Nomad Rides cofounders Michael McHugh (left) and Daniel Jones (right) launched the ride-hailing platform at Indiana University Bloomington.
Uber and Lyft have handily deflected any competition so far. Together, the two ride-hailing giants capture more than 98% of market spending, according to analytics company Second Measure.
Commissions for each ride comprise a significant revenue stream for both companies to the long-standing anguish of many drivers. Uber says it takes 25% of every ride, and while Lyft is more coy about its cut, the rates are estimated to be comparable. However, factors such as ride distance can cause the commission to balloon above 40%—a major reason why drivers for both companies organized a strike in May. When asked in 2015 why Uber was raising its commission rates, a then-executive reportedly said: “Because we can.”
One startup with backing from Silicon Valley accelerator Y Combinator wants to challenge the duopoly by eliminating the commission. Nomad Rides says its platform charges riders 20% less while drivers earn 20% more, paying Nomad a flat monthly subscription—currently, $25 per month. The startup launched its app at Indiana University Bloomington in February.
“The results were absolutely bananas,” cofounder and CEO Daniel Jones told investors during a two-minute pitch at Monday’s Y Combinator Demo Day. “In just 61 days, we completed over 5,700 rides. We had so much demand, we had over 9,400 ride requests.”
Jones and cofounder Michael McHugh, the company’s chief financial officer, have big ambitions. Sporting matching mint polos, they concluded the pitch to a roar of laughter after Jones asked if the audience was “interested in helping us kill Uber and Lyft.”