DoorDash hits a tipping point

CLXXIII

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Red weddings.

No one ever said it’s fun being a public company. Less than three months out from its lackluster debut on the New York Stock Exchange, Uber said yesterday that it was laying off more than 400 people from its global marketing team. The cuts are the largest since Uber was founded in 2009, equal to about 2% of staff but one third of the marketing team, which had around 1,200 people. Uber employees are calling it the “marketing red wedding,” a reference to the exceptionally gruesome massacre that takes place in Game of Thrones.

In a note to staff, Uber CEO Dara Khosrowshahi said the company needs to “admit when we aren’t where we need to be” and “get back on track.” “Today, there’s a general sense that while we’ve grown fast, we’ve slowed down,” he wrote. “This happens naturally as companies get bigger, but it is something we need to address, and quickly.” Jill Hazelbaker, Uber’s SVP of policy and comms who assumed leadership of marketing in June, said in her own note that the marketing team was “not set up for success.” She cited unclear decision making, redundancies at the regional and country levels, and “deep dissatisfaction within the team,” based on internal Uber surveys.

Uber wound up with a bloated marketing structure largely because of how it scaled, hiring dedicated teams for each new city it launched. Those teams usually included a general manager, a marketing manager (the “MM”), and an ops team (“Dops,” or driver operations). Some of these local managers eventually migrated to bigger offices—San Francisco, New York City, etc.—but other positions became defunct over time.

Uber is no stranger to losing money, having lost a truly absurd amount of it during its years as a private technology company, but layoffs have been uncommon. Uber terminated about 100 self-driving car operators—the people who monitored its driverless cars during road tests—in July 2018 after one of its cars struck and killed a woman in Tempe, Arizona. It fired about 20 employees in 2017 after an investigation into alleged misconduct, obviously a different situation. The only other notable layoffs that come to mind were when former Uber comms head Rachel Whetsone cleaned house shortly after joining the company in 2015, cutting more than a dozen employees to make way for recruits from Google. (Uber employees nicknamed this a red wedding, too.)

That Uber is now trimming staff suggests it is under increased pressure from public investors to bring its spending in check. Uber lost $1 billion in the first quarter of the year on $3.1 billion in revenue. It spent $1 billion on sales and marketing in the period, up from $677 million in the first quarter of 2018. The company’s stock has traded mostly below its $45 IPO price since the May 10 listing, closing yesterday at $43.88. Uber is due to report results for the second quarter next week.

Uber has always operated on a you-have-to-lose-money-to-make-money philosophy. When it was a startup a lot of people quite literally bought into this. Uber would be like, hey, we need another billion dollars, and someone—Softbank, Goldman, debt investors, rich people—would say oh yeah, let us help you out with that (sometimes without even knowing financial details!). Now Uber is a public company whose investors aren’t only tech enthusiasts and whose financials are available for anyone to look up and scrutinize, which makes the narrative tougher to control and excesses like a 1,200-person marketing team tougher to justify.

Tipping point.

We talked a couple weeks ago about how DoorDash used customer tips to subsidize worker pay, similar to the tipped minimum wage except that DoorDash workers (“Dashers”) are considered independent contractors and so they aren’t protected by wage and hour laws like regular employees. The bottom line was that if you wanted your tip to go to the worker as something extra rather than be counted toward their normal pay for the job, you should tip in cash, and not through the app.

DoorDash’s tipping policy—which, for the record, has been around for quite a while—got a lot more attention last week after a New York Times reporter detailed it in a story about his stint delivering food for online delivery platforms in New York City:

DoorDash offers a guaranteed minimum for each job. For my first order, the guarantee was $6.85 and the customer, a woman in Boerum Hill who answered the door in a colorful bathrobe, tipped $3 via the app. But I still received only $6.85.

Here’s how it works: If the woman in the bathrobe had tipped zero, DoorDash would have paid me the whole $6.85. Because she tipped $3, DoorDash kicked in only $3.85. She was saving DoorDash $3, not tipping me.

That excerpt went semi-viral on Twitter, and people got mad, and a couple days later DoorDash CEO Tony Xu popped up to say DoorDash would change its pay model. “We thought we were doing the right thing by making Dashers whole when a customer left no tip,” he tweeted. “What we missed was that some customers who *did* tip would feel like their tip did not matter.” 

File this one under “proof that consumer outrage works.” DoorDash’s tipping policy wasn’t new. Dashers knew about it, the press had covered it, hundreds of tech employees had even written an open letter protesting it. None of that seemed to bother Xu, who explained in a post on Medium in late June that DoorDash would stick to its existing pay model after surveying its workforce. It took those paragraphs from the New York Times doing the rounds on Twitter and the displeasure of thousands of consumers, if retweets are a good measure, for the company to have a change of heart. (A DoorDash customer has since sued the company for a tipping policy he alleges is “likely to deceive the public.”)

Xu’s proposed changes won’t necessarily be better for workers. Saying Dasher earnings “will increase by the exact amount a customer tips” is not the same as promising to increase earnings or even ensure they stay the same. Because DoorDash workers are classified as contractors, the underlying problem remains that they are exempt from US wage and hour laws, not to mention other benefits of employment like health care and paid time off. For workers to get paid more would almost certainly require DoorDash to make its service more expensive. The real test of righteous consumer outrage is what those same consumers would be willing to pay.

Scooters!

Here is an absolutely insane story from The Verge that I enjoyed tremendously beginning with this great lede:

There are more electric scooters than people in Pacific Beach, a crowded neighborhood in San Diego known for its bars, surf, attractive college students, and increasingly unaffordable rent.

The story is about ScootScoop, a dockless e-scooter impounding operation run by two men in San Diego who wear blue-collared shifts with a crossed-out scooter embroidered on the left pocket. John Heinkel is a professional repo man who used to hunt down cars and valuables for banks, like a celebrity’s yacht and a Ferrari abandoned in Mexico City. He met his business partner Dan Borelli last year during a stop at Borelli’s bike shop, where they got to talking about the influx of scooters.

The proposition is simple: ScootScoop gets rid of scooters for businesses and landlords tired of the devices cluttering up their properties. They have no funding, no employees, and few friends among scooter companies:

“The people of San Diego are being bamboozled by a local tow company scheme,” Bird’s press team says in an emailed statement. “Scooter Removal aka ScootScoop, orchestrated by Talon Auto Adjusters,” the name of Heinkel’s repossession business, “is unlawfully impounding micro-mobility devices and demanding a ransom for their return.”

Ransom is a word “that we don’t really particularly like,” Borelli told me. “It’s a fake bully word that’s been made up to make our character look worse.”

Elsewhere in dockless mobility, a Lime e-bike burst into flames in Queens, New York, on July 24, injuring the man who had attempted to ride it. You can watch the bike smolder at Rockaway Beach courtesy of the Rockaway Times. It’s peaceful like a campfire except instead of logs the fuel is a bicycle, which, you know, is less ideal.

The rider told police the battery appeared to explode. Lime in an initial statement said the fire was started not by the battery but after the bike’s lock was tampered with; in a later statement, Lime said a person had attempted to “forcibly break the bike lock with a sharp object, penetrating the well-protected small lithium battery that powers the lock.” This sharp object “ultimately ignited the battery,” Lime said, adding “our bikes are entirely safe when used properly.”

I mean, sure, a lot of things are safe when used properly and tampering is bad. But on some level I feel like if you dump scooters in the wild you can’t reasonably expect that everyone will use them properly—there is literally an Instagram account with 98,000 followers devoted to scooter “deaths.” Ideally it would take more than a sharp object to make one explode. Though as my coworker said, “if someone stabs a battery, what are you gonna do.”

Evicted.

A London man was ordered to pay a £100,000 fine and evicted from his council flat—social housing—after renting it out on Airbnb:

Council tenant Toby Harman rented out his studio apartment in Victoria, central London, by using a fake profile under the name “Lara” on the website.

He was uncovered when anti-fraud software found reviews mentioning the tenant by name and thanking him for advice, Westminster City Council said.

The council added that bank statements also showed he had received payments from Airbnb for a number of years.

“Social housing is there to provide much-needed homes for our residents, not to generate illicit profits for dishonest tenants,” Andrew Smith, a councillor for Westminster City Council, told the Independent. “We can now reallocate the property to someone in genuine need of a home.”

This time last year.

Lyft will pay you to ditch your personal car

Other stuff.

Uber in grocery delivery talks with European supermarkets. Arianna Huffington and Benchmark’s Matt Cohler resign from Uber board. Just Eat lays off up to 100 staff. Just Eat agrees on possible merger with Takeaway.com. Uber partners with Bengaluru startup Sun Mobility on electric auto-rickshaws. Cruise postpones plans for driverless ride-hail service. Toyota invests $600 million in Didi. OpenTable expands into food delivery. Bird seeks new funding at $2.5 billion valuation. Spin pushes scooter expansion. London cracks down on e-scooters. Man critically injured after e-scooter crash in London suburb. Olympic Park quietly extends e-scooter trial. Walmart tests autonomous “middle mile” delivery. Shoppers spend less at Amazon Go. Hello Alfred acquires Bixby. Compass raises $370 million from investors including Softbank. Airbnb fails travelers with disabilities. Vacasa buys Wyndham Vacation Rentals for $162 million in cash and stock. Amazon’s New York office hunt includes Lord & Taylor building. Softbank plans second Vision Fund. Postmates delivery bot gets new laser eyes. Chance the Rapper has spent $30,000 on Postmates.


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Send tips, comments, and red wedding allusions to @alisongriswold on Twitter, or oversharingstuff@gmail.com.