Eva Co-op Is Continuing The Cooperative Tradition
This article is based on interviews I conducted while researching for the article "Inside the Cryptocurrency Casino" in the October issue of Current Affairs. Much of the material from that article was omitted from the final article, but after several reader enquiries, the unpublished material is presented here. I have no relationship with the Eva Coop, financial or otherwise.
Joe Biden wasn’t the only one popping champagne after last year's election. While all eyes were on the presidential race, Big Tech scored a major victory with the passage of Proposition 22, which exempts drivers in the gig economy from the protection of California’s employment laws.
By all accounts, it was the most expensive ballot measure in California history. Companies like Lyft, Uber, DoorDash, Postmates and Instacart spent a combined $205 million, about ten times as much as the labor groups which opposed them.
Californians were “deluged with ads,” not only on television and radio but also through their smartphones. Anyone in California who opened the Uber app in the month before the election had to sit through a mandatory pro-22 ad, warning them of higher fees and longer wait times if the proposal failed.
Afterwards, they were prompted to click “Yes on 22” in order to use the app. (There was no option to vote no, but users could click “Okay.”)
As expensive as those ads were, they were a bargain compared to what the companies saved in salaries, sick leave, training, insurance and other worker protections. For most companies in the gig economy, the road to profitability comes from cutting labor costs while passing expenses like maintenance and insurance to their drivers.
Uber, for example, burned $8.5 billion last year in an effort to undercut its competitors—and once they're out of business, Uber can safely raise prices, having established an effective monopoly on local markets. The system squeezes value from both drivers and riders; fewer than four percent of Uber drivers last a full year.
This business model reflects the worst aspects of venture capitalism, says Dardan Isufi, co-founder and Chief Operating Officer of the Montreal-based Eva Co-op. Eva is a ride sharing platform, similar to Uber, but with two key distinctions.
First, Eva is structured as a cooperative. It is owned by the riders and drivers, who vote on key decisions, elect the company’s board, and decide how to allocate revenues.
Also, unlike centralized competitors, Eva’s app is based on blockchain technology, which is used to protect the data of its users and avoid centralization around a single corporate entity.
Power To The Riders
"We had the idea in late 2017, when Uber was bullying the government of Quebec,” Isufi explained over Zoom last Thanksgiving weekend. The government had announced legislation requiring Uber drivers to take 35 hours of online training, the same amount of training required for taxi drivers. In response, the company threatened to leave the province.
Uber ultimately did not leave Quebec, but the episode provided the idea for a new kind of ridesharing platform. Along with software engineer Raphael Gaudreault, Isufi alighted on the idea of a mobility app that serves the interests of the users.
“We decided to ally the cooperative principle of management to decentralization,” Isufi said.
Using blockchain-based smart contracts, the app allows Eva to “give back the means of production to workers, and also to give more power to riders.”
Although it only hit the road in 2019, Eva is already going places. In Montreal and Quebec City, Eva has 850 driver-members, as well as 28,000 riders, making it the second-largest mobility app in Quebec after Uber. A second Eva Coop is expected to launch in Alberta, with a third on the way in New York.
These are the first outposts of what the founders hope will become a “global empire” of member-owned cooperatives. Eva Global provides the technology and initial funding for new franchises, which act as nodes on the Eva blockchain. User data is either controlled by the cooperatives, or encrypted securely in the users’ devices.
The result is an app which is designed to serve the users, not investors. While Uber charges upwards of 25 percent of each fare (and UberEats takes even more) the Eva Co-op takes only fifteen percent, a figure which can be changed by a general vote of the membership.
In addition, the cooperative provides free insurance to all drivers while they are operating, through a partnership with Desjardins General Insurance.
And, while Eva Global acts as a parent company, it does not have the same control as Uber’s headquarters in San Francisco. Eva Global takes a maximum of five percent of total revenues, a ceiling which is encoded by smart contract and cannot be changed without agreement from the block producers.
User data is decentralized: even if Eva Global were hacked, as Uber was in 2017, it would be impossible to leak any sensitive rider information.
While the app is based on forked EOS software, you don’t need to understand the blockchain works in order to hitch a ride. There are no private keys or twelve-word mnemonics: all you need is a phone and a credit card.
The most complicated aspects—like wallet creation, tokens and trading—are handled entirely on the back-end. “Every month I take my car and drive as a driver, just so I can chat with the customers,” Isufi says. Most riders, he says, don’t even know what a blockchain is.
New Tech, Old Ideas
The emphasis on cooperation and worker ownership may seem a bit out of place, considering the predominance of libertarian and capitalistic ideas in the blockchain space. Isufi, a former officer in the Canadian Army, is hard to pin down as either a wishy liberal or a doctrinaire Marxist.
“I do like the capitalist system, in the sense that it allows us to innovate,” he says. “But I don’t like giving my money to Mark Zuckerberg or Jeff Bezos. They have enough money.”
“Our goal is to make profit," he added. "But profit for who? For members. Not profit for some shareholders. "
Canada has a long tradition of cooperative enterprise, dating back to the 1800s. Four in ten Canadians are a member of at least one cooperative organization, and the figure rises to 70 percent in Quebec. “Most Quebec citizens, their bank is a credit union,” Isufi says. “Most of our farmers are in agricultural co-ops. Some of the biggest stores in Canada are co-ops. For us, it was the ideological thing to do.”
That tradition also helped Eva arrive at its initial seed funding. Instead of going to traditional venture capitalists, Eva raised its first $810,000 CAD from government bodies and cooperatives like Mouvement Desjardins, one of the largest credit unions in Canada.
These investments allowed Eva’s founders to set up their offices and start hiring drivers, without giving control to financiers.
But there are disadvantages to this approach. One of them is money: most investors are not motivated by social good, and driver-owned cooperatives are not exactly a high-yield investment. “Funding is our biggest weak point,” Isufi says candidly.
“It’s almost a miracle that we were able to get this funding.”
The founders are now targeting more traditional investors, in exchange for equity in Eva Global.
There are also tradeoffs to using blockchain technology, despite efforts to keep it user-friendly. Unlike centralized platforms, Eva Co-op cannot reset your account if you get locked out. “People forget their passwords,” Isufi admitted. “And if they forget their security answer, they’re fucked.” That’s not the end of the world, since Eva Global can still create new user accounts and recover lost funds.
But the process is still a turnoff for infrequent users. “We’re losing a lot of drivers because of that,” Isufi says. “These are some of the barriers that blockchain imposes."
Delivering Through The Pandemic
The COVID-19 pandemic threw another wrench in the works, shuttering businesses and halting tourism. When I interviewed Dardan Isufi in October, Quebec was reporting a thousand cases per day, and every restaurant and bar in Montreal was closed. Even houseguests were forbidden.
But the health crisis also presented an opportunity to explore a new avenue of business: instant deliveries. “What we did is create a software that can integrate any online website,” Isufi explained, which can estimate delivery times and fees.
“Even Amazon Prime cannot do better than one business day, but we can do like thirty-four minutes.” There are no credit card fees or account creation: after placing an order, customers can track deliveries in real time, call the driver, and even change the destination.
Moreover, unlike the 30 percent commission by UberEats, Eva Co-op only charges merchants a flat monthly fee.
“Since we’ve launched that, forty percent of our market share is instant deliveries,” Isufi says, a figure which he estimates at about 2,000 deliveries per month, for 300 merchant clients. “I think the money-maker of Eva will be instant delivery.”
Can Co-ops Beat Uber?
Despite the pandemic, the Eva Coop in Quebec is continuing to onboard new riders. Ironically, Isufi says, Uber has turned into one of their best marketing tools: many drivers work on both apps, and introduce their other riders to the local ride sharing co-op.
The developers are also working on new functionality for the application’s users. While cryptocurrency payments are a distant goal, the priority right now is to introduce features like tipping and shared invoices, which may appeal to a mass market.
While the technology is unique, Eva’s founders see the project as more than just an interesting application of blockchain technology: it’s also a strong counterpoint to the Amazons and Ubers of the tech world, which derive value at the expense of their workers.
If Eva is successful, it will be a powerful demonstration that an enterprise can be both profit-oriented and socially responsible. “Every company should be community oriented,” Isufi says. “Why should we empower some already-rich people?”