Uber's big Volvo purchase, Bill Gurley chides unruly startups, Airbnb's "surprising" slowdown


Embrace the adventure.

How are things at Airbnb? That depends who you ask. According to the company's latest financials, business is good, with revenue up 50% year over year in the latest quarter, to $1 billion, and Airbnb on track to be profitable again. Profit, per CNBC, "accelerated over the last three months… and is set to surpass the company's own baseline forecast by $50 million."

According to Morgan Stanley, business is less good, with a "surprising" slowdown in user adoption in the US and Europe and increased concerns about privacy and safety on the platform. The trend is worrisome because people typically become more comfortable with new technology over time, rather than less.

The report doesn't get into what's driving these increased concerns, but it would be interesting to know whether scare campaigns by hotel-funded groups like Share Better are working. In response to Morgan Stanley, Share Better and the Hotel Association of New York City just launched two new video ads, "What Else Are They Hiding," and "The True Face of Airbnb," featuring greatest hits of bad Airbnb press like Paul Manafort's SoHo rental and "Airbnb Sued by Guest Who Says a Host Sexually Assaulted Her."

Meanwhile, according to The Information, employees are worried about "cracks in Airbnb's starry ideals" after the world's second-most valuable startup, facing that rumored slowdown in US and European travelers, fired about 50 full-time workers and more than 100 contractors who prepared its meals:

The food team, which sourced ingredients from local farms and made in-house sodas rather than offering more cans of Coke, had sentimental value. Executives at the company would tell new hires that the food was made by a staff that embodied one of the company's core values—to "be a host," meaning employees should make others feel like they belong.

Those values—which also include "champion the mission" and "embrace the adventure"—have helped set Airbnb apart from other super-valuable startups that faced scandal and dysfunction, like Uber. But the food team was a significant cost item—full-time managers on the food staff made six-figure salaries or close to it, while hourly workers made much more than industry averages.

The fired Airbnb workers will reportedly get jobs at Bon Appetit Management Company with "significant severances and no pay cut," but employees were distressed nonetheless. Airbnb CEO Brian Chesky reportedly acknowledged "sadness, anger, and confusion" in a companywide email, reminding them, "As we have scaled to support our global community, we have consistently been confronted with difficult decisions."

Well, yes! Airbnb, while generally much better at branding than Uber, is not so innocent. The company has hardly shied away from fights with city officials and has happily skirted regulations to grow its business. It was only this year that Airbnb, perhaps under pressure to clean up its act ahead of a public offering, adopted a more conciliatory tone with the global community and started enforcing regulations it had previously claimed were prohibitive to enforce (for example, a cap on rental nights and listings per host). But those are things for the policy and communications teams to worry about, not the starry-eyed employees of Airbnb’s main office in San Francisco, who are busy Embracing the Adventure.

Disciplined and profitable.

Famed venture capitalist and Travis Kalanick nemesis Bill Gurley is back to chiding Silicon Valley's unicorns, this time calling for them to "grow up" in a TV appearance shortly after subscription clothing company Stitch Fix made its market debut on Friday (Nov. 17).

"One of the unique things about Stitch Fix relative to all the unicorns in Silicon Valley is they've run a very disciplined and profitable approach," he said. "They've been profitable for several years. The reason that you never heard of them as a unicorn is that they never raised money over a billion because they didn't need to raise money." ("Unicorn" is industry slang for a company valued at $1 billion or more.)

"As many of the unicorns mature and age, many of them are having to come to the recognition that they have to grow up, get profitable, go public, or do something along those lines," he added. "This silly notion of 'we're going to stay private forever' is not playing out in a very positive way."

Gurley is a partner at Benchmark, a prestigious venture capital firm. In April 2016 he penned a viral manifesto that deemed the "unicorn financing market" "dangerous… for all involved." He helped to unseat, and subsequently sue, Kalanick, Uber's cofounder and former CEO, over the summer. Gurley has been an outspoken criticof companies like Instacart and Postmates, which he sees as a repeat of the failed delivery companies from the first dot-com bubble in the early aughts. He calls Stitch Fix CEO Katrina Lake "one of the very best entrepreneurs" he's ever worked with. Guessing Kalanick didn't make that list.

Uber's Volvo deal.

Uber is buying $1 billion worth of self-driving cars from Volvo in one of the biggest commercial orders for the vehicles yet. The company is purchasing around 24,000 "base cars" modeled on Volvo's popular XC90, a luxury SUV that typically starts at $50,000 in retail pricing, according to Reuters. They'll be modified with self-driving technology from Uber's driverless car unit, the Advanced Technologies Group.

Oh, but how about some nuance. A member of Uber's press team helpfully told Quartz by email "that 24,000 number offers a general framework" but "does not represent the actual confirmed number of cars that will be purchased" which "could certainly be more or less." So, I don't know, I guess Uber is purchasing somewhere between $0 and $1 billion or more of self-driving cars from Volvo.

Anyway, numbers aside, the purchase is interesting because Uber has for so long evaded questions about who will own driverless fleets when they go into operation. The question is important because the financial model for driverless taxis, while expected to be cheaper than employing humans, remains untested. ("It only becomes a commercial business when you can remove that vehicle operator from the equation," Jeff Miller, Uber's head of automotive alliances, told Reuters.)

The two basic options would be either that a ride-hailing company like Uber leases its self-driving cars, or owns and operates them, meaning it has to clean, maintain, and otherwise service them. It's unclear how expensive either of those models will be, and what the savings will be over having human drivers. A massive order of XC90s from Volvo suggests that Uber is leaning toward the second option, of owning and maintaining its own fleet, rather than leasing from a third party.

Elsewhere: An "Uber for Buses" Startup Is Launching an ICO to End Tipping Altogether.

The Flex economy.

Here is a good story from Gizmodo, filed to "THE GIG ECONOMY," on Amazon Flex, the nearly invisible workforce of plainclothes contractors that complete the "last mile" of Amazon deliveries, the final journey from a distribution center to your home.

Flex, like many other "gig" economy companies, is marketed (on Craigslist) as a "great opportunity to be your own boss." It screens workers online and has them submit to a background check. It's run through a smartphone app. Jobs are allocated in "blocks" measured in hours that drivers sign up for in a sort of random lottery. The work usually falls under Logistics (standard packages) or Prime Now (hourly/same-day delivery), though Amazon Fresh and Restaurants can also come into the mix. The Flex app provides "suggested" driving directions to each stop. Drivers can't be fired, but they might be deactivated.

If these tactics sound familiar, it's because they've been used by plenty of gig economy companies to justify classifying their workers as independent contractors instead of employees, while still finding ways to manage those workers' efforts. These companies frame instructions as "suggestions," talk about the value of "being your own boss" and tell people that they can set their own schedules all while finding other ways to direct and control what their workforce does. Shannon Liss-Riordan, the Boston-based lawyer who has sued Uber and many similar companies with contractor models, is unimpressed by Amazon Flex.

"I do think that Amazon is breaking the law," she tells Gizmodo. "I think it's breaking the law in a pretty widespread way."

Other stuff.

Amazon blames Fresh delivery issues on the Postal Service. Amazon Go almost ready to go. Allrecipes strikes deal with Amazon Fresh. Walmart expands same-day delivery with Deliv. Paris unimpressed by Airbnb's effort to curb illegal rentals. Employees See Crack in Airbnb's Starry Ideals. Airbnb buys Accomable. Japanese regulators raid Airbnb. Roommate startup Roomi raises $11 million. HopSkipDrive raises $7.4 million. Marriott unveils hotel for the "millennial-minded" Airbnb generation. Postmates launches in first international city. DoorDash plans expansion. Apple gives out Postmates Unlimited subscriptions. Postmates delivers the Impossible Burger. Lyft acquihires 12 people from Kamcord. France's Blablacar experiments with insurance brokerage business. Uber fined $8.9 million in Colorado for drivers with felony convictions. Airbnb, Expedia, opt to stay in Vancouver. What a Middling Uber Rating Might Say About You. Business looks up for rental car companies. SoulCycle founder Julie Rice heads to WeWork. Airbnb for pop-ups.