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Ride-hailing startup Alto thinks the current gig worker-based market is inherently flawed. Drivers’ wages are compressed by vehicle ownership and maintenance costs; Drivers are not guaranteed high quality service; Cities had to contend with angry taxi drivers; And app-based companies themselves are still not seeing the profits from a growth-over-cost mindset, with low fees to expand users into new markets.
Alto was created in 2018 to solve those problems by taking more control of the overall riding-on-snow experience. The startup leases its own fleet, hires drivers and is regulated as a transport company. Yes, that means it’s more expensive to ride than your average Lyft or Uber, but CEO Will Coleman says Alto isn’t for everyone. It is for customers who are willing to pay and expect good things.
Hence the name – “Alto” in Spanish means tall, high, high or superior.
Earlier this month, Alto launched the service in San Francisco, its sixth market across the U.S. The startup operates in Dallas, Houston, Miami, Washington, D.C. and Los Angeles, and said it continues to expand the model. To date, Alto has around 2,000 drivers on its platform driving 400 vehicles and is expecting 600 more vehicles on board.
Alto is one of many new ride-hailing startups hoping to address many of the flaws of the gig worker model. For example, Revel has an employee-only fleet of Teslas in New York, and Earth is doing the same in Texas. Meanwhile, employee-owned apps like the Co-Op Ride app are owned by drivers, and the company says they allow drivers to earn 8 to 10% more than those working for Uber or Lyft.
Alto, which last raised $45 million in Siribis B in the summer of 2021, says it grew 420% year-over-year (though the company didn’t say what) and says that growth is tied to a different level of service. .
Map of Alto Ride Snow Service in San Francisco. Image Credits: Alto
“We have to hire our drivers,” Coleman told TechCrunch. “We own the vehicles to clean them, to maintain them, to keep them safe and to ensure that our customers get the experience they expect on every trip.”
The vehicles in Alto’s fleet are all luxury and mid-size SUVs — currently Buick Enclaves and VW Atlases — that feature leather interiors, Pleglass partitions and in-vehicle Wi-Fi, the company said. The goal is to transition to a full EV fleet starting early next year, depending on vehicle availability.
To ensure the transition to EVs, Alto is building charging stations for future fleet electric infrastructure in all the cities where the company currently operates and in Silicon Valley.
Riders can access Alto’s service for just $12.95 a month or $99 a year as a member, which Coleman says creates a higher bar for purchasing, but ensures that Alto gets more profitable customers over time because they ride more often.
“We don’t have to build to the heights that our competitors do,” Coleman said.
While the membership model can be successful in the long run, it’s all about how you sell it. Several app reviews on the Google Play Store and the Apple App Store reveal customers who were disappointed when they were immediately prompted to enter their credit card details upon opening the app. Or even decide if Alto serves the passenger area.
In fact, based on reviews, the app seems to have several issues that are keeping users away. In the past year, customers have faced issues like pre-booked rides not showing up, app lagging, unable to check in, difficult user interface, unable to find drivers and more.
“I downloaded, signed up and paid my monthly fee, thinking I was paying for a reliable service with staff and such,” wrote one app reviewer. “Booked a car for the first time two days early for a trip to the airport. They didn’t show up and we called and they didn’t know why the car wasn’t on the way. Ordered a lift and Alto was here without even realizing what happened. Don’t recommend.”
Many reviewers said their rides were clean and smooth and they enjoyed the “vibe” of the service, but were hampered by problems with poor customer service and an inappropriate app experience.
Responding to this, Alto said it has limited capacity as it owns and operates its own fleet.
“The future of ride-hailing is in fleets — first electric, then autonomous. In that case, supply will always be more limited than the gig model,” Coleman said in a follow-up email. ~10 minutes early (for a better, reserved, experience) and wait for a three minute assembly time.
Coleman went on to say that Alto is constantly working to improve the app experience and grow its fleet to better serve its members.
Workers today, robots tomorrow
“We think of ourselves as human-driven autonomous ships, and that’s how we’re addressing the future,” Coleman said.
Alto’s ultimate goal is to create a platform that can be used in autonomous vehicles in the future. Coleman says Alto’s technology stack has more cut-throat facilitation capabilities for such transitions than Uber and Lyft, simply because those companies don’t control the supply.
“We think about orchestration, we think about how we can optimize resource utilization and therefore profitability for the best outcome for our entire fleet and customer base than any independent contractor,” Coleman said. “Uber and Lyft haven’t built any capacity, really. We’re building the real estate footprint, the charging infrastructure and the know-how to clean and store and maintain these hundreds of vehicles in the cities where we operate.
Coleman makes a good point, namely, that a company with current operational capabilities may find it easier to transition to autonomous vehicles — something Uber and Lyft’s top executives will no doubt be crossing their fingers for. They can be done with the terrible problem with the rights of the drivers.
For his part, Coleman doesn’t think any company today can even afford to transition to an employee model.
“Their model is predatory on drivers, and if they can’t make their model sustainable there’s no way to make it sustainable with employees,” Coleman said.
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