INSUBCONTINENT EXCLUSIVE:
Matthew Carpenter-Arévalo
Contributor
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Matthew Carpenter-Arévalo is a
former Google and Twitter Manager and current CEO of Céntrico Digital, a Latin American based digital agency
One month ago, Yonathan Segovia, a Cabify driver originally from Venezuela, was allegedly attacked by a mob of taxi drivers on the
streets of Quito in Ecuador
In the video that documents the aftermath of his alleged assault, a short-of-breath Segovia narrates to his cell phone what happened
Behind him stand a few traffic police and a contingent of semi-formally dressed taxi drivers donning sunglasses and gesticulating to the
Segovia directs the camera to the broken windshield and claims that he and his vehicle were attacked by xenophobic taxi drivers yelling
fuera Cabify (get out Cabify) and regresa a tu país venezolanos (go back to your country, Venezuelans)
Though incidents of violence against drivers of ride-sharing apps are rare in Ecuador, the official taxi syndicate rhetoric has intensified
as yellow cabs have become increasingly frustrated by what they perceive as government inaction over the encroachment of Uber and Cabify.
In
neighbouring countries such as Colombia and Costa Rica, taxi drivers have attacked ride-sharing app drivers, their cars, and even passengers
It had only been a few months after Segovia fled Venezuela violent streets that one of his brothers was murdered… killed in a case of
mistaken identity, according to the young driver
He had come to Quito to escape, and instead found himself in the middle of a pitched battle between local taxi unions and an international
ride-sharing company… a battle that had claimed foreign-born Cabify drivers as collateral damage
Before choosing Ecuador as his new home, Segovia considered a number of countries in the region
To help make his decision he browsed Venezuelan expat groups on Facebook where people exchange information about their experience and ask
He considered going to Panama, but was dissuaded by reports of xenophobia against Venezuelans there
He had about two months of salary saved for the journey and wanted to spend as little as possible on travel
He finally decided on Ecuador primarily because of its proximity and because the country has used the US dollar as its official currency
since a financial meltdown in 1999
Having long abandoned his studies to be a civil engineer, Segovia now needed to send money home to help support his family
Earning US dollars represented the safest way to ensure the well-being of his dependents back home
Segovia took the 2500 kilometer trip overland from Maracay on the Atlantic Coast to Quito
After arriving in the Ecuadorian capital he initially struggled to find work until he was taken on at a car-wash
Claiming to have suffered exploitation and abuse by the owner of the car wash because of his foreign status, Segovia left the car wash and
was told by a friend about Cabify and so he signed up for the driver training
Cabify enabled him to work flexible hours without suffering the type of discrimination he faced at the car wash
&It like I&m my own boss,& he says, although a boss that drives himself pretty hard
Most days Yonathan works 16-18 hour days
Thanks to his sacrifice, Yonathan has been able to send money back home to help his family leave Venezuela
No se vive en Venezuela, se sobrevive, (&No-one lives in Venezuela, they only survive.&) Segovia said
Now he has three brothers living in Argentina
Thousands of taxi drivers, shouting slogans against Uber such as Uber out and Down with piracy brought traffic to a near standstill in
Bogota, the capital of Colombia, a city of more than 8 million people, on May 10, 2017
(Photo by Juan Torres/NurPhoto via Getty Images)
Venezuelans are leaving their country in droves, and their plight is propelling the growth
of ride-sharing apps across Latin America
Desperate for work, Venezuelans are flocking to neighbouring countries and often finding immediate employment as drivers for US-based Uber
and its regional competitor, the Spanish-based Cabify
Although the relationship between Uber, Cabify, and the Venezuelan diaspora is often mutually beneficial, it also could be easily perceived
On the one hand, ride-sharing apps are the saving grace for many desperate migrants, providing a much needed sources of income
On the other hand, the precarious circumstances in which Venezuelans find themselves abroad means that they are incapable of negotiating the
conditions of their employment, making them even more vulnerable to the one-sided conditions ride-sharing apps often impose on their drivers
And the explosion of Venezuelan drivers has added a jingoistic element to the legal and regulatory battles between ride-sharing apps and
taxi syndicates, pitting locally-born taxi drivers against foreign-born riding-sharing drivers in confrontations that sometimes become
Venezuela was once a beacon for development in Latin America, which makes its current predicament all the more perplexing
In the 1960s Venezuela shed its military dictatorship and looked forward to becoming a developed country thanks to the discovery of the
world largest oil reserves beneath Lake Maracaibo
Despite its vast potential, the benefits of Venezuela growth did not trickle down to the country poorest citizens
People walk by graffiti with an image of late President Hugo Chavez in Caracas on May 11, 2018
& Venezuelan citizens face a severe socio-economic crisis, with hyperinflation & estimated at 13,800% by the IMF for 2018 & and shortages of
food, medicines and other basic products
(Luis ROBAYO / AFP/Getty Images)
In 1999 Lt
Colonel Hugo Chavez, a populist strongman and failed coup-leader, was elected on a mandate to bring socialism to Venezuela by appealing to
Benefiting from record-high $100/barrel oil prices, Chavez re-directed the country oil wealth to the poor through a vast array of well
meaning but unsustainable government welfare schemes
14 years into his mandate, Chavez died of cancer in 2013
Shortly thereafter the bottom fell out of the price of oil, plunging to $26/barrel by 2016
Chavez chosen successor, the former bus driver and union leader Nicolas Maduro, was elected in a contested vote in 2014
As oil wealth dried up, Venezuelans became aware of how years of socialist policies, including expropriations, had damaged the country
non-oil productive capacity, making them over-reliant on imports and increasingly short of foreign exchange
Rather than attempt to mend for errors past, Maduro doubled-down on socialism and oppression by attacking the media, violently suppressing
protests, throwing his opponents in jail, and creating a parallel congress after voters gave a majority to an opposition coalition in 2015
From there Venezuela nightmare has become increasingly farcical
Two of Maduro nephews have been convicted for drug trafficking by the United States
The country current vice-president was also accused by the United States of drug trafficking, prompting sanctions
Mismanagement has driven Venezuelan oil-production to an all-time low
Slowly, the country is running out of cash
Inequality, the cornerstone issue for the self-nominated Bolivarian socialists, is actually worse than ever.
It hard to overstate the scale
of the humanitarian, economic, political and social crisis that causes Venezuelans to leave
Inflation is expected to rise to 13,000% in 2018
Venezuela elections, including those held this month, are shambolic
Tropical diseases such as malaria that were controlled or eliminated in the 1960s are roaring back
According to the World Economic Forum, Venezuela was the sixth most dangerous country on the planet in 2017.
Leaving Venezuela is
Airlines such as United, Delta, and regional heavyweight Avianca have suspended flights to Venezuela due to accumulating debts with the
foreign-currency-strapped government
Many try to escape to neighbouring caribbean nations by boat, often with dire consequences
Though precise numbers are difficult to obtain, we know that roughly a million Venezuelans have left the country in the past two years
While some will migrate to the United States, the vast majority will flee overland to neighbouring countries
Colombia alone has registered at least half-a-million legal migrants, while Brazil receives 800 migrants a day.
Often arriving without money
or shelter, Venezuelan migrants depend on the networks of friends and family already established in their destination countries to find work
Through Mercosur, a regional trade block that includes most of the countries in South America, Venezuelans are usually able to qualify for
working visas, though many work illegally because the costs of getting a visa are prohibitive
Whereas highly-educated Venezuelans have more luck in finding gainful employment, many Venezuelans join the troves of native-born citizens
in either the informal economy or under-employment
Ride-sharing apps are well-suited to Latin America because most major cities already operate with an extensive network of informal taxis
Cars with hand-made signs that say &taxi& often circulate in dense areas seeking brave passengers while avoiding both formal taxis and the
Users are attracted to ride-sharing apps because of the additional security and the attention to detail in the quality of service
Whereas traditional taxis are looked upon suspiciously, Uber and Cabify allow for both traceability, on-demand services, and predictable
prices, providing a safe and dependable mode of transport where there often isn&t any
Both Uber and Cabify have focused aggressively on Latin America where the stakes are high
Two cities in Brazil, Rio de Janeiro and São Paulo, represent Uber biggest markets in terms of rides
Aside from Spain and Portugal, Cabify focuses exclusively on its operations in 12 Latin American countries
Chinese competitor Didi recently purchased Brazilian competitor 99 and promptly launched its first foreign operation in Mexico
According to Uber, the company has more than 36 million active users in the region and provides employment for more than a million drivers
Cabify, on the other hand, claims to have 13 million users and to have grown its installed-base by 500% between 2016 and 2017
As reported in TechCrunch, Cabify parent-company Maxi Mobility recently raised $160 million at a $1.4 billion USD valuation
Maxi Mobility Series E comes just as Uber sold its east-asia operation to rival Grab, prompting CEO Dara Khosrowshah to disclose that the
company is less focused on MA and more focused on organic growth, thus encouraging the flush-with-cash Maxi Mobility Latin America push
Seeking scale, Maxi Mobility also acquired regional competitor EasyTaxi.
Though their business models are similar there are notable
differences between how the two companies operate
Whereas Uber tends to invoice from abroad and thus avoid paying most local taxes, Cabify prefers to setup local entities and thus subject
itself to local tax and regulatory regimes where possible
While Uber burns through cash, Cabify flirts with profitability
The legal hurdles for ride-sharing apps in Latin America are similar to elsewhere in the world
Countries such as Mexico, Panama, and Uruguay have regulated ride-sharing apps
Others such as Argentina, have banned the apps& operations
In most countries in Latin America, including large markets such as Brazil and Colombia, the apps find themselves in legal limbo as cases
involving the companies make their way through the arduous and often politicized court systems
Chilean taxi drivers demonstrate along Alameda Avenue against US on-demand ride service giant Uber, in Santiago, on July 10, 2017./ AFP
PHOTO / Martin BERNETTI/Getty Images)
Though Uber was unable to disclose how many of its drivers in Latin America are Venezuelan expats,
Cabify acknowledged that in Panama up to 60% of its drivers are Venezuelan nationals
In Ecuador and Argentina, the number is reported to be closer to 10%
The number of Venezuelan drivers in Mexico, Colombia, Peru, and Chile was not disclosed by either company
This presence of Venezuelan drivers across the continent has not only been noticed by tech-savvy business travelers with a keen ear for
accents and a penchant for small talk
Panama went so far as to pass a law stating that ride-sharing app drivers must be Panamanian citizens.
Both companies acknowledge that they
follow local legislation in hiring drivers
Neither company confirmed that they explicitly check immigration status prior to hiring a driver; however, they do require a local license
which in turn requires a valid visa to obtain
Uber and Cabify require drivers submit an up-to-date police record from their country of residence, but not from the drivers& previous
countries of residence or countries of origin
Unless local legislation mandates limited hours, Uber and Cabify only sparingly limit the amount of time a driver can work, meaning drivers
can work as much or as little as they like
Because of the informal nature of their work, drivers are not covered by national health insurance policies
Because Venezuelans drivers are often new arrivals without credit history or savings, most negotiate agreements with vehicle owners who
manage the relationship with the ride-sharing app
Vehicle owners like to keep their cars operating at close to maximum capacity in order to extract maximum value
Some will juggle as many as three drivers at a time in order to keep their vehicles in constant operation
In markets where drivers are scarce it is common for drivers to negotiate 50/50 or 40/60 (40% for the driver, 60% for the owner) minus
expenses including gasoline and insurance
While Cabify and Uber approve and train each driver and reserve the right to remove drivers from their fleet, the owners of the vehicles are
responsible for paying the drivers
In an informal poll of drivers, most claimed to earn between $600 and $1000 USD per month, which is twice the minimum wage in many countries
in Latin America and comparable to if not more than what taxi drivers make
The same drivers claimed that they were making more with Uber and Cabify than they were working under the table in mostly service-sector
Most drivers reported working more than 60 hours a week, well beyond the 40 hour work week legislated in most countries
The Venezuelan drivers I spoke to across numerous countries generally speak well of Uber and Cabify whilst acknowledging their own
Many have stories to tell of vehicle owners that didn&t pay them, that docked their pay unnecessarily, or that were verbally abusive
Drivers are dependent on vehicle owners to honor their verbal promises and they have no settlement mechanism to mediate disputes either
through local governments or through the companies
For drivers who fall out with vehicle owners, their only option is to switch cars
After all, a driver with positive reviews and a clean record is attractive to vehicle owners hoping to maximize their return
None of the drivers I spoke to felt they were in a position to negotiate their working conditions with the ride-sharing apps
While it not clear that Uber and Cabify are targeting Venezuelans fleeing the humanitarian crisis that has engulfed their homeland as part
of their hiring strategy, it is clear that the companies have benefited immensely from their presence across Latin America, especially in
smaller markets such as Panama, Ecuador, and Bolivia
Finding a pool of unemployed, eager and qualified drivers has allowed the companies to scale the supply-side of their business and thus
ensure quick pick-up times for passengers, an essential feature for apps to become &sticky&
As one vehicle owner stated, &Cabify entered the market right at the same time that Venezuelans were coming in higher numbers
The company never would have achieved critical mass [on the supply side] were it not for Venezuelans.& Uber and Cabify also benefit from the
drivers& powerlessness: because the alternative to driving for a ride-sharing app is often worse pay without protections, Venezuelan drivers
accept the conditions dictated by the companies without protest
Most of the countries in Latin America that are receiving Venezuelan migrants lack the infrastructure and the know-how to manage a massive
Because many Latin American economies have large informal sectors, migrants quickly slip into the informal economy where they have neither
benefits nor protections such as minimum wage
Uber, Cabify, EasyTaxi, Didi, etc., represent technologies that Latin American consumers have taken to because they offer a superior
customer experience when compared to traditional taxi services
Nonetheless, the status of these companies continues to be tenuous in countries such as Brazil and Colombia, where court cases drag-on
slower than rush hour traffic in Sao Paulo or Bogotá
At the same time, politicians are reluctant to create legislation that will legalize ride-sharing apps for fear of upsetting powerful taxi
Ride-sharing apps offer a clear solution to an endemic transportation problem found in almost any Latin American city
In many ways the problem these apps solve is caused by slow-to-change politicians and resistant-to-change taxi unions
Unfortunately, until local governments catch-up in providing legislation that protects drivers fairly regulates ride-sharing apps., the
growth of companies like Uber and Cabify in Latin America will be based partly on innovation, and partly on desperation and will always take
place on the border of legality
In the meantime, as Latin American consumers jump into borrowed cars it worth remembering an adopted adage: there is no such thing as a free
