All posts in “gig economy”

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.

Babierge might just be the answer to your baby gear travel nightmares

Traveling with a baby for the holidays? First you’ve got your own gear to worry about, then a stroller, something for the baby to sleep in like a bassinet or pack n’ play, a baby carrier, toys, snacks, a diaper bag, possibly a car seat and whatever else the plane might allow you to shove into the overhead compartment or check at the gate. Then you’ve got to soothe and entertain the little one so everyone on the plane doesn’t hate you. the struggle. is. real.

But one startup out of New Mexico hopes to at least take care of the gear portion of your personal travel nightmare. Babierge (think baby+concierge) is a baby gear rental marketplace where, instead of lugging everything around with you from city to city, you can rent baby cribs, strollers and whatever else you’ll need from individuals wherever you go.

It’s also a way for families, called “trusted partners” to make an extra bit of cash for the baby gear they already have.

It works like this: those needing baby gear log onto the site and choose the destination city they’ll be traveling to. From there, you’ll see the family willing to rent and the equipment they have to offer listed below. Choose what you need and then select the dates you’ll need the equipment. From there you’ll see if the gear is available and the total price depending on how many days you want to rent. If all looks good you can check out and arrange for delivery wherever you may be in town.

© Nancee E. Lewis/San Diego Union-Tribune via ZUMA Wire

It’s conceivable the company could go beyond baby gear at some point. This month, some on the site are even offering holiday packages beyond baby gear such as delivery of a full-bodied faux pine Christmas tree that comes pre-lit with 300 mini-white & 300 mini-colored lights or a Menorah with candles and matches. However, given the name and focus the site isn’t likely to branch out further than a few of these one-offs.

Still, its growth is a testament to fulfilling a need in the market. According to Maier, Babierge has served about 5,000 traveling families this year, fulfilling more than 400 orders during Thanksgiving alone.

The company launched a mere 18 months ago and so far covers more than 100 markets in the U.S. and Canada. Babierge co-founder Fran Maier also tells TechCrunch Babierge is adding about 5 new markets a week — and all that on very little funding of about $500,000 from friends and family so far.

Of course, activity is going to spike around big family travel days like Thanksgiving and Christmas and Babierge will need to figure out how to sustain sales and revenue throughout the year. It’s also seen fast adoption from those wanting to rent their goods in several markets and will likely need more cash to help it safely scale.

Maier told TechCrunch she expects to get to about 6,000 orders by year’s end and has considered raising from venture capital or “wood for the fire” for next year.

In a way, the startup is a bit like Airbnb in the early days, but on a niche, baby scale. Still, it’s able to learn from those who’ve gone before and I’m told it does offer liability insurance to ensure no harm comes to either party in the process.

Or perhaps it’s more like a Craigslist. Trusted partners choose the pick up and delivery details and list their pictures, emails and phone numbers on the site. Babierge will need to scramble that contact info or create a messaging system to prevent unscrupulous individuals from abuse.

But Babierge says it also offers required safety and cleanliness training for all partners and is a good way for stay-at-home moms to earn a little extra cash for used baby items. The average partner makes about $600 per month, according to the startup.

Overall, it seems like a pretty useful idea and without much competition, excepting one company out of Colorado called Babies Away, which offers similar rental services in about 80 locations throughout the U.S.

“But they haven’t changed,” Maier says. Though Babies Away, which has been in business since 199, does offer more equipment on the site.

But it doesn’t come with the same personal touch or family friendly feel as Babierge. There’s no Christmas tree delivery, for instance.

It’s also not geared towards moms hoping to make a few extra bucks on extra gear. Babies Away partners run their shops like a straight up business.

But it’s a niche industry, either way. Parents (and grandparents and other family members hosting the parents) don’t need to rent gear all the time. Just a few time a year when families are traveling. Still, Babierge fills a definite need for those not wanting to lug their entire nursery with them around this time of year and i’m glad it’s around as I’ll be joining this special lot in the next few months.

Featured Image: Klaus Vedfelt/Getty Images

Uber now wants some drivers to pay it money—and there’s no guarantee they’ll benefit

Sounds like a perfectly upstanding deal.
Sounds like a perfectly upstanding deal.

Image: Spencer Platt/Getty Images

Pay now in order to potentially earn more later. It may sound like something straight out of a marketing scheme, but it’s in fact the latest promise from Uber to a subset of its drivers.

However, according to the ride-hail giant, this is not the latest revenue play from a company losing hundreds of millions of dollars a quarter, but rather part of an academic study with the goal of determining what value its drivers place on that gig economy-defining buzzword known as “flexibility.” 

The promotion was picked up by Alex Rosenblat, a researcher at Data&Society, who detailed the specifics in a Medium post. The offer, sent to drivers in the Houston area, promises the chance to bump up earnings by 33 percent — with, of course, a catch or two thrown in. 

“Buy a week of accelerated earnings for $115,” reads the message. “Opt in below by Saturday, October 21 at 11:59pm: $115 will be deducted from your pay for the week of October 16, and you’ll earn 33% more on every trip between Monday, October 23 and Sunday, October 29. As long as your weekly earnings exceed $349 you’ll come out ahead!”

The tricky part, of course, is that rides are assigned by Uber. So a driver’s ability to hit a certain number of trips — and potentially benefit from paying the company up front — is at the complete discretion of Uber itself. 

So what is Uber actually doing here? Could this be an attempt by the company to better predict future driver supply by locking its non-employees into driving the week before Halloween? Or is this, in fact, just another way the number one ride-hail provider in the world is attempting to figure out how to best squeeze every possible penny out of its drivers? How about both?

Neither, at least according to an Uber spokesperson in a call with Mashable, who insisted that this move is not indicative of any large-scale change the company intends to make. The spokesperson further noted that this study is being done in collaboration with MIT, and, for good measure, that it was approved by the university’s institutional review board. 

“Drivers tell us that they value the ability to choose when, where and how long to work,” the spokesperson told Mashable. “This academic study is part of broader efforts to better understand the extent to which drivers benefit from Uber’s flexible work model in quantitative terms.”

The study, which according to the spokesperson currently involves less than 1,000 drivers who have opted in, is focused on the city of Houston. However, it follows on similar research conducted in Boston. Obviously, whatever it is that Uber is trying to learn here, they’re attempting to get a wide and diverse sample. It’s almost like Uber has plans to roll this out on a larger scale — despite the company’s denial. 

And, well, what that says about the future of the gig economy is not so inspiring. Paying for the opportunity to work is some depressing shit, and just like the company’s self-driving play, Uber appears to be positioning itself to dominate whatever particularly dark future comes out of that. 

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OnboardIQ raises $9.1 million to automate hiring for hourly workers

OnboardIQ wants to make applying for hourly work less of a hassle, with a mobile-first platform that businesses can use to reduce the time they spend finding and hiring qualified workers. Now, three years in, the company has raised $9.1 million to expand their product and customer reach.

When we last wrote about OnboardIQ, back in 2015, the company was positioning itself as a way for on-demand startups to automate their hiring and onboarding processes. Well, I don’t know if you’ve noticed, but since then a lot of on-demand startups have gone kablooey.

As a result, OnboardIQ has widened its net of potential employers it works with. In retrospect, that’s probably a good thing, since the whole U.S. labor market seems to be moving toward hourly work, and hiring for hourly jobs is notoriously difficult.

It turns out, the same factors that caused hiring to be difficult and margins to be thin at on-demand businesses were also affecting sectors like retail, logistics, restaurant, grocery, warehouse and staffing.

In major retail chains, for instance, “There’s a huge amount of people to manage and turnover is shockingly high… Turnover can be as high as 75 percent,” OnboardIQ founder and CEO Keith Ryu said. “It was a huge wake-up call for us.”

Just getting an applicant through the hiring funnel and into a job can be a huge time-suck for businesses still using manual processes, making schedules with pen and paper and relying on gut for whether or not a new hire is going to be a good fit. In light of that, companies are looking for ways to drive cost efficiency even while trying to staff up their workforces.

And let’s not forget about the applicant side of things, where applying for work can be an opaque and demoralizing experience. While many larger businesses have moved on from paper applications to email and web forms, potential employers can be unresponsive, leaving applicants unaware of where they are in the hiring process.

OnboardIQ has attempted to solve many of those issues by creating a system for hiring that is branded and personalized, that is mobile first and uses SMS to communicate instead of email and that uses data and analytics to help people doing the hiring better gauge the chances of an applicant’s success in a job.

Since being founded, the company has processed more than 3.5 million applications and facilitated 400,000 hires. The next step in the company’s evolution is to use its vast amount of data anonymously to reduce the time companies spend reviewing large volumes of applicants and focusing on those that are most likely to get hired.

It’s an ambitious idea, but also a huge market — $50 billion is spent on hiring hourly workers yearly. But if OnboardIQ is successful, it hopes to actually make the process more efficient and less expensive.

This round of funding was led by Origin Ventures, with participation by SoftTech VC, Crosslink Capital and Y Combinator, bringing the total amount raised to $10.75 million.