As Uber and Lyft Battle California Law, Texas Ride-Hailing Startups See Opportunity in LA

Francesca Billington

Francesca Billington is a freelance reporter. Prior to that, she was a general assignment reporter for dot.LA and has also reported for KCRW, the Santa Monica Daily Press and local publications in New Jersey. She graduated from Princeton in 2019 with a degree in anthropology.

As Uber and Lyft Battle California Law, Texas Ride-Hailing Startups See Opportunity in LA

Over the last three years, L.A. Lyft driver Nicole Moore has watched her paychecks shrink as her hours have grown. Frustrated, she's ready to leave her part-time gig, but until now there have been few options. That's about to change.

This year, two Texas-based companies are going after one of rideshare giants Uber and Lyft's biggest markets: Los Angeles.

Dallas-based Alto plans to begin their services by the end of October. And the Austin collective Arcade City will start marketing its ride-hailing app in Los Angeles Tuesday. They will be joining other apps already trying to steal away market share such as Wingz and Swoop.

Meanwhile, Uber and Lyft remain mired in a heated battle in California to keep their drivers classified as independent contractors, a business model that, if upended ,could damage their road to profitability. The two, along with other gig companies, have sunk millions into backing Proposition 22, a November ballot measure that would exempt them from a new state law that requires them to classify their drivers as employees.

These two Texas startups offer starkly different employee models.

The venture capital-backed Alto, which has raised $20.5 million, wants to become "the Starbucks of ridesharing," co-founder and CEO Will Coleman told dot.LA.

Unlike Uber and Lyft, Alto classifies its drivers as W-2 employees and supplies them vehicles from its fleet. It launched in 2016, the year Uber and Lyft left Austin in the aftermath of a costly fight to stave off the city's efforts to tighten regulations on ride-hailing companies including background checks.

AltoDallas-based Alto plans to bring their service to L.A. by the end of October.

At the time, a handful of new rideshare startups popped up across the city. One of them was Arcade City, a then-Facebook group where thousands of recently unemployed drivers connected with Austin residents who needed rides.

The startup offers the interface and tools for drivers to build cooperatives, allowing them to set their own rates and build relationships with clients. The peer-to-peer service lets drivers set their own rates and hours. It also allows for them to build up clientele.

"It's a level of job security that no other rideshare in the world is even structurally capable of matching," founder and CEO Christopher David said. "I think that's exactly what California needs. Drivers at minimum deserve the option to build their own recurring customer base."

While Arcade starts marketing its new global app, David said cooperatives take time to form and it could be months before riders here can hail a car as quickly as they can in Austin's 150-driver network. Demand will influence how long this process takes. The app will be in beta testing until next week's official launch.

Moore, the Lyft driver, welcomes new companies to the market and thinks riders would, too. The driver is part of L.A. Rideshare Drivers United, a group that organized following a round of pay cuts and strikes in 2017 and opposes Proposition 22. Many complain that the companies' algorithms that determine the cost of a ride and driver pay are not stable and can't be relied upon for predictable wages.

"Our loyalty is not to Lyft or Uber," Moore said. "Drivers will tell you the 12 companies they've driven for. Almost every Uber driver has a Lyft sticker on their vehicle as well."

A loss of customers or drivers in Los Angeles would be a blow for Uber or Lyft. Last year, nearly a quarter of all bookings at Uber came from five metropolitan areas, two in California — Los Angeles and the San Francisco Bay. Lyft is also reliant on major metropolitan areas and depends on its available pool of drivers to keep up services.

Arcade City, Another Side Gig?

Part of David's pitch to would-be drivers is that current Uber and Lyft drivers can start building networks even before the co-ops are fully functioning. Half of Arcade's Austin drivers still work part-time for other ridesharing companies, and drivers are promised 1% from every credit card purchase their referrals make for three years.

"Our model is like beautifully parasitic on the other," he said.

While prices depend on the city and co-op rules, an Arcade City ride will typically run you a couple dollars more than one from Uber or Lyft. Riders can also pay by cash or barter with drivers for rides. In some cases, drivers let riders pay them back days later.

Arcade, which emerged in the heat of a battle between gig workers and the two ridesharing companies in Austin, has not been shy about taking a stance against his competitors.

In an open letter to Californians, Arcade's David encouraged drivers to vote no on Proposition 22 "because Uber and Lyft's years of mistreating drivers and bullying local governments should be punished, not rewarded."

Alto's Ride Hailing Model

Alto is a membership-based service, although non-members can hail rides. Half of Alto employees come from Uber and Lyft, Coleman said, and each one is interviewed and background checked before being hired. He said the company "attracts the most professional drivers," meaning ones who consider Alto a job rather than a gig to make extra cash.

It's expensive to absorb the costs of hiring employees, Coleman told dot.LA, but if companies don't pay into unemployment and workers compensation, taxpayers will. Indeed researchers at UC Berkeley found that Uber and Lyft would have paid $413 million to California's Unemployment Insurance Fund had they classified their workers as employees.

The company offsets the cost by charging more. Coleman told the Dallas Morning News earlier this year that Alto customers come from more affluent households with incomes of $100,000 or higher.

Alto has plans to begin operations in L.A. by late October, just around the corner from Election Day when voters will decide the fate of Prop 22.

Neither Arcade City nor Alto have officially registered for permits from the California Public Utilities Commission yet. According to the state, only one new company, Onward Care Inc., has been issued a permit this year. Both companies said they plan to go through state regulatory channels.

Moore said she's ready for another option because relying on the two apps to pay for expenses isn't cutting it.

"You used to work four or five days a week, pay your rent and put food on the table," Moore said. "And now, doing the same work for the same company in the same vehicle, you have to work seven days a week and you're barely making ends meet."
🚁 One Step Closer to Air Taxis in LA
Image Source: Joby Aviation

🔦 Spotlight

Joby Aviation, a pioneering electric air taxi company, has achieved a significant milestone by successfully flying a hydrogen-electric aircraft demonstrator for 523 miles with only water as a byproduct. This groundbreaking flight showcases the potential for emissions-free regional travel using vertical take-off and landing (eVTOL) aircraft, eliminating the need for traditional runways. The company's innovative approach combines its existing battery-electric air taxi technology with hydrogen fuel cells, paving the way for longer-range, environmentally friendly air travel.

For LA residents, this development holds exciting implications for future transportation options. Joby's technology could potentially enable direct flights from LA to destinations like San Francisco or San Diego without the need to visit conventional airports, offering a cleaner and more convenient alternative to current travel methods. The company's progress in both battery-electric and hydrogen-electric aircraft positions it at the forefront of next-generation aviation, promising to revolutionize urban and regional mobility.

Notably, Joby Aviation has already made strides in Southern California by securing an agreement with John Wayne Airport earlier this year to install the region's first electric air taxi charger. This strategic move sets the stage for LA to be among the initial markets where Joby will launch its electric air taxi service. With plans to commence commercial operations as early as 2025 using its battery-electric air taxi, LA residents may soon have access to a fast, quiet, and environmentally friendly mode of transportation that could significantly reduce travel times and traffic congestion in the region. In the not too distant future, LA might find itself in an identity crisis without traffic and excess smog 🤞🤞.

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Fuel Innovation: 7 Unforgettable Team Building Experiences in LA
Image Source: Discover LA

In today's competitive business landscape, team building activities have emerged as a crucial tool for fostering a positive work environment, enhancing productivity, and crucially, improving employee retention. Studies have shown that such activities help employees feel valued, with one report indicating that 93% of those who felt appreciated were more motivated at work. Importantly, team building events may improve retention rates, as employees who feel connected to their colleagues and company culture are more likely to stay long-term. With these benefits in mind, let's explore some of the most engaging and effective team building activities available in Los Angeles.


Image Source: Modern Luxury Angelino

Pickleball is a fantastic team bonding activity because of the easy-to-grasp rules and gentle pace make it perfect for everyone, regardless of age or fitness level. The game thrives on communication and teamwork, as players must collaborate and strategize to outplay their opponents, boosting team cohesion. Plus, the lively, fast-paced action sparks friendly competition and laughter, creating a fun and spirited atmosphere that brings everyone closer together. Los Angeles boasts numerous pickleball courts that are easy to rent if you have your own equipment. If you need additional assistance organizing your pickleball outing, there are plenty of full-service companies ready to handle every detail for you.

Resources: Pickle Pop, Corporate Pickle

Escape Room

Image Source: The Escape Game

Escape rooms are a great way to build camaraderie. They require participants to work together, combining their problem-solving skills and creativity to overcome challenges and puzzles. The immersive and time-sensitive nature of escape rooms fosters collaboration and communication. Additionally, the shared experience of tackling complex tasks and reaching a common goal helps build trust and foster positive emotions among colleagues.

Resources: The Escape Game, 60Out

Day Trip to Catalina Island

Image Source: Love Catalina

Catalina Island is a perfect day trip for a team because it provides a break from the usual work environment, allowing team members to relax and connect in a new setting. Shared experiences during the trip, such as exploring new places and participating in fun activities, help build stronger relationships and foster a sense of camaraderie. There are numerous team-building activities such as an arboreal obstacle course, an island tour, scavenger hunts and more.

Resources: Catalina Island Group Activities

Top Golf

Image Source: Topgolf

Topgolf is an excellent team building event because it provides an inclusive, relaxed atmosphere that accommodates players of all skill levels, fostering personal connections and improving team morale. The unique blend of competition and entertainment creates an ideal setting for building trust, enhancing communication, and revealing hidden skills among team members. Additionally, Topgolf offers structured team building packages with guided activities, discussion prompts, and lessons on culture, change, collaboration, and strategy, making it a versatile and effective platform for strengthening relationships and boosting overall team performance.

Resources: Topgolf El Segundo

SoFi Stadium Tour

Image Source: Discover LA

A SoFi Stadium tour offers a unique, behind-the-scenes experience of one of the world's most advanced sports venues, allowing team members to explore exclusive areas like premium suites, team locker rooms, and the player tunnel together. The tour provides a shared, memorable experience that can foster camaraderie and spark conversations among team members, regardless of their interest in sports. Additionally, the stadium's state-of-the-art features and impressive architecture can inspire creativity and innovation, while the group setting encourages interaction and collaboration, making it an engaging and enjoyable activity for teams of various sizes and backgrounds

Resources: SoFi Stadium Group Tours

Corporate Volunteering

Image Source: L.A. Works

Volunteer work serves as an excellent team building activity by uniting employees around a shared, meaningful cause, fostering a sense of purpose and collective accomplishment. It provides opportunities for team members to collaborate in new ways, often revealing hidden strengths and leadership qualities that may not be apparent in the regular work environment. Additionally, engaging in community service can boost morale, enhance the company's reputation, and instill a sense of pride among employees, leading to improved workplace relationships and increased job satisfaction.

Resources: Habitat for Humanity, L.A. Works, VolunteerMatch

Corporate Improv Sessions

Image Source: Improv for the People

A corporate improv class encourages spontaneity, creativity, and quick thinking, skills that are valuable in the workplace. It promotes active listening and collaboration, as participants must work together to create scenes and respond to unexpected situations, fostering better communication and trust among team members. Additionally, the playful and often humorous nature of improv helps break down barriers, reduces stress, and creates a shared positive experience that can improve team morale and cohesion long after the event.

Resources: Improv-LA, Groundlings, Improv for the People

🎬 Paramount and Skydance Are Back On
Image Source: Paramount

Happy Friday Los Angeles! Hope you all had a fantastic Fourth!!

🔦 Spotlight

Paramount and Skydance Media have rekindled talks to merge after negotiations abruptly halted in June. The proposed deal, contingent on approval from Paramount’s board, aims to combine Paramount’s extensive media holdings—including CBS, MTV, and Nickelodeon—with Skydance’s film expertise showcased in hits like "Top Gun: Maverick." This merger signals a potential transformation in the media landscape, positioning the new entity to compete more effectively amid challenges from streaming services and the decline of traditional cable TV.

Led by Shari Redstone, Paramount’s controlling shareholder via National Amusements, the deal represents a pivot towards revitalizing Paramount’s strategic direction amidst financial struggles and shareholder concerns. The involvement of major investors like RedBird Capital Partners and David Ellison underscores the financial backing aimed at stabilizing Paramount’s operations and addressing its $14 billion debt burden. Importantly, the agreement includes provisions to protect National Amusements from potential legal challenges, addressing previous hurdles that stalled earlier negotiations.

The deal also includes a 45-day period for Paramount to explore alternative offers, highlighting continued interest from other potential buyers like Barry Diller’s IAC and media executive Edgar Bronfman Jr. This flurry of activity underscores the significant stakeholders’ interest in Paramount’s future and its potential as a key player in a rapidly evolving media industry.

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  • Sidecar Health, a startup that offers personalized health insurance plans to businesses that allow members to see any doctor and pay directly at the time of service, raised a $165M Series D led by Koch Disruptive Technologies. - learn more

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