|To: Glenn Petersen who wrote (839)||4/3/2021 6:10:56 AM|
|From: Glenn Petersen|
|Ghost Kitchens Will Keep Appearing on Your Delivery App, Even as the Pandemic Eases|
Food-delivery platform Deliveroo is doubling down on renting delivery-only kitchen space to restaurateurs. U.S. delivery platforms could follow suit.
By Laura Forman
Wall Street Journal
April 2, 2021 5:30 am ET
Americans can’t wait to get back inside their favorite restaurants but, after the initial rush, it is likely that the pandemic changed dining habits permanently. One in six U.S. restaurants has been forced to close since the start of the pandemic, the National Restaurant Association said in December. Consumers’ embrace of food delivery could relegate even more dining-out experiences to consumers’ own dining rooms.
After overindulging in DoorDash’s U.S. public offering in December, investors ghosted the London initial public offering of UK-based food delivery company Deliveroo this week, possibly signaling indigestion with the sector—its shares fell by 26% in their debut. But it has a special ingredient that might warrant a second bite, or at least imitation by competitors. The Amazon-backed company is doubling down on the concept of commissary cooking facilities where everyone cooks but no one eats.
These so-called “ ghost kitchens” allow for the creation of restaurants that mostly exist, in effect, only on delivery apps or as takeout venues. They can help restaurants to expand their reach on a budget and help new restaurateurs who want to start servicing customers but aren’t sure where to lay down roots—or aren’t ready to sign an expensive long-term lease for a bricks-and-mortar location.
And while they could mean fewer opportunities for consumers to dine out, they also enable eaters to get their food faster.
Deliveroo, which began renting delivery-only kitchen space to restaurateurs back in 2016, now says it is the global leader in the business with close to 250 kitchens across eight markets world-wide. In January, the company announced plans to more than double the number of locations where it offers kitchens this year. The pandemic has no doubt made this concept all the more attractive to struggling restaurants as rents in desirable expansion areas like affluent suburbs have skyrocketed and usage of delivery services has grown rapidly.
DoorDash has only a single ghost kitchen in Silicon Valley, dubbed “a WeWork for restaurant kitchens” by TechCrunch. Uber Eats says it hasn’t invested in any ghost kitchens domestically, though it briefly tried a concept in Paris, before abandoning it last year, citing cost cuts.
U.S. food delivery companies might be spooked by the idea of such vertical integration, but some of their former executives clearly aren’t. Uber co-founder Travis Kalanick has been investing in the business through his startup CloudKitchens for several years now. A recent Wall Street Journal report found entities tied to Mr. Kalanick’s company have already spent more than $130 million acquiring properties like closed restaurants, auto-body shops and warehouses. Mr. Kalanick’s company was valued at over $5 billion following a $700 million capital raise back in 2019, according to PitchBook, proving commissary kitchens have significant potential in and of themselves.
Similar concepts are just getting started. Last year, former DoorDash software engineer Jon Goldsmith launched ghost kitchen startup Local Kitchens, which will soon have three locations in the Bay Area. Mr. Goldsmith’s company raised a seed round last fall that counted DoorDash chief executive officer Tony Xu, Twitter CEO Jack Dorsey and Yum Brands’ co-founder and former CEO David Novak as investors. Local Kitchens will join older U.S. startups in the space like REEF Technology and Kitchen United, backed by big names like SoftBank and Google Ventures, respectively.
The profitability of the business model is still something of an open question. Deliveroo said its business grew overall revenue 54% year on year in 2020 and still lost money on the basis of adjusted earnings before interest, tax, depreciation and amortization. That compares to DoorDash, which grew revenue 226% last year and generated profits on that basis.
Deliveroo wouldn’t comment specifically on the economics of its ghost kitchens, but its IPO filing notes it can charge higher commissions to restaurants using its kitchens by offering them a turnkey real estate service. That could prove especially attractive to U.S. food delivery companies. They have endured widespread temporary commission caps across U.S. cities amid the pandemic and are now facing the threat of permanent caps in some of their largest markets.
While Local Kitchens works with delivery providers like DoorDash, Mr. Goldsmith says his kitchens are unique in also offering a retail storefront where guests can order on kiosks and pick up their own food, lowering costs for diners and improving its own bottom line.
Ghost kitchens appear to offer benefits to all sides of a delivery platform’s marketplace. For one, they can more easily enable a land grab in untapped markets. They might also augment a platform’s restaurant selection. In addition to lower rent, ghost kitchens provide shared staff, facilities and supply purchasing—attractive features for a restaurant or chain of any size. Delivery drivers like them, too, according to Deliveroo, because they create a one-stop shop to fulfill multiple orders at once with shorter wait times—critical as unfair driver compensation has been a hot-button topic across the globe.
U.S. consumers may want to think twice about dusting off their dinner jackets after a year of collecting mothballs. The future of dining could look a lot like the past year.
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|From: Glenn Petersen||4/29/2021 3:40:44 PM|
|Uber, Lyft, DoorDash stocks fall sharply after U.S. Labor secretary says gig workers should be classified as employees|
PUBLISHED THU, APR 29 202112:32 PM EDTUPDATED 2 HOURS AGO
Jessica Bursztynsky @JBURSZ
-- Shares of Lyft, Uber and DoorDash dipped Thursday after Secretary of Labor Marty Walsh told Reuters in an interview that gig workers should be classified as company employees.
-- Lyft stock traded down 9.5%, while Uber shed about nearly 7%. DoorDash was down 9%.
-- “We are looking at it but in a lot of cases gig workers should be classified as employees ... in some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board,” Walsh told Reuters.
Shares of Lyft, Uber and DoorDash dropped sharply Thursday after Secretary of Labor Marty Walsh told Reuters in an interview that gig workers should be classified as company employees.
Uber shares lost more than 6%, while both Lyft and DoorDash dropped more than 10% in midday trading.
“We are looking at it but in a lot of cases gig workers should be classified as employees ... in some cases they are treated respectfully and in some cases they are not and I think it has to be consistent across the board,” Walsh told Reuters. He said the department will be reaching out to companies that employ gig workers to make sure the workers have access to consistent wages, sick time and health care.
“These companies are making profits and revenue and I’m not (going to) begrudge anyone for that because that’s what we are about in America,” he added, “but we also want to make sure that success trickles down to the worker,” he added.
Walsh’s views could set the tone for how the administration plans to tackle the gig economy. Stark policy changes could upend the core business models of ride-hailing and food delivery apps, making it harder for them to reach profitability.
Uber and Lyft have maintained optimism they will become profitable by the end of this year on an adjusted EBITDA basis. In its most recent quarter, Uber lost $968 million on a GAAP basis. Lyft reported a net GAAP loss of $458 million for its last quarter, while DoorDash reported a net GAAP loss of $312 million for its fourth quarter of 2020.
Classifying drivers as contractors allows the companies to avoid the costly benefits associated with employment, such as unemployment insurance.
The companies are already facing a patchwork of state and national regulations on the matter. Last year, Uber and Lyft successfully funded a voter proposition in California that overturned that state’s law classifying gig workers as full-time employees but lost a similar battle in the U.K.
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|To: Glenn Petersen who wrote (842)||5/6/2021 4:09:20 PM|
|From: Glenn Petersen|
|Uber seeks to reassure investors over rising US regulatory threat |
Ride-share group’s employment model faces scrutiny from labour secretary Marty Walsh
May 6, 2021
Uber and Lyft had lost a combined market value of more than $20bn in the week since labour secretary Marty Walsh, pictured, first signalled his intent to look more closely at the classification of workers on gig economy platforms © FT montage; Getty Images
Shares in Uber continued a weeklong tumble on Thursday, as the ride-share group was unable to shake investor wariness over looming regulatory threats, despite financial performance suggesting its profitability goals had survived the pandemic intact.
The company’s stock price dipped sharply on Wednesday as executives began to detail, on its earnings call, a long and potentially fraught road ahead in fending off the latest threat — this time from the Biden administration’s labour department.
As markets opened on Thursday, Uber and rival Lyft had lost a combined market value of more than $20bn in the week since labour secretary Marty Walsh first signalled his intent to look more closely at the classification of workers on gig economy platforms.
The stock drop comes despite both companies reporting a gradual return of rideshare demand, reiterating their goal of achieving their first-ever quarter of profitability, on an adjusted ebitda basis, by the end of this year.
“We believe Uber remains in a solid position to navigate any potential challenges to its labour model,” said a note from analysts at Truist, “though this is an issue that’s likely to weigh down the stock in the near/medium terms.”
Earlier on Wednesday, the labour department withdrew a rule that the Trump administration had sought to push through in its final days, which would have made it easier for businesses to classify their workers as independent contractors, avoiding federally mandated rules on minimum wage and overtime.
The department said the rule was “in tension” with the text and purpose of the Fair Labor Standards Act.
“By withdrawing the Independent Contractor Rule, we will help preserve essential worker rights and stop the erosion of worker protections that would have occurred had the rule gone into effect,” said Walsh in a statement.
“Too often, workers lose important wage and related protections when employers misclassify them as independent contractors,” he added.
What happens next could have a significant bearing on the viability of the gig economy business model, particularly in states that have yet to pass their own legislation on the issue and would turn to federal leadership for guidance.
“Retraction of the rule is a first step,” said Shannon Liss-Riordan, a leading labour rights and gig economy attorney. “The Biden administration has made clear that it supports a stronger test for employee classification, and not a weaker test.”
While the labour department has indicated it would not be enacting any new rule in the immediate future, the Biden administration is pushing legislation before Congress that would bolster worker protection measures, including classification and unionisation.
Speaking to investors on Wednesday, Uber executives sought to alleviate concerns.
“I think it should surprise no one that the Biden/Harris administration’s approach on these issues is similar to the Obama/Biden administration’s approach,” said Uber’s chief legal officer Tony West.
West, who is the brother-in-law of vice-president Kamala Harris, stressed the labour department’s apparent eagerness to meet gig economy players in the coming months to discuss measures, pointing out that there was no single consensus within the Democratic party on the matter.
“We think all of that creates a real opportunity for a dialogue that can ultimately lead to a solution that gives gig workers the protections they deserve while preserving the innovation that gives them the flexibility that they desire,” West said.
Uber has been coy about the potential cost of making any of its 3.5m global active drivers and couriers into employees, but recent changes give some glimpse at how it might seek to handle future financial burdens.
Following the landmark UK Supreme Court ruling in February, in which the court ruled that drivers should fall under the country’s “worker” designation, Uber recognised a $600m accrual for costs it expects to bear in settling historical wage claims. “What we’re looking for is a level playing field and other ride companies to do the right thing,” said Uber chief executive Dara Khosrowshahi.
Faced with tight controls in Germany, Uber is experimenting with a fleet model, where drivers are employed by fleet management companies, similar to minicab firms, who are contracted by Uber.
In California, Uber was among the gig economy players that in 2020 bankrolled a new law, Proposition 22, that allowed the companies to avoid making workers employees, instead giving them limited benefits such as minimum earnings and some provisions for healthcare.
Costs to cover Prop 22’s expenses had mostly been passed to customers, said Uber’s chief financial officer, Nelson Chai, with no impact on demand.
John Zimmer, Lyft’s co-founder and president, suggested the Prop 22 playbook would be emulated. “I’m optimistic we’ll have a few more success stories on bringing this model to more states this calendar year,” he told investors.
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But a recent survey, conducted by Tulchin Research in conjunction with union groups, suggested that as many as 85 per cent of app-based drivers had not made use of the healthcare benefits introduced by Prop 22, whether through not reaching the hours-driven threshold, not knowing enough about the plan, or simply not wanting what it offered.
Controversially, Uber has now removed some additional control it bestowed on California drivers — such as setting the price of fares — that it had used to argue its workers had more independence over how they work. The company is also looking at removing or altering the ability to see the trip destination before accepting, a feature that made the service less reliable because of drivers’ cherry-picking, Uber said.
“The history of what happened with Prop 22 in California provides a lot of lessons for workers’ advocates who are fending off such initiatives now in other states,” said Liss-Riordan. “The gig economy sold Prop 22 to the California voters as somehow in the interest of the worker, which is just a lie.
” Uber said: “Voters overwhelmingly passed Prop 22 because it’s what drivers actually wanted: flexibility with benefits. And in just the first three months since Prop 22 was implemented, Uber alone paid out tens of millions of dollars to drivers and delivery people in the form of new earnings guarantees, healthcare subsidies, and accident insurance.”
Uber seeks to reassure investors over rising US regulatory threat | Financial Times (ft.com)
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|From: Glenn Petersen||5/9/2021 3:51:01 PM|
|A very vibrant peer-to-peer "economy" is thriving on Facebook:|
Buy Nothing blew up on Facebook. Can it keep growing without it?
More than 3 million people use the free Facebook groups globally, gifting and regifting thousands of tangible and intangible things every day.
May 3, 2021
All three of Jane's coffee pots have been sourced from her local Brooklyn Buy Nothing group. | Photo: Jane Seidel/Protocol'
A lot of women have worn one particular pink flamingo swimsuit, thanks to Facebook. Not a style of suit, or part of a line from a particular seller. No: exactly one swimsuit, passed from young to old and back again in the Columbia Heights neighborhood of Washington, D.C. — the scanty neon pink swimwear slipped on, photographed, perhaps cannonballed in, cleaned and then passed along once more.
The women of Columbia Heights, if you know the right person, could get you, too, hooked up with this swimsuit. They'd be happy to. They'd extoll the virtues of this place they know — a bit like a cult, or perhaps an underground drug ring, the best-kept secret in town. Everything's FREE, can you believe it? It's not just the swimsuit they can get you! Perhaps you need some props for a pet photoshoot? There's a Christmas wreath made of paper ribbons that works great. Your blender just broke? Don't throw it out, what a waste! They know someone who'll fix that up so it's better than new.
That underground club is actually a Facebook group: Buy Nothing Columbia Heights/Mount Pleasant/Park View (full disclosure, I'm a member). It's got more than 3,000 members, about 80% of them women. Neighbors post and comment hundreds of times every day. It has a few very strict rules: You can post only to offer something for free, or to seek something for free. If you don't live within the boundaries of the neighborhood, you're not welcome. Seriously, get out.
The Buy Nothing Project is in some ways one of the internet's best-kept secrets. But it's also quite large, for a secret. There are nearly 4 million people using more than 6,000 private Facebook groups officially affiliated with BuyNothing in 44 different countries. It took the project's co-founders, Rebecca Rockefeller and Liesl Clark, more than five days to hand-count every one last month, with help from five volunteers.
The story of the Buy Nothing Project is inextricably tied to Facebook. One of the largest gift economies in the world developed naturally and spread quickly because Facebook made it easy. Groups formed of their own volition. Almost everyone has an account, or could make one. It's free. Everything about Facebook's structure is designed to encourage constant, obsessive engagement.
But Clark and Rockefeller were making a Facebook headcount last month because they're embarking on a project to change that. They don't want Buy Nothing to be dependent on a social network that they see as antithetical to their values. They're building an app of their own.
"Right now we are using a platform that is taking people's data and making money off of it. Some of the principles that need to be in place for functional gift economies are democratic in nature, so we really want to build a platform that is supportive of democratic ideals," Rockefeller said.
'You just show up and you give freely'
In 2008, before Facebook groups were invented, a website called Freecycle encouraged people to give away their secondhand goods to their neighbors (it still exists, its site design a time capsule of the mid-aughts). Rockefeller wanted to give away stuff that most would think of as trash — like a pile of sticks. Freecycle moderators protested: that was really taking the idea too far. But there was one woman happy to take them, and her name was Liesl Clark.
"I would give away things that no one else wanted except Liesl, and Liesl would give away things that no one else wanted. The moderator from our Freecycle groups wouldn't let me offer them, and then Liesl would come and get them," Rockefeller said.
The women became closer friends and "social experiment" partners when they both enrolled their children in a kind of home-schooling program in Bainbridge Island, Washington (where they still live).
Their first summer of Buy Nothing passed like something out of an '80s magazine. Every weekend, Clark and Rockefeller would gather before the farmers market with their friends and neighbors to give away what they could. All were welcome, and everyone would bring their excess. One woman owned a pasta shop and brought plump, fresh ravioli, Rockefeller and Clark brought leftovers from their garden, some people foraged chanterelles and other local mushrooms, a neighbor brought newly-harvested oysters. "We all felt that we would leave with more than we came with," Clark said. "That summer, that was how we fed our family. We ate so well, we met wonderful people, that's what we were trying to replicate."
They know that it could be bigger than them: "You just show up and you give freely."
The first official Buy Nothing Facebook group went live in 2013, just before Rockefeller went on a vacation with her family. Twenty people joined before Rockefeller could get online. A few hours later, it was thousands. "That moment of just being off of my phone for awhile, literally while we drove across the mountains, and seeing how much had happened while I was gone. All of these people were in there on their own, it just took this kernel to give them the framework," Rockefeller said. "I got a little bit of a chill, thinking, 'This does work.'"
More than a decade later, the project has grown into a tangled network far outside its founders' control. Clark and Rockefeller have helped it along, but the organic sprouting — Buy Nothing terminology for when a group gets too large and a new offshoot launches — happened within Facebook, through word of mouth, without any marketing fertilizer. The two women have since launched a site including guidelines for "official groups," a copyright and more, but they made it all open source and public license. They seem to struggle with the fact that in some way, this project is theirs; they want it to be everyone's, collectively, in a completely unironic, communist sense of the word
"A gift economy is an ancient economic structure, and that's an open-source idea," Rockefeller said. "This is something that is so obviously a gift that all of us should be able to access. No one should own this in a controlling sense."
'My little fairy godmother'
Buy Nothing members all over the world have given and received an enormous litany of physical goods, and an even wider array of intangible things. Baby clothes. Typewriters. Bicycles. Moving boxes. Half-eaten cakes. Furniture galore — tables, chairs, desks, couches and beds. Old laptops, old cellphones, a tape player, a record player, a film camera. A roller-blading lesson. Friendship time. Free pottery lessons.
Joelle Simeu moved to Chevy Chase, Maryland after graduating college. If the pink flamingo swimsuit epitomizes the young and flamboyant users in Columbia Heights, a mountain of unwanted, expensive furniture perhaps best reflects the older, wealthy women of the Chevy Chase Facebook community.
"It's kind of magical," she said. "Ask, and the women of Chevy Chase will provide. I kind of love seeing it as my little fairy godmother." Her apartment is loaded with furniture, pots, plants, fruits and vegetables, and a typewriter, all from the group. When she gave away a bicycle to her neighbor, they bonded; now that the vaccine is making social interaction possible again, she's thinking about asking her to lunch.
The Nashville, Tennessee, Buy Nothing group is "unofficial." It can't formally affiliate with the Buy Nothing Project because it allows people to post from across the greater region, and the small geographic range of the "official" groups is one of the few strict limitations Rockefeller and Clark push groups to follow. Lisa Tullis Williams, the administrator, founded the group with a handful of local mothers, and it has grown to nearly 9,000 members. Rockefeller and Clark consider groups like Williams's to be just as much a part of the gift economy community as any other, but don't count them in the "official" headcount.
The size of the Nashville group means members aren't just passing things from person to person. Sometimes a handful of people get together to collect items and food for the rapidly-growing homeless population in the city. Occasionally, the unhoused will make an appearance on the group to make requests, and others will volunteer time and their cars to help drive things.
"I think the economy and the current world situation has made people reassess how they are using their money, and what their needs are," Tullis Williams said.
'I've always been averse to Facebook'
Buy Nothing's rising star is on a collision course with Facebook's falling one. After the 2016 election, the public started to reckon with Facebook's addictive tendencies, the way the site was structured to encourage viral engagement and the use of Facebook groups as closed forums for conspiracy theories, all of which began to reshape how Buy Nothing users, and its founders, thought about the platform.
The discomfort had been a long time coming for Lucas Rix. His wife loved the Buy Nothing community in Del Ray, Virginia, but he felt that Facebook's ethos was contradictory to the group's communal expression of neighborly good will.
"I really just wanted to be a part of it in some way. I know they are using Facebook, and I've always been kind of averse to Facebook. I had so much reticence in joining on my own outside my wife's account," he said.
Unlike Clark and Rockefeller, Rix comes from the startup world and has ties to the tech community. He wanted to help them build an app. "I reached out because I wanted to steward their vision and technology that supports it. At this point in my career, I want to work on things that I care about," he said.
The two founders had been thinking about moving away from Facebook for a long time on their own. Over the years, the single most common question Clark and Rockefeller receive from users has been whether the project can make BuyNothing accessible for people without Facebook accounts. They also never wanted groups to have arbitrary geographic lines or people required to moderate them; in an ideal world, there would be no leaders, and people would always exchange goods with their reasonably-nearby neighbors.
To Rix, Clark, Rockefeller, and Tunji Williams — another serial startup founder who reached out independently to the project with his own ideas for Buy Nothing's future — the idea that Buy Nothing could move beyond Facebook seemed like not only a good one, but actually doable. The four formed a new company, a registered B-corporation called ShareThing, and fundraised the initial capital from their friends and family.
The barebones beta of the app launched in April, pushing Buy Nothing — its app is stylized as BuyNothing — to the first real precipice of change since its launch. A few existing group administrators have volunteered themselves and their neighborhoods to test the beta, but users all over the world have been sending each other and the official website panicked questions about the future of their beloved Facebook pages.
The app is not intended to replace Facebook entirely, Clark and Rockefeller said. They see it as an alternative offering for people who want to get off Facebook, and an option that will allow them to fully realize the vision they've had since the beginning. Its design should mean the end of moderators and formal groups; each person's neighborhood will be determined based on their specific location and the range of distance they customize.
'What are we afraid of?'
Each individual group will have to come to its own decision about its future. The users I talked to worried about infighting: What if some people decided to use the app, and others the Facebook group? Would it mean a splintering of the community? What if all the best stuff is still posted on Facebook? What if it doesn't feel as meaningful when everyone's "neighborhood" is different?
Simeu worried about her group in Chevy Chase. "Moving it away from the Facebook group would take away from the personality of the group. The essence of it being Facebook and being accessible to people who are a bit older, for women who grew up with Facebook, I think taking it away would definitely change the vibe and the atmosphere," she said. "It could also be a problem for older folks who are also on the app. It would imply having a cellphone that you can download things. I think it would probably isolate some users of the group."
I posed those same questions to Clark and Rockefeller. "Let's look at ourselves and see why we're asking that," Clark said. "Maybe you're afraid you're going to lose your connection with your neighbor. Maybe you're afraid you won't receive as much. What are the fears? And let's just give it a try."
"We've been asking ourselves those questions, what are we afraid of? And we just got over our egos," Rockefeller said.
The Buy Nothing Project is just another tool in the creation of a gift economy ethos, they said. The app, in the grand scheme of things, is not nearly as important as the social structure they feel they've helped boost.
"The idea that it needs to only exist in one thing is an example of the scarcity mindset," Rockefeller said. "There is true strength in diversity of access. Some people will find a way to make both work for them. There is real strength in that. You don't need that many people to have a really functional gift economy."
Buy Nothing App battles Buy Nothing Facebook Groups - Protocol — The people, power and politics of tech
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|From: Glenn Petersen||5/29/2021 7:00:47 PM|
|A Worker-Owned Cooperative Tries to Compete With Uber and Lyft|
New York Times
May 28, 2021
For years, Uber and other ride-hailing companies offered the promise of entrepreneurship to drivers. Drivers who were eager to set their own schedules signed up in droves, propelling the gig economy into a multibillion-dollar industry.
But some drivers never received the control and independence they had expected. They struggled with the costs of vehicle maintenance, loans and insurance, and they questioned whether Uber and Lyft paid a fair wage. Legislative efforts to grant them employment benefits were thwarted.
Now, dissatisfied drivers and labor advocates are forming worker-owned cooperatives in an attempt to take back some of the money — and power — in the gig economy.
The Drivers Cooperative, which opened for business in New York this week, is the most recent attempt. The group, founded by a former Uber employee, a labor organizer, and a black car driver, began issuing ownership shares to drivers in early May and will start offering rides through its app on Sunday.
The cooperative has recruited around 2,500 drivers so far and intends to take a smaller commission than Uber or Lyft and charge riders a lower fare. It is an ambitious plan to challenge the ride-hailing giants, and it faces the same hurdles that tend to block other emerging players in the industry: few have the technical prowess, the venture capital dollars or the supply of readily available drivers to subvert an established company like Uber.
Still, drivers who joined the effort said that even a small cooperative could make a big difference in their work, allowing them to earn more money and have a say in the way the company is run. The Drivers Cooperative said it planned to pay 10 percent above the wage minimums set by the city’s Taxi and Limousine Commission, and return profits to drivers in the form of dividends.
In normal times, the higher wage might attract drivers to the cooperative. But these are not normal times. Many drivers have been hesitant to return to the road given the pandemic, creating a national shortage.
During an earnings report this month, Uber said it had 3.5 million active drivers and couriers during the first three months of the year, down 22 percent from the previous year. The company has responded by aggressively increasing its spending on bonuses and incentives, branding the effort as a “ stimulus.” In March, Uber said drivers in New York City earned a median of $37.44 per hour.
But once the supply of driver recovers, Uber’s wages will most likely fall. The founders of the Drivers Cooperative said members of the group struggled to keep up with their expenses when they earned typical ride-hail wages. A spokesman for Uber declined to comment on the cooperatives.
“We’re constantly working to improve the driver experience on our platform and share the goals of allowing drivers to work efficiently and independently,” said Julie Wood, a spokeswoman for Lyft.
The economic stress caused by the pandemic has prodded workers to use cooperatives as a lever against existing companies and to — they hope — increase their pay, said Ariana R. Levinson, a professor at the University of Louisville’s Brandeis School of Law who studies employee ownership.
Although it is challenging for gig workers to organize, Ms. Levinson said they had formed small food delivery and ride-hailing cooperatives. “Independent contractors are really successfully using the co-op model to organize themselves and be able to compete for a living wage,” she said.
“I’ve never seen this hunger for change that exists with drivers. Every single transaction reveals exploitation,” said Erik Forman, a labor organizer and a founder of the Drivers Cooperative. “They feel like a way to regain control is to have control and ownership over the platform.”
Mr. Forman started the cooperative with Alissa Orlando, the former head of operations for Uber’s business in East Africa, and Ken Lewis, a black car driver in New York City. Ms. Orlando said she left Uber after witnessing driver outcry over pay reductions.
She started researching cooperatives during the pandemic as Uber and Lyft drivers struggled to gain access to unemployment insurance and adequate protective gear. Mr. Lewis and his brother worked in the taxi and black car industry, but said they dreamed about running their own business.
The Drivers Cooperative gets technical and business assistance from volunteers in the tech industry, Ms. Orlando said.
The cooperative aims to raise pay for drivers, and to address other common concerns, like predatory loan rates and surprise deactivations, which cut them off the apps that connect them with passengers. The group is partnering with the Lower East Side People’s Federal Credit Union to help drivers refinance their vehicle loans, an effort it hopes will further reduce their expenses.
In 2017, Uber agreed to a $20 million penalty with the Federal Trade Commission to settle claims that it misrepresented driver earnings and loan terms. The company no longer offers vehicle financing.
Drivers said they would most likely continue to drive for gig companies or black car services in addition to the Drivers Cooperative, adding it to the array of ride-hailing and delivery apps on their phones.
“Working with Uber has been something you do, because you don’t have another alternative,” said Michael Ugwu, who has driven for Uber for six years. Mr. Ugwu said he would continue driving for Uber, but would prioritize customers who requested rides through the cooperative’s app.
“Having your own business is the way forward and the way out,” Mr. Ugwu said. “Even if I make less money, I will focus on the co-op to make sure we succeed.”
Other groups of workers are also turning to cooperatives to exert more influence in the gig economy. The Driver’s Seat Cooperative, which incorporated in 2019 and operates primarily in Denver, Portland and Los Angeles, helps drivers harvest industry data about which ride and delivery apps are the most lucrative, and keeps an independent record of their earnings.
“The starting point for this was hearing drivers’ frustrations and their sense of being manipulated by the algorithm,” said Hays Witt, the chief executive of Driver’s Seat. “Data is reported back to drivers in different ways on each platform. Drivers have a hard time evaluating what works best for them.”
Mr. Witt said Driver’s Seat aims to sell congestion and traffic data to cities, which get little transparency from gig companies about their environmental impacts. The cooperative also plans to open membership to drivers later this year.
“People are trying to figure out: ‘How do we hold on to the value that we’re generating and pivot away from this super extractive model?’” Mr. Witt said. “It’s popping up because there’s a real problem, and co-ops offer a real solution.”
Mr. Lewis, a founder of the Drivers Cooperative, said drivers like him have wanted to create apps like Uber since it was introduced, but did not know where to start. Although a few efforts have sprung up across the country, like the delivery co-op LoCo, New York did not have a place for them to go.
“Drivers would be saying, ‘Why couldn’t we do this by ourselves?’” Mr. Lewis said. When the opportunity to join a cooperative along, he thought, “We’ve struggled with no change. Let me give this one last effort.”
A Worker-Owned Cooperative Tries to Compete With Uber and Lyft – DNyuz
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