New York evicts Airbnb, Bill Gurley slams food delivery startups, and self-driving Budweisers

XXXII

Belong nowhere.

Ah, to be Airbnb, a $30 billion company replete with policy and lobbying talent that nonetheless stunningly misplayed its hand in New York. On Friday governor Andrew Cuomo signed into law some of the toughest restrictions on short-term rentals in the country. Specifically, the entire-apartment rentals of less than 30 days that have been illegal in New York City since 2010 can no longer even be advertised. Airbnb says the bill was created to target it and that seems right, especially because Airbnb has for several years refused to comply with existing state law, and local officials weren’t too pleased with that. Now hosts can be fined up to $7,500 for a much more visible offense.

I am fascinated by where this process went so badly wrong. Perhaps it was last fall when Airbnb made a big show of “being transparent” by inviting people to make an appointment to visit a small room in New York’s Civic Hall where they could view, but not copy down or photograph, curated Airbnb host data on company laptops. Or maybe something happened during the legislative process—Airbnb claims the bill was the result of backroom dealing between legislators and the hotel industry. Really though the post-mortem is looking simpler: Airbnb truly thought there was no way the short-term rentals bill would pass the state legislature this summer, and when it did, overwhelmingly, in June, the company didn’t know what to do.

If one thing is clear, it’s that Airbnb didn’t do itself any favors between June and now, as it threatened to sue New York should Cuomo sign the bill (something it’s since done), poured $1 million into a lobbying PAC, and, in a last-ditch attempt to mitigate the blow to its business, proposed something of a compromise via an op-ed in the New York Daily News once the legislation was already on the governor’s desk. If the goal was to engender good faith, that seems like the wrong way to have gone about it. 

Elsewhere: New Orleans City Council Legalizes Short-Term Rentals, Limits Whole-Home ListingsAirbnb Could Wipe Out 70% of Its South Korea Listings by Next Month.

Gig good guys.

Over the last few years the gig economy has yielded its fair share of villains, so it’s fitting that their foils are now emerging—i.e., companies that are being nicer to their workers. Happier workers, the thinking goes, are more productive, loyal, and likely to stay in their jobs. That makes the business better and customers more satisfied. (See: Walmart.) Also, crucially, increased retention can save companies a LOT of money on recruiting and churn.

Startups in this camp include Managed by Q (it hires office cleaners as employees and gives them equity), Homer (ditto, for delivery couriers), Eden (hires office cleaning “wizards” as employees), and Juno (an Uber competitor that hires drivers as contractors but allows them to earn stock by working a minimum number of hours). The first three are betting that spending more on workers who will stick around beats hiring contractors who will likely be out the door before a year, even if it costs 30% more in benefits and wages. Juno’s setup is a bit more complicated, but that hasn’t stopped it from running with the nice-guy branding. Juno’s entire pitch is basically, “We are nicer than Uber.”

Of course, a gig economy good guy won’t necessarily remain one forever. Lyft also tried to brand itself as the kinder, friendlier ride-hailing company but when funding became tighter and competition stiffer most of that went out the window. Juno has already started to trim discounts in New York and even drivers who are fans will tell you they’re not sure how long the good times will last. That said, ride-hailing is a uniquely brutal business in being very low-margin and capital-intensive. And, at the end of the day, most people don’t care who’s driving their taxi as long as it’s safe, clean, and fast. That makes keeping good workers ultimately less important than having a large, liquid supply of cheap labor on hand at all times. Something like office services (Q’s and Eden’s business) or even business logistics (Homer’s), on the other hand, probably has higher margins and stands to gain more from building good client relationships, all of which makes investing in workers more worthwhile. 

“You’re not doing awesome.”

Tough love from Bill Gurley, venture capitalist and unicorn doomsayer. He talks about the capital-intensive nature of ride-hailing (“most of the competitive assaults aren’t better features or a new UI, they’re discounts”), startups that aren’t going public (“I think there’s been this really bad meme spread in Silicon Valley about IPOs being bad”), and tech’s “soft” reset (“people have gotten a little bit smarter, they’re not doing as many dumb things”). But my favorite is the bit on food delivery startups, a category Gurley is none too fond of:

When capital gets widely available, venture capitalists take on more risk. One of the ways they take on more risk is they choose businesses with lower and lower gross margins. And they’re just riskier to execute. Most of them are also consumer businesses, and if you discount you can attract customers. And I think the press misses this a lot because they’ll just count customers and say, “Oh look, you’re doing awesome!” But if you’re losing money on every transaction, you’re not doing awesome, you’re giving something away and it’s going to end.

Indeed.

Self-driving beers.

Otto, the self-driving truck startup that Uber bought this summer, has completed its first fully autonomous delivery. The cargo? 50,000 Budweisers.

The drive was as mundane as the beer in the trailer. At 12:30 am, after leaving the brewery in Fort Collins and merging onto Interstate 25, an Otto driver punched a switch labeled “engage,” and, once sure autonomous mode had, in fact, engaged, climbed out of his seat. He buckled the safety belt behind him, to keep the warning chime from driving him crazy as the truck trundled 120 miles south to Colorado Springs.

Wonder how Pittsburgh feels about the slight to Yuengling.

Other stuff.

The Tech Bubble Didn’t Burst This Year. Spanish-language soap star drives for Uber. The Malibu Juice Magnate. UberChina gets major changes. Didi “definitely going global.” Will it break up with Lyft? China’s Airbnb rival grows. Uber ramps up federal lobbying. Pennsylvania legalizes ride-sharingEnglish tests for Uber drivers. Health discounts for Uber offers drivers. Uber and machine learning. Uber for birth control. Tesla plans ride-share. Lyft tests membershipsHail a tractor in India. Scammer on Lyft. On-demand apocalypse. Vigilante Uber hunter. The patients hurt by Theranos. Is the ClassPass Model Sustainable? Talking, electric, self-driving busDingding YeucheUberProm. The Origin of the Internet’s Most Famous Dumpster Fire. How the Web Became Unreadable.