Most Lyft IPO bonuses for drivers total less than a dime per ride

Deco Carter is one of the first Lyft drivers who established a persona as Hip Hop Lyft. He does trivia games with some passengers and gives prizes. Despite his early start, Carter fell shy of the 10,000 rides that would win him a $1,000 bonus from Lyft because he only drives part-time now. less Deco Carter is one of the first Lyft drivers who established a persona as Hip Hop Lyft. He does trivia games with some passengers and gives prizes. Despite his early start, Carter fell shy of the 10,000 rides ... more Photo: Jana Asenbrennerova / Special To The Chronicle Photo: Jana Asenbrennerova / Special To The Chronicle Image 1 of / 1 Caption Close Most Lyft IPO bonuses for drivers total less than a dime per ride 1 / 1 Back to Gallery

When Taylor Hazell started driving for Lyft five years ago, the ride-hailing company was still whimsical — giving drivers fuzzy pink mustaches for their cars and encouraging them to greet passengers with fist-bumps. Lyft even paid to wrap his whole car in a hot-pink decal.

Hazell, 29, of Richmond, has put in 40 to 50 hours a week with Lyft ever since, driving five to seven days a week and racking up over 22,000 rides.

That qualifies him for Lyft’s version of Willy Wonka’s golden ticket. Next week, the San Francisco company will give him a $10,000 cash bonus, which he can pocket or use to buy shares in Lyft’s upcoming Wall Street debut at the offering price — usually a much better deal than ordinary investors get.

“I appreciate them giving me a chance to say, ‘OK, I want a piece of the pie,’” he said. He plans to use some of the bonus to repair his Prius and some to invest in the stock.

Only a handful of drivers are likely to get a slice that big.

Drivers are crucial to Lyft’s success, but they are independent contractors and securities rules prohibit giving them stock. Lyft does not want to change their employment status, which would cost the company prohibitively. Instead it plans a bonus program to help loyal drivers participate in its hotly anticipated initial public offering, expected late this month or in early April.

But Lyft has set a high mark for who qualifies, leading some drivers and observers to wonder whether it’s more stunt than substance.

“Lyft is getting a lot of publicity with this; it’s a marketing move,” said Matt Kennedy, senior IPO market strategist at Renaissance Capital, which manages funds that track public offerings. “And it’s a way of building goodwill with drivers.”

Uber reportedly plans a similar program offering drivers bonuses and the opportunity to buy shares, although the company declined to comment. Both ride-hailing services, like some other companies reliant on independent contractors, say they want to reward their gig workers with stock. Several companies, including Uber, Airbnb and Postmates, have written to regulators asking for rules changes to allow this. “We are continuing to have productive discussions with policymakers and regulators,” Airbnb said in a statement. Lyft declined to comment.

Lyft said in a regulatory filing that it plans to distribute $10,000 bonuses to drivers who’ve completed at least 20,000 rides — a high hurdle, which only a select few who’ve worked as much and as long as Hazell will meet. It will distribute $1,000 bonuses to drivers who’ve done 10,000 rides, attainable for drivers who’ve worked very long hours for a couple of years.

That amounts to only a dime per ride at most for the 10,000-trip bonuses, and 50 cents a ride for the 20,000-ride elites.

And it’s a pittance compared to what rank-and-file employees stand to gain. Stock is the hiring currency for Silicon Valley companies. Twitter’s IPO, for instance, minted about 1,600 new millionaires among its employees, according to an analysis by the business data firm Privco, albeit one that Twitter disputed.

“Drivers are getting a fraction of what employees are getting,” Kennedy said.

Lyft driver bonuses will come on or about March 19, along with directions about how to buy the stock by setting up brokerage accounts with Fidelity Investments, Lyft said in an email to qualifying drivers reviewed by The Chronicle.

Tech IPOs usually “pop” on their opening day, with the stock shooting up once the market opens. That means people who can buy at the opening price realize an immediate gain. The Los Angeles tech company Snap, for instance, closed its first day up 44 percent, although it since has fallen significantly.

Some drivers are disgruntled at being left out. Plenty of them won’t meet the bar, not least because many work for both Uber and Lyft so it’s hard to accumulate so many rides on just one service.

It’s also possible that Lyft, which last year lost $911.3 million on revenues of $2.2 billion, may need to further erode what drivers earn for rides on a daily basis, so it can become profitable.

Photo: Jana Asenbrennerova / Special To The Chronicle Drivers who qualify can use the bonus to buy shares, and can pay...

San Francisco musician Deco Carter, 42, made a name for himself as “Hip Hop Lyft,” running quizzes in his tricked-out 2006 Toyota Scion, and handing out prizes. He’s a star on social media and has garnered lots of press coverage. But even though he started with Lyft in 2013, a year after its founding, he’ll miss out on the bonus. He has about 8,000 rides because he drove full-time for just two years and has been part-time since then while caring for his two children.

“I’m disappointed that I wasn’t included in this,” he said. “Honestly I feel that I’ve gone way and beyond any other driver, I’m a role model; I’ve proved that I embody what Lyft has tried to accomplish. I’m a little hurt.”

Carlo Garibay of Hercules was one of Lyft’s first 20 drivers in summer 2012. After averaging about 35 hours a week since then on both ride-hailing services, he has about 10,000 Lyft rides and 11,000 on Uber. He aims to make it a fun time for passengers with a karaoke machine and disco ball in his Acura MDX — and that helps with tips, too.

“To be honest, I earned this,” he said of the $1,000 bonus. “Drivers are the backbone. I deserve a little bit more, but it is what it is.”

He plans to invest at least some of the money in Lyft’s stock. Only drivers “in beast mode” can accumulate 20,000 miles, he said.

Photo: Connor Radnovich / The Chronicle Lyft driver Carlo Garibay checks his blind spot while on a trip...

Several other big tech companies have offered opening-day prices to regular folks such as Square merchants and Etsy craftspeople who contributed to their success.

San Francisco’s Lending Club, for instance, went public in the biggest tech IPO of 2014. It allowed its peer-to-peer lenders — the people who used its website to make loans to small businesses and individuals — to invest at the opening price, although they could only buy 250 shares each.

“We invested at $15, the IPO price, and at the end of the first day it had popped to just over $23 — a 56 percent gain in one day,” said Peter Renton, who runs the LendIt financial technology conference. “I know plenty of people (other peer-to-peer lenders) who sold that first week, collected the increase and were happy.”

He held onto his shares, which are now just under $3.

“I haven’t done that well out of it, but I’m still a big supporter of the company,” Renton said. “I loved it. The little guy always gets left out of IPOs, so it was a way to include regular people. That was very appealing and increased loyalty for some time until the stock tanked.”

Carolyn Said is a San Francisco Chronicle staff writer. Email: csaid@sfchronicle.com

Twitter: @csaid