Sexual harassment at Uber, iffy labor practices at Instacart, and Airbnb’s profit aspirations

XLVII

Look what I spotted in the Brooklyn wild yesterday:

#deleteUber.

The hashtag that forced Uber to cobble together an automated account removal process is back after a horrifying tale of sexual harassment and systematic mistreatment by HR and upper management from a former Uber engineer. Susan Fowler’s story, “Reflecting on one very, very strange year at Uber,” is here, if you haven’t read it already. A few excerpts:

On my first official day rotating on the team, my new manager sent me a string of messages over company chat. He was in an open relationship, he said, and his girlfriend was having an easy time finding new partners but he wasn't. He was trying to stay out of trouble at work, he said, but he couldn't help getting in trouble, because he was looking for women to have sex with. It was clear that he was trying to get me to have sex with him, and it was so clearly out of line that I immediately took screenshots of these chat messages and reported him to HR…

…When I reported the situation, I was told by both HR and upper management that even though this was clearly sexual harassment and he was propositioning me, it was this man's first offense, and that they wouldn't feel comfortable giving him anything other than a warning and a stern talking-to. Upper management told me that he "was a high performer" (i.e. had stellar performance reviews from his superiors) and they wouldn't feel comfortable punishing him for what was probably just an innocent mistake on his part…

…When I joined Uber, the organization I was part of was over 25% women. By the time I was trying to transfer to another eng organization, this number had dropped down to less than 6%.

By the time Fowler quit—after she says another manager threatened to fire her for reporting things to HR—that number had fallen to 3%.

Travis Kalanick, who seems to have learned at least one thing from the previous round of #deleteUber, took to Twitter pretty quickly to describe Fowler’s account as “abhorrent & against everything we believe in.” Arianna Huffington, who is on Uber’s board, said she will work with HR head Liane Hornsey to conduct “a full independent investigation,” and last night Uber also said it had hired former US attorney general Eric Holder to assist with the review. (Airbnb brought on Holder last summer to help address racial discrimination in its home-sharing network.)

Anyway, rather than go on about how horrible this all is, here are two key—and I think underappreciated—points from the Twittersphere. (1) Uber’s high valuation and refusal to go public have kept a lot of employees trapped there, regardless of how toxic its culture may be. (2) There have been too many stories of sexism in tech to count, yet this is the first one that the tech community writ large seems to accept. What did that take? Fowler documented everything, wrote a dispassionate blog post, alleged nothing that occurred at a social event with alcohol, and came out against a company that a lot of people already hate. When it takes all those things for a startup—and the tech community—to acknowledge there’s a problem, well, that problem is even uglier and more insidious than you’re ready to believe.

Tipping point.

Fowler’s account has reignited other critiques of Uber, such as its habitual mistreatment of drivers. On that note, here’s something I wrote for Quartz recently: Uber has absolutely no good reason for keeping tipping out of its app.

Before you say, “tipping is bad”—yes, I know. To quote Slate, my former employer, tipping is an abomination. That said, the preferred alternative to tips is to increase the base wage earned by employees, as famed restaurateur Danny Meyer explained when he debuted a no-tipping policy at the Modern, an upscale dining spot in midtown Manhattan. Uber cuts prices relentlessly and has fought doggedly in court to avoid classifying its drivers as employees, a status that confers both minimum-wage protection and benefits. Travis Kalanick is no Danny Meyer.

Why doesn’t Uber have in-app tips? Uber is “cashless,” tipping is “tacky,” “being Uber means there’s no need to tip!” Pretty shabby reasoning for a company that typically barters in numbers and logic. Why should it build in tipping? Lots of customers want to tip their drivers (and UberEats couriers) and are dismayed when they aren’t able to. When giving the chance to tip, meanwhile, people overwhelmingly do. In the first half of 2015 in New York, 97% of solo riders in yellow cabs who paid with a credit card left a tip, with a median value of $2. On Seamless (Grubhub), 99% of customers tip, with a median gratuity of 15%. On Lyft, which does offer tipping, customers have left more than $175 million to date.

For Uber drivers, tips could make a big difference. In New York, where the typical driver makes $19 and completes two to three trips an hour, another $4 to $6 in tips would represent a 21% to 32% increase in earnings. For a family with two children and two working adults, that’s the difference between just scraping by and having funds to spare. I assume Uber knows all this and, due to some combination of stubbornness, hubris, and insensitivity, still doesn’t really care. Easy enough, when you’ll never have to worry about earning a living wage yourself.

Service fees.

Oh, why not, let’s continue talking about worker abuse! Here is an update from Recode on Instacart’s decision to replace in-app tips for its shoppers with a “service fee” that it collects. After the move sparked an outcry from the many poorly paid Instacart workers who rely on tips to earn a reasonable wage, the company reversed—kind of. Instacart restored tipping to its app, but made it incredibly difficult to find. To leave a tip now, customers must click a small and innocuous arrow to the right of “service fee” in the checkout screen, then locate “additional tip” (fun fact: it’s not additional), and hit another small and innocuous arrow to raise the amount from zero.

Why did Instacart get rid of tips? Workers’ rights! Tips are bad (see above). Instacart said replacing tips with a service fee would “improve the shopper experience” by making pay more consistent and increasing the base commission on each order. What Instacart didn’t say: Tips are rarely booked as revenue, but a “service fee” can be, helping to fatten up the company’s margins. Workers’ rights are so fun to use as a cover for accounting sleights-of-hand. Of course, just last month Instacart cut pay for a bunch of workers by 6% to 21%, and I wouldn’t be surprised if the company tried to spin that as in shoppers’ best interest, too. As Instacart famously told workers when it slashed their rates last year, these pay cuts “are designed to help you become more efficient, and therefore, earn more.”

Great expectations.

Ok, new topic! Airbnb, previously reported to have been profitable in 2016, expects to book $3.5 billion a year in profit by 2020, Fortune’s Leigh Gallagher reports. That’s “more than the bottom lines of 85% of the companies in the Fortune 500” and “a 3,400% increase from what the company had in similar profits last year,” Gallagher writes. Uber, by comparison, lost about $3 billion in 2016. A unicorn is a startup valued at a billion or more, but what do we call a unicorn that produces several unicorns-worth of profit in a year? A derivacorn? A medusa? From Gallagher, the ever-important caveat: “This is all expectations, and [Airbnb CEO Brian] Chesky loves little more than talking about the potential of Airbnb in the future.”

Other stuff.

Chicago fines David Plouffe $90,000 for lobbying illegally on behalf of Uber. Uber exec: “relationships with cities are hard sometimes.” Uber’s “perpetual motion” stock buybacks machine. General Motors plans “thousands of self-driving Bolts” for 2018. China’s millennials embrace the gig economy. Postmates mandatory arbitration is no longer mandatory. Brazil judge rules Uber driver is employee. MIT professor working with Uber on racial bias. Uber partners with MoneyFarm to help UK drivers save. Uber rivalries intensify in Southeast Asia. Grab to acquire Kudo for ~100 million. Britney Spears stayed in $30 million Airbnb for Valentine’s day. Airbnb would like to spend more money. Airbnb but for toxic mold. Satya Nadella praises Indian startups. “Uber said Modolo Filho was its first driver to be murdered in Brazil. He would not be the last.”