Gig Worker Stock Rewards | Moves App

Rewarding Gig Workers with Equity: The Moves Collective

Moves, a fintech startup based in Toronto, is pioneering a new approach to compensating gig economy workers. The company intends to distribute stocks from the platforms they serve – such as Uber, Lyft, DoorDash, and Grubhub – as a form of reward. The initial rollout of the Moves Collective, the startup’s innovative service, begins Thursday with Uber stock, with plans to rapidly incorporate shares from other major companies, according to Moves CEO Matt Spoke.

The Core Concept: Aligning Interests

The underlying principle driving Moves is the belief that granting gig workers ownership stakes will foster a stronger sense of economic alignment with the platforms they utilize. Moreover, should a substantial number of workers accumulate stock holdings through the Moves Collective, they could potentially establish a voting bloc capable of influencing corporate decisions. Moves reports that it currently possesses a “significant and growing stake” in these companies, consisting entirely of common shares with full voting privileges.

Addressing Concerns in the Gig Economy

The past year has witnessed increasing discontent among gig economy workers, manifesting in protests and legislative efforts in states like California, Illinois, Massachusetts, New Jersey, and New York. These initiatives aim to reclassify gig workers as employees, thereby extending to them fundamental rights such as healthcare, paid time off, and sick leave. Companies including Uber, Lyft, DoorDash, and Instacart have actively resisted these changes, particularly in California concerning Proposition 22, and have formed a coalition in Massachusetts to advocate for a ballot proposal classifying gig workers as independent contractors.

Economic Value and Worker Recognition

“Gig workers generate substantial value within the gig economy, yet they rarely receive commensurate economic benefits,” explained Matt Spoke of Moves in an interview with TechCrunch. “Our goal is to provide them with a genuine economic stake in the success of the companies they contribute to.”

How the Moves Collective Works

Gig workers already utilizing the Moves platform – which offers tools for tracking and managing finances, a monthly spending account, and instant cash advances up to $1,000 – are eligible to join the Collective and earn stock rewards. Moves will present users with a series of “tasks,” such as referring friends or completing surveys, in exchange for free stock or fractional shares, deposited into a brokerage account opened by Moves on their behalf.

Leveraging Collective Power for Governance

The Moves Collective is designed to unite gig workers and amplify their collective voice in corporate governance. Moves intends to submit proxy material at annual shareholder meetings of leading platforms to ensure worker interests are represented, as stated by Spoke.

Funding the Rewards Program

Moves’s core revenue model is based on interchange fees generated each time a gig worker uses their Moves card for purchases. This revenue stream directly funds the stock rewards distributed to workers.

“Essentially, we are strategically allocating revenue to acquire and retain customers,” Spoke clarified. “The revenue derived from checking account usage is reinvested into the product to finance these rewards, which are denominated in stocks.”

Current Status and Future Expansion

Currently, the program operates on an invite-only basis, with shares accumulated through a partnership with Bumped Financial, a stock rewards program. Moves is also monitoring Instacart’s IPO for potential stock acquisition and is considering extending support to Amazon stock for Flex delivery drivers and Target stock for Shipt workers.

Addressing High Churn Rates

Spoke highlights a common challenge faced by app-based gig economy companies: “They all grapple with exceptionally high driver and worker churn rates. Workers frequently leave for competing apps or exit the gig economy entirely, forcing these companies to spend significant resources on constant worker replacement.”

(Reference: Uber’s $250 million driver incentive program led to substantial Q2 losses.)

Past Attempts at Worker Equity

Prior to their IPOs, both Uber and Lyft explored the possibility of issuing stock to drivers as a means of improving retention and fostering loyalty. However, regulatory hurdles hindered these efforts. Ultimately, both companies opted to provide one-time cash awards to select drivers, offering them the option to purchase stock.

For example, Uber allocated 5.4 million shares – representing 3% of its total shares – to drivers, with any unclaimed shares to be offered to the public.

To illustrate the potential value, Uber’s former CEO Travis Kalanick realized approximately $5 billion from his stake, while Alphabet generated around $3.2 billion from its holdings. U.S.-based drivers were given the opportunity to use cash bonuses to purchase up to $10,000 worth of company stock.

Regulatory Considerations

Gig economy companies face regulatory complexities when offering stock options to workers. SEC Rule 701 permits companies to issue stock to employees, consultants, and advisors without extensive financial disclosures, but gig workers don’t neatly fit within this exemption. In 2018, the SEC sought feedback on expanding the rule to accommodate evolving work relationships. Uber responded, requesting revisions to allow “partners to share in the company’s growth, potentially enhancing earning and saving opportunities.”

Current regulations would classify direct stock incentives from Uber or Lyft as employer compensation, a territory they are hesitant to enter. However, their past interest suggests a willingness to explore outsourcing such services.

Collaboration Potential

“Uber, Lyft, DoorDash, and Instacart have collaborated on issues like Proposition 22 and are jointly lobbying against new regulations,” Spoke noted. “I believe they would recognize the overall benefit of this approach. Eventually, we aim to demonstrate tangible benefits – such as increased driver retention – and propose a collaborative funding model.”

Moves’ Growth and Future Plans

Moves currently serves approximately 10,000 users across all 50 states. Founded in February 2020, the company launched its platform in April 2021. Plans are underway to resume fundraising in the first half of next year, contingent on refining the business’s unit economics and establishing a compelling use case for the Moves Collective.

“Uber’s primary focus isn’t necessarily their drivers, but rather their consumers,” Spoke concluded. “They prioritize innovation for the consumer side of their market, often treating workers as a secondary consideration.”