tomorrow

“We really see ourselves as a human-powered autonomous fleet, and that’s how we solve for the future as well,” Coleman says.

Alto’s endgame is to create the vehicle control system now that can be used with autonomous vehicles in the future. Coleman argues that Alto’s tech stack has optimization capabilities more suited to such a transition than Uber and Lyft’s, simply because those companies don’t control the offering.

“We’re thinking about orchestration, how we can optimize the best outcome for our entire fleet and customer base, rather than each individual independent contractor, to drive asset utilization and therefore profitability,” said Coleman. “Uber and Lyft have frankly not built operational capacity. We are building the real estate footprint, the charging infrastructure and just the know-how to clean, store and maintain these fleets of hundreds of vehicles in all the cities where we operate.”

Coleman makes a good point, which is that it could be easier for a company with existing operational capabilities to transition to, well, driving a fleet of autonomous vehicles — something top executives at Uber and Lyft are undoubtedly fingering. for crosses. they can be done with the annoying problem of dealing with driver permissions.

Coleman, for his part, thinks neither company can afford to move to an employee-driven model today.

“Their model is predatory towards drivers, and if they can’t make their model sustainable with that, then they can’t possibly make it sustainable with workers,” Coleman said.

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