In part two of our Mobility-as-a-Service series, Zachary is joined once again by Ryan McManus, founder and CEO of SHARE Mobility. Based in Columbus, Ohio, SHARE Mobility is an all-in-one mobility solution that offers all of the tools that organizations need to manage multimodal transportation programs.
Zach and Ryan discuss the future of the mobility industry. Topics include near-term changes (electric vehicles, commuter benefits ordinances, and autonomous driving), and the policy and behavioral shifts that must occur for the U.S. to fully embrace innovations in mobility and ridesharing.
Visit our website for information about our legal services related to emerging technologies.
In part two of our Mobility-as-a-Service series, Zachary is joined once again by Ryan McManus, founder and CEO of SHARE Mobility. Based in Columbus, Ohio, SHARE Mobility is an all-in-one mobility solution that offers all of the tools that organizations need to manage multimodal transportation programs.
Zach and Ryan discuss the future of the mobility industry. Topics include near-term changes (electric vehicles, commuter benefits ordinances, and autonomous driving), and the policy and behavioral shifts that must occur for the U.S. to fully embrace innovations in mobility and ridesharing.
Visit our website for information about our legal services related to emerging technologies.
ZBP
Now, what you see from being in the mobility space in the next five years, if you have a crystal ball, what do you, what do you think some of the biggest challenges are, kind of in this space, not just for shares mobility but kind of just in the industry as a whole?
McManus
So, I think the biggest challenge is perception of progress. I believe the automotive industry has a lot of de-innovation happening. You can look at electric vehicles. We’re now in our third wave of electric vehicles, and the makers of them have done a pretty good job historically of ensuring that they’re not successful, okay, and you’ve got this promise of autonomous vehicles that if you really know, it hasn’t changed the state of the industry in the last, like, four or five years, hasn’t really changed at all, but there’s a lot of perception that it is. I think lobbying and status quo and trying to protect dealerships’ current ways cars are sold are all things that are gonna hold back progress in this industry. I think from a policy perspective, we could get there a lot further, but the reality is, is we don’t make the right vehicles today for the future that I’m trying to create. We are building cars to be bought by individuals to be driven 5% of the time and sent off to the junkyard after 10 to 15 years. They last a long time, you don’t use them that frequently, and everybody’s got their own, right? But if our new administration is successful in taking the Federal Transit Administration dollars and infrastructure dollars and instead of putting 70 or more percent of that into roadways, they start putting that into equitable access services, public transit, improving mobility in rural areas, then it could be, it could create the demand for the automakers to start creating the perfect shared vehicle, and until we see automakers start to project fewer volume of sales in the future, we should all know that their intentions have not changed. Bill Ford wants to still see more Mustangs and F150s no matter what he talks about Ford Plus, right? And if the automakers looked at what I said earlier about the value of time in the vehicle and monetizing all of the data, they’d realize that they could make more than ten times the value of a vehicle sold by putting into a subscription model, and you could be retaining these customers forever. Your lifetime value could multiply significantly, but they’ve got supply chain infrastructure and investments in manufacturing capacity that they have to depreciate, and so they’ve got a glide path that’s longer than the glide path that I want, and so in the next five years, I think it’s very much about affecting the things that could accelerate that glide path. The things I’m doing are, we’re just testing electric vehicles in our micro-transit fleet, and I can already identify some challenges about how traditional ride handling might try to use an electric vehicle and how they’re gonna be far superior in our model where we know all of the demand for the vehicle in advance, but if we can be demonstrating how to utilize shared electric vehicles, start to do it in scale, we can find the right automotive partner to eventually build the perfect shared vehicle.
ZBP
That’s a lot to take in, and as I’m kind of thinking through that, I think there’s a lot of moving components that you kind of talked about there, from the autonomous vehicle, and I mean one of the things is, you’re talking about the development. Kenton and I have often joked about, just with the development of autonomous vehicles, about how people were always saying they were coming in 2020, and obviously 2020 came and went, and I know there was a pandemic, so I’m not trying to, but we’re still, we still don’t have fully autonomous vehicles. I know that Honda’s releasing a Level 3 autonomous vehicle in Japan, and we’ve got GM and Ford introducing Level 2 Plus services or they’ve already had them, but you’re right. I mean, we don’t have a Level 4 or a Level 5 in a fully autonomous vehicle, and I mean, the timelines as to when they may be out, I’ve seen various timelines anywhere from 2024 to 2030 to 2035, so I think there’s a lot of questions I think that remain out there about a lot of things that you’re talking about and whether or not, I mean one of the things that we’ve also talked about on this show, too, in these episodes is that people, I mean, Americans love their cars, and America has had a long infatuation with the automobile.
McManus
Neil deGrasse Tyson was just on Joe Rogan, and they were talking about America’s obsession with horses and cars, and I think people will always love driving, but they’ll do that for pleasure. They’ll go to a track. I see a future of dude ranch-style tracks where you can go drive cars for the day.
ZBP
Sure.
McManus
So if you really love to drive for pleasure, I think you’re always gonna be able to do that. So June, for us, is our five-year anniversary. Five years ago, we started a company, and the founding vision was to build technology for a world where everyone is a passenger, and I always said three things. It’s technology, policy and behavior change. I still believe policy is the thing that’s holding us back. In 2016, I drove a Tesla across the country, and 59% of the time, I didn’t touch the wheel, so we’ve had the pretty decent AV tech for a little while. It’s the behavior change part that’s the problem. We all buy our cars. We all have two of them. We drive them 5% of the time, and they last 10 to 15 years, so the changeover cycle of those vehicles isn’t very frequent. It’s one of the reasons why I focus not on personal vehicles but on fleet-owned vehicles because, for example, we’ve got a city up on the north side of town that we work with where we’ve taken one of the city-owned vehicles and we put it into our micro-transit fleet. We’re working on increasing the utilization of that so instead of the life being, say, 10 years, it might only last 2, but I’ve got every bit of juice out of that and we’re able to bring in the next electric-connected autonomous vehicle because we’re accelerating the cycle of changeover. And then the last thing on behavior change that I think has to happen before we can have autonomous vehicles or we have a health scenario is planning ahead. We live in an on-demand world. My car is in the driveway so I can go get it. I hail an Uber on demand; I don’t plan ahead. Well, if we all own our own autonomous vehicles and we’re all handling them on demand, the roads are gonna be hellish because they’re all gonna be empty driving around doing errands. If they’re doing errands for us personally, those who have an economic need aren’t gonna have access to them at all, and because they’re running around this neighborhood, they’re not in a neighborhood that has more need, so the way that we’re trying to effect at SHARE Mobility is look at finding groups of people that will plan all of their transportation for the month and get more know demand from a group of people so that we can dedicate assets to serving those people and then they get to fractionally have mobility as a service, and so if I can get more people to just plan the commute, that’s all I’m focused on is I just want you to plan your commute, plan the 40 trips you’re gonna take to and from work, do it through our app. I can save somebody 5 grand a year just by giving them a more efficient service if they plan ahead, and so my goal with SHARE Mobility is to partner with organizations that people already trust and bring them a tool that makes it really easy to plan the trip they take the most, which is their commute to work. And then we focus on those with a financial need first and those like you that might be considering wouldn’t it be great if I did this. We’ll get you later.
ZBP
Well, I mean, I will tell you too. It’s funny as you’re talking about planning these trips because I think about my own personal commute, and I roughly leave my house within a 5 to 10-minute window almost every day, and so I think, well, couldn’t I really, I mean, my trip really is already kind of planned.
McManus
It is.
ZBP
It’s just a question, I mean, it’s just a question of telling somebody else to come get me at that particular time and making sure that I’m actually ready at that time, but pretty much already there as it is. My commute, my personal commute home varies a little bit day by day, but my commute here doesn’t, and that’s, I mean, so that’s one of the things that you’re thinking about, I was thinking about at least, as you were talking about kind of planning ahead.
McManus
Right
ZBP
And I know that there’s, I mean I know that there’s, especially other industries or other professionals who have kind of a more set schedule.
McManus
Airlines.
ZBP
Than probably I do.
McManus
Nobody books an airline on demand or I wanna go to the airport now. They, they plan all that.
ZBP
Absolutely.
McManus
I think the commute is something that you could very easily plan for, but it’s the, it results in chaos theory where everybody is making slight differences on a day-to-day basis, 5 to 10 minutes, and it just means that rides that could have been shared don’t get shared.
ZBP
Right. Right. Now, I think you probably already talked about this a little bit when we were addressing kind of the challenges in the mobility industry or when we were talking about, I’m sorry, yeah the challenges. Do you think there are any kind of opportunities or changes at least in the near term that you see in the mobility space, and kind of, what do you think that near term may be, because I know a lot of people, we were just talking about the autonomous vehicles. Analysts are kind of all over the place as to when we might actually see a high-level autonomous vehicle, but do you see anything that’s happening kind of in the near term that we should be watching out for or are kind of expecting?
McManus
So I think electric vehicles are a trend that is past the tipping point, so don’t listen to my skepticism ---------- on the third wave. I think electric vehicles are here within the next 12 months. We’re gonna have 14-passenger electric vehicles that we can start putting into our fleet, and I think the need becomes electric charging infrastructure. We’re doing pretty good in Columbus, but I think other parts of the country have a long way to go. The other thing is commuter benefits ordinances, and so I know there are some communities here in Central Ohio. I would love to see us do this at a city-level in Columbus, and I think there is some interest in it. That’s a commuter benefits ordinance, so because of SmartColumbus, a lot of companies in the city offer commuter benefits, but nobody had ever thought of it, and a decade ago, Google started doing it, and they’ve got the Google Bus and they drive everybody to work. But there’s a huge benefit in a city when all of the employers, especially the large ones, are making it easy for their employees to choose something other than an individual car and creating some incentives around that, and so, there’s only about six cities in the country right now, maybe seven, that have a commuter benefits ordinance, and I think that’s gonna be something that more and more cities take on as an action plan, and so in the same way that they have parking requirements when you’re building a new building. I think you’re gonna see commuter benefits requirements, and it’s easy to accommodate. You just put something in the new hire packet and you make sure every new employees knows their options to get to work, and then you can change the job application. It doesn’t have to say, “Do you have reliable transportation?” It can say, “These are the options that we offer for you to get to work . . .,” and if we were successful in doing that, over a five-year period, everyone in the city would hear about commuter benefits based on the normal rate of job change, and if you can catch somebody when they’re making that decision to go to work, it’s so much easier than trying to convince you to create a new habit, so day one, new job, this is how you’re gonna get there. Even if it’s different than you’ve done before, you’re starting something fresh. Getting you to change on day two is much harder, so I’m very bullish on the power of a commuter benefits ordinance to make all employers participate in helping their employees make that decision, and then commuting becomes like health care where if you don’t have it, you’re not gonna be able to compete and everybody expects that a business offers commuter benefits.
ZBP
It reminded me, because I listened to one of your podcasts recently, and they were talking about the job/car dilemma.
McManus
Yeah, quite a paradox.
ZBP
Yeah, and how almost, because I think you at least alluded to this in your response about how most job applications say, “Do you have reliable transportation?” ‘But sometimes people need that first job in order to purchase the car in order to have the reliable transportation, and so they may not need the job that they’re trying to get if they already have the reliable transportation, so it’s the chicken and the egg type of conundrum, sometimes not only from a mobility standpoint but kind of but kind of from an economic development standpoint, and so I think that that’s a really interesting, the commuter benefits is a really interesting area that could benefit not only a whole host of things but could also benefit from an economic development issue.
McManus
I think that “Do you have reliable transportation?” is a veiled filtering question, and it’s a discriminatory question. It’s amazing that our legal system has allowed that question to stay in the job application, but “Do you have a car?” is not allowed because that’s discriminatory. Why are we allowed to ask “Do you have reliable transportation?” It’s an outdated thing. I mean, do you know why every job application has that?
ZBP
I don’t, but I will also tell you that, I mean, I don’t practice, while I do some employment work, that’s certainly not my primary focus.
McManus
It’s just something that every company has adopted as kind of a standard thing. I couldn’t find any origin case law or anything about why everybody does it, but it’s a CYA thing. Everybody knows if I ask it this way, I’m clear; if I ask it a different way, I might be discriminating.
ZBP
Right.
McManus
They’re clearly discriminating by having that question.
ZBP
Now I’m gonna shift gears on you again, ,just because you and I had talked about this briefly before we started the show, but one of the areas, the other areas, that we oftentimes talk about in the ridesharing platform, and frankly this is, it’s much broader than just ridesharing, but it really goes to the whole gig economy structure as a whole, is the difference between independent contractors who usually receive a 1099 and employees who generally receive what we call a W-2. And I know that you’ve got some thoughts on this and working in this space, we would just kind of love to hear what your thoughts are. And I will also say, too, as Kenton and I have talked about this, the landscape is kind of shifting and changing, and sometimes rapidly, and frankly there’s still a lot of, kind of, what ifs as it relates to some of the things that California is doing in introducing a potential third classification of worker. We knew that during the pandemic, we knew that some of the gig economy companies also were advocating for unemployment benefits for their gig economy workers, and kind of this whole, I would say kind of a muddy mess at times, but this area where these people are falling, so since you’re in this space, we’d love to hear your thoughts on it.
McManus
I don’t understand the obsession with independent contractors and this perceived belief by a lot of investors that giving somebody a below living wage is a good business model. I do not understand how that became the status quo in the ride-hailing and shared gig economy is that everybody is paid less than they’re worth. I don’t get that. I think it’s a huge liability issue that the ride-hailing companies are trying to proactively do something about by working with lawmakers to establish the rules and set the rules, so they kind of went in and said, we’re gonna break it. The rules don’t exist. We’ll figure it out on the fly. Different states do it different ways, but when it comes to the 1099 vs. W-2 debate, there’s billions of dollars in risked liability for the ride-hailing companies if any state was successful in getting the law passed that said all of these are a W-2 because you have a lookback period. You can go back, what, seven years, maybe? It is seven? So you could go back seven years. You could charge the ride-hailing companies the taxes, both sides of it, for every person that was a 1099 driver, and say now you’re a W-2. That’s billions of dollars of liability that could kill those companies, and so I think they’re proactively trying to create new laws that ensure that that won’t happen. I thought that they would create laws that move them into W-2 drivers so they could re-set pricing, but they’ve already re-set pricing, and the ride-hailing companies are in the process of killing themselves. They went from surge pricing when it was high demand to now it’s a surge pricing on high and low-demand, so if there’s no one riding or if there’s a lot of people riding, you’re gonna pay more, and it’s, it’s increasingly becoming something you can’t use on a daily basis.
ZBP
It’s an interesting, that’s an interesting take. We just, we’ve talked about it a lot in this space because there is an ongoing, from a tort liability perspective, there is an ongoing argument that people want to classify the drivers as employees to try to increase the potential liability against Uber or Lyft or the other ridesharing companies or other gig economy companies just in general, frankly so that they can tie the liability -------------. So it’s just an interesting, it’s an interesting concept, and we always love to hear other people’s takes on it, especially those who are working in the industry.
McManus
I’d like to get your input on this, but I think one of the things that needs to happen in mobility as a service and ride-hailing is some kind of capped liability, almost in the same way that school buses have. If school buses are in an accident, I think it’s a half a million dollars liability that they’re capped it, and then it takes away the question of how much liability is there and let’s move it off to this guy and let’s not take it. I think the operator should hold the liability, and the industry needs to get their stuff together and say in the world of autonomous vehicles, the operator is the owner. It’s not this, the car doesn’t own itself, right?
ZBP
Right.
McManus
But in the future, the operator will be the owner, and the operator holds all of the liability, so cap that liability for the operator so that they don’t have to price that into the service. That will just help those who need it.
ZBP
The issue, and I mean, I’ll just tell you that the issue of capping liability, as I’m sure you know this, is a policy decision that’s made by our, usually our state legislatures, which is, I mean, which, whether it’s school buses or whether it’s relating to punitive damages in a particular case or whether it’s relating to municipalities, all those type of policy decisions, especially when it relates to capping liability, are almost all done by state legislatures. And so, but, flipping to your other point as it relates to autonomous vehicles, that’s another discussion that we’ve had, because frankly, it’s a little inconsistent at this time because generally the way, and I’m sure you know this, is that when we talk about concepts and theories of tort law, they’ve almost always focused on issues of control, and so if I were to loan my car to Kenton and Kenton gets in an accident in my car, because Kenton was controlling my car, and just for people who may not know this, Kenton is the co-host with me who’s usually on this show but he’s in the room with me today. But if I loan my car to Kenton and he gets in the accident, he is liable. Now I may be liable for a different tort called, as it relates to a negligent loaning my car to him if I knew he was a terrible driver, it’s called negligent entrustment, but if I didn’t know that and Kenton had a clean driving record, then I probably wouldn’t have any liability. It would be on him, that’s in control, so when we think about the autonomous vehicles, that shifts because once we get to a higher level of autonomy, Level 4 or 5, then I think the question becomes who is in control and then who does bear the responsibility when that vehicle gets in that accident. So I think it’s a very interesting point as well.
McManus
I think it still goes back to ownership and who’s gonna end up owning these vehicles. It’s a question that I’ve asked on my podcast a lot, but I’ve never gotten a clear answer. Everybody says, well I don’t know yet or we don’t want to own the vehicles. I think that question needs to be answered because the vehicle ownership of an autonomous car is essential. We need to know how those are gonna be bought. I don’t think it makes sense for individuals to have to use them, at least not once you get to a Level 4.
ZBP
One of the things that we’ve heard, or as you’ve said, is that this kind of concept of we’ll see, one of the things that we’ve heard as touted or floated in the industry is related to essentially ensuring that your car would come, essentially with an insurance, and so if I bought a fully autonomous vehicle from whoever, I mean, let’s just say Honda. If I bought a Honda fully autonomous vehicle, it would come fully insured for the life of the vehicle, and so Honda would insure whoever was utilizing the vehicle for that time period and the insurance would essentially just be built into the car.
McManus
Yeah. You know, as I said earlier about some of the things I’m concerned about, I think insurance companies are one of the reasons why we are not making as much progress as we could. The commercial auto insurance companies are completely broken. They do not know what to do with this new model of mobility, and they do not want to see the 90% of their policies that are held in individual vehicle ownership moving to a model where they’re held by fleets because they’re losing their shirt on the fleet business. They just don’t know what they’re doing. It makes such complete sense that you would package the insurance with the vehicle, especially if you’re owning a large amount of them and you’re doing the maintenance. The future for companies like ours is really around self-insurance and captives and building a new model for commercial auto insurance because I just don’t see the industry doing it. I say that in a very insurance city.
ZBP
Absolutely.
McManus
And if there was somebody at a leadership level with common sense around the value of this commercial auto opportunity, they’d be working with us.
ZBP
That’s interesting. Well, Ryan, Ryan, we really appreciate your coming on the show and talking with us today, and we look forward to seeing what’s ahead for shared mobility as the future goes on.
McManus
Yeah, thanks Zach. I really appreciate the opportunity to come here and talk about this topic, and I think the next couple of years are gonna be really impactful to determine how long it’s gonna take us to get to autonomous vehicles with changes happening. It’s just a matter of how long.
ZBP
Absolutely. Well, thanks again. We appreciate it.
END OF EPISODE 10
ZBP