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   Technology StocksPeer-to-Peer, Gig and On-Demand Economies


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To: Glenn Petersen who wrote (794)8/10/2020 9:48:58 AM
From: Glenn Petersen
   of 857
 
Uber CEO advocates for ‘third way’ to classify gig workers while fighting California labor lawsuit

PUBLISHED MON, AUG 10 20209:11 AM EDT
UPDATED 31 MIN AGO
Lauren Feiner @LAUREN_FEINER
CNBC.com

KEY POINTS

-- Uber CEO Dara Khosrowshahi laid out his argument for a “third way” to classify gig workers in a New York Times op-ed published Monday.

-- The op-ed comes as Uber fights a lawsuit from the California attorney general that claims it denied its drivers benefits by falsely classifying them as contractors.

-- Khosrowshahi suggests companies that rely on gig work should be required by law to create benefits funds that can be used by workers for anything from health insurance to paid time off.

Uber CEO Dara Khosrowshahi laid out his argument for a “third way” to classify gig workers as he fights a lawsuit from the California attorney general that claims it denied its drivers benefits by falsely classifying them as contractors.

In a New York Times op-ed published Monday, Khosrowshahi elaborated on his vision of a new labor construct which he had previously floated by President Donald Trump ahead of his signing of the CARES Act. Though the bill ultimately provided relief to gig workers along with others impacted by the pandemic, Khosrowshahi had urged Trump and Congress to consider updating labor laws more broadly to support gig workers who cherish the flexibility of contract work but also desire the protection of employee status.

The op-ed comes as Uber awaits a California judge’s ruling on a preliminary injunction over its worker classification. California Attorney General Xavier Becerra and three city attorneys filed suit against Uber and its rival Lyft in May, alleging they broke the state’s new law which aimed to reclassify gig workers as employees, rather than contractors. Uber, Lyft and other companies that rely on gig work have consistently opposed the law and have backed a ballot initiative seeking to roll back the requirement.

In the op-ed, Khosrowshahi calls the classification of workers as contractors versus employees a “false choice.” By requiring companies work within a binary system, he said, they take on “more uncertainty and risk” when they choose to provide more benefits to independent workers.

Instead, he suggests companies that rely on gig work to be required to create benefits funds that can be used by workers for anything from health insurance to paid time off. The amount of money workers can take out of the fund would be based on the number of hours of work they put in. Since all gig companies would have to contribute to the fund, workers would be able to accumulate benefits even if they switch between the apps they use to make money.

According to Khosrowshahi, Uber would have contributed $655 million to benefits funds last year if such a law had existed in all 50 states, though he does not specify the percent contribution he expects gig companies would be required to set aside. He estimates a driver in Colorado averaging more than 35 hours a week would have made about $1,350 in benefits last year, which he said would cover two weeks of paid time off or a median annual premium payment for a subsidized health insurance plan offered through an Uber partnership.

Khosrowshahi says gig workers should be allowed to choose which benefits they want. He said while policymakers believe health care would be most important to drivers, health care does not even rank in the top five benefits drivers say they want most when polled by Uber.

Gig companies should also be required to provide medical and disability coverage for when workers get hurt on the job, Khosrowshahi said, adding that they cannot currently offer such benefits “without risking their independent status under the law.” New laws should also prevent companies from denying opportunities to independent workers on the basis of protected classifications like race and gender, he argued.

Khosrowshahi said Uber would be “more transparent about what drivers make and the realities of the work,” starting with a new earnings estimator drivers can use to understand what they can expect to earn in their area. He also committed to surveying all active drivers in the U.S. about what is and isn’t working and releasing the results publicly. Uber will also help every driver register to vote, he said.

“During this moment of crisis, I fundamentally believe platforms like Uber can fuel an economic recovery by quickly giving people flexible work to get back on their feet,” Khosrowshahi wrote. “But this opportunity will be lost if we ignore the obvious lessons of the pandemic and fail to ensure independent workers have a stronger safety net.”
cnbc.com

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To: Glenn Petersen who wrote (795)8/10/2020 3:47:28 PM
From: TimF
   of 857
 
If your not going to just leave people free to contract with others as they want (my preference) and instead feel the need to force people in to different specific boxes each with its own set of rules, then a "third-way" makes sense here. Its different then conventional employment and also different then a strongly independent contractor.

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To: TimF who wrote (796)8/10/2020 4:34:17 PM
From: Glenn Petersen
   of 857
 
This idea has been kicked around by the gig companies for at least five years. Given the realities of U.S. politics, they should have aggressively pursued it while they still had some leverage and goodwill. In the past couple of years the gig companies have lost a lot of goodwill, and today they lost some of their leverage:

Judge grants preliminary injunction requiring Uber and Lyft to stop classifying drivers as contractors

PUBLISHED MON, AUG 10 20204:17 PM EDT
Lauren Feiner @LAUREN_FEINER
CNBC.com

KEY POINTS

-- A California judge granted a preliminary injunction Monday requiring Uber and Lyft to stop classifying their drivers as independent contractors pending further action by the court.

-- California Attorney General Xavier Becerra brought the lawsuit in May along with city attorneys from San Francisco, Los Angeles and San Diego.

-- The ruling does not end the legal battles for Uber and Lyft as California’s Labor Commissioner announced additional lawsuits against the companies alleging wage theft.

A California judge granted a preliminary injunction Monday requiring Uber and Lyft to stop classifying their drivers as independent contractors pending further action by the court. The order will take effect after 10 days, as the companies requested a brief stay during the appellate review process.

California Attorney General Xavier Becerra requested the injunction as part of a lawsuit he brought in May along with city attorneys from San Francisco, Los Angeles and San Diego. The suit, filed in San Francisco Superior Court, alleged Uber and Lyft violated the state’s new law known as Assembly Bill 5 (AB5), which was created as a way to classify gig workers as full employees and ensure benefits from their employers. Uber and Lyft were among a group of tech companies that have previously opposed the bill, arguing their workers enjoy the flexibility of creating their own schedules as contractors.

California officials sought an injunction on the alleged misclassification and restitution for workers and civil penalties worth up to hundreds of millions of dollars.

Uber CEO Dara Khosrowshahi advocated for a “third way” to classify workers in a letter to President Donald Trump in March as the first round of coronavirus relief measures were being negotiated. He argued there should be a way for workers to gain protections without sacrificing the flexibility of contract work.

The ruling does not end the legal battles for Uber and Lyft, however. Last week, California’s Labor Commissioner announced lawsuits against the companies alleging wage theft due to misclassification. The commission seeks to recover wages it believes were owed to drivers currently classified as contractors. The suits were filed in Alameda County Superior Court.

This story is developing. Check back for updates.

cnbc.com

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From: Glenn Petersen8/12/2020 7:27:08 AM
1 Recommendation   of 857
 
Airbnb Plans to File for IPO in August

Shares in the home-sharing platform could begin trading by year-end

By Corrie Driebusch, Maureen Farrell and Cara Lombardo
Wall Street Jiurnal
Updated Aug. 11, 2020 12:59 pm ET

Airbnb Inc. is close to filing to go public in a move that would underscore a surprising rebound for the home-sharing giant and the IPO market.

The company plans to file IPO paperwork with the Securities and Exchange Commission later this month, laying the groundwork for a potential listing before the end of the year, according to people familiar with the matter. Morgan Stanley MS 2.37% has been tapped to lead the offering, with Goldman Sachs Group Inc. GS 0.80% also playing a key role, the people said.

There is no guarantee Airbnb will move forward on the expected timeline, in part because of the uncertain timing of the SEC’s review process and since there is no telling whether stocks will still be in favor with investors by the time the company is ready to stage an offering. A listing could take different forms: The company could pursue a traditional IPO, launch a direct listing—in which no money is raised—or take advantage of the latest trend of merging with a blank-check company.

Either way, the long-awaited move will bring one of the stalwarts of the sharing economy into the public domain, alongside ride-sharing platforms Uber Technologies Inc. and Lyft Inc., and sets up the next few months to be an especially busy time for big IPOs. Airbnb was recently valued at $18 billion, down from an earlier valuation of $31 billion.

San Francisco-based Airbnb, the largest home-sharing platform in the U.S., joins a rush of companies tapping public investors after the IPO market emerged from a virtual standstill triggered by the coronavirus pandemic. Music label Warner Music Group Corp. and insurance startup Lemonade LMND -6.91% Inc. staged successful debuts in June and July, and shares of food-delivery startup DoorDash Inc. and data-analytics firm Palantir Technologies Inc. are both expected to start trading later this summer or in the early fall.

An imminent debut would also mark a turnaround for Airbnb, which was founded in 2008 and allows people to list their homes for rent. For years, the company shied away from the public markets as it grew into one of the most highly valued startups, with $4.8 billion in revenue in 2019. It spent big, however, prompting an even steeper loss in 2019 than in prior years, The Wall Street Journal reported. Its woes deepened late last year after issues emerged involving crime and safety problems on its platform.

As the pandemic spread across the globe, so did the company’s headaches. People stopped traveling, causing bookings to plummet. Airbnb, three years ago valued at more than $30 billion, rushed to secure financing from private-equity firms Silver Lake and Sixth Street Partners at a high interest rate—and with warrants that when exercised would value the company at $18 billion. In May, Airbnb said it would lay off a quarter of its staff.

Chief Executive Brian Chesky said in an interview in April that the company was working to file IPO paperwork with the SEC in March but that the coronavirus’s impact on global travel quashed those plans.

Since spring, however, the rebound for Airbnb has been surprisingly swift. Even as people stayed closer to home, they still sought rental-home bookings. On July 8, guests booked more than one million nights of future stays at Airbnb listings around the world, the company said. It was the first time to hit that level since March 3.

Still, moving forward now carries risk, especially for a money-losing company such as Airbnb, given IPO investors’ limited tolerance for red ink. WeWork’s deep losses helped doom the office-sharing company’s attempt to go public, and Uber’s failure to turn a profit more than a year after its IPO continues to weigh on its stock.

Even Quicken Loans parent Rocket Cos RKT -5.03% ., a solidly profitable company, struggled to find demand at its target valuation, and the mortgage giant priced its offering below expectations last week. The stock has risen only modestly since then.

But overall, the market is one of the most hospitable for IPOs in years. U.S.-listed IPOs have raised more than $60 billion so far in 2020, according to Dealogic, on track for the highest level since the tech boom in 2000. On average, these IPOs have risen 23% in their first day of trading, the biggest first-day pop since 2000.

—Preetika Rana contributed to this article.

wsj.com

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From: Glenn Petersen10/17/2020 3:19:51 PM
1 Recommendation   of 857
 
Why millions of freelancers fear a Biden presidency may put them out of work

PUBLISHED SAT, OCT 17 202010:00 AM EDT
Elaine Pofeldt @ELAINEPOFELDT
CNBC.com

KEY POINTS

-- With 59 million Americans freelancing, the future of freelance work is a key concern for these workers as the presidential election approaches.

-- Biden has expressed support for the Protecting the Right to Organize (PRO) Act on his campaign website.


-- The PRO Act would use the same three-pronged ABC test as California’s AB-5 law to decide who is a freelancer nationwide.AB-5 classifies contractors as employees and makes it hard for freelancers to work for businesses in their industry.

With the presidential election coming, Carolyn Bothwell, a freelance copywriter from Charlestown, Massachusetts, has been hearing from concerned members of the freelancer community she started, Freelance Founders, about what the results may mean for their business.

Some are wondering what Democratic candidate Vice President Joe Biden’s public support for AB-5, a union-backed California law, aimed at preventing the misclassification of rideshare drivers by giving them the status and protections of full-time employees, means for the future of their businesses. AB-5 had to be modified repeatedly after taking effect on Jan. 1, 2020, because it was putting so many other types of freelancers out of work. “They are really worried about it,” says Bothwell. That’s because Biden -- historically a supporter of unions -- wants a federal law similar to AB-5 that could place steep restrictions on who can be a freelancer.

With more Americans freelancing than ever before, the future of freelance work is a key concern for some workers as the presidential election approaches. A recent Upwork survey, Freelance Forward 2020, found that 59 million Americans did some form of freelancing in 2019, up 2 million from the year before.

Many freelancers across the nation have been keeping an eye on headlines about AB-5. The law that took effect on Jan. 1, 2020 is an attempt to address inequities in the gig economy including the independent contractor policies of ride-sharing companies such as Lyft and Uber. It assumes that every worker in the state is an employee unless employers can prove otherwise using the rigorous “ABC test” it is based on.

The B-prong of the test says that to be considered a contractor, a worker must perform work that is outside of the usual course of business for the hiring company — making it harder or impossible for many freelancers to work for clients in their own industry. Similar measures have been considered in other states, including New York and New Jersey, so far unsuccessfully.

A California Appeals Court has been hearing arguments this week by lawyers for Uber and Lyft as they try to overturn a lower court ruling that said they had to reclassify their drivers as employees.

In addition to rideshare drivers, AB-5 swept many other types of freelancers into its net, making some employers decide not to hire freelancers from the state and prompting a heated outcry from freelancers in fields that did not get carve-outs that exempted them. The law has now been amended so many times it offers exemptions for more than 100 industries. The fixes are likely to continue, says Steve King, partner in Emergent Research, which studies the independent workforce. “It’s still really confusingly written,” he says.

On Election Day, California residents will now be asked to vote on Proposition 22, a ballot measure that would overturn AB-5, backed by a group of rideshare and gig economy companies that are investing more than $180 million in defeating it. Proposition 22 would deem rideshare drivers to be independent contractors, rather than employees or agents. The ballot initiative would also require app-based rideshare companies to provide a guaranteed minimum wage, a subsidy for health benefits, medical and disability coverage for workplace injuries, and added protection against harassment and discrimination. “It effectively creates a third category of worker,” says King.

Biden has opposed Proposition 22. In a tweet on May 26, the same day he was endorsed by the AFL-CIO, he urged Californians to vote no on this issue.

Biden’s Pro Act

What concerns freelancers in other states, in the meantime, is that Biden has expressed support for the Protecting the Right to Organize (PRO) Act, tweeting that he would sign it on Sept. 7 and expressing his support in the Biden Plan for Strengthening Worker Organizing, Collective Bargaining and Unions on his campaign website. The PRO Act would use the same three-pronged ABC test as AB-5 to decide who is a freelancer nationwide.

The PRO Act, heavily supported by Democrats, would weaken right-to-work laws in states that let employees opt out of participating in unions and paying union dues. It also gives the National Labor Relations Board the ability to fine companies that retaliate against workers for organizing and give collective bargaining rights to many workers who do not have them now.

Jim Hoffa, the Teamsters general president, noted his support of the legislation in a blog post: “The misclassification of workers is on the rise and too many working Americans are falling through the cracks.”

Some freelancers are so fearful of what would happen if the PRO Act were enacted with the ABC test that this is affecting their choice of candidates. “My vote is 100% on this issue because we are talking about 100% of my income,” says Kim Kavin, a freelancer writer from Long Valley, New Jersey. She co-founded a Facebook group called Fight for Freelancers NJ to oppose a law similar to AB-5 that was proposed in New Jersey but did not make it to a vote. “Especially in the current economic situation we face, I want to keep earning a living.”

The Biden campaign did not respond to a request for comment on the candidate’s positions on AB-5 and the PRO Act. However, in the plan for strengthening worker organizing on his website, Biden says that if elected, he will ?aggressively pursue employers who violate labor laws, participate in wage theft, or cheat on their taxes by intentionally misclassifying employees as independent contractors.”


As president, Biden will put a stop to employers intentionally misclassifying their employees as independent contractors,” the statement goes on to say. “He will enact legislation that makes worker misclassification a substantive violation of law under all federal labor, employment, and tax laws with additional penalties beyond those imposed for other violations. And, he will build on efforts by the Obama-Biden Administration to drive an aggressive, all-hands-on-deck enforcement effort that will dramatically reduce worker misclassification.

He will direct the U.S. Department of Labor to engage in meaningful, collaborative enforcement partnerships, including with the National Labor Relations Board (NLRB), the Equal Employment Opportunity Commission, the Internal Revenue Service, the Justice Department, and state tax, unemployment insurance, and labor agencies. And, while Trump has weakened enforcement by sabotaging the enforcement agencies and slashing their investigator corps, Biden will fund a dramatic increase in the number of investigators in labor and employment enforcement agencies to facilitate a large anti-misclassification effort.”

Trump’s stance on worker classification

The Trump administration has also taken a position on worker classification. The Department of Labor in September proposed a new rule to clarify employee and independent contractor status under the Fair Labor Standards Act. It would adopt an “economic reality” test that looks at whether workers are in business for themselves or are economically dependent on the employer for work. The determination of whether they are in business for themselves would depend on the nature and degree of the workers’ control over the work and the opportunity for profit and loss based on initiative and investment.

The analysis would also look at the amount of skill required for the work, the degree of permanence of the working relationship between the worker and the hiring entity, and whether the work is an “integrated unit of production.” The 30-day comment period on the rule ends on Oct. 26, 2020.

At the Freelancers Union, executive director Rafael Espinal says there needs to be more education about how freelancers’ livelihood will be affected if the PRO Act moves forward as written. Although the group’s membership leans Democrat, Espinal says many freelancers generally don’t feel represented by either party.



Freelancers Union executive director Rafael Espinal says although its membership leans Democrat, many freelancers generally don’t feel represented by either party. “Those who are aware of the negative impacts of AB-5 in California are extremely concerned about what the next presidency can mean for their industry.”
Christina Emilie Photography
-------------------------

“Those who are aware of the negative impacts of AB-5 in California are extremely concerned about what the next presidency can mean for their industry,” says Espinal.

A grassroots movement underway

The Freelancers Union has been actively reaching out to legislators to make sure they are aware of the potential impact of the PRO Act on its members. On Sept. 10, the Freelancers Union held a town hall with Senate Minority Leader Chuck Schumer (D-NY), where the group raised concerns about the PRO Act. “He committed to working with us and making sure we don’t have the same outcome that came out of California at the federal level,” says Espinal.

The Freelancers Union now plans additional outreach to other legislators, says Espinal.

“We are doing our best to build lines of communication with legislators that can help us guide the PRO Act and any similar legislation to a point where freelancers are not negatively impacted by it,” says Espinal. “We also are working on creating a space to raise awareness so freelancers’ voices can get heard and legislators can hear how laws like this have been detrimental to the freelance workforce. We hope to get to a point soon in which we are playing a more active role in the conversations around the PRO Act and any similar legislation on the state level.”

With many people losing jobs or forced to find more flexible work arrangements by the demands of the pandemic, the issue of worker classification is likely to increase in importance in the next few years.

“I expect the number of freelancers to grow after pandemic, given previous trends,” says Espinal. “After 2008, there was a huge increase in the number of people who decided to go freelance.” And for many, whatever laws are on the books about how they are classified will determine how easy, or difficult, it is to earn a living independently.
\
cnbc.com

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From: Following-Mr.Pink10/19/2020 4:00:22 PM
   of 857
 
Thoughts on On-Demand Economics in the supply chain / logistics space?

Like -- fleeting.us

Seems counterintuitive compared to how the AB-5 ruling ended... putting more truckers out of jobs

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From: Glenn Petersen11/2/2020 4:53:13 PM
   of 857
 
Uber and Lyft rise as investors expect California voters to pass Prop 22

PUBLISHED MON, NOV 2 20204:06 PM EST
Michelle Gao @MICHGAO
CNBC.com

KEY POINTS

-- Investors expect California voters tomorrow to pass Proposition 22, which would allow the ride-sharing companies to maintain their current business model.

-- If Proposition 22 fails, Uber and Lyft say they will have to implement measures such as cutting the number of workers and raising prices for riders.

Uber and Lyft shares rose 4.2% and 7.3%, respectively, as investors expect California voters on Tuesday to pass Proposition 22, which would allow the ride-sharing companies to maintain their current business model.

If it passes, Proposition 22 would exempt ride-sharing and delivery companies from a new California law that forces such gig economy companies to reclassify their workers as employees rather than contractors, and offer benefits such as sick leave and unemployment protection. A successful Proposition 22 could also undermine the lawsuit California has brought against Uber and Lyft for allegedly violating that new law.

But if Proposition 22 fails, Uber and Lyft say they will have to change their business models, likely by cutting the number of workers and raising prices for riders. They previously threatened to shut down temporarily in California this summer before an appeals court extended a stay on the issue.

Uber and Lyft have contributed most of the almost $190 million raised through mid-October to get Proposition 22 passed. The companies have also pushed for Proposition 22 in messages to users on their own apps.

A UC Berkeley poll from late October found 46% of voters were voting yes to Proposition 22, while 42% were voting against and 12% were undecided. MKM Partners released an investor note today with results from its own survey, which found 57% of voters, up from 47% in its Sept. survey, are planning to vote for the proposition.

Story Link

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To: Glenn Petersen who wrote (801)11/4/2020 7:56:14 AM
From: Glenn Petersen
1 Recommendation   of 857
 
Uber, Lyft Win California Bid to Keep Drivers as Contractors

By Ellen Huet
Bloomberg
November 4, 2020, 12:27 AM CST Updated on November 4, 2020, 3:24 AM CST

-- Companies spent some $200 million on their ballot campaign

--Uber, Lyft’s shares soar in pre-market New York trading

Gig economy giants including Uber Technologies Inc., Lyft Inc. and DoorDash Inc. have won their effort to pass a hotly contested ballot measure that will exempt the companies from a state law requiring them to classify most of their workers as employees.

Uber and Lyft soared more than 14% in pre-market trade after California voters, in the most expensive ballot initiative in state history, approved a ballot measure exempting gig-economy companies from the state labor law known as A.B. 5. Almost 58% of voters were supporting the proposition versus 42% against, with more than 80% of the vote reported, according to the California Secretary of State’s Office.

Drivers for Uber, Lyft, DoorDash and their ilk will receive some new corporate perks but won’t be eligible for full employment benefits and protections as lawmakers had intended. Uber and Lyft alone will save more than $100 million a year on employment costs, according to one estimate.

The measure, Proposition 22, was critical for the ride-hailing industry in California and beyond. At stake in the vote was the future of these app-based work platforms, which use armies of independent contractors to deliver takeout and ferry passengers across town.

This fight’s importance was reflected in the ballot initiative’s financial contributions. DoorDash, Instacart Inc., Lyft, Postmates Inc. and Uber together spent $200 million on the campaign, making it the costliest ballot measure in state history. The “No on 22” camp, which was mostly funded by labor unions, only ever raised about a 10th as much.

The measure’s approval means gig companies can continue using independent contractors to power their services. The workers will receive a new set of benefits, like a health insurance stipend and minimum hourly earnings, based on the number of hours they are actively working but not the hours spent waiting for each gig.

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From: Glenn Petersen11/5/2020 8:14:49 AM
   of 857
 
DoorDash and Instacart face brighter IPO prospects after ballot victory in California

PUBLISHED THU, NOV 5 20208:00 AM EST
UPDATED 5 MIN AGO
Ari Levy @LEVYNEWS
CNBC.com

KEY POINTS

-- DoorDash and Instacart contributed a combined $75 million to help pass Proposition 22 in California and keep their businesses intact.

-- Both companies have seen orders spike since the Covid 19 pandemic forced consumers to stay home.

-- “There was a huge cloud over hanging over their head,” said Larry Albukerk, managing partner of EB Exchange Funds.



A shopper prepares fill his cart at a Giant supermarket in Washington, DC, April 6, 2020.
Evelyn Hockstein/The Washington Post via Getty Images)
-----------------------------------------------

Food delivery companies DoorDash and Instacart have a clearer path to the public markets after scoring a critical ballot victory in California.

With the passage of Proposition 22 this week, the San Francisco-based start-ups will be exempt from a new labor law in California that requires companies to classify certain workers — including delivery drivers — as employees instead of contractors. DoorDash and Instacart, along with ride-hailing companies Uber and Lyft, were so committed to winning that they made it the most expensive ballot measure in California history.

Both delivery companies are considered among the top IPO candidates for 2021. In October, Instacart raised $200 million at a $17.7 billion valuation, up from $7.9 billion at the start of the year. DoorDash raised $400 million at a $16 billion valuation in June.

Of the roughly $190 million that companies spent on Yes on Prop 22, close to $48 million came from DoorDash and over $27 million from Instacart, according to the California Secretary of State’s website.

Uber and Lyft, which went public last year, jumped 15% and 11%, respectively, on Wednesday after the favorable outcome.

Even with these gains, both companies are trading below their IPO price and have struggled to gain investor confidence because they lose billions of dollars a year. The Covid 19 pandemic has also hurt their core ride-sharing businesses, as demand for consumer travel and work commutes plunged, although Uber’s decline was tempered somewhat by its growing delivery business.

Instacart and DoorDash are in a better position financially because they exclusively deliver food (and, in Instacart’s case, groceries). Demand for delivery services has skyrocketed as the Covid-19 pandemic has kept many people at home for the last eight months.

Even so, offering all drivers benefits like paid sick leave and unemployment protection would have been hugely expensive to both companies.

‘Huge cloud’

“There was a huge cloud over hanging over their head,” said Larry Albukerk, managing partner of EB Exchange Funds, which facilitates trades in private tech companies.

Though Albukerk doesn’t transact in their stocks, he said he sees a lot of investor demand for shares of DoorDash and Instacart in the private market and expects that to translate into good public market performance. But he said investors will be more conservative after seeing the poor stock market showings from Uber and Lyft. WeWork was also forced to pull its IPO in September 2019, giving investors another reason to be cautious.

“The fact that Lyft and Uber didn’t quite meet expectations means maybe you have to readjust the expectations,” Albukerk said.

Instacart didn’t respond to a request for comment. In an emailed statement, DoorDash CEO Tony Xu called passage of the measure a win for customers, drivers and restaurants.

“Californians sided with drivers, recognizing the importance of flexible work and the critical need to extend new benefits and protections to drivers like Dashers,” Xu wrote. “We look forward to partnering with workers, policymakers, community groups, and more to make this a reality.”

Natalie Hwang, founding managing partner at investment firm Apeira Capital, said the passage of Prop 22 removes a potential existential threat to the companies and allows them to keep their labor costs in check as they prepare to go public. However, she warned that profitability will remain a challenge, making DoorDash and Instacart very risky bets.

They also will have to provide some added benefits as part of Prop 22, like minimum earnings guarantee and some health-care coverage.

“These are still fairly tough models to operate profitably at scale, and viability is still a question,” Hwang said. “Investors should still look at these stocks with some degree of caution.”

cnbc.com

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To: Glenn Petersen who wrote (803)11/13/2020 4:10:25 PM
From: Glenn Petersen
   of 857
 
The DoorDash registration statement: sec.gov

DoorDash releases filing to go public, reports $149 million in losses on revenue of $1.9 billion through September

PUBLISHED FRI, NOV 13 20208:43 AM EST
UPDATED 4 HOURS AGO
Lauren Feiner @LAUREN_FEINER

KEY POINTS

-- DoorDash, the leading food delivery app in the U.S., filed its IPO prospectus with the Securities and Exchange Commission.

-- DoorDash reported $1.9 billion in revenue for the nine months ended Sept. 30 and a net loss of $149 million.

--,Its last private valuation was $16 billion, and it has raised $2.5 billion.

DoorDash, the leading food delivery app in the U.S., filed its IPO prospectus with the Securities and Exchange Commission on Friday. The company will list its shares on the New York Stock Exchange under the symbol DASH.

DoorDash reported $1.9 billion in revenue for the nine months ended Sept. 30. That’s up from $587 million during the same period last year. As its revenue grew, DoorDash also narrowed its net loss to $149 million over the same period in 2020. In 2019, DoorDash had a net loss of $533 million over the nine-month period.

The company said it has 1 million Dashers (delivery workers) and more than 18 million customers. It also had over 5 million customers on its $9.99 per month DashPass service as of Sept. 30. The offering gives customers free delivery from restaurants part of the program.

DoorDash will offer three classes of stock with different voting shares. Class A common stock will grant owners one vote per share. Class B shares will come with 20 votes per share and Class C shares will have no voting rights.

Offering multiple classes of stock has become a common practice in Silicon Valley, especially when the chief executive is also a founder, as is the case with DoorDash’s Tony Xu. The prospectus says Xu and his two co-founders, Andy Fang and Stanley Tang, are expected to enter a voting agreement that would give Xu the authority “to direct the vote and vote the shares” of Class B stock held by his co-founders.

“As a result, Mr. Xu will be able to determine or significantly influence any action requiring the approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and bylaws, and the approval of any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction,” the filing says.

The company seeks to join competitors GrubHub and Uber on the public market. DoorDash has the lead in U.S. market share among them, with 49% of meal delivery sales in September compared with Uber’s 22% and GrubHub’s 20%, according to analytics firm Second Measure.

DoorDash is one of the most hotly anticipated IPOs of 2020. Though the pandemic threw a wrench in many companies’ plans, Airbnb, Roblox and Wish are all expected to go public by the end of the year, CNBC reported Thursday.

DoorDash, whose last private valuation was $16 billion, has raised $2.5 billion.

DoorDash will become the latest gig economy company to go public. The business model has raised questions about worker rights in recent years since gig companies often allow workers to pick up tasks without being full-time employees.

Voters in California last week supported a proposition backed by DoorDash and other gig companies that will allow them to maintain their workers as contractors rather than employees, despite California’s new labor law that aimed to change that. That worker structure helps gig companies like DoorDash and Uber avoid expenses like unemployment insurance and paid time off, though the proposition did provide for some additional protections for workers.

Following the win, Xu indicated that DoorDash would look to spread similar proposals across the country.

The company said one risk factor to its business is failing to “cost-effectively attract and retain Dashers.”

“If we do not continue to provide Dashers with flexibility on our platform, compelling opportunities to earn income, and other incentive programs that are comparable or superior to those of our competitors, we may fail to attract new Dashers or retain existing Dashers or increase their use of our platform,” the filing says. Companies advocating for the California proposition often argued that an employment-based model would undermine their ability to offer flexibility to workers, though labor experts and government officials have dismissed that argument.

DoorDash also explicitly says in the filing, “If Dashers are reclassified as employees under federal or state law, our business, financial condition, and results of operations would be adversely affected.” The company says that reclassification would adversely impact the business due to things like legal injunctions prohibiting them to from using existing business practices, claims for employee benefits and claims of discriminations.

DoorDash also acknowledges in the filing that it has been a target of legal challenges due to its tipping model for Dashers and says the pay model could continue to be a risk. The D.C. attorney general sued DoorDash last year, for example, claiming its former tipping model was “deceptive” because it allegedly led users to believe their tips would go straight to the workers, when it instead offset workers’ guaranteed minimum pay from DoorDash. While it has a new pay model that it said has resulted in more compensation for Dashers, DoorDash said it “may also cause less consistency in earnings across deliveries in some cases.”

Food delivery has been a rare bright spot during the pandemic as consumers avoid restaurants and stay at home, sometimes under local restrictions to contain the virus. GrubHub’s stock, for example, has shot up more than 49% year to date, while the S&P 500 has grown about 9.5%.

DoorDash warned that it may not be able to continue growing at the pace seen during the pandemic.

“The circumstances that have accelerated the growth of our business stemming from the effects of the COVID-19 pandemic may not continue in the future, and we expect the growth rates in revenue, Total Orders, and Marketplace GOV to decline in future periods,” the company said.

The company also warned that intense competition and the ease and low cost of switching between food delivery options could threaten its business in the future despite its strong position in the U.S. market today.

In his opening letter in the prospectus, Xu laid out his vision for the company beyond food delivery.

Xu said the goal is “to build products that transform the way local merchants do business and enrich the communities in which they operate.”

He lays out three “mutually-enforcing assets” that will facilitate that goal. The first is creating an “on-demand logistics platform” that can direct local delivery of any item, not just food. The second is building out services for merchants that will give them more insight into their own operations to help them grow. And the third is expanding the DashPass from restaurants to other local businesses so consumers can earn benefits wherever they shop with the program.

DoorDash has twice made CNBC’s Disruptor 50 list, which identifies 50 innovative private companies across various sectors.

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