This is Uber growing up: Khosrowshahi calls for portable benefits

It will be surprising to many, but Uber is poised to become a mature and responsible company. CEO Dara Khosrowshahi today signed on to a letter from the Service Employees International Union (SEIU) and others asking Congress to create a portable benefits system for on-demand workers. The Hill reports that Khosrowshahi, investor Nick Hanauer, and the SEIU were strongly endorsed by Virginia Democrat Senator Mark Warner.

Ultimately, business and government will work together to address the vast changes to work, employment relationships, and the social safety net that allows the kind of labor mobility required in the emerging economy.

On-Demand Economy Notes, January 24, 2018

Lots of short notable goodness for your on-demand economy appetite today. News and thoughts follow.

ADP gets serious about on-demand. ADP, the Paterson, N.J. payment processing and payroll provider, acquired WorkMarket, a freelance management platform. The startup’s Work OS supports on-demand and full-time employee relationships that is integrated with Salesforce, among others. This marks the beginning of a serious experimentation phase for on-demand work models. 

Amazon isn’t perfect. Amazon Restaurants, the retail giant’s food delivery service, has laid off 50 staff in Seattle. It is not clear that means the group is under the knife, but it shows that food delivery services are still wide open markets.

The Institute for the Future released an important on-demand economy white paper, “Designing positive platforms: a guide for a governance-based approach” to on-demand marketplaces. Their focus on governance, the rules of engagement between a platform and worker, as well as the way the platform ensures representative and transparent practices to minimize information asymmetries in their markets, is critically important. As a former Chaordic Commons trustee, I can attest to the difficulty in creating governing documents like the IFTF advocates. The IFTF framework is an invaluable contribution to this dialogue. Read it for yourself. Summaries won’t do it justice.  And there is a useful list of companies studied for the report.

Gig worker payments are shifting to day-of-delivery and direct deposit. Lots of interesting data points in this article. PayPal is the conduit for 35 percent of gig workers’ payments and 54 percent of workers use direct deposit.  Drivers use direct deposit far more than other categories. I imagine we will see a day when a job contract is a debit card.

Amazon may not have cashiers in its Go convenience stores, but Bolt, a San Francisco startup just coming out of stealth mode, according to TechCrunch, is angling to help the rest of the stores on Main Street catch up. The initial services focus on online commerce, from check-out to fraud and business intelligence. Transaction platforms like this will survive and thrive based on customer engagement. Bolt looks ready to attack the cart abandonment problem today.

Omnicom, the ad conglomerate, incubated Spry, an on-demand public relations firm, which launched this week. The business idea turns on the idea that editors make the press release professional, and freelancers can be called on to generate drafts quickly and cheaply. for press releases is a wedge, but the agency faces competition from full service firms that can amplify the messages they create. Omnicom’s spin-out, Cision, and PRNewswire businesses will eventually play a part in Spry’s success.

Mastercard launched the Inclusive Futures Project to address on-demand transactions, government services, and smart cities experiments. Here is the plan and partner projects announced today, with this explanation of the focus: “Two commercially viable segments surfaced as areas in need of more dedicated focus and research: Struggling Middle Income consumers and Gig Economy workers. The reality is: all too many of these individuals and their families fight to achieve and maintain financial stability; and as such, consistently find themselves excluded, unable to reap the benefits of a growing economy.”

Drones are coming with your stuff. Dorado, a European on-demand delivery service says drones are two to six times cheaper and 1o times faster than current options. What is Dorado’s play? To raise $55 million through a ICO to fund its go-to-market strategy for home and business deliveries in Europe. The firm has raised $r million from Goldfish Fund, an ICO-centric institutional fund.

Fiverr tells Crunchbase News it acquired AND CO, a SaaS platform for freelancers and self-employed workers. A video release explains the deal. The company suggests this deal indicates consolidation is underway in the on-demand economy. It’s just the first wave. AND CO had previously raised $2.5 million.

GoDaddy doubles down on SMB social commerce

GoDaddy has acquired Main Street Hub, a social marketing tools and services company, for $125 million in cash with $50 million in  performance incentives, according to TechCrunch. This is interesting for several reasons:

  • SMB marketing must evolve to support on-demand and in-home engagement.
  • SMBs generally favor Do-It-With-Me and Do-It-For-Me (DIFM) models over Do-It-Yourself marketing services. Only 22.5 percent of respondents to the latest BIA/Kelsey survey of SMBs preferred DIFM services.
  • Scale in services is difficult to achieve, and at 10,000 SMB customers Main Street is at a tipping point that will determine if it can grow.

GoDaddy’s 17 million U.S. small business customers must appear a ripe target for Main Street. GoDaddy, too, has searched for additional revenue from SMB customers. At some point in the negotiations, someone at the table must have said “Pitch [Main Street} to the 28 million SMBs in the United States, and we’re sure to generate a billion dollars or more in fees.” In fact, it would take 333,000 customers at Main Street’s current entry price to make that goal.

However, scaling up a services-centric business is much more complicated than automated services, such as website hosting or email marketing delivery. The cost of delivering marketing services rises with each client as that client adds services, scaling linearly, at best, or producing lower margins in many circumstances. When I worked on web hosting at hibu a few years back, the only viable way to deliver web sites was outsourcing to the Philippines, and even that was challenging.

The other factor to consider is SMBs’ tendency to bring services in-house once they feel they have a process they can reproduce. Main Street’s best customers are likely to migrate to automation and in-house resources if they succeed.

The next phase of marketing requires local familiarity, not simply marketing competence. This means people must be familiar with the culture they are marketing into, and that points to lots of U.S.-based consultants. That is not cheap, yet TechCrunch calls this acquisition a “perfect match.”

Main Street assigns an account manager to each small business client, with pricing starting in the $250/mo. range, or $3,000 a year. That’s a small market, representing a few million U.S. businesses, at most. Meanwhile, Salesforce, Oracle, Amazon, and others continue to move their services down-market, into direct competition for these companies.

GoDaddy is taking a big bet in an intensely competitive sector. It isn’t a sure thing, and requires additional features and local expertise that will be hard to scale.

Trust and Fintech: A people problem

Banks offer many more services, along with charging a lot more fees, than a generation ago. As virtual services grow, trust has fallen. Financier Worldwide looks at personalization, GDPR (learn it, know it), and the impact of social media. However, the customer relationship all comes down to trust.

Banks offer many more services, along with charging a lot more fees, than a generation ago. As virtual services grow, trust levels continue to decline. Only 32 percent of Americans trust their bank “a great deal” or “quite a lot,” according to Gallup’s 2017 polling.

Financier Worldwide looks at personalization, GDPR (learn it, know it), and the impact of social media on banking relationships from the Customer Experience (CX) perspective. However, the customer relationship all comes down to trust, which requires human interaction.

“An overwhelming majority of customers consider their banking relationship merely transactional and are seeking better experiences from banks,” suggests Fabrice Albizzati, a partner in EY’s FS advisory practice. “Customers are looking for service providers that know them, that  they can trust and, in turn, stay loyal to. FS institutions, therefore, need to optimise CX and implement a more personalised approach to recapture customer loyalty.”

Notice that customers want the bank to “know them.” Instead, banking and financial service offers bombard the consumer today, by direct mail, email, and SMS. Most of these offers are fishing for potential customers rather than providing targeted services that build trust. They scream indifference to the customer’s daily challenges. The cost to banks is a constant low-yield search for more customers, many of whom trade off between offers over time instead of settling into a relationship and increasing share of wallet with the bank. 

No matter how many technologies we invent, the person-to-person relationship cannot be replaced by pure digital interaction. “Recapturing customer loyalty” is a project that involves the right human interaction blended with digital services to create a sense that the financial company values the customer’s trust and money. Send people to meet people at the right time. Deliver great service and savings to banking customers, and be ready to demonstrate that value in-person, combining listening and empathy with data insights.

People will use technology to reweave trust. It’s a process we are many years into with diminishing returns on technical investments alone. Now, it’s time to help connect in order to rebuild trusting relationships.


Uber’s December EU court loss has global consequences

Lexology analyzes an important employment and regulatory decision by the Court of Justice of the European Union after the Spanish Asociación Profesional Élite Taxi, a driver’s union, challenged Uber’s operating model in Barcelona. The court, which is the highest in the E.U., sided with drivers.

Lexology analyzes an important employment and regulatory decision by the Court of Justice of the European Union after the Spanish Asociación Profesional Élite Taxi, a driver’s union, challenged Uber’s operating model in Barcelona. The court, which is the highest in the E.U., sided with drivers.

Uber selects the non-professional drivers to use their own vehicles and, without the UBER branded application: (i) those drivers would not be led to provide transport services to the fares, and (ii) those customers would not use the services provided by those drivers. Accordingly, looking at the nature and effect of the services provided by Uber and the control exercised by Uber, the CJEU ruled that it was providing transport services – not information society services. As such, it ruled that Article 56 TFEU and the laws under the E-Commerce Directive, and related legislation, did not apply to these circumstances. Moreover, the CJEU noted that as these taxi services amounted to non-public urban transport services and such had not yet become the subject of an EU wide common transport policy, it remained open for individual Member States to regulate the conditions under which these services were provided.

Slowly, Uber is being forced to acknowledge the reality of local government. If you follow labor law, this is a must-read. Government is designed to be slower than the economy, and is catching up in mobility markets.

Update: Scotland is coming after Airbnb, too: The Times of London reports that Patrick Harvie, a Scottish housing advocate said: “There is a huge difference between what’s generally called the collaborative economy of people putting a spare room in their own home up for short-term let, and the conversion of entire properties to effectively mini-hotels which operate without paying any business taxes and which are distorting the housing market in this way.”

Smart thermostats open the door to on-demand services

Parks Associates, an IoT and smart home research firm, released a report suggesting that 13 percent of U.S. broadband households (there were 106 million such homes as of 2016) have installed smart thermostats as of 2017. That’s up from 11 percent in 2016, an increase of approximately 2.1 million homes last year. What does this mean for on-demand services that can tap into smart thermostats (with consumers’ permission)? Let’s brainstorm.

Parks Associates, an IoT and smart home research firm, released a report suggesting that 13 percent of U.S. broadband households (there were 106 million such homes as of 2016) have installed smart thermostats as of 2017. That’s up from 11 percent in 2016, an increase of approximately 2.1 million homes last year.

What does this mean for on-demand services that can tap into smart thermostats (with consumers’ permission)? Let’s brainstorm:

Think of the ADT model. The security company monitors the state of a home and, when there is a break-in, alerts the police. A smart thermostat could provide live monitoring of a home’s temperature and furnace/air conditioning to deliver real-time service. Your furnace fails and before you realize it is not heating the home, a service provider shows up to fix it. With a digital lock in the scenario, consumer might not even need to be home to discover and fix a heating problem in winter. Feels like magic to the homeowner.

Home activity monitoring. Nest’s thermostats have been detecting activity in the home and adjusting temperatures when consumers arrive home. Water heaters cold lower their electrical or gas usage during the day. Tie activity monitoring to a meal-delivery service to trigger the arrival of dinner just after he customer comes in from work. 

Security. The smart thermostat can also detect unexpected entry to a home and signal the customer or a security firm when something is amiss. It may be just one more sensor, but motion/sound detection could replace traditional doors and window security monitors, lowering the price of home security installs and services.

On-demand work tracking. A smart thermostat linked to on-demand service providers’ networks could track when a housekeeper, dog-walker, plant watering service, or other labor enters and leaves the home. Consumers could have validation that their housekeeper worked the full time they were expected to, even when no one was home, from their smart thermostat.

On-demand companies need to anticipate and build business relationships around devices that extend the customer relationship. Smart thermostats, smart speakers, smart thermostat-speakers, electrical and water system monitors, smart refrigerators, smart phones, smart TVs, and myriad other devices can help identify consumer needs before they are detected by consumers themselves. However, these services must respect the customer’s privacy and act in service of their interests, or such tools will seem intrusive. 

Update: Chuck Martin at MediaPost discusses how companies are embracing IoT today, as well. Lots of very interesting results from a survey of 500 executives considering or actively investing in IoT-enabled customer experiences.




Google invests in Go-Jek

Google is reportedly part of a new $1.19 billion investment round at Indonesian ride hailing service Go-Jek. According to South Africa’s Business Report, Google could put as much as $98 million into the company, which also has investments from Tencent. 

The deal opens the way for adoption of Google’s Waymo autonomous car technology by Go-Jek, among other potential benefits. Go-Jek did not comment on the deal.

SoftBank takes control at Uber: Stay out of Asia

SoftBank completed its $9.3 billion transaction with Uber, making it the largest shareholder in the company and returning handsome profits to early investors, as well as making Travis Kalanick a billionaire. The cost: Uber must turn its focus to the United States, Europe, Latin American countries, and Australia to become profitable. 

The Financial Times reports that Rajeev Misra, Softbank’s Uber board member, said Uber can be profitable with a focus outside Asia, where SoftBank has investments in several mobility companies, including Ola and Didi Chuxing. In a pricelessly SoftBankian phrase, Misra said of Uber’s potential: “Who cares if they lost a billion more or half a billion less?”

On closing, SoftBank comes away with 15 percent of Uber for its money.

Revel in the details of Travis Kalanick’s fall from Uber

I think Uber’s past is well known and don’t generally revisit the issue unless significant new transgressions are uncovered. Plenty of small transgressions are still emerging, but let’s move on. But then, this description today of Uber founder and former CEO Travis Kalanick’s response to the release of videotaped verbal abuse of an Uber driver:

As the clip ended, the three stood in stunned silence. Kalanick seemed to understand that his behavior required some form of contrition. According to a person who was there, he literally got down on his hands and knees and began squirming on the floor. “This is bad,” he muttered. “I’m terrible.”

Then, contrition period over, he got up, called a board member, demanded a new PR strategy, and embarked on a yearlong starring role as the villain who gets his comeuppance in the most gripping startup drama since the dot-com bubble.

What follows is entertaining and alarming. Rather than engage in schadenfreude, we need to learn from this story. Uber’s ability to raise billions in funding was driven by the Ultimate Jerk. Can that be a sign of healthy investing practices?

Goodyear takes tire maintenance to on-demand market

Goodyear faces a double challenge. The tire company must address consumer’s growing expectation that services should come to their home or office and it faces a change in vehicle ownership as autonomous shared vehicles take over from personal automobiles.  It has a strategy and it makes sense:

“As shared mobility continues to grow in popularity, we are seeing applications where miles driven per vehicle increase from 15,000 per year to as much 5,000 per month,” said Chris Helsel, Goodyear’s chief technology officer [said in a press release]. “Those increased miles mean increased demand for tire maintenance and repair, especially when you consider customer expectations for comfort and safety from a mobility service.”

Partnering with STRATIM, a San Francisco-based vehicle maintenance data intelligence developer, Goodyear will begin to provide fleet services to on-demand companies. But the same mobile approach can serve consumers. This enables scenarios such as buying “tires for life” as an add-on to a car purchase or lease. 

Whether people embrace autonomous vehicles or keep their own cars, the Goodyear approach announced today keeps the road open to subscription and on-demand revenue.