A voter-approved measure strips them of basic protections enjoyed by employees in other businesses.
Uber, Lyft, Instacart, DoorDash — the major backers of California’s Proposition 22 — are getting their way. The proposition, which will keep gig workers classified as independent contractors, is projected to pass. The Associated Press called the race with 67% of precincts partially reporting.
At the time of publication, 58.2% of voters (more than 6.3 million people) voted for Prop 22, while 41.5% of voters (about 4.5 million people) voted against it.
The ballot measure will implement an earnings guarantee of at least 120% of minimum wage while on the job, 30 cents per engaged miles for expenses, a healthcare stipend, occupational accident insurance for on-the-job injuries, protection against discrimination and sexual harassment, and automobile accident and liability insurance. It’s worth noting that those earnings guarantees and reimbursement for expenses only reflect a driver’s engaged time, and does not account for the time spent in between rides or deliveries.
Proponents of Prop 22 claimed their win late Tuesday night when about 57% of the votes were accounted for. Meanwhile, some opponents of the measure conceded.
“We’re disappointed in tonight’s outcome, especially because this campaign’s success is based on lies and fear-mongering,” Gig Workers Collective wrote in a blog post. “Companies shouldn’t be able to buy elections. But we’re still dedicated to our cause and ready to continue our fight.”
The folks over at Gig Workers Rising also said the fight is far from over.
“This battle is but a stepping stone towards our continued fight to get gig workers the rights, benefits, and dignified working conditions they deserve,” Gig Workers Rising said in a statement.
Prop 22 was primarily backed by Uber, Lyft, DoorDash and Postmates . Last week, DoorDash put in an additional $3.75 million into the Yes on 22 campaign, according to a late contribution filing. Then, on Monday, Uber put in an additional $1 million. That influx of cash brought Yes on 22’s total contributions to around $205 million. All that funding makes Proposition 22 the most expensive ballot measure in California since 1999.
On the other side, major donors in opposition of Prop 22 included Service Employees International Union, United Food & Commercial Workers and International Brotherhood of Teamsters. One gig worker, Vanessa Bain, recently told TechCrunch,
“The reality is that, you know, it establishes a dangerous precedent to allow companies to write their own labor laws,” Vanessa Bain, a gig worker and organizer at Gig Workers Collective, recently told TechCrunch. “This policy was created to unilaterally benefit companies at the detriment of workers.”
The creation of Prop 22 was a direct response to the legalization of AB-5, the gig worker bill that makes it harder for the likes of Uber, Lyft, DoorDash and other gig economy companies to classify their workers as 1099 independent contractors.
AB-5 helps to ensure gig economy workers are entitled to minimum wage, workers’ compensation and other benefits by requiring employers to apply the ABC test. According to the ABC test, in order for a hiring entity to legally classify a worker as an independent contractor, it must prove the worker is free from the control and direction of the hiring entity, performs work outside the scope of the entity’s business and is regularly engaged in work of some independently established trade or other similar business.
Currently, Uber and Lyft are in the midst of a lawsuit regarding AB-5 brought forth in May by California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Diego and San Francisco. They argued Uber and Lyft gain an unfair and unlawful competitive advantage by misclassifying workers as independent contractors. Then, in June, the plaintiffs filed a preliminary injunction seeking the court to force Uber and Lyft to reclassify their drivers.
In August, a judge granted the preliminary injunction. Uber and Lyft appealed the decision, but the appeals court last month affirmed the decision from the lower court. However, the decision will be stayed for 30 days after the court issues the remittitur, which the court has yet to do. Meanwhile, both Uber and Lyft previously said they were looking at their appeal options.
Throughout the case, Uber and Lyft have argued that reclassifying their drivers as employees would cause irreparable harm to the companies. In the ruling last month, the judge said neither company would suffer any “grave or irreparable harm by being prohibited from violating the law” and that their respective financial burdens “do not rise to the level of irreparable harm.”
But now that Prop 22 is projected to pass, this lawsuit has far less legal ground to stand on. It’s also worth noting that Uber has previously said it may pursue similar legislation in other states.
The California Secretary of State began releasing partial election results from the state’s 58 counties at 8 p.m. PT. However, do not expect a final count tonight, or even tomorrow. That’s partly due to the fact that California accepts absentee ballots postmarked no later than Nov. 3, 2020. Meanwhile, county elections officials have until Dec. 1, 2020 to report final results.
A group that also includes Lyft and DoorDash has spent nearly $200 million to support a California proposition that could save them from a new labor law.
Instacart is making its grocery delivery and pickup services more accessible to lower-income customers by offering customers the ability to pay for groceries using their SNAP (Supplemental Nutrition Assistance Program) benefits. This is the first time Instacart shoppers have been able to use government assistance programs when paying for groceries, and follows earlier moves by larger retailers, including Amazon, Walmart, and others in extending SNAP EBT to online grocery.
In Instacart’s case, the option is being made available in partnership with ALDI, which will offer the ability for SNAP EBT participants to access fresh food and other staples using the online service.
When shopping, Instacart users will be able to add ALDI’s EBT SNAP-eligible items to their cart, then select how much of their benefits they want to allocate to their order before checking out.
The program will launch over the new few weeks, and will first arrive at ALDI’s over 60 Georgia stores before expanding to over 570 stores across Illinois, California, Florida and Pennsylvania in the months ahead.
Instacart says it runs its Customer and Shopper Care team from Atlanta, which one reason why it selected Georgia as the debut market — adding it was important to first support the communities where its own employees live and work.
Today, online grocery shopping is often seen as a luxury service, but that should not be the case. Often, it’s just as affordable to shop online than in-store (if using the pickup option, at least), as customers can more easily compare prices with other retailers online. For some lower-income customers, online shopping can also save time when they’re stretched between jobs and family commitments.
The pandemic has now further complicated access to food for those on SNAP benefits, and in particular, for high-risk individuals. These customers now have to take risks with their lives and health to shop in-store, making online grocery more of a necessity.
“The introduction of Instacart’s EBT SNAP payments comes at a time when food insecurity in the U.S. has compounded as the nation continues to be impacted by COVID-19,” Instacart stated in its announcement. “According to Feeding America, due to the effects of the pandemic, more than 54 million people may experience food insecurity in 2020, which includes a potential 18 million children. In Georgia specifically, food insecurity impacts 12.5% of the population and disproportionately affects communities of color,” it noted.
Instacart is now one of several online retailers supporting SNAP EBT for groceries.
Before the coronavirus outbreak, the U.S. Dept. of Agriculture had been working to make online grocery more accessible to SNAP recipients through an online purchasing pilot program with support of retailers including Amazon, Walmart, ShopRite, and others. The pilot retailers have made it possible to shop for groceries online, then pay using SNAP EBT.
ALDI and Instacart are not listed on the USDA’s website as program participants, however.
Khosla Ventures, the eponymous venture firm helmed by longtime Silicon Valley rainmaker, Vinod Khosla, is raising $1.1 billion for its latest venture fund, according to documents from the Securities and Exchange Commission.
The filing was first spotted by Ari Levy over at CNBC.
Khosla, whose investing career began at Kleiner Perkins Caufield & Byers (back when it was still called Kleiner Perkins Caufield & Byers) is rightly famous for a number of bets on enterprise software companies and was a richly rewarded co-founder of Sun Microsystems before venturing into the world of venture capital.
Like his former partner, John Doerr, Khosla also went all-in on renewable energy and sustainability both at Kleiner Perkins and then later at his own fund, which he reportedly launched with several hundreds of millions of dollars from his personal fortune.
Over the years Khosla Ventures has placed bets and scored big wins across a wide range of industries including cybersecurity (with the over $1 billion acquisition of portfolio company Cylance), sustainability (with the Climate Corp. acquisition), and healthcare (through the public offering of Editas).
And the current portfolio should also have some big exits with a roster that includes: the unicorn lending company, Affirm; the nuclear fusion technology developer, Commonwealth Fusion Systems (maybe not a winner, but so so so cool); delivery company, DoorDash; the meat replacement maker, Impossible Foods; grocery delivery service, Instacart; security technology developer, Okta; the health insurance provider, Oscar; and the payment companies Square and Stripe .
That’s quite a string of unicorn (and would-be unicorn) investments. And it speaks to the breadth of the firm’s interests that run the gamut from healthcare to fintech to sustainability and the future of food.
Khosla will likely benefit from the surge of interest in investments that adhere to new environmental, social responsibility and corporate governance standards.
There are billions of dollars that are looking for a home that can invest along those criteria, and for the last 16 years or so, that’s exactly what Khosla Ventures has been doing.
Instacart announced today that it has raised $200 million in a new funding round featuring prior investors. D1 Capital and Valiant Peregrine Fund led the investment. Instacart is now worth $17.7 billion, post-money, or $17.5 billion pre-money. The plan is to use the funding to focus on introducing new features and tools to improve the customer experience, and further support Instacart’s enterprise and ads businesses, according to a blog post.
Previously in 2020, Instacart raised $100 million in July, and $225 million in June. The June round valued the company at around $13.7 billion, meaning that the unicorn’s new funding round — raised just months later — came at a much higher price.
Instacart, like some other tech, and tech-enabled businesses, has seen demand for its service expand during the pandemic. It’s not hard to trace a connection between COVID-19 and its business results, as folks wanting to stay at home have turned to on-demand services to keep themselves safe.
The growth shown by Uber’s food delivery business is another example of this trend.
Instacart’s valuation has more than doubled since its 2018 Series F, when it was worth around $7.9 billion. The pace at which Instacart has created paper value is impressive, though its IPO plans appear murky from the outside and how much of the its COVID-bump will be retained when the pandemic ends is not yet clear.
The startup famously turned a profit during a month in Q2, worth around $10 million per The Information. The same report indicated that Instacart lost around $300 million in 2019. What the company’s full-year profitability profile will look like is not know.
TechCrunch sent a number of questions to the firm, including if it has had any further profitable months in 2020, and how quickly it grew in Q3 2020. The company’s spokespeople did not answer those questions.
“Today’s investment is a testament to the strong conviction our existing investors have in the strength of our teams and the important role Instacart plays for customers, partners, and the entire grocery ecosystem,” Instacart CEO Apoorva Mehta said in a press release. “I’m incredibly proud of our team’s work to scale our business this past year and rise to meet the unprecedented consumer demand and growth.”
Instacart is one of the company’s caught up in a regulatory war after California passed AB5, which changed the state’s rules on gig workers. A voter proposition — Prop 22 — that would keep rideshare drivers and delivery workers classified as independent contractors, is coming up for a vote in California. Instacart is in favor of the proposition, along with Uber, Lyft, DoorDash and Postmates (now owned by Uber).
Uber, Lyft, Instacart and DoorDash have collectively contributed $184,008,361.46 to the Yes on 22 campaign. Those contributions have been monetary, non-monetary and have come in the form of loans. In September, the four companies each committed another $17.5 million to Yes on Prop 22 in monetary contributions. Of all the measures on this November’s ballot, Yes on Prop 22 has received the most contributions, according to California’s Fair Political Practices Commission.
Beyond Prop 22, Instacart is facing a lawsuit from Washington D.C. District Attorney General Karl A. Racine that alleges the company charged customers millions of dollars in “deceptive service fees” and failed to pay hundreds of thousands of dollars’ worth of sales tax. The suit seeks restitution for customers who paid those service fees, as well as back taxes and interest on taxes owed to D.C. Specifically, it alleges Instacart misled customers regarding the 10% service fee to think it was a tip for the delivery person, from September 2016 to April 2018.
Meanwhile, amid the pandemic and wildfires in California, workers have demanded personal protective equipment and better pay, and, most recently, disaster relief.
PopSQL, a startup that builds a collaborative SQL editor for teams, today announced that it has raised a $3.4 million seed round led by Google’s AI-focused Gradient Ventures fund. Other participants include Y Combinator and FundersClub, as well as angel investors Max Mullen, the co-founder of Instacart; Calvin French-Owen, the CTO of Segment; and Guillermo Rauch, the CEO of Vercel.
Like most startups at this stage, the company plans to use the new capital to execute on its product roadmap.
“I started PopSQL because I was frustrated with the existing tools on the market. I wanted a SQL editor that was beautiful, easy to use and collaborative. Just as new collaboration tools like Slack changed the way teams communicate, our vision is that PopSQL will change the way teams analyze and share data,” said Rahil Sondhi, CEO and founder of PopSQL. “The new capital from Gradient allows us to scale the company and pursue our vision of creating the best tools for teams to analyze data together.”
With PopSQL, teams can write a database query once and then easily share it within their company (and build a library of shared queries in the process). That’s a massive timesaver for many companies, where queries like this are often still shared by email or as code snippets in Slack, which PopSQL also integrates with. With this tool, developers and data analysts can also easily create different versions of a query.
PopSQL currently supports a wide range of databases, ranging from Snowflake, Google Cloud’s BigQuery, AWS Redshift, PostgreSQL, MySQL, SQL Server, Oracle, MongoDB and Cassandra.
In addition to the collaborative features, though, PopSQL also offers a number of other interesting features, including the ability to schedule recurring queries using what is essentially a visual cron editor.
The tool also features some basic charting functions and while these are mostly meant to easily allow users to visualize their queries, you can also use this feature to build basic dashboards, for example. Sondhi noted that he doesn’t necessarily think of PopSQL as a business intelligence tool, but the core functionality is there if you want it.
While government statistics say inflation is low, the reality is that the cost of living has risen during the pandemic, especially for poorer Americans.
Instacart is facing a lawsuit from Washington, D.C. Attorney General Karl A. Racine that alleges the company charged customers millions of dollars in “deceptive service fees” and failed to pay hundreds of thousands of dollars worth of sales tax. The suit seeks restitution for customers who paid those service fees, as well as back taxes and on interest on taxes owed to D.C.
The suit specifically alleges Instacart misled customers regarding the 10% service fee to think it was a tip for the delivery person from September 2016 to April 2018.
“Instacart tricked District consumers into believing they were tipping grocery delivery workers when, in fact, the company was charging them extra fees and pocketing the money,” Racine said in a statement. “Instacart used these deceptive fees to cover its operating costs while simultaneously failing to pay D.C. sales taxes. We filed suit to force Instacart to honor its legal obligations, pay D.C. the taxes it owes, and return millions of dollars to District consumers the company deceived.”
This is not the first time Instacart has faced legal issues over its service fees. In 2017, Instacart settled a $4.6 million suit regarding claims that the company misclassified its personal shoppers as independent contractors, and also failed to reimburse them for work expenses. As part of the settlement, Instacart was required to change the way it described a service fee, which many people mistakenly thought meant tip. Even when Instacart clarified the language, the suit alleges Instacart still buried the option to tip.
“In this respect, Instacart’s checkout design compounded
consumers’ tendency to confuse the service fee with a shopper tip,” the suit alleges.
This lawsuit comes as Instacart is facing uncertainty in California over the way it classifies some of its shoppers and delivery people. Despite a new law going into effect in January that clearly lays out what type of workers should and should not be classified as independent contractors, Instacart has yet to classify its workers as employees. Instead, Instacart, along with Uber, Lyft and DoorDash, are backing a ballot measure, Prop 22, that seeks to keep their workers classified as independent contractors.
TechCrunch has reached out to Instacart and will update this story if we hear back.
Gig Workers Collective, a gig worker-activist group led by Instacart shoppers, is asking Instacart to provide disaster relief to workers impacted by natural disasters.
The demands come at a time when several parts of California are engulfed in flames. The three biggest fires, the LNU Lightning Complex, SCU Lightning Complex and CZU Lightning Complex, have collectively destroyed 1,225 structures and claimed the lives of five people, according to the San Francisco Chronicle’s fire tracker.
In light of the wildfires and other anticipated climate change-related disasters, Instacart workers want the company to provide disaster pay at a daily rate equal to the average rate of daily pay, including tips, over the previous 30 days for each day Instacart’s operations are shutdown. Additionally, GWC wants Instacart to shut down its operations in markets where a city has declared a state of emergency or issued evacuations.
“Thousands of gig workers in California alone have been displaced, or seen the demand for their services dwindle in the face of natural disasters,” GWC wrote on Medium today. “Instacart can unilaterally shut down operations without paying its impacted workforce a dime, leaving displaced workers to fend for themselves. It is shameful that a company that became profitable for the first time during the pandemic off of the backs of its workers, has abandoned those very same workers during their time of need.”
These demands come shortly after Instacart agreed to distribute $727,985 among some San Francisco-based Instacart workers as part of a settlement pertaining to health care and paid sick leave benefits.
This group of workers also argues Instacart workers should be classified as employees, which would make them entitled to certain benefits, like paid sick leave, health care, unemployment benefits and more.
TechCrunch has reached out to Instacart for comment. We will update this story if we hear back.
At last week’s Early Stage virtual event, founders and investors shared some of their best insights about startup building and what they’re looking for in their next investments. We’ve assembled a compilation of insights covering different elements of entrepreneurship from a handful of founders and VCs:
- Jess Lee, partner at Sequoia Capital on identifying your customer
- Garry Tan, managing partner at Initialized Capital on finding the right problem
- Ann Miura-Ko, co-founding partner at Floodgate on product-market fit
- Ali Partovi, Neo founder and CEO on hiring
Jess Lee, partner, Sequoia Capital: Start with your customers
Jess Lee has a whole framework for describing customers as if they were characters in a film.
“The way to think about it is as a fictional character who represents a particular user type that might use your product or company or your brand in a particular way,” she said. “And many companies have multiple personas.”
A more scientific way is thinking of your customers as a cluster of data points. The persona that emerges is at the center of that cluster.
“So if you map out all of the possible customers, you tend to see these clusters and then you describe who the person is at the center of that cluster,” Lee said.
What makes a good persona is someone who feels useful for product design but also memorable. That means creating a persona that has a clear story with real pain points, she said.
“And that’s the most important thing,” she said. “What do they care about and what problems are you trying to solve?”
Online shopping service Instacart says reused passwords are to blame for a recent spate of account breaches, which saw personal data belonging to hundreds of thousands of Instacart customers stolen and put up for sale on the dark web.
The company published a statement late on Thursday saying its investigation showed that Instacart “was not compromised or breached,” but pointed to credential stuffing, where hackers take lists of usernames and passwords stolen from other breached sites and brute-force their way into other accounts.
“In this instance, it appears that third-party bad actors were able to use usernames and passwords that were compromised in previous data breaches of other websites and apps to login to some Instacart accounts,” the statement reads.
The statement comes after BuzzFeed News reported that data on more than 270,000 user accounts was for sale on the dark web, including the account user’s name, address, the last four digits of their credit card, and their order histories from as recently as this week.
Instacart said that the stolen data represents a fraction of the “millions” of Instacart’s customers across the U.S. and Canada, a spokesperson told BuzzFeed News.
But who’s really to blame here: the customers for reusing passwords, or the company for not doing more to protect against password reuse?
Granted, it’s a bit of both. Any internet user should use a unique password on each website, and install a password manager to remember them for you wherever you go. That means if hackers make off with one of your passwords, they can’t break into all of your accounts. You should also enable two-factor authentication wherever possible to prevent hackers from breaking into your online accounts, even if they have your password. By sending a code to your phone — either by text message or an app — it adds a second layer of protection for your online accounts.
But Instacart cannot shift all the blame onto its users. Instacart still does not support two-factor authentication, which — if customers had enabled — would have prevented the account hacks to begin with. When we checked, there was no option to enable two-factor on an Instacart account, and no mention anywhere on Instacart’s site that it supports the security feature.
Data published by Google last year shows even the most basic two-factor can prevent the vast majority of automated credential stuffing attacks.
We asked the company if it plans to roll out two-factor to its users. When reached, Instacart spokesperson Lyndsey Grubbs would not comment on the record beyond pointing to Instacart’s already-published statement.
Instacart claims security is a “top priority,” and that it has a “dedicated security team, as well as multiple layers of security measures, focused on protecting the integrity of all customer accounts and data.”
But without giving users basic security features like two-factor, Instacart users can barely protect their own accounts, let alone expect Instacart to do it for them.
In the blink of an eye, millennials, moms and grandparents alike have abandoned the decades-old practice of wandering dusty grocery aisles for the convenient and novel use of online grocery. While Instacart, Amazon Fresh and others have been offering an alternative to brick-and-mortar grocery for years, it is the pandemic that has classified them as essential businesses and more than ever afforded them a clear competitive advantage.
But these past couple months have seen not only drastic changes in consumer behavior, but also fundamental shifts in the business models adopted by grocers worldwide. These shifts are not temporary — indeed, they are here to stay, corona-catalyzed and permanent.
Fulfillment innovation can drive efficiency and cost savings
For the consumer, online grocery generally starts and ends the same way: They place their order on an app or website, and hours later it shows up at their door. But the ways those orders are being fulfilled run the gamut.
The most widely known approach comes from Instacart, which relies on hundreds of thousands of human shoppers fulfilling customers’ online grocery orders by shopping side-by-side with regular brick-and-mortar customers. The model clearly works for Instacart, which is valued at nearly $14 billion after its latest raise.
However, this model is far from ideal. Even pre-COVID, shoppers were known to crowd out regular customers, not to mention introduce high delivery costs and the element of human error to the fulfillment process.
One obvious solution has become the central fulfillment center, or CFC. CFCs are large, standalone warehouses — often serving distinct geographies — that can supply both brick-and-mortar stores and online grocery deliveries. As order volumes rise and consumers demand faster and faster delivery times, innovation has already been infused into the CFC model.
Some grocers, notably Kroger, believe that introducing robotic automation into CFCs via solutions such as Ocado can create economies of scale for fulfillment. These CFCs deploy fulfillment robots, controlled by air-traffic control tech, that run along a grid system and move goods via categorized crates. Kroger is continuing its investment in the model, recently announcing three new Ocado-automated CFCs in the West, Pacific Northwest and Great Lakes regions of the United States. The smallest location is over 150,000 square feet.
While Kroger remains uniquely attached to the CFC model, Albertsons/Safeway, Walmart and many others prefer the microfulfillment center (MFC). MFCs, typically far smaller in size (think ~10,000 square feet), are automated warehouses carved out of the back of existing stores that drive faster fulfillment times in a smaller geographic area, allowing chain stores to use their numerous geographic locations to act as effective fulfillment/delivery hubs for e-grocery coverage.
Gig economy companies like to tout the flexibility and freedom they offer workers, but for the people finding work through companies like Instacart, Uber, DoorDash and Lyft, the economic and physical risks can outweigh the rewards.
Contractors who are now considered front-line providers of essential services for their wealthier customers in the age of social distancing brought on by the COVID-19 epidemic have struggled with lack of benefits, lost tips and wages, and a dearth of back-end support.
Dumpling, a startup in the food delivery space, was born to challenge the status quo in the gig economy by giving more ownership to the workers that power it. Dumpling connects shoppers to all the resources they need to migrate off the Instacart platform and start their own personal-shopping business.
Dumpling is launching with a focus on food delivery, as the pandemic has transformed the perk into an essential service for home-bound citizens. So far, it has enabled more than 2,000 shoppers in all 50 states to become their own personal Instacarts.
Dumpling co-founders Joel Shapiro and Nate D’Anna met in college and were looking for a way to work together. Shapiro and D’Anna ditched their corporate jobs at National Instruments and Cisco, respectively, to create Dumpling.
“[We thought] what if we actually create a company to solve their problems and not just the one percenters hanging out on the coast?” D’Anna said
Before we get into how Dumpling works, let’s discuss the obvious: Not every gig worker wants to be a business owner, which is exactly the opposite of what the startup needs to succeed. Despite the gig economy’s proliferation over the last decade, only 3% of adults said they performed gig work as a primary source of income; fewer than 1 in 10 adults were full-time gig workers, according to the Federal Reserve’s latest report.
Instead, a larger issue within the gig economy is classification of workers, leading to the rise of unions and co-ops for more shopper support.
Dumpling is another example of what the future would look like.
Shapiro admits that not every gig worker will need Dumpling. But instead of pitching Dumpling solely as a place for gig workers to start their own businesses, he thinks the startup can bring more money into workers’ hands.
“With multiple years of all these multi-demand apps, we know that workers are going to be exploited and screwed at some point and their pay is going to be drastically reduced,” he said. “We’re trying to make them ultimately have control so the rug can’t be pulled out underneath them.”
How it works
To start, Dumpling helps users create their own LLCs. Then it offers a slew of different products, including a Dumpling credit card to help shoppers buy groceries before customer payment, an app to help centralize deliveries and customer communication, and a forum for mentorship and worker support.
Shoppers primarily acquire customers through marketing and self-promotion when dropping off orders for other delivery apps, according to Dumpling. Some customers have recently started going directly to Dumpling to look for shoppers to order from in the area.
Dumpling gives 100% of tips to business owners. Unlike Instacart, Dumpling allows business owners to pick what tip options show up for their customers and set a personal default tip minimum. There is also space for customers to leave reviews.
The company makes money in a few different ways. It charges shoppers a one-time $10 fee to set up, which includes a Dumpling credit card, a listing on the website and a shopper search tool. The platform then charges shoppers either a $39 monthly fee or a $5 per-transaction fee for each time they book a job. On the other end, customers pay 5% on top of orders for payment processing.
Dumpling claims it can help shoppers make three times as much money as Instacart shoppers. But let’s do the math.
While the monthly fee or $5 per-transaction fee could eat into tips, Dumpling claims that users make $33 in average earnings per order, which is three times as much as Instacart users. Instacart estimates that full-service shopper pay ranges from $7 to $10 per order, according to a NerdWallet article.
Because shoppers can set their own rates, customers could simply flock to the cheapest option of the day, thus driving competition between shoppers to keep rates low (and make less money).
There are a few reasons why Dumpling doesn’t think it’s going to be a race between shoppers.
First, Dumpling customers are largely repeat clients who crave a personalized shopper to help them out. This repeatability gives shoppers some flexibility and stability, income-wise. Shoppers can schedule weekly grocery delivery times so they can manage the orders, instead of trying to drive an Uber and maximize their time on the road.
Second, Shapiro hopes that pricing isn’t the only reason a customer goes to a shopper. He noted that reviews and ratings are big sells, as well as areas of focus like vegan, local farmers’ markets, dietary restrictions and special diets. Imagine if you’re newly joining Keto and you can get a Keto-savvy shopper to pick up ingredients for you, in other words.
In the past three months, the platform has brought in tens of thousands of reviews on shoppers. The average rating of a Dumpling shopper is 4.9 to 5 stars.
It can’t fix what is broken
Even though Dumpling wants to bring ownership to the gig economy, it is experimenting with ways to support its growing network. One way would be getting bulk discounts on health insurance and benefits. Soon, Dumpling is starting a fraud protection benefit for any shopper on its platform.
While Dumpling can’t fix the gig economy, it can drastically change the way that the people within it work and own their career. Especially those few who rely on the gig economy as their sole job.
Matthew Telles, one of Instacart’s first shoppers in Chicago, fondly remembers the grocery delivery platform’s early days. He would average 20% tips on all orders, rarely drove more than five miles for a delivery and was even invited to staff engineering calls to give feedback on the platform.
Then Amazon bought Whole Foods, a deal which Telles thinks pressured Instacart to get the biggest market reach as quickly as possible (which included saving money). He received orders from all over the state. Instacart threatened to take away tips. The engineering call invites stopped.
Five years later, Telles remains on the app to advocate for shoppers. His efforts have contributed to millions in settlement payments from Instacart. The company, which has risen to a level of prominence during the pandemic, recently turned its first profit. Its shopper network continues to complain of lack of support from the platform, and has organized multiple times for better wages, changing default tip minimums and personal protective equipment.
“Fighting Instacart is my hobby now,” Telles said. “Dumpling is now my career.”
Dumpling did not disclose profitability, but said order volume has spiked by 20x. The unprecedented growth has led Dumpling to recently announce it raised $6.5 million in Series A funding, led by Forerunner Ventures. Participating investors include Floodgate and FUEL Capital. The company’s total known venture funding to date is $10 million.
As for Telles, he loves the flexibility he can have to pick up a gratitude meal for the most consistent customers along with their groceries. He’s cut his hours in half and doubled his income by going full time on the app. And, to his delight, he’s been invited on calls with Dumpling’s co-founders themselves, similar to the early days of Instacart.
Fringe is a new company pitching employers on a service offering lifestyle benefits for their employees in addition to, or instead of, more traditional benefits packages.
“We didn’t think it made sense that employees need to be sick, disabled, dead or 65+ to benefit from their benefits,” wrote Fringe chief executive Jordan Peace, in an email.
The Richmond, Virginia-based company was founded by five college friends from Virginia Tech rounded up by Peace and Jason Murray, who serves as the company’s head of Strategy and Finance. The two men previously owned a financial planning firm called Greenhouse Money, which worked with small businesses to set up benefits packages and retirement accounts.
During that time, the two men had a revelation… employees at these small and medium-sized businesses didn’t just want retirement or healthcare benefits, they wanted perks that were more applicable to their day-to-day lives. Because Murray and Peace couldn’t find a company that offered a flexible benefits package on things like Netflix, Amazon or Hulu subscriptions, Uber rides, Grubhub orders or Instacart deliveries, they built one themselves.
As they grew their business they brought in college friends, including Isaiah Goodall as the vice president of partnerships, Chris Luhrman as the vice president of operations and Andrew Dunlap as the head of product.
Peace and Murray first launched the business in 2018 and now count over 100 delivery services, exercise apps, cleaning services and other apps of convenience among their offerings.
For their part, employers pay $5 per employee covered per month and set up a monthly stipend (that may or may not be subtracted from a total benefits package) of somewhere between $50 and $200 that employees can spend on subscription services.
It’s a pitch to employers that Peace says is especially compelling as office culture changes in the wake of massive office closures and work-from-home orders from major U.S. companies as a response to the COVID-19 epidemic.
“In-office perks and even most ‘off-site’ perks (gyms, massage spas, etc.) are all null and void,” wrote Peace. “Even post-COVID, it’s highly likely that many of these aspects of office culture will bear less significance with many CEOs vowing to allow ‘WFH forever.’ This means companies need a way to package their office culture and ship them home. Fringe is perfectly positioned for this and determined to be the first name that comes to mind to provide a solution.”
Peace sees this as the next step in the evolution of benefits offerings for employees. He traces its legacy to the development of private health insurance and 401k retirement plans. “After another 40 years lifestyle benefits are the newest breakthrough — and like its predecessors, will be almost universally adopted in the next 5 years,” Peace wrote.
Many gig-based business models help customers take advantage of workers. Let’s stop giving tech companies a free ride.
Reddit co-founder Alexis Ohanian is leaving Initialized Capital, the investment firm he co-founded in 2011 with Garry Tan, as first reported Axios and confirmed by TechCrunch. The move comes weeks after Ohanian publicly stepped down from the Reddit board of directors, with Y Combinator president Michael Seibel taking his spot.
Ohanian launched Initialized Capital back in 2011 with a $7 million investment vehicle. Since, the San Francisco-based firm has grown immensely and made early stage bets in companies like Flexport, Instacart, Cruise, Coinbase, and Codecademy. Most recently, it closed a $225 million investment vehicle in 2018, its fourth fund to date.
Ohanian is leaving Initialized Capital to work on “a new project that will support a generation of founders in tech and beyond,” Kim-Mai Cutler, a partner at Initialized and former long-time writer for TechCrunch, said in a statement to TechCrunch. According to the Axios story, Ohanian is leaving Initialized to work more closely on pre-seed efforts. On its website, Initialized details that many teams it talks to already have launched products and have a plan to earn revenue.
“We understand that products and business models evolve, but it’s good to see in a very concrete way how teams are able to ship products and work together,” the firm wrote. If Ohanian raises a pre-seed fund, it will be interesting to see how he changes this methodology.
Ohanian did not directly respond to a request for comment.
It’s worth mentioning that partner departures in venture capital are rarely crystal clear break ups. As Initialized confirmed, Ohanian will remain involved in the firms existing investment vehicles and portfolio companies due to legal ties. It is unclear if Ohanian will remain on any board seats he is on. Ro, a company in which Ohanian has a board seat on, did not immediately respond to a request for comment.
One big question is whether Ohanian’s departure would trigger a key man clause in the firm’s limited partnership agreement. “Key man” clauses, which are typical in limited partner agreements, require that certain designated people (typically the main partners in a firm) must stay continuously employed at a firm and be active investors. When a key man clause is triggered, limited partners often have a variety of tools ranging from control over new hiring to outright ending the investing at a fund in order to protect their investment in a fund.
In this case, it would be surprising if Alexis Ohanian wasn’t a key man since he is one of the leading general partners and a founder of the firm.
Ohanian stepped away from being involved in the day to day of Reddit in 2018 and recently left his board seat at the company following protests against police brutality. The co-founder urged Reddit to fill the seat with a Black board member. Reddit ultimately selected Y Combinator CEO Michael Seibel to fill the position.
Tan, the other founding partner of Initialized, helped YC grow in its early days and helped build the famed accelerator’s internal software system and late-stage funding program. “[Tan] will continue to lead Initialized Capital into the future, finding and funding great entrepreneurs as he has done for nearly a decade,” Cutler said in a statement to TechCrunch. “Garry and Alexis remain committed to each other as long-standing friends and business partners. The firm fully supports Alexis in his future pursuits.”
Initialized Capital currently has $500 million assets under management and has backed over 200 companies to date.
Additional reporting by Danny Crichton.
The unicorns are still at it, Vision Fund 2 or no Vision Fund 2.
This week, Instacart announced that it has raised fresh capital at a valuation north of $13 billion. And, on the tail of that news item, DoorDash is looking to add more cash at a valuation that could stretch to a pre-money valuation that exceeds $15 billion, according to The Wall Street Journal.
It’s an interesting state of affairs, as the prices that super-late-stage unicorns are able to charge private investors push their valuations so high that only the largest and richest companies might be able to afford buying them. The result could be a closed M&A window that leaves only an exit hatch marked “IPO.”
Amazon, for example, paid around $13.7 billion for Whole Foods, a chain of U.S. grocery stores that the technology giant also uses as distribution points for parcel delivery. Instacart, the grocery delivery service, is now worth $13.7 billion as well.
As the private company’s final investors won’t want to merely break even on their investment, Instacart
Facing unprecedented growth, Instacart has secured new funding to keep up with demand. The San Francisco company announced today that it has raised $225 million in a round led by DST Global and General Catalyst. Existing investor D1 Capital Partners participated in the round, which brings Instacart’s valuation to $13.7 billion.
Instacart will use the cash to invest in shoppers and partners, build out its advertising and enterprise business, and focus on customer experience, per Apoorva Mehta, founder and CEO of Instacart in a statement. The company will also invest in technical and operational infrastructure to help customers get their groceries on time, with orders up 500% year over year.
The round comes during a time when racial tensions are heightened following the police killing of George Floyd, an unarmed black man. In the days after his death, many tech companies have spoken out about the tragedy. Last week, Instacart said it would invest $1 million to support its internal teams and “help support actionable change,” Mehta tweeted. Of that $1 million, $500,000 will go to compensate in-store shoppers and teams, with the rest going to nonprofit organizations like the Equal Justice Initiative and others.
That $10 million figure referenced in Instacart shopper-activist Vanessa Bain’s tweet above is the amount of money Instacart has spent on a ballot measure to keep shoppers classified as independent contractors.
Instacart, which heavily relies on independent contractors to shop and deliver groceries to customers, announced plans to grow its shopper network by nearly 250%. Its services are available at 30,000 stores across the U.S. and Canada.
The Y Combinator graduate claims it is accessible to 85% of households in the United States and more than 70% of households in Canada.
During the COVID-19 pandemic, Instacart became an essential service with essential workers putting their lives on the line to get people their groceries. Millions of families have turned to the platform to get groceries without the health risk of going to a grocery store, all while the company is hiring hundreds and thousands of shoppers to address this exact demand. The growth in sales has led Instacart to turn its first profit, reports The Information. But amid this hyperventilating growth, many Instacart shoppers are disgruntled with Instacart and the way it operates.
Shoppers, however, have been frustrated with Instacart for years — at least since 2016, when independent contractors boycotted the app over the elimination of tips. Since then, full-service shoppers, who are classified as independent contractors, have consistently spoken out against the company. In October, Instacart shoppers organized around better wages and changing the default tip setting to at least 10%. Amid the pandemic, shoppers went on strike nationwide to demand better safety protections, pay and an extended sick pay policy. To date, Instacart has made some changes, but has left much to be desired.
Instacart announced today that it is changing its tip policy to protect its growing shopper network from tip-baiting. Tip-baiting, a grotesque tactic, is when customers bait shoppers with a big tip and then reduce the tip to zero after they receive their groceries. It emerged as Instacart’s demand skyrocketed due to the pandemic and people being unable to go to the grocery store.
Instacart continues to say that tip-baiting is rare and that less than 0.5% of orders have tips removed after delivery. It says it has doubled for shoppers since the COVID-19 pandemic began. However, the policy change shows progress on how the company treats its shopper network, who have been essential as shelter-in-place orders keep people and the immunocompromised from going to grocery stores.
Instacart is now requiring customers who remove tips after delivery to leave feedback, and claims it will deactivate any customer who consistently removes tips. The company also said that it is reducing the tip-adjustment window (the time period for how long a customer can change the tip) from three days to 24 hours.
The smaller window, ideally, would limit the amount of time that a shopper needs to wait for a final tip.
Along with the tip changes, Instacart is updating its Instant cashout feature, first launched in 2019. Shoppers will now be able to cash out tips 24 hours after they complete a delivery for more immediate access to money. The company is also waiving all cashout fees for shoppers using Visa cards until the end of July 2020. Instant Cashout is also expanding to Canada.
The news comes as Instacart’s shopper network continues to grow more disgruntled. For context, the company has announced plans to grow its shopper network by nearly 250% due to demand from the pandemic and shelter-in-place orders. Some shoppers say that aggressive hiring adds fuel to the fire and doesn’t address core problems with Instacart, like bugs in the app, tip-baiting or lack of safety kit distribution.
In March, Instacart shoppers went on strike to demand better treatment, including asking if Instacart could change the default tip percentage back to 10%. The policy change today does not include this change. The default tip percentage is 5%.
Gig workers are essential workers during this time. It is long overdue for Instacart to start making policy changes that treat them like it.
When Larry Liu moved to the U.S. in 2003, one of the first challenges he experienced was the lack of Chinese ingredients available in local groceries. A native of Hubei, a Chinese province famous for its freshwater fish and lotus-inspired dishes, Liu got by with a limited supply found at local Asian groceries in the Bay Area.
His yearning for home food eventually prompted him to quit a stable financial management role at microcontroller company Atmel and go on to launch Weee!, an online market selling Asian produce, snacks and skincare products.
Like other players in grocery e-commerce, the five-year-old startup has seen exponential growth since the coronavirus outbreak as millions are confined to cooking and eating at home. Nearly a quarter of Americans purchased groceries online to avoid offline shopping during the pandemic, according to Statista data. Online grocery giants Instacart and Walmart Grocery boomed, both hitting record downloads.
In a Zoom call with TechCrunch, Liu, who’s now chief executive of Weee!, said that COVID-19 played a “very important role” in his company’s recent growth, and paved its way to profitability.
“It happened a lot faster than we expected, but we were growing rapidly with even more ambitious plans for expansion prior to COVID-19,” he said. “People are buying more because restaurants are closed. Many are first-time users of grocery delivery.”
The startup’s revenue is up 700% year-over-year and is estimated to generate an annual revenue in the lower hundreds of millions of dollars.
Online grocery, the WeChat way
The global spread of COVID-19 and resulting orders to shelter in place have hit retailers hard.
But while the present is largely bleak, preparing for the future has retailers adopting technologies faster than ever. Their resilience and innovation means retail will look and fee different when the world reopens.
We gathered four views on the future of retail from the TechCrunch team:
- Natasha Mascarenhas says retailers will need to find new ways to sell aspirational products — and what was once cringe-worthy might now be considered innovative.
- Devin Coldewey sees businesses adopting a slew of creative digital services to prepare for the future and empower them without Amazon’s platform.
- Greg Kumparak thinks the delivery and curbside pickup trends will move from pandemic-essentials to everyday occurrences. He thinks that retailers will need to find new ways to appeal to consumers in a “shopping-by-proxy” world.
- Lucas Matney views a revitalized interest in technology around the checkout process, as retailers look for ways to make the purchasing experience more seamless (and less high-touch).
Alexa, how do I look?
Extra Crunch Live is on fire, and the hits keep rolling! Next week, we’ll sit down with Initialized’s Alexis Ohanian and Garry Tan. You can catch the chat live on Tuesday, June 2 at 2 p.m. EDT/11 a.m. PDT.
Alexis Ohanian is the founder and former CEO of Reddit, and his investment portfolio includes Flexport, Ro and Papa. Garry Tan has invested in Instacart and Coinbase, to name a couple, and also has a background in entrepreneurship, having founded Posterous and Posthaven. Previously, Tan was a partner at Y Combinator for four years.
For those of you who aren’t caught up, Extra Crunch Live is a virtual speaker series that connects Extra Crunch members with the brightest minds in tech and VC where the audience has a chance to ask direct questions.
We’ll talk to Ohanian and Tan about how they’re advising their portfolio companies through the pandemic. Which startups should hunker and conserve cash, and which ones should sprint and advance? Is there a middle ground, and if so, what does it look like?
We’ll also discuss their outlook on economic recovery and opportunities that allow entrepreneurs to capitalize on the speed at which the world is changing. Which sectors are piquing their interest? Is Initialized going to invest aggressively in this ecosystem or be more risk-averse than usual? What’s it like doing deals over Zoom or Google Meet?
Extra Crunch members are encouraged to drop their questions in the Q&A chat for Ohanian and Tan. We’ll get to as many of them as possible, so please click here to join.
You can find the full details for our discussion below the break.
In the coming weeks, we’ll be chatting with GGV’s Hans Tung, Eventbrite’s Julia Hartz, Superhuman’s Rahul Vohra and Plaid’s Zach Perret. You can check out the full schedule here. Members also have access to the complete backlog of Extra Crunch Live episodes, which include chats with Kirsten Green, Roelof Botha, Mark Cuban and Aileen Lee.
See you there!
Enterprise barcode scanner company Scandit has closed an $80 million Series C round, led by Silicon Valley VC firm G2VP. Atomico, GV, Kreos, NGP Capital, Salesforce Ventures and Swisscom Ventures also participated in the round — which brings its total raised to date to $123M.
The Zurich-based firm offers a platform that combines computer vision and machine learning tech with barcode scanning, text recognition (OCR), object recognition and augmented reality which is designed for any camera-equipped smart device — from smartphones to drones, wearables (e.g. AR glasses for warehouse workers) and even robots.
Use-cases include mobile apps or websites for mobile shopping; self checkout; inventory management; proof of delivery; asset tracking and maintenance — including in healthcare where its tech can be used to power the scanning of patient IDs, samples, medication and supplies.
It bills its software as “unmatched” in terms of speed and accuracy, as well as the ability to scan in bad light; at any angle; and with damaged labels. Target industries include retail, healthcare, industrial/manufacturing, travel, transport & logistics and more.
The latest funding injection follows a $30M Series B round back in 2018. Since then Scandit says it’s tripled recurring revenues, more than doubling the number of blue-chip enterprise customers, and doubling the size of its global team.
Global customers for its tech include the likes of 7-Eleven, Alaska Airlines, Carrefour, DPD, FedEx, Instacart, Johns Hopkins Hospital, La Poste, Levi Strauss & Co, Mount Sinai Hospital and Toyota — with the company touting “tens of billions of scans” per year on 100+ million active devices at this stage of its business.
It says the new funding will go on further pressing on the gas to grow in new markets, including APAC and Latin America, as well as building out its footprint and ops in North America and Europe. Also on the slate: Funding more R&D to devise new ways for enterprises to transform their core business processes using computer vision and AR.
The need for social distancing during the coronavirus pandemic has also accelerated demand for mobile computer vision on personal smart devices, according to Scandit, which says customers are looking for ways to enable more contactless interactions.
Another demand spike it’s seeing is coming from the pandemic-related boom in ‘Click & Collect’ retail and “millions” of extra home deliveries — something its tech is well positioned to cater to because its scanning apps support BYOD (bring your own device), rather than requiring proprietary hardware.
“COVID-19 has shone a spotlight on the need for rapid digital transformation in these uncertain times, and the need to blend the physical and digital plays a crucial role,” said CEO Samuel Mueller in a statement. “Our new funding makes it possible for us to help even more enterprises to quickly adapt to the new demand for ‘contactless business’, and be better positioned to succeed, whatever the new normal is.”
Also commenting on the funding in a supporting statement, Ben Kortlang, general partner at G2VP, added: “Scandit’s platform puts an enterprise-grade scanning solution in the pocket of every employee and customer without requiring legacy hardware. This bridge between the physical and digital worlds will be increasingly critical as the world accelerates its shift to online purchasing and delivery, distributed supply chains and cashierless retail.”
Gerald Timothee walks miles everyday to deliver groceries, taking every precaution against the coronavirus. He rarely sees his customers anymore.
As business restrictions are lifted, employees have moved from advocating workplace safeguards to making sure the measures aren’t removed too soon.
The last two decades have ushered in significant change and transformation. I believe the 2020s will be dispositive in redefining the pillars of our economy, and COVID-19 magnifies this greatly. As of this writing there are 3,611,394 confirmed cases, and the U.S. accounts for 33% of those. We are now dealing with a 4.8% Q1 GDP contraction and expectations for Q2’s shrinking runs into the 25% range, more than 30 million unemployed and a $7 trillion federal intervention — in a span of six weeks.
Eric Schmidt recently predicted that the coronavirus pandemic is strengthening big tech. It is hard to disagree with him; it almost feels obvious. Big tech and other digital companies are net beneficiaries of new habits and behaviors. Some of this shift will be permanent, and well-capitalized tech companies are likely to expand their power by grabbing talent and buying companies for their IP — then dissolving them.
With power comes political backlash and public wariness. One flavor of that counter pressure is already in full effect. Sen. Elizabeth Warren and Rep. Alexandria Ocasio-Cortez have proposed new legislation that seeks to curtail acquisition activity via the Pandemic Anti-Monopoly Act. I’ll reserve judgment on their effort, but the theme is familiar: the strong get stronger and the weak get weaker, which further widens gaps and calcifies disparity.
The COVID-19 shock is highlighting a chasm that has evolved over decades. The digital divide, lack of capital access, sporadic paths to education and microscopic levels of wealth accumulation in communities of color and the implicit/explicit bias against non-coastal “elites” are some contributing factors.
During the 2008 crisis, the combined value of the five biggest companies — ExxonMobil, General Electric, Microsoft, AT&T and Procter & Gamble — was $1.6 trillion. Microsoft is worth almost that today — all by itself. No need to talk about FAANG, because since the pandemic’s economic halt, Peloton downloads went up five-fold in a month, Zoom grew to 200 million users from 10 million in December and Instacart users grew six times in that period.
Roelof Botha of Sequoia Capital was recently quoted as saying, “Like the killing off of the dinosaurs, this reorders who gets to survive in the new era. It is the shock that accelerates the future that Silicon Valley has been building.” It is hard to argue with his views.
To be clear, I am a beneficiary of and a big believer in technology. Throughout my career I have managed it, invested in it and made policy on it. For example, one of the multi-billion-dollar programs I oversaw, the Small Business Innovation Research (SBIR) program, has invested more than $50 billion in tens of thousands of startups, which have collectively issued 70,000 patents and raised hundreds of billions of capital — and 700 of them have gone public, including tech titans such as Qualcomm, Biogen and Symantec.
My point: I think about technology a lot, and, lately, about its repercussions. There is a massive shift afoot where more power and influence will be consolidated by these remarkable companies and their technology. Besides the economic consequences of the strong crushing the weak, there are serious ethical issues to consider as a society. Chamath Palihapitiya has been pretty vocal about the moral hazard of what is essentially a massive transfer of wealth and income. On one side you have mismanaged and/or myopic corporations and on the other, the counterparty is the American people and the money we need to print to bankroll the lifeline. I am not talking about Main Street here, by the way.
It is not hard to imagine a world in which tech alone reigns supreme. The ethical dilemmas of this are vast. A recent documentary, “Do You Trust this Computer,” put a spotlight on a frantic Elon Musk ringing the alarm bell on machines’ potential to destroy humanity. Stephen Hawking argued that while artificial intelligence could provide society with outsized benefits, it also has the potential to spiral out of control and end the human race. Bill Gates has been less fatalistic, but is also in the camp of those concerned with synthetic intelligence. In an interesting parallel, Bill has for years been very vocal on the risks pandemics pose and our lack of preparedness for them — indeed.
These three men have had a big impact on the world with and because of technology. Their deep concern is rooted in the fact that once the genie is out of the bottle, it will make and grant wishes to itself without regard to humanity. But, is this doomsday thinking? I don’t know. What I do know is that I am not alone thinking about this. With COVID-19 as a backdrop, many people are.
Algorithmic sophistication and computer horsepower continue to evolve by leaps and bounds, and serious capital continues to be invested on these fronts. The number of transistors per chip has increased from thousands in the 1950s to over four billion today. A one-atom transistor is the physical boundary of Moore’s Law. Increasing the amount of information conveyed per unit, say with quantum computing, is the most realistic possibility of extending Moore’s Law, and with it the march toward intelligent machines and a tech first world. The march has been accelerated, even if peripherally, by the pandemic.
While the promise of technology-driven progress is massive, there are some serious societal costs to exponential discovery and unleashed capability acceleration. Dartmouth’s Dr. James Moor, a notable thinker at the intersection of ethics and technology, believes that the use and development of technologies are most important when technologies have transformative effects on societies. He stipulates that as the impact of technology grows, the volume and complexity of ethical issues surrounding it increases. This is not only because more people are touched by these innovations, they are. It is because transformative technology increases pathways of action that outstrip governance systems and ethical constructs to tame it.
So what? The twists and turns of technology application lead to consequences, sometimes unknowable — and for that reason we should be increasingly vigilant. Did Zuckerberg ever imagine that his invention would have been so central to the outcome of the 2016 election? Unknowable consequences, exhibit one. Interconnected systems touch every aspect of society, from digital terrorism to bioengineering to brain hacking and neural cryonics to swarm warfare, digital assets, intelligent weapons, trillions of IoT connected devices — the list goes on.
As a society, we should be open to innovation and the benefits it ushers in. At the same time, we must also remain committed to sustainable tech development and a deployment mechanism that does not fail to shine a light on human dignity, economic inequality and broad inclusiveness. These seem like esoteric issues, but they are not, and they are being put to the test by COVID-19.
A fresh example of this thematic happened recently: Tim Bray, a VP and engineer at Amazon’s AWS, resigned because of the company’s treatment of employees, and was quoted as saying, in part, “…Amazon treats the humans in the warehouses as fungible units of pick-and-pack potential. Only that’s not just Amazon, it’s how 21st-century capitalism is done… If we don’t like certain things Amazon is doing, we need to put legal guardrails in place to stop those things.”
Eliminating human agency has been at the core of innovation during the last four decades. Less human intervention in a call center, a hedge fund trading desk, a factory, a checkout line or a motor vehicle seems fine — but in cases of greater importance, humans should remain more active or we will, at best, make ourselves irrelevant. In the past, labor displacement has been temporary, but it seems to me that the next wave is likely to be different in terms of the permanence of labor allocation, and big tech getting bigger will likely hasten this.
Innovative capability has been at the center of progress and living standard improvements since we harnessed fire. The world’s technology portfolio is an exciting one, but potentially terrifying to those who could be more hampered by it, such as the front-line workers on Main Street shouldering the health and economic brunt of the coronavirus.
Years ago, Peter Drucker pointed out that technology has transformed from servant to master throughout our history. Regarding the assembly line, he noted that “it does not use the strengths of the human being but, instead, subordinated human strengths to the requirements of the machine.”
In my opinion, Drucker’s quote is at the very core of our point in time, happening on a scale and speed that is hard to fathom and changing the digital divide amongst us into a digital canyon between us and technology.
The global pandemic has tested the bounds of businesses across the world and transformed the way many of us live our lives. For those among us who are unable to leave our homes at all as COVID-19 virus rages, online retail and food services have been a kind of lifeline.
But as contact-free delivery becomes the norm, it can be easy to forgot all the people working to provide those services at risk to their health. And more often than not, employees are working for low wages or tips.
A number of protests have been organized at companies like Amazon and Instagram in the intervening weeks and months, but a wide-scale, cross-company event hasn’t really surfaced. That could change on May 1, as employees mark the longstanding tradition of International Workers’ Day with a May Day general strike.
Material for the event has been circulating online, rebadged “Essential Workers’ Day,” as a nod to the exemptions to stay at home orders for retail and food delivery, among others. The event is framed as a combination strike and boycott, targeted at Amazon/Whole Foods, Instacart and Target/Shipt (as well as Walmart and FedEx, according to various sources).
Specific demands differ from employer to employer, but workers have broadly asked for essential health protections, sick leave and hazard pay as the pandemic has continued to wear on and profits have spiked for many providers.
Vice spoke to Christian Smalls, one of the organizers, the Staten Island Amazon employee who was fired after organizing a walkout at one of the company’s fulfillment centers. “We formed an alliance between a bunch of different companies because we all have one common goal which is to save the lives of workers and communities,” he told the site. “Right now isn’t the time to open up the economy. Amazon is a breeding ground [for COVID] which is spreading right now through multiple facilities.”
Amazon workers have been particularly vocal about the retail giant’s response to the pandemic. In addition to Smalls, two other employees who were publicly critical of the company were fired by Amazon — though the company denied the direct link. Instacart employees have also organized boycotts and strikes, including one in late March.
“We remain singularly focused on the health and safety of the Instacart community. Our team has been diligently working to offer new policies, guidelines, product features, resources, increased bonuses, and personal protective equipment to ensure the health and safety of shoppers during this critical time,” the company said in a statement. “We welcome all feedback from shoppers and we will continue to enhance their experience to ensure this important community is supported.”
Other companies have previously issued similar statements regarding employment during the crisis. We’ve reached out to them for additional comment on the planned protests.
Update: An Amazon spokesperson offered TechCrunch the following statement,
While we respect people’s right to express themselves, we object to the irresponsible actions of labor groups in spreading misinformation and making false claims about Amazon during this unprecedented health and economic crisis. The statements made are not supported by facts or representative of the majority of the 500,000 Amazon operations employees in the U.S. who are showing up to work to support their communities. What’s true is that masks, temperature checks, hand sanitizer, increased time off, increased pay, and more are standard across our Amazon and Whole Food Market networks already. Our employees are doing incredible work for their communities every day, and we have invested heavily in their health and safety through increased safety measures and the procurement of millions of safety supplies and have invested nearly $700 million in increased pay. Working globally with our teams and third parties we have gone to extreme measures to understand and address this pandemic with more than 150 process changes to-date. We spend every day focused on what else Amazon can do to keep our people and communities safe and healthy.
The protests at Amazon and elsewhere over working conditions and low pay have been small, but they aren’t inconsequential.
Kara Carmichael has been an Instacart shopper for years in Orlando, Fla. It’s how she’s been able to support her family, she told TechCrunch. But she says she has noticed an increase in third-party bot activity that has made shopping “nearly impossible.”
Despite the high demand for Instacart amid the COVID-19 pandemic, shoppers like Carmichael are facing difficulties claiming orders within the shopper app. This is the result of what appears to be some sophisticated work by third-party apps like Ninja Hours, Sushopper and others.
“They grab the batches within a blink of an eye,” Carmichael said. “I can barely see the amounts offered. Sometimes I may even just receive a notification because the batch has been taken before it was even registered in my app.”
Ninja Hours appeared on the scene about a year ago in the Little Havana community in Miami, according to Logan B., an Instacart shopper with experience using Ninja Hours. Shoppers could pay Ninja Hours about $25 to $35 a week to get access to hours for the following week and in exchange, Ninja Hours would take over the shopper’s app to claim hours on their behalf. This was during a time when Instacart required shoppers to claim hours rather than on-demand orders.
Ninja Hours also provided account activations for immigrant workers without proper documentation. For $200, according to Logan, undocumented immigrants could pay Ninja Hours to create an account for them so they could shop.
Logan says Instacart eventually caught on to Ninja Hours, which forced the service to shut down. Ninja Hours then became Hours For You, which emerged in the fall, Logan says. Hours For You then folded into Sushopper earlier this year.
“The site would go offline for a week and then they would send you a text message,” he said. “It was always written in Spanish — really targeting the Latino community.”
Other shoppers didn’t seem to notice this was going on, Logan says, because Sushopper would claim the orders before they would even appear on the apps. But now that Sushopper has shut down, there’s a new service — one that is not quite as fast.
“There is definitely still a service out here because I’m not getting anything at all,” Logan, who has since stopped paying for early access to orders, said. “There’s no way anyone would be able to grab it that fast.”
What’s happening is that shoppers can see the orders come in, but then they pretty much immediately disappear. Below, you can see a gif of how the moment batches become available, one order immediately disappears.
With this new service, which he doesn’t know the name of, the messages are coming in Portuguese. That leads him to believe it’s run by a different group of people.
“It’s so mainstream now and it seems just about everywhere is having a problem,” Logan said.
Instacart has acknowledged this is a practice that goes on but says that this is not a breach of its platform.
“The safety and security of the entire Instacart community is our top priority,” an Instacart spokesperson told TechCrunch. “We have several robust security measures in place to ensure the security of the Instacart platform. Selling or purchasing batches is not an authorized use of the Instacart platform and is a violation of our Terms of Service. Anyone found to be engaged in any type of inappropriate or fraudulent use of the Instacart platform, including selling or purchasing batches or utilizing any of these types of services, will have their accounts immediately deactivated. We advise shoppers not to engage with any individual or company that claims to provide priority access to batches on the platform, particularly those that request sensitive information such as Instacart usernames, passwords, and/or credit card information.”
Despite Instacart’s efforts, it’s gotten so bad that Carmichael ends up sitting in her car for hours waiting for a batch she can try to snag before the bots.
“My thumbs are sore and eyes are strained,” she said. “I’ve only managed to grab four orders. My livelihood is literally being snatched out from beneath me.”
She and others have reached out to Instacart to report the issue, Carmichael said. But in her experience and the experience of those she knows, Instacart has not responded. Some shoppers, however, are able to get through to Instacart support about this issue. As you can see below, Instacart acknowledges an issue and told one shopper it will “be fixed as soon as possible.”
Before the bot activity ramped up in Orlando, Carmichael was receiving about 20 orders a week. During the week of March 16-22, for example, Carmichael completed 26 batches, according to documents reviewed by TechCrunch. Last week she was only able to claim 11. This week, she has only been able to get four batches.
This increase in bot activity comes at a time when Instacart is ramping up its hiring of full-service shoppers. Just yesterday, Instacart announced it’s adding 250,000 more shoppers to meet demand. That came after Instacart announced last month its plans to hire another 300,000 shoppers.
The increased number of full-service shoppers coupled with third-party bots quickly claiming orders, it’s no wonder why some shoppers are feeling frustrated. Behind the scenes, Instacart is working to ban unauthorized third parties from accepting batches. In the meantime, the company is recommending shoppers not engage with those services.
Instacart’s aggressive hiring spree is continuing due to COVID-19 shelter in place orders. Today, the company announced it is adding 250,000 more shoppers to meet consumer demand, and to help the company return to “one-hour and same-day delivery,” according to a statement.
Along with the hiring announcement, Instacart is implementing a slew of new policies, including extended COVID-19 sick pay and bonuses for both part-time employees and full-service shoppers, and in-app check-ins for shoppers that need health and safety kits.
In just one month, Instacart has announced plans to grow its shopper network 250%.
In March, the company announced it will hire 300,000 new full-service shoppers on top of its existing 200,000 shoppers. It has since met that goal, and with today’s hiring news, Instacart’s shopper network will be 750,000 shoppers. The company also announced earlier this month that it is more than doubling its care team, from 1,200 agents to 3,000 agents.
The company’s recent hiring illustrates how essential businesses are disproportionately in demand while other companies struggle with layoffs.
Aggressive hiring and new policies could level out some of the stresses that Instacart shoppers have recently been inundated with from unprecedented demand from customers.
Last month, some Instagram shoppers went on strike, demanding the company provide personal protective equipment, add hazard pay of $5 per order, change the default tip minimum, extend the sick pay policy to those who have pre-existing conditions and more.
Instacart has responded to some of these demands. Last month, the company outlined an extended pay policy and contactless pay option. The company also introduced new product features aimed at making delivery windows for shoppers more flexible and fast.
While Instacart’s news today shows the company focusing on quality return to shoppers and customers, the existing damage control is not stopping the company from looking for new opportunities.
Last week, Instacart announced that it is jumping into prescription delivery with Costco.
The company said Thursday the delivery service is now available from nearly 200 Costco locations in Arizona, California, Delaware, Florida, Illinois, New York, Washington and Washington D.C. The service, which was initially piloted at several locations in Southern California and Washington, will expand nationally in the coming months, the company said.
Customers who use the online prescription service will receive a text message from their Costco pharmacy when their prescription is ready. The text will include a link with the option to schedule their prescription for delivery. Once the customer clicks the link, they will be redirected to Costco’s site. From here, customers can confirm their prescription and continue to add groceries and household goods to their Instacart Costco delivery order. The orders are delivered to customers in a sealed, tamper-proof bag to ensure customer safety and privacy.
Instacart is also offering contactless delivery for most medications. Instacart shoppers are able to scan a customer’s ID for verification without a signature on qualifying prescription orders. Customers are also able to schedule delivery up to one week in advance under the new service.
The new service was driven by demand in the wake of COVID-19, Instacart president Nilam Ganenthiran.
“For many people, we know that part of their grocery shopping experience goes beyond fresh produce, meat, seafood and pantry staples, and also includes getting much-needed medications,” said Ganenthiran.
Instacart has seen demand for its grocery service skyrocket as the COVID-19 pandemic spread. The company’s total order volume last week was 400% higher than the same week last year. Customers are spending more as well. The average customer basket size — meaning the total amount a customer spends on their order on Instacart — is more than 25% month-over-month, according to the company.
The increase in demand has prompted Instacart to expand its reach by adding nearly 150 new stores to its marketplace since March 1. It’s also adding workers to keep up with the increase in customers.
Instacart announced April 10 that it doubled its “Care” team, from 1,200 agents to 3,000 agents. These employees answer questions about how Instacart works as well as respond to delivery issues and other mishaps with orders.
The hiring news followed a strike in March organized by Instacart shoppers who demanded personal protective equipment, hazard pay, default tips and extended sick pay.
Good morning friends, and welcome back to TechCrunch’s Equity Monday, a short-form audio hit to kickstart your week.
Before we jump into today’s show, don’t forget that the long-form Equity that started in the unicorn era and continue in today’s changed world still drops on Friday. We had a blast last week, so make sure to catch up.
That said, there was a lot to go over this morning, so let’s get into what we had to discuss:
- Global spend patterns are changing, helping some startups and slowing others. But notable in the mix is how well grocery delivery is doing; if the change will be enough to turn uncertain bets like Instacart into sure things, however, is not yet clear.
- Earnings are finally nearly here. We’ll see the big names start to disclose results next week. In the next three weeks or so we’ll hear from Apple, Microsoft, Facebook, Netflix and Spotify. The results will help us understand how the market is doing; and, by proxy, how startups are performing.
- Quoting from our script this morning: “Would it be great to know how startups are doing without resorting to our chronic use of public proxies? Yes. Any startup who wants to kick off that trend can send in reports of how their Q1 went and what they expect in Q2 and the other two quarters of 2020 to EquityPod@TechCrunch.com. That’s probably the easiest way to get your company on the show, so, please do write in with specifics.”
- We took a look at the latest rounds from Kargo and Pangea.app.
- Finally, SoftBank’s huge Vision Fund bill is coming due. I almost can’t believe these numbers. What a mess.
And that’s the show for today. Stay safe, and we’ll be back Friday morning to cap off whatever this week winds up becoming.
Instacart is adding more support roles to help its shoppers, customers and retail partners as the company faces unprecedented demand for its grocery delivery services due to COVID-19 shelter in place orders.
Today Instacart announced that it has doubled its Care team, from 1,200 agents to 3,000 agents. Care team employees will work on answering questions about how Instacart works, delivery issues, address mishaps and other general woes.
The hiring news comes after Instacart shoppers organized a strike last month, demanding personal protective equipment, hazard pay, default tips and extended sick pay.
Instacart has been on a hiring spree as customer demand increased more than 300% year over year last week alone. Last month, the Instacart shopper community grew to 350,000 active shoppers, up from 200,000 two weeks ago.
Today, along with doubling its Care team, Instacart says it has also hired and signed an additional 15,000 representatives that will join the team by May. With that, Instacart says it will have a Care team of about 18,000 members.
Some of Instacart’s new hires have are experienced support agents recently laid off in the flurry of cuts across the hospitality and travel industry.
With more demand, and thus more stresses on shoppers than ever before, the new members seem like yet another move by Instacart to try to pacify its growing shopper network. Last month, Instacart outlined an extended pay policy and contactless pay option. The company also introduced new product features aimed at making delivery windows for shoppers more flexible and fast.
Earlier this week, tip-baiting emerged as a grotesque tactic used by customers. Customers have been baiting Instacart shoppers to pick up their groceries by putting large tips on the bill through the app. Then, once the shopper drops off the groceries, customers are changing that tip to a lesser amount or even to $0.
The ability to change the tip price up to three days after grocery drop-off is an option provided through the Instacart application.
According to Instacart, tip-baiting is rare. Customers either adjusted their tip upward or did not adjust tip at all on 99.5% of orders. The company also removed the “none” option in the customer tip section with hopes that customers will tip at minimum.
While these feature updates will likely have a positive impact, Instacart has still not banned customers from changing the tip after getting their groceries. The new roles will not be able to help shoppers with tip-baiting changes either, as the tip is entirely up to the customer.
The company has also not changed the default tip minimum, as worker protests asked for tip defaults to be put at 10% during this time.
The surge of hires for Instacart’s Care team was not related to the tip-baiting issue, says the company, but instead related to the surge of demand for the service.
In Los Angeles, some community-supported agriculture services have seen their membership triple in just a few weeks.