Cory Savary didn’t expect to get rich driving for Juno. But he did think the ride-hailing startup that promised him part-ownership in the company as a driver would stay true to its word.
“I thought even if I wasn’t going to be a millionaire, I could at least get a couple hundred dollars for the blood, sweat, and tears and risking my reputation for these companies,” said Savary, who started driving full-time for ride-hailing apps in 2015 and signed up for Juno last summer.
Juno sold to Gett this week for $200 million, combining the two companies into an interesting third player in the U.S. ride-hailing market. It was the kind of deal that was supposed to mean a payday for Juno’s equity-holding drivers.
Instead, Savary was offered $100.
“This is penny stock — I could make more picking up pennies in Manhattan,” he said.
Attracting drivers is crucial to the success of ride-hailing companies. When Juno launched in New York City about a year ago, its “socially responsible” mission and driver friendly policies helped it convince people like Savary to add it to their rotation alongside Uber, Lyft, Via, and Gett.
A big part of that was the offer of equity in the company. Drivers would own “restricted stock units” in Juno that could translate into cash if Juno ever went public or got sold. The shares were awarded based on how much a driver drove for Juno — as long as they hit 120 hours a month on the platform.
Now, those drivers are getting their payouts, and they’re not happy.
Drivers who had thousands of shares based on their work for Juno, like Savary, were offered payouts generally around $100, according to the emails they received from Juno.
Based on the email below, drivers received less than $0.03 per restricted stock unit.
Exactly how drivers’ stock in Juno would work was always a little fuzzy. Juno couldn’t give out stock to its drivers forever, since a company only has so much equity available, and tax law made awarding these shares tricky. Juno told drivers in its email announcing its acquisition by Gett that before the merger the company was already reevaluating its equity grants after hearing from the Securities and Exchange Commission.
The SEC had asked Juno to change how it was implementing the program going forward, specifically registering it or using an exemption from registration in a different manner. Given these discussions with the SEC, Juno was considering, among other things, whether the RSUs previously granted were void under the terms of the RSU program.
Either way, they’re void now. Gett, an Israeli company with a small presence in New York, won’t continue Juno’s stock program. Instead, the ride-hailing company will offer cash incentives that similarly depend on how much a driver uses the Juno app (which will remain separate from Gett for now). But that cash incentive program doesn’t come with the bigger-picture strategy of treating drivers like partners and part-owners in the ride-hailing endeavor.
“It’s really sad what happened. Most drivers are very frustrated and saddened by it,” said Steven Savander, a part-time ride-hailing driver who talks to other drivers through the Independent Drivers Guild.
Drivers weren’t expecting to make it big through their stock in Juno, but many thought the shares would be worth more than $100, especially considering Juno’s sale for $200 million.
To get their stock payouts, drivers must waive all claims to any other compensation through Juno’s RSU program. Some drivers don’t want to do that and are trying to figure out what kind of legal recourse they have instead.
“I hope to sue,” Savander, who was granted $107 for his 6,035 shares in Juno, said. “Giving up all those shares for a couple hundred bucks is a slap in the face.”
Juno didn’t respond to request for comment or answer questions about the calculation it used to translate stock into cash payouts. And the end of the only ride-hailing option that seemed to make a meaningful effort to prioritize drivers begs the question: Is it possible for a ride-hailing company to compete with Uber while treating drivers well?
“It sends mixed signals. The fact that Juno was able to come in and become the de-facto No. 3 competitor after Uber and Lyft in the biggest transportation market in the world with a driver-focused angle shows that, on a local level, it is easier than people might think to compete with Uber and Lyft,” said Harry Campbell, who runs the blog The Rideshare Guy and communicates with ride-hailing drivers across the country. “At the same time, Juno went into talks with Gett and realized the operational side was insanely challenging. That’s really the biggest opportunity — on the consumer side of Uber there’s not a whole lot that can be improved, but on the drivers’ side there are a lot of problems and a lot of opportunities.”
Along with awarding stock, Juno took a lower cut of the fares drivers earned than its ride-hailing competitors and distributed smartphones for drivers to use to run the app. Those smartphones, though, served as advertising for Juno while drivers might have been ferrying Uber passengers around New York.
“They built the company on drivers’ reputations and word of mouth,” Savary said. “And then they sold it and said screw you, we’ll give you $100 so shut up and take this. It’s really unfair.”