Tryp Rides Provided Uninsured Rides in South Florida
Tryp Rides Provided Uninsured Rides in South Florida
Let’s Start With A Bit of Background First
Around April 2019 Tryp Rides missed two pay periods to employees. Prior to this, they had apparently paid roughly $110,000 to an insurance company for a quarter’s worth of coverage in order to open the South Florida market. A quarters worth of coverage that covered a period of time in which there was no functioning app. From what we know, Tryp Rides was supposed to be making quarterly payments to this insurance provider. It can be deduced that around the time that Tryp Rides started missing payroll for employees, they likely started missing payments to the insurance provider. When it came time to launch South Florida in August, they had apparently already defaulted on payment installments for quarters 2 and 3. This was not being communicated to employees or the community of drivers. From what we can tell, the only people who were aware of this were Jeffery Aaronson (Tryp Rides CFO and Board Member) and Bob McNulty (Robert McNulty – Tryp Rides CEO and Board Member).
Insurance Wasn’t The Only Problem For The Tryp Rides
Lack of an active TNC required insurance wasn’t the only thing keeping Tryp Rides from launching in Miami. Tryp Rides had no way of creating driver merchant accounts until September 9th, 2019. The payment provider who is now responsible for Tryp Rides’ international wallet payments did not have a way to do driver merchant accounts or even credit card tokenization for that matter. It wasn’t until Tryp Rides decided to veer away from the MLM model that they were able to find a partner that was capable of providing merchant accounts at the scale needed.
Tryp Rides had no way of creating driver merchant accounts until September 9th, 2019. Click To Tweet
You can find out more about the driver merchant account debacle in an article Taha wrote. The article is titled: “Tryp Rides wants to pay 100% of the fare, but had no way to do it”. I wanted to mention it here to encapsulate the fact that even if Tryp Rides had the ability to set up merchant accounts, they would have been legally prohibited from providing rides since they were uninsured. Nevertheless, Tryp Rides proceeded to provide two rides in the South Florida market during the “launch” event in August while likely violating the Florida State laws regarding the TNC Insurance requirement. As far as we know, Bob and Jeff did not share this information with anyone in the company, users or investors. Putting the company, its associates, and the drivers who drove at significant risk.
Tryp Rides proceeded to provide two rides in the South Florida market during the “launch” event in August while likely violating the Florida State laws regarding the TNC Insurance requirement. Click To Tweet
Try to be Realistic and Know Your Place
An important note to consider: This insurance company was not a regional or local provider. Rather, it covered an unnecessary amount of nationwide miles. This was unnecessary for multiple reasons. One, Tryp Rides was not even close to launching in multiple markets. Furthermore, not even Uber or Lyft use nationwide blanket commercial insurance coverage. For example, they may use Geico in one part of the country and Allstate in another. This is yet another example of Tryp Rides neglecting to face the reality of being a startup and not a solidified player in the rideshare industry.
The Past Has a Way of Catching Up
Coming full circle here, neglecting to pay the insurance company came back to haunt Tryp Rides in a big way further down the road. When it came time to finish the app, Tryp Rides had not made payments to its software vendor (OneByte division of Web N App) for some time. Below is an excerpt from the notarized Affidavit provided by the CEO of the software vendor Muneeb Ali. He described these issues in detail.
Excerpt From Muneeb Ali’s Affidavit – Muneeb is the CEO of the OneByte a division serving Web N App.
According to our contract and the requirements to build an app to compete with Uber and Lyft, Tryp Rides should have paid $769,250 by 26-August-2019 for an app that has the technical capability to scale up to 28,000 drivers through a staged rollout. Tryp Rides had only paid $120,000 towards the contract by 26-August-2019 instead of the $769,250 that was agreed in the contract and the budget proposed to build this app.
In November, Tryp Rides decided to launch NYC. It made sense for Tryp Rides to launch NYC because drivers were insured through the TLC dispatch base’s license that Tryp Rides was operating under as well as the NYC Black Car Fund, a fund created through a tax tacked on to each fare paid by the rider. At the same time, instead of using the money from a recent round of funding to finish the app, Tryp Rides paid the insurance company in the neighborhood of $150,000 in hopes of simultaneously opening up South Florida. In true to form fashion, once again biting off more than they could chew.
Unfortunately, it seems that wasn’t enough for the insurance company to reinstate the coverage plan since Tryp Rides had missed multiple payments leading up to this. From what we know the insurance provider attempted to restructure the agreement and put the $150,000 toward previously missed contractual payments. Tryp Rides committed the same funds to their software vendor to finish the app which is obviously required for Tryp Rides to launch. By mismanaging the funding allocation again, Tryp Rides failed to properly open even one market, much less the two they were promising the world. If Tryp Rides managed to complete the app and pay for the work in full to launch NYC, Tryp Rides could’ve generated enough revenue in NYC to catch up on missed payments to the insurance provider, and perhaps even open up South Florida shortly thereafter. The inability to foresee the repercussions of these actions was a major turning point for the company.
By mismanaging the funding allocation again, Tryp Rides failed to properly open even one market, much less the two they were promising the world. Click To Tweet