Uber shortchanged drivers on wages, Sprig shuts down, and WeWork starts a gym


Booms and busts.

It’s easy to see the food delivery boom as repeat history. Investors also showered money on startups that promised to make instant gratification cheap during the first dot-com bubble, and then watched as it all fell apart. The failure of SpoonRocketMaple, and, last week, Sprig was presaged nearly two decades ago by Kozmo and Webvan, delivery startups also done in by fickle customers and thin margins. The difference isn’t that these modern companies failed, but how. To quote T.S. Eliot, not with a bang, but with a whimper.

In the early 2000s, things ended very much with a bang. Kozmo, the predecessor to Postmates, registered for a $150 million IPO in March 2000 before calling it quits and laying off 1,100 employees in April 2001. Webvan, an early grocery delivery service, went public in November 1999 at a market value of $7.9 billion, despite an anticipated loss of $65 million that year and operating losses for the “foreseeable future.” Its stock cratered over the next two years until in July 2001 Webvan laid off 2,000 employees and filed for chapter 11 bankruptcy.

But this new food delivery bubble hasn’t burst, just deflated, slowly and unremarkably. There have been no failed IPOs, no cratered stocks, no layoffs thousands-strong. Instead the signs of a bust are shrinking discounts, disappearing cookies, and quiet farewell notes on startup websites. Venture capitalists have finally tired of subsidizing our meals, but that doesn’t mean the food delivery dream is over for good. Chinese food delivery startup Ele.me is raising at least $1 billion led by Alibaba; France’s Frichti just landed $34 million. Frichti delivers cold meals like Munchery, a struggling startup in the US, but remains undiscouraged. “FoodTech is not over but a few will be able to switch over from aggressive top-line growth to sustainable cash burn thanks to virtuous margins and metrics,” Rodolphe Bereby, Frichti’s chief financial officer, wrote me the other day.

Maybe! They said that about Kozmo and Webvan too. “Given more time and more hospitable market conditions, Kozmo would have succeeded in rounding the corner and would have continued to grow,” the company’s CEO said after it collapsed. “We’re very proud of what we’ve accomplished,” said Webvan’s spokesman when it wiped out billions of dollars in market value and declared bankruptcy with $96.5 million in liabilities. “As a concept and a business model, we believe that we have made a difference.” I guess that’s true, they did “make a difference” in that they found an exciting new way to lose a lot of money.

How will today’s food delivery companies be remembered? They haven’t succeeded and they also haven’t really “made a difference,” even euphemistically. “We built a brand that struck a chord with our customers and developed hundreds of menu items,” said Maple when it ended service. “Food delivery has a bright future, and I’m proud of the work we have done at Sprig that has had a positive impact on the space,” said Sprig. Kozmo and Webvan failed more spectacularly and if nothing else it earned them a legacy. The Sprigs and Maples of the world won’t even have that.

$45 million.

Remember when you were a kid and played that game “Telephone,” where someone started by whispering a message to the person next to them, and then you continued around in a circle and by the end the message was totally garbled, either because someone misheard it or, more likely, there were enough kids who thought it was funny to change the words that the original message never stood a chance? I mention this because the internet also likes to play this game. Last week we played it with Uber, which said May 23 that it would pay back “tens of millions” of dollars to “tens of thousands” of drivers in the city after years of shortchanging their wages. These are obviously non-ideal numbers and I tried very hard to get Uber to get more specific, but the best answer I got was more than 11 and less than 99. (Thanks, guys.)

Anyway that’s what I reported in Quartz but the Wall Street Journal did some math. Uber payments “could total at least $45 million,” the Journal reported, citing Uber’s statement that the average payment would be about $900 and using an estimate of 50,000 drivers owed money from the Independent Drivers Guild, a non-union group that represents ride-hailing drivers in New York. That is good, the media really should publish more back-of-the-envelope calculations that use company-provided averages and advocacy-group provided estimates. I am sure the math was very sound. So apparently were a lot of other people! “Uber to pay drivers back $45m after taking too big a cut out of taxi fares,” declared the Independent. “Oops: Uber Kept Nearly $50M of Drivers' Money,” proclaimed PC Mag. “Uber underpaid its New York City drivers and probably owes them $45 million,” shrugged Mashable.

I don’t really have a broader point to this except that I feel like since we rag on startups (and especially Uber) when they fudge the math, we should also be careful not to do it ourselves. That is how misinformation spreads and I think we generally agree that misinformation Is Bad. Ideally Uber would have been more precise in its figures—or not shortchanged its drivers on their earnings in the first place—but you can understand why it didn’t want to. Averages are a nice way to hide extremes, and I’ve seen some payments to drivers that reached past $7,000, and rumors of ones that went much, much higher. So tens of millions to tens of thousands it is. Last time I checked, $45 million is one of many, many numbers that fall within that range.

Set your own schedule.

Uber loves to tell drivers that they can set their own schedules, but Lyft is the first one to really deliver on it. The company last week added a feature that lets drivers accept rides hours or even days in advance:

“It gives the drivers control over their schedule and think about what they’re going to do,” said Tali Rapaport, Lyft’s vice president of product. “We can now give certainty.”

While flexibility has long been the battle cry in attracting drivers to join platforms like Uber and Lyft, locking drivers into rides in advance doesn’t impinge on their freedom, Rapaport says. Instead, it gives them more of an advantage in choosing prebooked rides that work with their schedules.

Some flexibility is good but too much can cause problems. Remember that story the New York Times did a few years ago on scheduling chaos at Starbucks? Unpredictable work hours can destabilize someone’s life, especially for low-income families just scraping by. Ride-hailing companies like Uber and Lyft don’t control hours in the same way but they do control pay. Sometimes there’s a boost; sometimes there’s not. Sometimes there’s a special promotion or guaranteed hourly wage; other times it’s the minimum fare. Drivers have very little way to know for sure how much they’ll make from one week to the next because so much of their pay is tied up in bonuses and one-off incentives. They’re conditioned to think day-to-day, even hour-to-hour, in a gamified universe that keeps them chasing the next surge. Setting your own schedule shouldn’t just mean show up and maybe we’ll have some work for you. Lyft is finally giving drivers a better option. 

WeWork out.

WeWork launched a fitness business and missed a HUGE opportunity by not calling it WeWork Out.

Since last year, the company has offered fitness classes including spinning, yoga, meditation, dance, and kickboxing at several of its New York City locations, according to a public website for “WeWork Wellness.” Classes take place alongside WeWork’s small office services, in common areas, on rooftop decks, and in other spaces that the brand has turned into “pop up” fitness studios.

Elsewhere in weirdly named co-living companies, UrWork has raised another $58million to take on WeWork in China’s shared offices market. UrWork is in 20 cities and plans to expand to Singapore, Los Angeles, New York, London, and maybe Taipei this year. And back in Silicon Valley, HubHaus, a shared housing developer, has raised $1.4 million to help professionals “find quality shared housing solutions with a true sense of community.” You might be able to make a quick buck just claiming all the remaining names that combine “work” or “house” (or “haus”) with an indefinite pronoun. UWork, iWork, UrHouse, MyHaus. There should be an app for this. I bet there already is.

Other stuff.

Travis Kalanick’s mother killed in boating accident. Uber’s general counsel for AMEA steps down. Ford lures back Uber engineer. Uber sued over upfront pricing. Judge orders Uber to hand over unredacted Otto term sheet. Women’s group cuts ties with Uber. Eric Holder report on Uber due this week. Lyft adds premium black car rides. Uber and Lyft return to Austin. Uber Drivers in South Carolina Have to Break the Law to Accept Tips. Josh Mohrer leaves Uber. Brazilian ride-hailing company raises $100 million from SoftBank. Quiqup raises $26 million for on-demand deliveries. Bike-share service from ex-Lyft employee raises $8 million. Faraday Future seeks $1 billion as LeEco sputters. Early Uber employee launches Uber for storage. Australian fund manager calls Uber a Ponzi scheme. Morgan Stanley analysts say Waymo could be worth $70 billion. Elderly woman faces eviction for illegal Airbnb rental. Airbnb runs its own data university. UK flats will offer free Uber rides. Postmates offers electric scooter rentals. The Bachelorette Is Back With Postmates. Meet Stan, the outdoor valet parking robot. Who is Anthony Levandowski? “It’s not about starting well. It’s about finishing damn well.”