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Category: SharingEconomyTrends

SharingEconomyTrends

  • We Are a Marketplace That Sells Demand Generation, Says Grubhub CEO

    We Are a Marketplace That Sells Demand Generation, Says Grubhub CEO

    “We are a marketplace that sells demand generation,” says Grubhub CEO Matt Maloney. “We sell growth. That’s what our primary product is. We’re not a logistics company. We do logistics because we know that’s an end to get to restaurant growth and make money off our logistics. The gross margins on the logistics are not fabulous. The gross margins on the demand generation are fabulous which is why I differentiate between a logistics company and demand gen company. If you’re selling consumers, you’re selling growth, and you can charge a lot for that.”

    Matt Maloney, CEO of Grubhub, discusses with Jim Cramer on CNBC how Grubhub is in the business of driving growth for restaurants and is not just a logistics company:

    The American Public Has Just Adopted Digital Ordering

    This is our fifth anniversary of our IPO. The market now is ten times what I thought it was five years ago. It’s because the American public has just adopted digital ordering as their preferred way to engage with their local restaurants. We are not just marketing to Millennials. We are marketing on national television across all channels, all time zones, and hitting all segments. We just see that people realize that digitally ordering on their app or on their desktop is just easier.

    Of course, our ad campaign is working. I wouldn’t have it on TV if it wasn’t working. You think about it this way. You know your LTV, your lifetime value of your customer, once they start ordering we know that they’re lifers. They’re on forever. We can make that revenue model and then we know how much it cost to put the ad on there. So yes, over time, as people see the ad, more and more it becomes less and less effective. But we’re nowhere near our LTV.

    https://youtu.be/qpyVP-JhToc
    Grubhub National TV Commercial

    I have always been willing to be extremely aggressive investing in the future. Historically, I was bound by the amount of money I could invest. The reception of these communications just weren’t hitting the public and they weren’t working as well. Then around the third quarter of last year, we saw that we could spend way more than we had historically. I’m just talking about effectiveness. Spending it effectively. We came to the street on our third quarter earnings call and said we see opportunity and we are going long in the fourth quarter.

    Yum Made $200 million Investment – They Believe in Our Story

    People are going to say where’s the beef, the old Wendy’s commercial. They’re like show me the money. (We don’t have Wendy’s) but everyone talks to everyone in this industry. I think over time exclusivity is just not going to happen. (We have Yum) and Yum is the biggest restaurateur in the world. YUM is an incredible brand which includes Taco Bell, KFC, and Pizza Hut. They are very forward-thinking. They invest in technology a lot and they wanted to make a fundamental partnership and we wanted to understand what the brands needed from a partner.

    Yum made a $200 million investment because they believe in our story. We didn’t need the investment because we have a very healthy balance sheet. What it did it was really bringing the support of the young brand and the franchisees into Grub. As a tight partnership, we’re able to execute on technology and growth for them in a way that nobody else in the industry is doing right now. I totally disagree (that we aren’t making money from this partnership).

    We Are a Marketplace That Sells Demand Generation

    We are a marketplace that sells demand generation. We sell growth. That’s what our primary product is. We’re not a logistics company. We do logistics because we know that’s an end to get to restaurant growth and make money off our logistics. The gross margins on the logistics are not fabulous. The gross margins on the demand generation are fabulous which is why I differentiate between a logistics company and demand gen company.

    If you’re selling consumers, you’re selling growth and you can charge a lot for that. That’s the profitable side. Everyone else in my industry is a logistics company which has razor thin margins. One of my competitors said they’re the next FedEx. Do you really want to be the next FedEx? There’s the multiple that we can get as marketplaces and there’s the multiple that logistics companies can get.

    Everyone Would Prefer to Order Digitally

    I think that everyone in the country would prefer to order digitally than order on the phone. That’s why we acquired Tapingo. It’s an incredible acquisition because it gives us further scale on campuses. Tapingo is a pickup focused product. So here’s what you need to think about. We sell growth, we sell orders. I don’t care if that’s a pickup order, a delivery order, a self-delivery order, or a catering order.

    Everyone else in my industry only does delivery facilitated by that platform. Because we partner with the restaurants (which means) the restaurants are subsidizing part of our transaction fee, we are always cheaper. That’s what people don’t understand. There’s a lot of bait and switch pricing going on (from competitors).

    We Are a Marketplace That Sells Demand Generation, Says Grubhub CEO


  • Uber Built A Very Anti-Fragile Business, Says Jason Calacanis

    Uber Built A Very Anti-Fragile Business, Says Jason Calacanis

    “Uber built a very anti-fragile business in regards to having the Eats business and having the Rides business,” says early Uber investor Jason Calacanis. “When the Ride’s business went down that kind of indicates people are staying home. When they stay home they use Uber Eats and increasingly Drizly, Cornershop, and Postmates. Watching the Uber team take on this challenge of the pandemic year has been really impressive.”

    Early Uber investor Jason Calacanis says that unlike Lyft, Uber built a very anti-fragile business with the combination of Eats and Rides and has become relentlessly focused:

    Uber Built A Very Anti-Fragile Business

    What we’re really going to see here is that Uber built a very anti-fragile business in regards to having the Eats business and having the Rides business. When the Ride’s business went down that kind of indicates people are staying home. When they stay home they use Uber Eats and increasingly Drizly, Cornershop, and Postmates. People are ordering groceries. Watching the Uber team take on this challenge of the pandemic year has been really impressive.

    It reminds me a lot of Disney and how they got focused around Disney+ as the center of the organization. They looked at what was happening in the pandemic and said parks are great, merch is great, movies are great, let’s just put everything into Disney+ and accelerate that. Look what happened to that company. I’ve got to give Dara Khosrowshahi a lot of credit. He got rid of a lot of the noise like self-driving cars which are a multi-decade kind of vision. He sold off the places where they weren’t going to be in first, second, or even third place. He did JVs and sold off those businesses like Russia and China, etc. That’s well documented.

    The Space Can’t Have 50 Players Losing Money

    They found a new really inspiring footing which is if Amazon is two-day delivery going to one-day, Uber’s is one-hour delivery going to 10-minute delivery. That is Travis Kalanick’s original vision for Uber. When I met with him when he was building the company and I was the third or fourth investor his vision was this is a logistic company. We took atoms in the world made them bits on the internet. Now we’re going to take bits on your phone, an app, and we’re going to move atoms in the real world. That was his original pitch. Here we are in decade two where I’m still own the same shares I’ve had since I bought them for a penny or whatever back in 2008 or 2009. I remain super bullish. I have a huge position in Uber and I’m going to hold it for the next decade.

    It’s fairly obvious that there are acquisitions and consolidation that need to happen in the space in order for it to be profitable. The space can’t have 50 players losing money. We’ve watched Lyft, Postmates, Doordash, and everybody, say that we’re going to have to charge what this product is worth. We’re going to have to stop burning money. There’s no free VC money. The public markets are not down with lose money forever and grow. I think we found a happy medium here between what public market investors want, profits, and what private market investors want, growth.

    Uber Has Become Relentlessly Focused

    I think Dara has done an exceptional job. Some things will come from acquisitions but most of it has to be just relentless execution and focus. That is the inspiring part of what happened here. Uber has become relentlessly focused. Things that were coming in 10 or 20 years like self-driving in all likelihood will be a commodity business. In 10 or 20 years there’ll be five companies who have that technology. VTOLs are very fascinating and very interesting, but again that’s probably seven, eight, nine, or ten years off as a very niche product.

    Uber Built A Very Anti-Fragile Business, Says Jason Calacanis
  • Congress Out To Kill Uber and the Entire Gig Economy Again

    Congress Out To Kill Uber and the Entire Gig Economy Again

    Congress, in a political payoff to unions, have again introduced legislation to effectively make gig economy jobs like Uber, Lyft, DoorDash, etc. illegal. The difference this time is that since they now control the House, Senate, and the Presidency it could very well pass. The legislation is modeled after the gig killing bill that was passed in California and that was later overturned via initiative by the people. Unfortunately, at the national level there is no initiative process to overturn Congress.

    Despite the job-killing nature of the bill the Democrat’s press release sings its praises:

    “Top Democrats Introduce Bill to Protect Workers’ Right to Organize and Make our Economy Work for Everyone. Legislation addresses growing income inequality by protecting workers’ right to join a union and negotiate for higher wages and better benefits.”

    The House bill was introduced by House Committee on Education and Labor Chairman Robert C. “Bobby” Scott (VA-03), Congresswoman Frederica Wilson (FL-24), Congressman Andy Levin (MI-09), Congresswoman Pramila Jayapal (WA-07), and Congressman Brendan Boyle (PA-02).

    The Senate bill was introduced by Senate Committee on Health, Education, Labor, and Pensions (HELP) Chair Patty Murray (D-WA) and Majority Leader Chuck Schumer (D-NY).

    The bill mimics the California bill which Uber CEO Dara Khosrowshahi said would effectively end Uber as we know it in California. The company is already losing money and it would be impossible for it to pay a minimum wage of $15 an hour plus benefits to all of its 1 million drivers. It also begs the question, does the Democrat party not realize that the very people who love Uber and who are independent contractors for Uber probably are also majority Democrat voters? After all, the gig economy was popularized by liberal San Francisco based Uber itself.

    Without an initiative process at the national level, the only way to keep the millions of gig jobs alive and to keep rideshare and food delivery readily available would be for their voters to vote the majority party out of office. There really is no middle ground here. In the meantime, if this bill passes Congress and is signed by Biden the gig economy will become illegal.

  • YouTube Can Now Check For Copyright Issues During Upload

    YouTube Can Now Check For Copyright Issues During Upload

    YouTube is rolling out a major new feature designed to protect content creators, warning them of potential copyright issues during upload.

    Called “Checks,” the new tools is designed to save creators some headache and potential lost revenue by warning them of copyright issues before they go live with content. Many creators had previously resorted to uploading their videos as unlisted or private to check for copyright or monetization issues before going public.

    The company made the announcement in a YouTube Help post:

    Hey Creators! Today we’re rolling out a new step in the upload process on Studio desktop called “Checks” – which will automatically screen your uploads for potential copyright claims and ad suitability restrictions. This new step will help you minimize the number of videos uploaded with copyright claims and/or yellow icons and avoid surprises or worries.

    More information can be found in the Help Center. In the meantime, the new Studio tool should be a big help to content creators.

  • Vimeo Raises $300 Million In Equity, Valued At $5.7 Billion

    Vimeo Raises $300 Million In Equity, Valued At $5.7 Billion

    Vimeo has raised $300 million in equity, raising its valuation to some $5.7 billion as it prepares to become independent.

    IAC announced in December its plans to spin Vimeo off as an independent, publicly traded company. As a video hosting platform, and YouTube’s prime competitor, Vimeo has experienced significant growth. In fact, the company saw 57% year-over-year revenue growth in December.

    As Vimeo prepares to go public, the new funding will provide the capital it needs to continue its growth and innovation.

    “As the world embraces video like never before, Vimeo is in an incredibly strong position to help more businesses take advantage of this powerful medium,” said Anjali Sud, CEO, Vimeo. “We have built an industry-leading solution that the market needs, and we intend to move swiftly to bring our professional-quality tools to millions more users.”

    “Vimeo is the quintessential IAC success story,” said Joey Levin, CEO, IAC. “With patience, discipline, and ambition, Vimeo has transformed from a tiny seed to a large global enterprise making its mark on the world, and Anjali Sud is an exceptional leader.”

  • Uber CEO Says ‘Eats’ Growing At Unprecedented Rate

    Uber CEO Says ‘Eats’ Growing At Unprecedented Rate

    “The Uber Eats business continues to grow at unprecedented rates,” says Uber CEO Dara Khosrowshahi. “Revenue has almost tripled year on year. That business continues to accelerate. It looks like the Eats business is sticky. I wouldn’t count on the growth rates we are having now post-pandemic. However, I do think that you are going to have big growth rates off of a much larger base as a result of everything that has happened.”

    Uber CEO Dara Khosrowshahi says that Uber Eats is growing at unprecedented rates during the pandemic and he expects the business to do well post-pandemic as well:

    Uber Eats Growing At Unprecedented Rate

    On the Uber Eats side, it is an entirely different story where the business continues to grow at unprecedented rates. Revenue has almost tripled year on year. That business continues to accelerate. When we look at Eats we are seeing some great trends. The monthly actives on Eats are up 70% on a year on year basis. The trips are up 110% on a year on year basis. New orders, orders per eater, or basket sizes, all of these trends are up double-digit.

    We’ve taken a look at Eats’ performance in markets that are opening up such as New York City and we haven’t seen any kind of performance degradation in Eats. What that suggests to us is that there is a whole new class of consumer that’s experiencing the delight of being able to pick anything and have it delivered within 30 minutes and eat what you want how you want it. It looks like the Eats business is sticky. I wouldn’t count on the growth rates we are having now post-pandemic. However, I do think that you are going to have big growth rates off of a much larger base as a result of everything that has happened.

    As Cities Open Up Uber Opens Up

    It really is impossible to tell when the mobility business can come back. It depends entirely on the health situation on the ground. With markets that are opening up faster because of the health situation or the society, things are coming back. For example, we looked in New York City where the counts have been down relative to the rest of the country and in just October our volumes were 63% of pre-pandemic levels. This is materially higher than they were in the rest of the nation.

    You have week-day use cases of the service outside of commute that is now at pre-pandemic levels or higher. As cities open up Uber opens up as well. We actually think that we can be a beneficiary of certain trends that we’re seeing.

    We have invested in safety such as digital mask verification. We also have the No Mask No Rides advertising campaigns. People are feeling safer using Uber. Our reliability and predictability are absolutely unrivaled. While we look at share and we always want to make sure that we are competitive really what we focus on is the reliability of the service and safety of our drivers and hopefully coming back as the health situation improves.

    Vaccine Could Radically Improve Bookings

    There is a pretty consistent improvement in the mobility business as you go month to month to month. This is one of the benefits of having a truly global business. Within that steady improvement, there are all sorts of ups and downs. Hong Kong has had some openings and closings. Obviously, Europe is now going through another shutdown. US case counts are moving up. The individual curves are not smooth. But when you look at our global portfolio it smooths out.

    We are seeing a month to month improvement. For example, if you look at our last quarter overall gross bookings were down 50%. In September, the last month of the quarter, they were down only 44%. You just see this kind of consistent improvement. We think that the consistent improvement will continue into next year. We think a vaccine could radically improve the slope of that improvement.

    Uber CEO Dara Khosrowshahi Says ‘Eats’ Growing At Unprecedented Rate
  • Lyft Hopes To Finally End ‘Living Under a Cloud’

    Lyft Hopes To Finally End ‘Living Under a Cloud’

    “What we’re expecting is that other states might have otherwise been teed up to try to replicate AB5,” says Lyft’s Chief Policy Officer Anthony Foxx. “What we want to do is engage in discussions with leaders of states who maybe had considered that and to try to talk about a different model, a different way to pursue what we all want. We want to make sure that the drivers are well taken care of, not only when they’re driving but before and after. Also, we want to make sure there’s clarity and certainty in this industry so that it’s not living under a cloud.”

    California Assembly Bill 5 (AB5), was overturned by the people in regards to ridesharing with the passage of Proposition 22 Tuesday. AB5 was passed by the Democrat-controlled state legislature and signed by California Governor Gavin Newsom in September 2019 as a favor to both the taxi industry and unions who heavily finance Democrat campaigns. AB5 required companies that hire independent contractors to reclassify them as employees. The bill would have made it financially impossible according to Uber and Lyft for them to operate in California. Unfortunately, Proposition 22 did not change AB5’s ban on independent contractors in other industries.

    Lyft’s Chief Policy Officer Anthony Foxx Hopes To Finally End ‘Living Under a Cloud’

    “This was massive in terms of almost an existential business risk to these models in terms of the gig economy,” says Dan Ives of Wedbush Securities. “It could have been a $500 million incremental expense to Uber a $150 million for Lyft. In my opinion, they’re really popping the champagne today because this was really a best-case outcome. It was a dark cloud over the gig economy in these stocks and I think worth potentially 15 to 20 percent to ultimately where I see the valuations.”

    “What was really the crux of the issue is the worry of the street that this was going to be a pandora’s box situation, a ripple effect across cities and states,” added Ives. “The fact that the voters in California approved this was really a seminal moment. From the beginning, really the last year and a half, it’s been a head-scratcher in terms of what this could have done not just to the gig economy. Of the hundreds of drivers that we’ve talked to, 95 percent of them were against the AB5. This is definitely a sigh of relief early this morning for investors as well as for the drivers themselves.”

    Dan Ives: This was an existential business risk to these models in terms of the gig economy.
  • Uber Eats To Essentially Power World Commerce, Says CEO

    Uber Eats To Essentially Power World Commerce, Says CEO

    If there was a time to lean into delivery, this is the time. We’re going to be the global leader in that business. We’re going to expand beyond food into other categories such as groceries and pharmacy, essentially powering world commerce.

    Uber CEO Dara Khosrowshahi discusses how Uber Eats is going to ‘essentially power world commerce’ in a Zoom call with the Wall Street Journal:

    If there was a time to lean into delivery, this is the time,” We’re going to be the global leader in that business. We’re going to expand beyond food into other categories such as groceries and pharmacy, essentially powering world commerce.

    The food delivery business is profitable in certain countries. For example, two of our top five international markets are profitable today and were profitable last quarter. The profitability really depends on how hard we are leaning in toward expanding supply and acquiring customers. The perspective that we have on this business is that even though it’s growing it’s actually very early in its development.

    For example, Japan is a huge market potential for us and one of our leading growth markets. Less than ten percent of restaurants in Japan are signed up to use Uber Eats as a delivery service. When you have a situation where your penetration is ten percent of the ultimate market size you lean in as a company.

    We are fortunate in that we’ve got very strong balance sheets, over $7 billion in cash and available capital. That allows us to lean into certain businesses. If there was a time to lean into delivery, this is the time. We’re going to be the global leader in that business. We’re going to expand beyond food into other categories such as groceries and pharmacy, essentially powering world commerce.

  • Twitter Will Deploy ‘Read Before You Retweet’ Prompt to All Users

    Twitter Will Deploy ‘Read Before You Retweet’ Prompt to All Users

    Twitter is planning on bringing its ‘Read Before You Retweet’ prompt to all users, following several months of testing.

    Twitter began testing the feature in June in an effort to help stop the spread of disinformation that social media platforms have increasingly been called to task for. The results of the tests have been positive, with significant upticks in the percentage of people actually looking at the articles they retweet.

    https://twitter.com/TwitterComms/status/1309178716988354561?s=20

    Social media companies are looking at multiple ways of reigning in disinformation and radical content. Time will tell if Twitter’s new feature has a long-lasting impact.

  • Autonomous Driving for Trucks Will Happen First, Says Full Truck Alliance CFO

    Autonomous Driving for Trucks Will Happen First, Says Full Truck Alliance CFO

    “Our view is that the commercialization of autonomous driving for passenger vehicles will probably take a bit longer than people would think,” says Richard Zhang, CFO of Full Truck Alliance. “We think the commercialization of autonomous driving for trucks will probably take place a lot sooner than it will take place in the passenger car vehicle sector.”

    Full Truck Alliance is a multi-billion dollar valued company that is becoming the Uber of trucks throughout China. The fragmentation of the trucking industry in China between independent truckers and shippers has resulted in an empty load rate of over 40 percent, about four times higher than in the United States. The Full Truck Alliance app and online platform connects shippers to truckers in real-time enabling huge reductions in empty loads.

    Richard Zhang, CFO of Full Truck Alliance based in China, discussed the company’s future in an interview on CNBC International TV this morning:

    Full Truck Alliance in China is the Uber for Trucks

    The problem we’re trying to solve is very simple because there are high inefficiencies between matching with the truck drivers and also matching with the shippers. The empty load rate in the US is only ten percent while the empty load rate in China is 40 percent. The empty load rate is very similar to the vacancy rate in the hotel business. The reason is that the market here is highly fragmented. You have highly fragmented truck drivers and highly fragmented shippers, lots of SMEs.

    Before we came into existence the matching between the truck drivers and shippers were taking place across a thousand offline marketplaces in China. What we have been trying to do is bring that offline marketplace online and use our algorithms in the back office to match automatically the truck drivers and the shippers. We are trying to reduce that empty load rate to well below 40 percent.

    Monetization Via Membership and Uber-Like Fees

    Our monetization strategy for Full Truck Alliance is as a product of a merger between two companies, Truck Alliance and also Yunmanman a little over a year ago. Post-merger we started monetization and the monetization takes place in two ways. Number one is we are charging a membership fee for the shippers and also very similar to Uber or DiDi we’re charging a take rate on the transactions themselves.

    We were very close to achieving our 2018 profit objective. We are actually very marginally close to break-even at the current moment and we have no doubt that we’re going be making earnings in 2019.

    Autonomous Driving for Trucks Will Happen First

    Our view is that the commercialization of autonomous driving for passenger vehicles will probably take a bit longer than people would think. We think the commercialization of autonomous driving for trucks will probably take place a lot sooner than it will take place in the passenger car vehicle sector. Therefore we are deploying a certain amount of resources into that sector in the form of investment.

    We have decided to be a strategic investor in an autonomous driving truck company for them to actually develop that technology and for us to actually use. The mandate for the partner is to actually put a fleet on the road in China to start working with our shippers in the next 12 to 24 months. That’s our mandate and so it depends on how successful they’re going to be at executing our strategy.


  • Ultimate Solution For Uber and Lyft Is Autonomy

    Ultimate Solution For Uber and Lyft Is Autonomy

    “The ultimate solution for Uber and Lyft is autonomy,” says Loup Ventures Managing Partner Gene Munster. “If this employee model simply doesn’t work you are going to see these companies push even harder into autonomous systems simply eliminating the drivers. However, this will attract more competition. I think the two best companies positioned within that would be Google and their Waymo initiatives and also Tesla and how they are going to vector into the ridesharing market.”

    Gene Munster, Managing Partner at Loup Ventures, discusses how California in forcing drivers to be employees may ultimately speed up the efforts of Uber and Lyft to go fully self-driving and thereby simply eliminate all human drivers:

    What Would The Drivers Want?

    Both Uber and Lyft are in a tight spot. There was reprieve today. But this topic is not over with this vote coming November 3rd and California’s influence that they can have with other states. If you put all of this together and think about if these changes to employees across the country, it could be a 15 percent increase (in costs). This is effectively their profit margins.

    I do want to caution the voters of California and also some of the lawmakers on one aspect. What would the drivers want? Most of these drivers use both apps, both Lyft and Uber. If they are employees they likely will be restricted from jumping from app to app. That would cut down some of their rides and cut down what they will be paid on an hourly basis. I don’t think that the right path here is as clear for the drivers in simply becoming an employee.

    Ultimate Solution For Uber and Lyft Is Autonomy

    The ultimate solution for Uber and Lyft is autonomy. If this employee model simply doesn’t work you are going to see these companies push even harder into autonomous systems simply eliminating the drivers. One of the unique things about Lyft and Uber is it is a two-sided marketplace. They have drivers and riders. In an autonomous world you don’t need drivers. Essentially, that would leave Lyft and Uber with their key asset, their brands around movement. I think that is an asset but I don’t know if it is worth $55 billion.

    What I really take away from this is that over the next few years there are going to be ups and downs related to this regulation. Longer term, we know where this is going. Cars should be autonomous for safety reasons and productivity reasons. Ultimately, ridesharing with Uber and Lyft is going to be fully self-driving. This topic we are discussing today is going to be largely irrelevant.

    Lyft is already testing self-driving rides in Las Vegas

    Google and Tesla Will Compete With Uber and Lyft

    There are some key nuances to an autonomous ridesharing business model. As I mentioned, there is a two-sided marketplace. That’s really what makes Lyft and Uber special today. One of the sides of the marketplace, the drivers side of this, is under some pressure right now. But if we eliminate the drivers side then you don’t even have a marketplace. You are just trying to get consumers to ride. That opens up new competitors. There are about six of them that are trying to get there.

    The autonomy option is a better option for Lyft and Uber than what they currently have with humans driving. For an investor it’s a more profitable option. However, ultimately it will attract more competition. I think the two best companies positioned within that would be Google and their Waymo initiatives and also Tesla and how they are going to vector into the ridesharing market.

    I Would Put My Money On Lyft

    Assuming their ballot initiative wins in November, I’m in the Lyft camp. This is partly because I like their focus just on the US and on ridesharing. I think that the Uber Eats business, while its had a tremendous tailwind, it will get progressively more competitive and it’s tougher to make money in that business.

    Ultimately, if I had my choice I would put my money on Lyft. There is another X factor here. There is something subtle about Lyft’s culture. It is a more investor friendly culture and that influences my view.

    Ultimate Solution For Uber and Lyft Is Autonomy, Says Loup Ventures Managing Partner Gene Munster
  • California Law Kills Uber and Lyft And The Entire Gig Economy

    California Law Kills Uber and Lyft And The Entire Gig Economy

    California Assembly Bill 5, which has been upheld in a recent court ruling, literally bans the right of an individual to work for themself according to California Assemblyman Kevin Kiley (R). The law will ban hundreds of different professions and especially the hundreds of thousands of jobs created by the gig economy over the last decade.

    Here is how California Assemblyman Kevin Kiley describes the laws impact:

    This law, California Assembly Bill 5, has made it impractical for Uber and Lyft to operate here. Everyone saw this coming. We’ve known this whole year that this law has been devastating for people. It’s actually devastating not just for Uber and Lyft but for hundreds of professions in California.

    This law, AB-5, has basically banned being an independent contractor or an independent worker. It says you have to be in the employ of someone else. They are shutting down Uber and Lyft and that will leave 100,000 of their drivers out of work. We have millions of Californians who also rely on their services. It’s going to be yet another blow to our economy which is already doing about as bad as any state in the country.

    California Law Kills Uber and Lyft And The Entire Gig Economy
  • Lyft May Shutdown In California

    Lyft May Shutdown In California

    Lyft is warning it may join Uber in shuttering operations in California following a preliminary injunction classifying its drivers as employees.

    Uber, Lyft and the state of California have been locked in a battle over how to classify the two companies’ drivers. Under the Assembly Bill 5, gig workers are considered employees if they are critical to a company’s business. The law has profound implications for companies like Uber and Lyft, whose entire model is geared around independent contractors.

    In his ruling, the judge granted a preliminary injunction preventing Uber and Lyft from classifying their drivers as independent contractors, effectively making them employees. While both companies plan to appeal the ruling, according to The Verge, Lyft President John Zimmer made it clear that losing the appeal would result in Lyft leaving the state. In a call with investors, he said: “If our efforts here are not successful it would force us to suspend operations in California.”

    Uber and Lyft’s case will have far-reaching consequences for the gig economy in California and beyond.

  • Uber CEO: Will Shut Down In California Until Voters Decide

    Uber CEO: Will Shut Down In California Until Voters Decide

    • We will have to essentially shut down Uber until the voters decide.
    • Reclassifying drivers from contractors to employees is unfortunate.
    • You would just get a much smaller service at much higher prices.
    • The vast majority of our drivers don’t want to be full-time workers.
    • Really unfortunate at a historical time of unemployment in California.
    • It would put vast swaths of our drivers out of work.
    • It would take away transportation from hundreds of thousands of Californians.
    • Our labor laws are hopelessly outdated.
    • It’s essentially how Uber started, kind of a black car service with few cars. 
    • We can’t go out and hire ten of thousands of people directly overnight.
    • We would focus on the center of cities versus smaller cities or suburbs.

    “We think the ruling by a California judge was unfortunate on reclassifying drivers from contractors to employees,” says Uber CEO Dara Khosrowshahi. “We think we (already) comply with the laws. But if the judge and a court finds that we are not and they don’t give us a stay to get to November then we will have to essentially shut down Uber until the voters decide.” 

    Dara Khosrowshahi, CEO of Uber, discusses a court ruling requiring Uber to classify Uber drivers as full-time workers. Khosrowshahi says that this will force Uber to become a much small black car service focused on city centers and with much higher prices for rides. Essentially the service would no longer exist in California suburbs and rural areas:

    Vast Majority of Uber Drivers Want To Remain As Contractors

    We think the ruling (in California) was unfortunate (on reclassifying drivers from contractors to employees). We obviously respect the law and the judge. We do have about eight days now where there is a stay. We are going to go back to the court and appeal the ruling and hope that the court reconsiders. If the court doesn’t reconsider then in California, it’s hard to believe we will be able to switch our model to full-time employment quickly, so I think Uber will shut down for a while. Really, the big question is in November with Prop. 22, we have a proposition out there that puts forward what we believe is the best of both worlds. 

    The vast majority of our drivers, a 4-1 ratio, want flexibility, and don’t want to be full-time workers. With Prop. 22 drivers can continue to have the flexibility that they have but they can enjoy the protections, benefit fund, an earning standard so that they have the protections that many people associate with full-time work. We are hoping that in November the California voters can speak. We are confident that this better way which is kind of the best of both worlds will be the way going forward for California.

    We Will Shut Down Until The Voters Decide In November

    In California, we have changed our model substantially. For example, riders in California pay drivers directly. Drivers can set their own price as an independent contractor would. Drivers have all the flexibility to decide whether or not they want to take a ride or not. We think we (already) comply with the laws. But if the judge and a court finds that we are not and they don’t give us a stay to get to November then we will have to essentially shut down Uber until the voters decide. 

    It would be really unfortunate at a historical time of unemployment in California. It would put vast swaths of our drivers out of work without the opportunity to earn. It would take away transportation from hundreds of thousands of Californians. It would be really really unfortunate. Obviously we would look to comply with the law long-term and we’re hoping the law gives us the best of both worlds. Our labor laws are hopelessly outdated. You’ve got the haves and have-nots and you can have actually a better way.

    Smaller Service, Higher Prices, Only Focused On Big City Centers

    Hopefully, the courts will reconsider. By no means do we want this to happen. If they don’t we are going to have to work to move to a full-time model. It’s essentially how Uber started, kind of a black car service with very few cars on the road and much higher prices. So we will look to flip to a full-time model but this is a model that we built over ten years. We can’t go out and hire ten of thousands of people directly overnight. It would take a significant amount of time to switch over. We have teams thinking about it and working on it. We don’t think it’s the likely outcome by the way and we would look to get back on the road as quickly as possible. 

    You would just get a much smaller service, much higher prices, and probably a service that’s focused on the center of cities versus a bunch of the smaller cities or the suburbs that we operate in right now. That’s the reality. It’s not a game of chicken or one way or the other. It’s really up to the courts and we are going to comply with the law. We will look to get going but it will be a very very different service once we get going.

    Uber CEO: Will Shut Down In California Until Voters Decide
  • The New York Times Parts Ways With Apple News

    The New York Times Parts Ways With Apple News

    The New York Times has become one of the first major media outlet to pull out of its deal with Apple News, citing conflicting strategies.

    Apple set out to reimagine the news industry, while at the same time providing a way for beleaguered newspapers to reach new customers in the digital age. Apple News hit the 125 million monthly users milestone earlier this year, and boasts some of the biggest names in news.

    Despite the platform’s success, The Times has announced it will be leaving Apple News, effective June 29. The organization wants to focus on its own distribution and direct relationships with customers, rather than working through a third-party.

    “Core to a healthy model between The Times and the platforms is a direct path for sending those readers back into our environments, where we control the presentation of our report, the relationships with our readers and the nature of our business rules,” Meredith Kopit Levien, chief operating officer, wrote in a memo to employees. “Our relationship with Apple News does not fit within these parameters.”

    It remains to be seen if The Times is a one-off, or if other publishers will follow suit.

  • Coronavirus: Uber Business Taking Hit, Has Enough Funds

    Coronavirus: Uber Business Taking Hit, Has Enough Funds

    In a call to investors, Uber CEO Dara Khosrowshahi has said the company is losing significant business because of the coronavirus, but has enough funds on hand.

    According to Business Insider, Khosrowshahi told investors the hardest hit areas have seen a 60-70% decline in rides, and that could go as high as 80% for the year. In spite of that, the CEO said the company has $10 billion in unrestricted cash.

    “We have plenty of liquidity on the books which positions us to come out of this crisis strong and capable,” Khosrowshahi said.

    Another bright spot is Uber Eats, the company’s food delivery service. As people forgo restaurants, Uber Eats is seeing growth in even the worst hit areas. Between the news that Uber has enough cash to survive the crisis, and news its food delivery service is growing, the company’s stock was up as much as 43% Thursday.

    Uber should serve as an example for other companies. Between having enough cash to weather a storm, and diversifying into a disruptive business, the company seems well-positioned to survive any temporary hit to its core business.

  • The Sharing Economy Creates Opportunities To Buy Happiness

    The Sharing Economy Creates Opportunities To Buy Happiness

    Minimalism has transitioned from a trend into a lifestyle, proving it unnecessary to own the things you desire to use to be happy. Although the sharing economy is still in its beginning stages, it provides resources that have helped millions of Americans live to their fullest potential. Let’s discuss how you can maintain a great lifestyle without owning things.

    The American Economy is thriving. The national unemployment rate is at a half-century low and nominal wage growth has reached a decade pinnacle – all while the economy continues to sprout. While these economic turnarounds are noteworthy, the standard cost of living has climbed 14% within the last three years – far outpacing wage growth. Consequently, Americans are jumping through hoops to afford a great lifestyle.

    From 2017 to 2018, the cost of living hiked by more than 30% in Fresno, California; Colorado Springs, Colorado; Arlington and Austin, Texas; and Columbus, Ohio. In contrast, renters in 13 states typically spend more than half of their net income on necessities. Simultaneously, real real wages haven’t changed in over 50-years. Average hourly wages sat at $20.27 in 1964, converting to $2.50 in 2018-dollars, and $22.65 in 2018.

    With stagnant wages and an increasingly costly economy, luxury lifestyles are becoming as fictional as The American Dream.More than half of Americans have less than $1,000 resting in their savings account while 32% have no savings at all. In 2019, 2 in 3 Americans haven’t been able to afford a summer vacation averaging $1,979. This has heavily influenced the general decline of happiness since the 1990s.

    Believe it or not, money can buy and influence happiness as it can fulfil your needs and desires, as well as reducing stress when under hardships. Furthermore, it has been reported that your emotional wellbeing increases as salaries rise, providing more comfort in your life, up to $75k per year. Self-reflections become more positive with a higher income, up to $95k per year, as well. However, the key to happiness isn’t just having money, but how we spend it. 

    Here’s a look at the science on buying happiness. The human mind wanders 47% of the time, often to a dark place, but anticipation and good memories counteract these negative thoughts. Participants of a 2003 study felt happier when anticipating and engaging in a planned experience to later recall on. This provides a sense of self: giving experiences to mention when telling your life story. Participants in a 2012 study feel experiences reflected their identity and values. Sharing experiences is a great way to connect with others since most people despise hearing others speak about their stuff as it could leave you feeling inferior.

    The sharing economy promotes peer-to-peer platforms that provide access to shared goods and services down to transportation and lodging. Utilizing the sharing economy is an easy and environmental approach to increasing personal optimism, saving money, and even making money by turning your dormant belongings into extra cash. Discover more about the sharing economy below.

  • Uber CEO Reveals Formula To Profitability

    Uber CEO Reveals Formula To Profitability

    “Scale is the primary driver toward profitability,” says Uber CEO Dara Khosrowshahi. “It’s getting big. We’ve got over a billion rides per quarter and we’ve got trips growing at 35 percent on a year on year basis. It’s a combination of growing top-line over 35 percent, technology innovation to delight the customer and take costs down at the same time, and then good old fashioned efficiency, making sure that our corporate costs don’t grow as fast as our revenue. All of those together give you a formula to get to profitability.”

    Dara Khosrowshahi, CEO of Uber Technologies Inc., discusses how Uber can continue to be transformational and ultimately be profitable in an interview on Bloomberg Technology:

    Uber Can Continue To Be Transformational

    We have resolved all of the governance conflicts that the company had. There were many legal issues that the company was involved with. We have SoftBank as a partner and you want SoftBank to be behind you and a big partner and a big investor. We have a great investor base. We’ve taken the company public and company’s revenue, gross bookings, have grown 75 percent since I joined. We now have a path to profitability. So while we’ve had bumps on the road, and every adventure has bumps on the road, I like where we are. I especially like the position we are in now for the next two years.

    I think Uber (can continue to be transformational over the next decade). Really what Uber has done is brought transportation and opportunity at this point to what we believe is just a small segment of the population. We’ve got over four million driver-partners all over the world which is a huge number. It is unparalleled. But we want Uber to be available to everybody. What we are doing now is going into the next step of introducing other transportation choices to Uber. We’ve always gone with pool, but for example, we are testing busses in Cairo now to even bring the price of Uber down to the next level, a dollar or a buck fifty, etc. 

    The Rideshare Business Itself Is Turning Quite Profitable

    We are introducing bikes and scooters for personal electric mobility. Essentially, anyway that you want to get around your city we are going to be there for you. It will be mostly Uber goods but we will also have other third parties such as transit, such as one of our partners Lime as well. Any way that you want to get around we want Uber to be there. And if you want food, if you want even local commerce which I think we will power or even Uber Eats or some of our other services will be there for you as well.

    If you look at our rideshare business, it covered our overhead less than about $100 million. The rideshare business itself is turning quite profitable. We believe that the profits in the rideshare business are not only going to grow top-line but we believe we are going to grow the bottom-line as well. Then there are other businesses, Eats, autonomous, freight, etc. These are extraordinary opportunities that we are funding. I do believe that we are going to prove to our investors that we can take on a serial basis big parts of our business, turn them profitable, and use those parts of our business to fund investments in other areas. 

    Our Formula To Profitability

    I’m very confident that Uber can be profitable. I think the losses that we reported, it was a $5 billion loss from an accounting perspective. If you live in an accounting world that’s a big loss. I live in the real world. Actually, in the real world or EBITDA losses of $656 million were lower than Q1 and were on a good path in terms of our EBITDA losses as well. None of this is going to be easy. All of this is going to take great execution from all of our teams, marketing, technology, etc. We are going to be demanding our employees to be doing even more with less and to execute incredibly effectively in order for us to grow the top-line and the bottom-line as well. 

    Scale (is the primary driver toward profitability). It’s getting big. We’ve got over a billion rides per quarter and we’ve got trips growing at 35 percent on a year on year basis. We think we can use technology to be much more efficient. For example, instead of you now having to email a call center agent or call a call center agent if you have issues, you can just do it in the app. These are technology innovations that allow customers to have a better experience and at the same time they bring down costs. It’s a combination of growing top-line over 35 percent, technology innovation to delight the customer and take costs down at the same time, and then good old fashioned efficiency, making sure that our corporate costs don’t grow as fast as our revenue. All of those together give you a formula to get to profitability.

    Uber CEO Dara Khosrowshahi: Our Formula To Profitability
  • Uber CEO: We Expect This Business To Be Very Profitable

    Uber CEO: We Expect This Business To Be Very Profitable

    “Not only do we expect to hit cashflow break-even, but we expect this business to be very profitable at maturity,” says Uber CEO Dara Khosrowshahi. “I think that going forward our spending declines as a percent of revenue. So when you’re growing trips 35 percent year on year your spending is going to increase. But we’re going to get leverage on the marketing line and we’re definitely going to get fixed cost leverage going forward.”

    Dara Khosrowshahi, CEO of Uber, discusses the company’s latest quarterly results and predicts that Uber will ultimately be very profitable in an interview on CNBC:

    Uber Is Much More Than a Rideshare Company Now

    The IPO for us is a once in a lifetime moment. It was a really important moment for the company. Some of what we did like the driver appreciation award, almost $300 million that we put in the hands of over a million drivers globally were really important for us to do. It created a messy P&L from an accounting standpoint. I think it is hiding underlying trends that are actually very healthy for the company. If you look at trends for the company which is going to matter long-term, you have got gross bookings over $16 billion growing 37 percent on a year on year basis. You’ve got trip volume, and trips are units, growing 35 percent year on year. You’ve got audience, monthly active platform customers, now over 100 million, growing 30 percent. The actual revenue growth excluding the driver appreciation award was up 26 percent. 

    What I did tell our investors is to expect that to accelerate into the back half of the year. The back half of the year you are going to see if trends stay the same, revenue growth in excess of 30 percent. When you look at profitability, we beat our own internal targets and we beat Street targets as well. We came in at a loss of $656 million. It’s still a big loss but the losses are improving and the take rates are improving. If you back out some of those one-time expenses, we went from a loss of $800 million to a loss of $656 million. We got much more efficient on the marketing front. We actually took marketing as a percentage down while we were still growing the top line over 30 percent as well. This is much more than a rideshare company now, it’s a transportation company. 

    We Expect This Business To Be Very Profitable At Maturity

    We are in a situation as far as the network effect of the company where we don’t need to increase the marketing and incentives. We can go in with loyalty plans both for riders and drivers that are going to add to leverage and ultimately profitability of the company. This is a marketplace company that has over 20 percent revenue margins and revenue margins are increasing year on year. Not only do we expect to hit cashflow break-even, but we expect this business to be very profitable at maturity. 

    I think that going forward our spending declines as a percent of revenue. So when you’re growing trips 35 percent year on year your spending is going to increase. But we’re going to get leverage on the marketing line and we’re definitely going to get fixed cost leverage going forward. I think that this quarter proved that out and we have to keep hitting our marks in the next couple of quarters. It’s a super-competitive marketplace but we are confident. We like what we saw operationally this quarter.

    Uber CEO Dara Khosrowshahi: We Expect This Business To Be Very Profitable at Maturity
  • Turo Car-Sharing App Gets $250 Million From IAC To Take On Car Rental Industry

    Turo Car-Sharing App Gets $250 Million From IAC To Take On Car Rental Industry

    “As we continue to grow and invest in our brand more and more people are sharing their vehicles,” says Turo CEO Andre Haddad. “With our app, you can actually share your car so that you can earn money when you’re not using your car. Last year we ended the year with more than 400,000 vehicles listed and our community is now more than 10 million strong. We’re growing really rapidly. We’re hoping to be in the next few years in the same realm as ride-sharing and home-sharing.”

    Andre Haddad, CEO of Turo, discusses the $250 million in new funding from IAC, the tremendous growth of their car-sharing app, as well as fights with Enterprise Rent-A-Car which has been trying to stop them in their tracks in an interview on CNBC:

    We’re Hoping To Be In The Same Realm As Ride-Sharing

    Turo is a great business. There are almost one-and-a-half billion cars around the world and they are idle the vast majority of the time. With our app, you can actually share your car so that you can earn money when you’re not using your car. In the last few months, we’ve seen people earning more than $500 a month sharing their car a few days a month. It’s a great opportunity for car owners to share their cars and earn money with them when they’re not using them.

    We focus a lot on building trust and safety. We have a great partner with Liberty Mutual to cover all the insurance for both the car owner that is sharing their cars with their guests as well as providing coverage for guests that are driving these cars. It’s all about bringing that new idea to market and building trust and building safety for our community. As we continue to grow and invest in our brand more and more people are sharing their vehicles. Last year we ended the year with more than 400,000 vehicles listed and our community is now more than 10 million strong. We’re growing really rapidly. We’re hoping to be in the next few years in the same realm as ride-sharing and home-sharing.

    We’re Very Excited To Partner With IAC

    We’re very excited to partner with IAC. IAC is an incredible company that has a lot of expertise in the world of marketplaces. We’re looking forward to collaborating with Joey Levin and the team at IAC to help accelerate our progress and help accelerate our growth. We obviously want to invest more in our expansion. We want to refine our customer experience and we’d like to expand into more markets. Those are the key priorities for us in the next few years.

    Over the last few months, we’ve seen that the average host is sharing their vehicle roughly a third of the time, about ten days a month. With that ten days a month they’re earning roughly $550 of earnings on a monthly basis. As you can imagine with $550 of earnings you can pay for your car payment. It’s an incredible deal for a lot of people who are using the app. Traditional ownership implies utilization that’s less than 10 percent of the time. It’s a very inefficient use of an asset that depreciates really rapidly and has a lot of fixed costs. Turo is a tremendous opportunity for people who want to make better use of their asset.

    Enterprise Is Trying To Avoid Competition So We’re Fighting Back

    We are faced with a lot of challenges on the regulatory front. Really it’s driven by the traditional rental car industry and by Enterprise in particular. I think the traditional car rental players are concerned that consumers now have a bit more choice. They are concerned that we have probably a better selection, better value, and better convenience as an alternative to the traditional options of car rental. We’ve definitely been battling Enterprise this year. There are 37 states in the United States alone where we have gone into government relation battles with Enterprise. They’re trying to pass laws that will restrict the ability for consumers to share their cars. They’re trying to avoid competition so we’re fighting back. 

    We’ve been building a strong coalition of like-minded people. We have great support from the car manufacturing industry and from the insurance industry. We have prevailed in all of these regulatory battles this year. We have prevailed in 25 state regulatory battles last year as well. We’re trying to be very vigilant when it comes to protecting the ability for consumers to share their cars and we’re going to continue to fight these battles.

    Turo Car-Sharing App Gets $250 Million From IAC To Take On Car Rental Industry – Turo CEO Andre Haddad
  • We’re Trying to Build the Amazon Prime of Rental, Says Rent the Runway CEO

    We’re Trying to Build the Amazon Prime of Rental, Says Rent the Runway CEO

    “You will see the continuous expansion over the next year into many different categories,” says Rent the Runway CEO Jennifer Hyman. The company just raised additional funds at a $1 billion valuation. “Anything that you do not use every single day, we want to make it fiscally irresponsible for someone to not have a subscription to Rent the Runway. We’re trying to build the Amazon Prime of rental.”

    Jennifer Hyman, CEO of Rent the Runway, discusses in an interview on CNBC how her company benefits from the growing sharing economy and how ultimately she envisions Rent the Runway becoming the Amazon Prime of rental:

    We Benefit From the Advancement in the Sharing Economy

    It’s been 10 years since we’ve been working hard to pioneer this new form of dynamic ownership. Ten years ago we were not a darling of the industry and really had to partner with designers to show them that this was an entirely new customer base for them and a new revenue stream. This is just how young people are thinking about ownership across the board. I actually think we benefit from the advancements in the sharing economy. If you think about how this concept of dynamic ownership where we have unlimited choice and the ability to use whatever product we want whenever we want it, our digital worlds have already moved there.

    That’s how we consume entertainment. That’s how we consume music. The idea that you would have that closet in the cloud for the physical world and that form of dynamic ownership, the Millennial Generation Z consumer is so ready to adopt this behavior. That’s what we’ve seen since we launched our subscription, just this dramatic growth and acceleration, not only in how many users we have but in how frequently they use the product. They’re using it 120 days of the year with the unlimited subscription, which is now 70 percent of our revenue.

    Dynamic Ownership Applies to the Closet, the Home, and Beyond

    Think about how frequently millennials are moving and how your home has become this new bastion of self-expression. Your home used to be a private space and now because of social media, it’s as public as you taking photos of yourself every single day. So the ability to continuously dynamically change your home and have new items arriving we really think that this idea of dynamic ownership applies to the closet, the home, and beyond.

    Think about all the things that you don’t have to use every single day and bringing that into the physical world and think about the sustainability of this as well. The millennial and younger customer really cares about the fact that there’s a huge amount of waste. Over 80 percent of the closet is not used regularly. So to create a new contract with the customer where she could have the variety that she wants but she doesn’t have to accumulate all of this stuff that she doesn’t use. You couple that with the fact that this younger generation is living in cities where you don’t even have the space to house all of the extra stuff that you might have put in your garage.

    We’re Trying to Build the Amazon Prime of Rental

    It (revenue) really depends on the item. That metric changes every year based on our cost to serve, which goes down every year. It also matters what cost we procure the inventory at. We started a model last year which is a platform where brands are giving this inventory on consignment and we actually are revenue sharing with them on that inventory. It’s our own version of fulfilled by Amazon and it’s now a new revenue monetization stream for the 600 brands that we work with.

    You will see the continuous expansion over the next year into many different categories. Anything that you do not use every single day, we want to make it fiscally irresponsible for someone to not have a subscription to Rent the Runway. We’re trying to build the Amazon Prime of rental. Rent the Runway is primarily a logistics company. What we really do is we restore physical goods to perfect condition before we send them out to the next customer. We now know all of these different data points about any given fabric, how to restore it to perfect condition and how to maximize the turns while it still looks brand-new.