|Apr 25, 2017||Public post|
Worker retention in the gig economy is notoriously poor and Uber is no exception. Previous research conducted by Uber’s in-house economist and Princeton’s Alan Krueger found that about 50% of drivers quit the platform after their first year. But The Information tells us things are even worse:
Only around 3% of people who sign up to drive for Uber are driving a year later. The data breaks down this way: Of all the drivers who sign up for an Uber account in the U.S., only 20% of them get their vehicles passed by the company’s physical inspection and a verification that the drivers have car insurance. Of that group, 60% proceed to drive at least a single trip for Uber. But of that cohort, only about 25% are still drivers a year later. That’s a measly 3% retention rate when starting at the top of the “funnel.”
3%! On the one hand, not great, Bob! On the other, what? There is some strange analysis going on in that paragraph. I.e., the “retention rate” in this case is based not on people who work for Uber but people who at some point applied to work for Uber. That is a weird statistic! I mean by that measure a company that retained the vast majority of workers it actually hired would still have a “measly retention rate” if it rejected 90% of applicants up front. Colleges! Elite colleges would have absurdly poor retention. Yale admitted 6.9% of applicants to its incoming freshman class. Even if 97% of them graduate, by The Information’s logic we would say Yale retained/graduated only 6.7% of those students. This is obviously ridiculous and to quote this guy from Twitter, “In what universe do you say Uber had a problem retaining the 80% they REJECTED?”
A better way to look at those numbers is starting with the 20% of drivers who passed Uber’s inspection and verification process, or with the 60% of that 20% who drove at least one trip. From that, you could argue that Uber’s one-year retention rate of drivers is between 15% and 25% which, again, is not great, and a far cry from what Uber represented in its own research on “the labor market for Uber’s driver-partners” (data that, admittedly, is now four years out of date). But it’s a heck of a lot better than 3%.
Elsewhere, rich-people retreat Block Island is one of the last holdouts against Uber:
Come summer, the sleepy island welcomes thousands of vacationers, many of whom depend on taxis to get to its bluffs, lighthouses, beaches and weathered-gray shingle homes. Now, as at least one ride-hailing company proposes to deregulate the community’s strict 88-year-old taxi code, longtime drivers are fighting to protect a way of life that helps them make ends meet in a place where the median home costs $1.2 million.
“This is our livelihood,” said taxi driver Champlin Starr, a retired oil tanker captain whose family first landed here in the 1660s. “People come to Block Island because they want an experience. They’re not going to get it with someone who doesn’t know where the landmarks are. This is our home.”
Somehow, I doubt the folks who vacation there will agree.
Waymo is hitting Uber where it hurts. First with a lawsuit that threatens to halt Uber’s work on autonomous vehicles, now with its first public trial of self-driving cars. The trial is taking place in the Phoenix area of Arizona which, incidentally, is where a self-driving Uber flipped over in late March, causing the company to temporarily suspend its driverless testing program. Waymo is letting people sign up online to be an “early rider” in its self-driving car program. “As an early rider, you’ll be able to use our self-driving cars to go places you frequent every day, from work, to school, to the movies and more,” the website reads. Waymo says it will accept “hundreds” of people over the course of the program and that its initial coverage area—which includes Chandler, Tempe, Mesa, and Gilbert—“measures twice the size of San Francisco.” Rides are free.
Meanwhile, Waymo has also announced plans to put way more (waymo, lol) cars on the road. Waymo intends to add 500 self-driving Pacifica minivans—cars that vaguely resemble a beluga whale—to its driverless fleet, a sixfold increase. Production of those vehicles will ramp up beginning in May, the company said in a release. You can almost hear the groans over in Pittsburgh, the headquarters of Uber’s self-driving efforts. Uber is hiring ambitiously for its Pittsburgh team but Waymo’s lawsuit has cast a long shadow over the project. In the latest on that, Waymo alleged Friday that Uber is actively attempting to “cover up” its theft of trade secrets, and urged the judge to bar Anthony Levandowski, the Uber engineer and former Waymo employee at the center of the case, from continuing to contribute to Uber’s autonomous work. Good times all around.
Online grocer Instacart is done mincing words on profitability. Instacart CEO Apoorva Mehta was in New York yesterday and, over coffee, told me the company has figured out its “flywheel” of demand, enough to call its mature markets “cash-flow positive.” That means those markets bring in more money than they lose. “That’s very cool because before we used to talk about ‘gross margin’ or ‘contribution margin,’” he said, using terms startups often employ to hedge when asked about profitability. “No, it’s just ‘cash-flow positive.’”
Mehta says all of Instacart’s markets of 18 months or older, about 15 or 20 of its total 40, are cash-flow positive today. Instacart has struggled to get its Uber-for-groceries model right. Last year it suspended one-hour delivery in New York, cut pay for its independent-contractor shoppers, and slowed hiring after laying off 12 full-time recruiters. “Look, this is something that was very hard to figure out, and there’s a lot of things that we didn’t understand at the beginning of this,” Mehta said. Instacart, which raised $400 million at a $3.4 billion valuation in March, is now pushing into more US markets. It’s also trying its hand at the ultimate Amazon play: a year of free grocery delivery for new customers in Texas and other new markets in the Midwest.
Instacart is giving new customers a year of Instacart Express, a $149 annual membership that comes with free delivery on orders of $35 and up. Instacart is betting that if it can get customers in the door, they’ll end up sticking around. “We wanted to see what the impact of that is going to be in Texas and see how that flywheel grows the market, and then take that to other markets as well,” Mehta said. Before he started Instacart, Mehta spent two years working at Amazon, where the flywheel is a hallowed concept. Amazon CEO Jeff Bezos borrowed the term from business consultant Jim Collins, and used it to justify the company’s ultra-low prices as well as its original Prime membership. Today about 50% of US households subscribe to Prime and more than 90% of first-time subscribers come back for a second year.
People who use Instacart Express tend to order more frequently and get more stuff. This is similar to the pattern noted by Amazon, which has famously said its Prime members spend twice what other Amazon shoppers do each year. Mehta calls this, “negative retention,” because even if some customers drop off, the ones who remain end up becoming more valuable over time. “Some investor told me, like, ‘you have negative retention,’” Mehta says, laughing. “I’m like… is that a good thing or a bad thing?” Very good, if it sticks.
Here is a fun story about a UMass Amherst student who tried renting out her dorm room on Airbnb. Spoiler: It didn’t go too well.
It seems like a nice spot—a high rise over looking campus. But renting out your dorm room is very much against the rules.
"You can't rent your room as an Airbnb at UMass amherst," explained campus spokesman, Ed Blaguszewski.
The university reportedly squashed the student’s Airbnb attempt before she managed to earn any money. Other students have mixed opinions on the matter. “If I had thought of it I might have done it. But probably not,” says Michael Tringali, the most indecisive student interviewed for this article. Another student, Lexie Hawley, tells Western Mass News the logistics would have been tough. “After 8pm we have sign in through the dorms,” Hawley says. “You can’t get in without a student ID or someone signing you in who lives there.” Ah, college. I really wish UMass had let the student move forward with this particular sharing economy experiment, because I am genuinely curious who would want to Airbnb a college dorm room where you have to sign in after 8pm, which sounds like a special form of hell. I guess now we’ll never know.
Uber expands sexual harassment investigation. Uber bros spray-painted “#undelete” on a wall. Judge wants more info on proposed $4.6 million Instacart settlement. “Hailo” sues Uber for patent infringement. Getaround raises $45 million. DoorDash partners with GenZe on electric bikes. Judge unimpressed by Uber’s arbitration notice. Uber VP of global vehicle programs Sherif Marakby is out. Uber partners with Portland on electric vehicles. Axel Springer buys stake in Uber. Online grocer Farmdrop raises £7 million. Silicon Valley’s $400 Juicer May Be Feeling the Squeeze. A Note From Juicero’s New CEO. Here’s Why Juicero’s Press Is So Expensive. Kanye and Kim’s Tribeca Airbnb is back for $20 million. Post Malone orders $8,000 of Popeyes to Coachella on Postmates. Lady Gaga stayed in $10,000-per-night Airbnb at Coachella. Shared Office Evangelist WeWork Is Now Designing Private Offices. Unicorn lemonade. Unicorn frappucinos. “There’s something about Park Slope that is very unicorn friendly.”