All posts in “gig economy”

Thumbtack now offers benefits to independent contractors

The gig economy has been under much scrutiny as of late due to the way it pays — or, skirts around paying — its independent contractors. Thumbtack, a platform for finding professionals to do anything from home maintenance do DJing a party, is now offering benefits to some of its independent contractors.

“In a time where it feels like all the stories are about some tug of war between labor and a platform, I hope what this highlights is that there are opportunities for working together and to find solutions that are in service of the broad set of pros and their needs,” Thumbtack CEO Marco Zappacosta told TechCrunch ”

This is thanks to Thumbtack’s new pilot partnership with Alia, a portable benefits platform. Alia, which is a project of the National Domestic Workers Alliances Lab, works by enabling customers to contribute to their cleaner’s benefits. These benefits entail paid time off, life insurance and coverage for disabilities, accidents and critical illnesses.

“There’s been a lot of talk about portable benefits,” Thumbtack CEO Marco Zappacosta told TechCrunch. “Really, what we need to do is start experimenting, start learning, start trying and start doing. We found this is a great way to start and improve our relationships with pros.”

Initially, Thumbtack will only offer benefits to its housecleaners in California and New York. Through the partnership, Thumbtack customers will be able to contribute any amount of money to go toward the professionals’ benefits, though, the suggested donation is $5. For the first six months, Thumbtack will also contribute $25 to each pro (up to $20K in total) who joins Alia.

The relationship between a housecleaner and resident can be very personal and intimate, Zappacosta said. That’s why he believes there is an opportunity to leverage that relationship. Still, customers might not be as willing to contribute as Thumbtack hopes they’ll be, and Zappacosta understands that other approaches may be necessary.

“This is one shot on a goal,” Zappacosta said. “The only way we’re going to learn exactly what works best is by trying. The private sector alone won’t be able to solve this problem. It will require a government solution to make it easier for folks to access benefits who are out of traditional employment structures. This is the start of a long road.”

Instacart ends its shady tipping policy, thanks to internet backlash

Instacart has been filling up carts, and emptying pockets.
Instacart has been filling up carts, and emptying pockets.

Image: Cyrus McCrimmon/Denver Post via Getty Images

Internet outrage might feel tiresome sometimes, but it can also be a force for good. 

The grocery and food delivery company Instacart has changed the way it pays its gig-economy workers, according to BuzzFeed. Following the outrage and worker organizing that occurred after several reports detailed the company’s payment structure — in which it used tips, not company revenue, to cover base wages — Instacart CEO Apoorva Mehta told delivery workers in an email that the company would reverse its policy.

“Based on your feedback, today we’re launching new measures to more fairly and competitively compensate all our shoppers,” Mehta wrote. “Tips should always be separate from Instacart’s contribution to shopper compensation.”

Instacart’s move, though retroactively admirable, is the latest example of the tech industry’s habit of adjusting policies designed to bolster a company’s bottom line only after public outrage ensues.

Over the last week, reports from NBC News and the New York Times publicized the unsavory-seeming way that Instacart, as well as fellow delivery service Doordash, compensated the people who make deliveries (called Shoppers, in the case of Instacart). In November 2018, Instacart instituted a new policy that guaranteed a base pay of $10 for all deliveries. 

Great, right? Not so much. 

On Reddit and other forums, Shoppers showed how any tips they received were being used to make up that $10 — as opposed to adding the tip on top of the base pay. DoorDash instituted a similar policy in 2017. And workers say it has reduced their income by 30 or 40 percent, according to NBC.

The practice gained the media’s attention after one man’s story went viral. After receiving a $10 tip, he only received a payment from Instacart of $10.80. When he asked Instacart why his tip wasn’t showing up, they told him it was because the tip had been used as part of the base pay. A post by the advocacy organization Worker Washington titled “Earn eight cents an hour by delivering groceries with Instacart!” sparked outrage, a petition, a class-action lawsuit, and even attention from lawmakers. 

Now, two days after the NBC article publicized the worker’s story, Instacart won’t use tips to cover the promised based pay. Mashable has reached out to Doordash to ask whether it is considering taking similar action. We will update this story when and if we hear back.

This isn’t the first time user feedback and press attention have caused a tech company to change course. Patreon famously reversed changes it made to its payment structure that put fees on patrons after its community complained — that move ended up earning them the good will and loyalty of Patreon users. But several other companies and ideas have gone belly up because of internet outrage. The Twitter response to the ill-conceived idea to basically turn homeless people into WiFi hotspots caused the charity behind the idea to abandon their plan. And who can forget Bodega, the company whose business model and name so enraged the people of the internet that it had to rebrand to Stockwell, and no one has heard a peep from them since.

Many tech companies claim to be disruptive forces for good in their communities. But too often, decisions made in a Silicon Valley conference room end up duping customers and users, and squeezing as much money out of they can from the gig economy workers that power the system. 

Public oversight has so far proven to be these companies’ most effective moral compass. Otherwise, that compass often points to more money for companies, and more problems for workers.

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How Jyve secretly raised $35M & built a $400M retail gig economy

What if instead of just accepting Uber rides, gig workers could pick from higher paying skilled tasks around town like stocking shelves, checking inventory, or driving a forklift at a local grocer? When they work quickly and accurately or learn new trades, they get to choose between more complex jobs. That’s the idea that’s racked up $400 million in staffing contracts for Jyve, an on-demand labor platform that’s coming out of stealth today after 3.5 years.

“I believe the skill economy is way bigger than the gig economy” says CEO Brad Oberwager. He sees Uber driving as just the low-expertise beginning of a massive new job type where people with specializations or experience are efficiently matched to retail work. Jyve’s secret sauce is the work quality review system built into its app for managers and stores that lets it know who got the job done right and deserves even better opportunities.

Jyve’s potential to become the skilled labor marketplace has quietly attracted $35 million in funding across a seed and Series A round raised over the past few years led by SignalFire and joined by Crosscut Ventures and Ridge Ventures. “Jyve is one of the fastest-growing companies we’ve seen, having already reached $400 million in bookings in three short years” writes Chris Farmer, CEO of SignalFire. “They are creating a new economic class.”

It’s all because Safeway hasn’t touched a bag of Doritos in 50 years, CEO Brad Oberwager tells me. Grocery stores have long outsourced the shelving and arrangement of products to the big brands that make them, which is why the retail consumer packaged good industry employs 10 million people in the US, or over 10% of the country’s workforce. But instead of relying on one person to drive goods to the store, load them in, and shelve them, Jyve can divide those tasks up and match them to neraby people with sufficient skills to cut costs.

“Retail isn’t dying, it’s changing, and brands that are thriving are the ones investing in their in-store experience as well as owning their e-commerce initiatives,” observed Brad Oberwager, CEO and founder of Jyve. “The question we must ask then is how do we fill this labor shortage and also enable people to refine special skills that are multi-dimensional and rewarding.”

Oberwager knows the tribulations of grocery shelving well. He built online drugstore before the dot com boom, then started making his own food products. He created True Fruit Cups, one of the country’s largest importer of grapefruit, and founded and sold his Bare apple chips company. Competing for shelf space with big brands paying workers to setup elaborate displays in grocers, he saw a chance to reimagine retail labor.

But it was when his daughter got sick and he realized the surgeon who performed the operation was essentially a high-skilled mercenary that he seized on the opportunity beyond grocers. “He walks in, does the surgery, walks out. He’s a gig worker, but it’s a skill I’m willing to pay a lot for” says Oberwager.

He created Jyve to aggregate the demand from different stores and the skills from different workers. When somene signs up for Jyve, they start with easier tasks like moving boxes in the backroom. If they do that well, they could unlock higher paying shelf stocking and display arrangement, then product ordering and brand abassadorship. At each step, they take photos and leave comments about their work that are reviewed by a combination of store and brand managers, as well as Jyve’s machine vision algorithms and human quality control team. It can quickly tell if someone puts the Cheerios box on the shelf the wrong way, and won’t give them public-facing tasks if they don’t improve

“70% of our market managers were originally drivers, and they become w2 workers” Oberwager says proudly. Jyve even makes it easy for brands and retailers to hire its top giggers for full-time jobs. Why would the startup allow that? “I want to put it on  billboard, “Work hard, get promoted” he tells me. The fact that Oberwager’s last name could be interpreted as “higher wages” in German makes Jyve seem like his destiny.

Keeping work quality up to snuff will be a challenge, but by dangling higher wages, Jyve aligns its incentives with its workers. The bigger hurdle may be convincing big brands and retail institutions to change the way they’ve done staffing forever. Oberwager professes that it takes a long time to onboard, but also a long time to offboard so it could build a solid moat if it’s the first to win this market. Jyve is now in over 1200 cities across the US, and a real-time map showed a plethora of gigs available around San Francisco during the demo.

Oberwager admthat the unskilled gig economy is “a little dehumanizing. It makes people a cog in a machine.” But he hopes each “Jyver” as he calls them can become more like a circuit – a complex machine of its own that powers something bigger.

Why the gig economy was doomed from the start

For a while there, it seemed like “Uber for X” was the only pitch that mattered.

To many, the rapid rise of Uber wasn’t just a major tech success story — it signaled a wholesale change that was coming to how people thought of work. Traditional jobs, the thinking went, would soon become less and less common, with predictable, inefficient employment getting replaced by the flexibility of independent contract work. The “gig economy” was underway, and it was unstoppable.

Except that it stopped. In her new book, Gigged, reporter Sarah Kessler chronicles the ascent and decline of the gig economy, starting in the early 2010s, when it seemed every service — from grocery shopping to cleaning offices — could be “app-ified” to be done by easily scalable contract work, to the death of many of those services a few years later, when their models proved unsustainable.

Kessler, a former Mashable startups reporter, visited the MashTalk podcast to talk about the gig economy, and its failure.

Gigs that don’t translate

One of the main problems, she observed, is that for many jobs outside of driving people from Point A to Point B, the work requires more skill than you think. It turns out that even something as seemingly menial as grocery shopping has nuance to it, and individuals tend to be very particular about the way it’s done. Finding the best avocados for you might not be the same as finding the best avocados for me.

“People saw Uber making this business model work, and you had a bunch of people who are experts at starting tech companies launching a service business for cleaning or washing your clothes or whatever,” says Kessler, “And it is a lot more complicated and requires a lot of expertise to do those things, and so a lot of them did get in trouble.”

Sarah Kessler

Sarah Kessler

Not only did the jobs require more skill than expected, but the gig economy is set up in such a way that work is inherently modular, sometimes varying wildly from contractor to contractor. The problem is customers generally want consistency and reliability, and for many of these tech startups, creating an environment that encourages that — while also offering a cheaper product than traditional employee-driven industries — was too tall an order.

Not all gig economy companies failed, though. One of them, a cleaning company called Managed by Q, ended up pivoting to an employee model, just with the same conveniences enabled by technology that the original contractor model had. There was some sacrifice in nimbleness, but the shift resulted in a better business overall.

“They did make that change, and decided there was a business reason to do so,” Kessler explains. “They wanted their cleaners to have relationships with people whose offices they were cleaning, and through those relationships they would start to sell other services like supplies. And you needed to have happy workers who liked your company in order for that to work.”

Downfall of ‘Uber for X’

The danger of pivoting away from the original gig economy promise is that it’s a much tougher sell to investors, who tend to fixate on scale, scale, scale. While there will always be tech startups based around centralizing contract work — and some may even succeed — the central lesson of the gig economy is that it’s much harder than it looks.

“You could see in the reviews of some services that they would be raving about one person but then talking about getting your jewelry stolen by the next person. The acquisition cost of trying to go find people, who have no allegiance to you and then pseudo-train them to do what you want to do but then they leave the next week when they find a real job, is pretty high.”

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Deliveroo employees are getting shares, riders are getting nothing

Food delivery startup Deliveroo is feeling generous today. The company is handing out equity to all full-time staff members. In other words, 2,000 employees are going to receive the equivalent of $13.5 million in Deliveroo shares.

“Our phenomenal growth and success has been made possible thanks to the hard work, commitment and passion of the people who make this company what it is,” co-founder and CEO Will Shu told Reuters. “And that deserves recognition which is why I want all employees to be owners in Deliveroo and to have a real stake in the company’s future as we expand and grow.”

This is a great way to prove that you care about your employees. And yet, there are a few caveats.

First, the company is currently worth over $2 billion. In total, Deliveroo is just handing out 0.675 percent of the company to its employees. I’m sure plenty of early employees already have equity.

But those who joined more recently aren’t likely to get rich over this — it represents a $6,750 equity bonus per employee on average. And shares usually vest after a certain amount of time.

Second, this is the perfect example of the gig economy. In addition to the usual benefits, full-time employees are getting rewarded once again. If you’re a self-employed rider, Deliveroo doesn’t want to thank you.

Arguably, Deliveroo still thinks that riders are disposable. They might be the ones who pick up food in restaurants and hand it to customers, but they will never be full-time employees.

Sure, Deliveroo and Uber Eats are now providing free accident insurance coverage, but it mostly covers hospital bills. Riders have been asking for better rights, and this insurance package is just a good way to ease the pressure.

Working with contractors at scale is the backbone of Uber, Deliveroo and many other on-demand startups. This way, startups don’t have to pay the minimum wage or expensive benefits. Startups can also terminate their relationships with their ‘partners’ without any consequence.

It’s a great way to pressure your contractors in working more for less money. And today’s move by Deliveroo is further proof that riders are just an afterthought.