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France slaps Google with $166M antitrust fine for opaque and inconsistent ad rules

14:23 | 20 December

France’s competition watchdog has slapped Google with a €150 million (~$166M) fine after finding the tech giant abused its dominant position in the online search advertising market.

In a decision announced today — following a lengthy investigation into the online ad sector — the competition authority sanctions Google for adopting what it describes as “opaque and difficult to understand” operating rules for its ad platform, Google Ads, and for applying them in “an unfair and random manner”.

The watchdog has ordered Google to clarify how it draws up rules for the operation of Google Ads and its procedures for suspending accounts. The tech giant will also have to put in place measures to prevent, detect and deal with violations of Google Ads rules.

A Google spokesman told TechCrunch the company will appeal the decision.

The decision — which comes hard on the heels of a market study report by the UK’s competition watchdog asking for views on whether Google should be broken up — relates to search ads which appear when a user of Google’s search engine searches for something and ads are served alongside organic search results.

More specifically it relates to the rules Google applies to its Ads platform which set conditions under which advertisers can broadcast ads — rules the watchdog found to be confusing and inconsistently applied.

It also found Google had changed its position on the interpretation of the rules over time, which it said generated instability for some advertisers who were kept in a situation of legal and economic insecurity.

In France, Google holds a dominant position in the online search market, with its search engine responsible for more than 90% of searches carried out and holds more than 80% of the online ad market linked to searches, per the watchdog which notes that that dominance puts requirements on it to define operating rules of its ad platform in an objective, transparent and non-discriminatory manner.

However it found Google’s wording of ad rules failed to live up to that standard — saying it is “not based on any precise and stable definition, which gives Google full latitude to interpret them according to situations”.

Explaining its decision in a press release the Autorité de la Concurrence writes [translated by Google Translate]:

[T]he French Competition Authority considers that the Google Ads operating rules imposed by Google on advertisers are established and applied under non-objective, non-transparent and discriminatory conditions. The opacity and lack of objectivity of these rules make it very difficult for advertisers to apply them, while Google has all the discretion to modify its interpretation of the rules in a way that is difficult to predict, and decide accordingly whether the sites comply with them or not. This allows Google to apply them in a discriminatory or inconsistent manner. This leads to damage both for advertisers and for search engine users.

The watchdog’s multi-year investigation of the online ad sector was instigated after a complaint by a company called Gibmedia — which raised an objection more than four years ago after Google closed its Google Ads account without notice.

At the time, Gibmedia requested provisional measures be taken. The watchdog rejected that request in a 2015 decision but elected to continue investigating “the merits of the case”. Today’s decision marks the culmination of the investigation.

In a response statement on the decision, a Google spokesperson said: “People expect to be protected from exploitative and abusive ads and this is what our advertising policies are for.”

Its statement also claims Gibmedia was “running ads for websites that deceived people into paying for services on unclear billing terms”. “We do not want these kinds of ads on our systems, so we suspended Gibmedia and gave up advertising revenue to protect consumers from harm,” the Google spokesperson added.

However the watchdog’s press release anticipates and unpicks this argument — pointing out that while having an objective of consumer protection is “perfectly legitimate” it does not justify Google treating advertisers in “a differentiated and random manner in comparable situations”.

“Google cannot suspend the account of an advertiser on the grounds that it would offer services that it considers contrary to the interests of the consumer, while agreeing to reference and accompany on its advertising platform sites that sell similar services,” it writes. 

While the watchdog does not state that it found evidence Google used ambiguous and inconsistently applied ad rules in a deliberate attempt to block competitors, it asserts the behavior displays “at best negligence, at worst opportunism”.

It also suggests that another element of Google ad rules could lead sites to favor a content policy aligned with its own ad-funded services — thereby pushing online publishers to adopt an economic model that feeds and benefits its own. 

During Google’s implementation of the now sanctioned practices the watchdog points out that the company has received regular warnings around EU competition rules — noting the string of European Commission antitrust decisions against Google products in recent years. (Most recently, in March, Google was fined ~$1.7BN for antitrust violations related to its search ad brokering business, AdSense.)

While, since 2010, it says it has issued a number of decisions related to the drafting and application of rules on the ad market which Google could also have taken note of.

In addition to being fined, being required to clarify its procedures and to set up a system of alerts to help advertisers avoid account suspensions, the decision requires Google to organize mandatory annual training for Google Ads support staff.

It must also submit an annual report to the watchdog specifying the number of complaints filed against it by French Internet users; the number of sites and accounts suspended; the nature of the Rules violated and the terms of the suspension.

Within two months of today’s decision Google must also present the watchdog with a report detailing the measures and procedures it will take to take to comply with the orders. A further report is due within six months detailing all the measures and procedures Google has actually put in place.

At the start of this year Google was also fined $57M by France’s data protection watchdog for violations of Europe’s General Data Protection Regulation.



Dutch court orders Facebook to ban celebrity crypto scam ads after another lawsuit

15:04 | 12 November

A Dutch court has ruled that Facebook can be required to use filter technologies to identify and pre-emptively take down fake ads linked to crypto currency scams that carry the image of a media personality, John de Mol.

The Dutch celerity filed a lawsuit against Facebook in April over the misappropriation of his likeness to shill Bitcoin scams via fake ads run on its platform.

In an immediately enforceable preliminary judgement today the court has ordered Facebook to remove all offending ads within five days, and provide de Mol with data on the accounts running them within a week.

Per the judgement, victims of the crypto scams had reported a total of €1.7 million (~$1.8M) in damages to the Dutch government at the time of the court summons.

The case is similar to a legal action instigated by UK consumer advice personality, Martin Lewis, last year, when he announced defamation proceedings against Facebook — also for misuse of his image in fake ads for crypto scams.

Lewis withdrew the suit at the start of this year after Facebook agreed to apply new measures to tackle the problem: Namely a scam ads report button. It also agreed to provide funding to a UK consumer advice organization to set up a scam advice service.

In the de Mol case the lawsuit was allowed to run its course — resulting in today’s preliminary judgement against Facebook. It’s not yet clear whether the company will appeal but in the wake of the ruling Facebook has said it will bring the scam ads report button to the Dutch market early next month.

In court, the platform giant sought to argue that it could not more proactively remove the Bitcoin scam ads containing de Mol’s image on the grounds that doing so would breach EU law against general monitoring conditions being placed on Internet platforms.

However the court rejected that argument, citing a recent ruling by Europe’s top court related to platform obligations to remove hate speech, also concluding that the specificity of the requested measures could not be classified as ‘general obligations of supervision’.

It also rejected arguments by Facebook’s lawyers that restricting the fake scam ads would be restricting the freedom of expression of a natural person, or the right to be freely informed — pointing out that the ‘expressions’ involved are aimed at commercial gain, as well as including fraudulent practices.

Facebook also sought to argue it is already doing all it can to identify and take down the fake scam ads — saying too that its screening processes are not perfect. But the court said there’s no requirement for 100% effectiveness for additional proactive measures to be ordered. Its ruling further notes a striking reduction in fake scam ads using de Mol’s image since the lawsuit was announced

Facebook’s argument that it’s just a neutral platform was also rejected, with the court pointing out that its core business is advertising.

It also took the view that requiring Facebook to apply technically complicated measures and extra effort, including in terms of manpower and costs, to more effectively remove offending scam ads is not unreasonable in this context.

The judgement orders Facebook to remove fake scam ads containing de Mol’s likeness from Facebook and Instagram within five days of the order — with a penalty of €10k per day that Facebook fails to comply with the order, up to a maximum of €1M (~$1.1M).

The court order also requires that Facebook provides de Mol with data on the accounts that had been misusing his image within seven days of the judgement, with a further penalty of €1k per day for failure to comply, up to a maximum of €100k.

Facebook has also been ordered to pay the case costs.

Responding to the judgement in a statement, a Facebook spokesperson told us:

We have just received the ruling and will now look at its implications. We will consider all legal actions, including appeal. Importantly, this ruling does not change our commitment to fighting these types of ads. We cannot stress enough that these types of ads have absolutely no place on Facebook and we remove them when we find them. We take this very seriously and will therefore make our scam ads reporting form available in the Netherlands in early December. This is an additional way to get feedback from people, which in turn helps train our machine learning models. It is in our interest to protect our users from fraudsters and when we find violators we will take action to stop their activity, up to and including taking legal action against them in court.

One legal expert describes the judgement as “

“. Law professor Mireille Hildebrandt told us that it provides for as an alternative legal route for Facebook users to litigate and pursue collective enforcement of European personal data rights. Rather than suing for damages — which entails a high burden of proof.

Injunctions are faster and more effective, Hildebrandt added.

The judgement also raises

around the burden of proof for demonstrating Facebook has removed scam ads with sufficient (increased) accuracy; and what specific additional measures it might deploy to improve its takedown rate.

Although the introduction of the ‘report scam ad button’ does provide one clear avenue for measuring takedown performance.

The button was finally rolled out to the UK market in July. And while Facebook has talked since the start of this year about ‘envisaging’ introducing it in other markets it hasn’t exactly been proactive in doing so — up til now, with this court order. 



Wardrobe picks up $1.5 million for a new fashion rental marketplace

18:00 | 6 November

Wardrobe, a new peer-to-peer fashion rental marketplace, has today announced the close of a $1.5 million seed round and its public launch out of beta.

The funding was led by angel investor Cyan Banister and Ludlow Ventures, with participation from GroupUp Ventures, Airbnb cofounder Nate Blecharczyk and HQ Trivia founder Rus Yusupov, among others.

Wardrobe was founded by Adarsh Alphons after he had an epiphany about just how many items of clothes in his own house went mostly unused. In fact, the WSJ suggests that most people only wear around 20 percent of their wardrobe on a regular basis. Alphons says that the average woman has 57 items of clothes in her closet that she doesn’t even wear once a year.

So began Wardrobe.

Wardrobe is a peer-to-peer rental marketplace for vintage, designer, and luxury brand clothing. However, unlike Rent the Runway or other sharing economy fashion platforms, Wardrobe uses dry cleaners as hubs for the inventory. This not only allows the company to scale more quickly from geography to geography, but also to remain lean without taking on the risk of big warehouses and complicated logistics around shipping.

Here’s how it works:

Folks who want to rent their clothes on Wardrobe simply fill out a few answers to questions and receive a shipping label in the mail. Once their clothes are approved, they’re sent to a local dry cleaner where they wait to be rented for either 4, 10, or 20 days.

Wardrobe HQ handles everything from storage to shipping to photographing the pieces for the app.

The owner of the clothes makes between 70 and 75 percent of the rental cost after the cost of dry cleaning.

Interestingly, Alphons learned in beta that users want to not only browse the app for clothes, but follow specific users and closets that they particularly like. So the app is now tailored to let users follow one another and watch each other’s closets, creating an environment that may attract influencers to the platform.

Wardrobe currently has partnerships with more than 40 Manhattan dry cleaners, serving all of the island below 110th Street. Alphons says that each dry cleaner can hold between 100 and 1,000 items of clothing at a time.



Fountain, a platform for recruiting gig and hourly workers, raises $23M

20:14 | 29 October

Contract, self-employed and temporary jobs are on the rise in developed markets, with some 85% of the global workforce, 2.7 billion people, estimated to be on some form of hourly wage rather than flat salary.

Today, a startup that helps companies source these kinds of candidates is announcing a round of funding to help meet that demand. Fountain, which has built a platform to find and screen candidates for field roles — not knowledge worker desk jobs, but hourly work that likely has you on your feet — has raised $23 million, money that it will be using to continue expanding its platform, the kinds of services it provides to its customers, and its geographical footprint.

Fountain already has some scale: the company currently sources and processes more than 1 million inbound candidate applications each month, filling some 150,000 jobs in the process, CEO and founder Keith Ryu said in an interview.

In addition to building engines to source candidates through a number of channels such as traditional job boards, social media channels, a company’s own site, and more, Fountain then helps with screening, interview scheduling, background checks (using third-party providers for this part), communicating with the candidate, handling the paperwork and finally onboarding.

Led by DCM, this latest round also included a potentially strategic backer, the Chinese recruitment site 51job, as well as Origin Ventures, Uncork Capital, and others that are not being named. This brings the total raised by Fountain, which previously was called OnboardIQ and had been incubated in Y Combinator, to $34 million.

Fountain’s business targets two main kinds of employers. First, ridesharing companies like Uber, delivery startups like Postmates and home services providers like Thumbtack all function by virtue of their pools of “gig” workers, self-employed people who choose their own working hours and dip into the platforms for assignments when they have time to fulfil them.

But the challenge of finding good people for field jobs is not venture-backed startups’ alone. The second big category that Fountain taps for business is the wider pool of retail and food industry businesses that have long relied on hourly workers also find it hard to source qualified and reliable people.

Between those two, Ryu said that customers cover big “gig economy” businesses like Uber Eats, Caviar and Cabify; large fast food franchises including Taco Bell, Burger King and KFC chains; and a number of other customers that use Fountain’s APIs for white-label services and prefer not to be named. (I think it’s interesting that Uber Eats is on Fountain’s customer list, but Uber is not.)

Fountain was founded in 2015, arguably at the peak of demand for recruiting gig economy workers. In the years since then, and especially in recent times, demands have moved away for these companies from aggressive expansion (bringing on, for example, lots of new drivers), and into more profitable operations. Ryu said that the knock on effect for Fountain has not been a reduction, but a change, in terms of the services required, with some companies opting to outsource where in the past they might have handled recruitment in house.

“There has been some attention to reducing operating costs per driver, including driver acquisition,” he said. “That is where we have been getting involved, using our size [and reach] to reduce the cost to the employer.”

This has also had the effect of also seeing Fountain change up its own strategy to make more of an effort to target more traditional businesses that are based around hourly employees: no longer contractors, but still very much in the field.

“As the unrivaled leader in gig hiring and recruiting, Fountain is already reshaping the way billions of job seekers interact with employers,” says David Chao, co-founder & Partner at DCM, in a statement. “Fountain has been exceptionally capital efficient and has best-in-class customer retention,” adds Kyle Lui, Partner at DCM.

Fountain is not disclosing its valuation with this round. In its last round, back in 2017, it had a very modest $40 million price on it, although given its growth since then (it had sourced 5 million candidates in two years in 2017; now it sources 1 million each month) this is likely to be significantly higher.



Labor leaders and startup founders talk how to build a sustainable gig economy

01:44 | 17 October

Over the past few years, gig economy companies and the treatment of their labor force has become a hot button issue for public and private sector debate.

At our recent annual Disrupt event in San Francisco, we dug into how founders, companies and the broader community can play a positive role in the gig economy, with help from Derecka Mehrens, an executive director at Working Partnerships USA and co-founder of Silicon Valley Rising — an advocacy campaign focused on fighting for tech worker rights and creating an inclusive tech economy — and Amanda de Cadenet, founder of Girlgaze, a platform that connects advertisers with a network of 200,000 female-identifying and non-binary creatives.

Derecka and Amanda dove deep into where incumbent gig companies have fallen short, what they’re doing to right the ship, whether VC and hyper-growth mentalities fit into a sustainable gig economy, as well as thoughts on Uber’s new ‘Uber Works’ platform and CA AB-5. The following has been lightly edited for length and clarity.

Where current gig companies are failing

Arman Tabatabai: What was the original promise and value proposition of the gig economy? What went wrong?

Derecka Mehrens: The gig economy exists in a larger context, which is one in which neoliberalism is failing, trickle-down economics is proven wrong, and every day working people aren’t surviving and are looking for something more.

And so you have a situation in which the system we put together to create employment, to create our communities, to build our housing, to give us jobs is dysfunctional. And within that, folks are going to come up with disruptive solutions to pieces of it with a promise in mind to solve a problem. But without a larger solution, that will end up, in our view, exacerbating existing inequalities.



We’ll have self-flying cars before self-driving cars, Thrun says

00:18 | 4 October

Once you get up high enough, you don’t have to worry about a lot of the obstacles like pedestrians and traffic jams that plague autonomous cars. That’s why Sebastian Thrun, Google’s self-driving team founder turned CEO of flying vehicle startup Kitty Hawk, said on stage at TechCrunch Disrupt SF today that we should expect true autonomy to succeed in the air before the road.

“I believe we’re going to be done with self-flying vehicles before we’re done with self-driving cars” Thrun told TechCrunch reporter Kirsten Korosec.

Why? “If you go a bit higher in the air then all the difficulties with not hitting stuff like children and bicycles and cars and so on just vanishes . . . Go above the buildings, go above the trees, like go where the helicopters are!” Thrun explained, but noted personal helicopters are so noisy they’re being banned in some places like Napa, California.

That proclamation has wide reaching implications for how cities are planned and real estate is bought. We may need more vertical takeoff helipads sooner than we needed autonomous car-only road lanes. More remote homes in the forest that have only a single winding road that reaches them like those in Big Sur, California might suddenly become more accessible and thereby appealing to the affluent since they could just take a self-flying car to the city or office.

The concept could also have wide-reaching implications for the startup industry. Obviously Thrun’s own company Kitty Hawk would benefit from not being too early to market. Kitty Hawk announced its Heaviside vehicle today that’s designed to be ultra quiet. If the prophecy comes true, Uber which is investing in vertical take-off vehicles could also be in a better position than Lyft and other ride-hailing player focused on cars.

To make sure its vehicles don’t get banned and potentially pave the way for more aerial autonomy, Kitty Hawk recently recruited former FAA Administrator Mike Huerta as an advisor.

Eventually, Thrun says that because cars have to navigate indirect streets but in the air “we can go in a straight line, we believe we will be roughly a third of the energy cost per mile is Tesla.” And with shared UberPool style flights, he sees the cost of energy getting down to just “$0.30 per mile”.

But in the meantime, Thrun is trying to get people, including me, to stop saying flying cars. “I personally don’t like the word ‘flying car’, but it’s very catchy. The technical term is called eVTOL. These are typically electrically propelled vehicles, they can take off and land vertically, eVTOLs, vertical takeoff landing, so that you don’t need an airport. And then they fly very much like a regular plane.” We’ll see if that mouthful catches on, and if the skies get more congested before the roads thin out.

Kitty Hawk Heaviside starry night


Drivy rebrands to Getaround six months after acquisition

01:20 | 2 October

European peer-to-peer car rental service Drivy has a new name. It is now called Getaround, which shouldn’t surprise anyone who has been following Drivy’s recent news. Back in April, Getaround announced the acquisition of Drivy for $300 million to expand to Europe. And Drivy is now 100% part of Getaround as the company is unifying its brand across the globe.

While Getaround now operates under a single brand again, there are still two mobile apps — Drivy is called Getaround EU for now. Drivy CEO Paulin Dementhon is now the CEO of Europe for Getaround.

In addition to the new name, Getaround now offers hourly car rentals in Europe just like in the U.S. And that’s about all there’s to know.

Overall, there are 5 million Getaround users and 20,000 cars around the world. The company operates in 300 cities across 8 countries.

While Drivy started as a sort of Airbnb for cars, the company has slowly evolved to focus less on cars owned by regular car owners. The startup introduced a device that lets you lock and unlock the car using a smartphone. It then started partnering with small companies that own tiny fleets of connected cars that they want to list on the platform.



Clutter acquires The Storage Fox for $152M to add self-storage to its on-demand platform

15:00 | 20 September

The world of on-demand storage has seen some ups and downs, with some of the biggest hopefuls pivoting into new areas, some as unrelated as cryptocurrency, in the search for better product-market fit. One that found its groove early on, however, is today announcing an acquisition to expand its existing business into a new market category. Clutter, the on-demand removals and storage company backed by SoftBank, is today announcing that it has acquired The Storage Fox, a startup that will spearhead Clutter’s expansion in to self-storage services in urban locations, starting first in the New York metro area where The Storage Fox is currently active.

The deal is valued at $152 million, Clutter said. Ari Mir, Clutter’s co-founder and CEO, added in an interview that  Clutter did not need to raise any extra funding to finance this acquisition, but said his company is likely to be taking on more financing in the future for growth.

To date, Clutter has raised $310 million, according to PitchBook, including a $200 million round earlier this year led by SoftBank that valued the company at $600 million post-money. Future financing is likely to come in the form of debt to acquire property, as well as equity to expand the business’s platform, hiring and more. It’s currently active in 1,000 cities and towns across the US and the plan will be to stay domestic until it has wider penetration, before exploring how to grow internationally. The deal will bring the total amount of space that Clutter leases and owns up to two million square feet.

“Expanding into self-storage is something we have been discussing since Clutter’s Series A pitch to Sequoia and we are excited to see it come to fruition,” said Omar Hamoui, partner at Sequoia Capital, in a statement. “The acquisition reinforces Clutter’s market leadership and expands Clutter services by offering a better experience for customers who need self-storage or on-demand storage.”

(Notably, too, is that Clutter had to actively bid for this business: “Portfolios like that of The Storage Fox are extremely rare, and this acquisition signals that Clutter is uniquely positioned to take on and succeed in the self-storage industry,” said Eliav Dan, Head of West Coast Real Estate Finance at Barclays, which acted as Clutter’s exclusive financial advisor, in a statement. “Clutter competed with multiple self-storage REITs throughout the bidding process to win the deal — a testament to the strength of the company’s management team and its ability to execute on an innovative business model.”)

Up to now, Clutter business has focused on extending the on-demand model — which has become a cornerstone for a huge wave of e-commerce startups that are tapping into new innovations for managing logistics, the rise of the gig-economy, the proliferation of smartphones, and consumer tastes for instant gratification — to the messy business of helping people move and store their worldly possessions, from which Clutter makes revenues by charging service fees.

Customers might typically be urban dwellers — for example moving to smaller digs or simply looking for a way to, yes, de-Clutter — but the storage centers themselves tend to be far outside city centers. On top of this, Clutter has largely operated on a long-term lease model with the facilities that it uses.

In that regard, this acquisition will be giving the company a couple of interesting new possessions of its own, to tap the self-storage market, estimated to be worth $40 billion annually.

The Storage Fox’s facilities, like other self-storage businesses, are located in areas that are much closer to urban centers, since the model is predicated more on people being able to dip in and out of their storage units quickly and potentially very regularly. In its case, its facilities today are in Yonkers, White Plains, Queens and Brooklyn.

It will also give Clutter a trove of real estate that it will now own: The Storage Fox didn’t appear to raise any traditional VC funding, but it did have large finance agreements in place in order to buy property. That is a pattern that Clutter is likely to continue, Mir said.

Now that there will be more accessible space on Clutter’s platform that it actually owns, it will also give the company a point of entry into a new potential range of business services alongside the self-storage. Could that extend into something like office space, potentially pitting Clutter against one of its portfolio neighbors, WeWork? Mir declined to answer specifically but we’ve seen some outlier cases — such as this guy who lived out of his storage unit — that, while not exactly okay for a number of reasons, does underscore that there is a lot of potential there.

“There are over 52,000 self-storage facilities in the US alone,” Mir said. “If you take all that and add it up, there are more square feet in those storage spaces than there are in McDonald’s and Starbucks in the US, combined. At the same time, inside of cities, we’re running out of space. So our vision is to apply all the technology that we’ve built in house to increase the value that these self-storage facilities provide across society.”

Clutter has already made some moves beyond simple storage in its existing business: it’s already actively advertising the option to rent, sell, donate and dispose of your items if you choose — although it seems that these four services are not yet actively live. Earlier this year, it acquired the storage business of Omni, which itself is currently focusing on rentals.

Storage over all has not been an easy area to tackle for a lot of reasons: on top of the usual issues of needing to ensure that the contractors — the face and engine of your business — are responsible and good at their jobs, the cargo can be unexpectedly large or fragile, and the movement of it might be tied up in all kinds of backstories that make getting from A to B and eventually back to the owner again very complicated.

Mir concedes that the customer satisfaction aspect has been challenging: it’s one of those areas that people are quick to publicly complain when something has gone awry. He also insists that its ratings and Clutter’s efforts are generally improving, and frankly it’s great to hear him be honest about this and not deny that criticism is a challenge and that the company is always working to make this better.



Hundreds of Uber and Lyft drivers to launch a protest caravan across California

16:01 | 22 August

If you’re like me, chances are good you just distractedly clicked on this article while scrolling through your feed in, or while waiting for, a Lyft. Maybe, like me, you need that app to get to back-to-back meetings in different locations today, as you’re well on your way to at least a 60-hour workweek between the various things you do. Maybe you’re exhausted. Maybe the ride you just took, zoning out on your phone in an Uber on Quiet Mode, was actually a lifesaver.

And as you settle into each new driver’s backseat, en route to each new destination in your crazy busy life, maybe, like me, you find yourself somewhat unwittingly implicated in one of the most contentious ethical struggles of this generation – a struggle with profound implications for the future of work.

Yesterday, California-based advocacy organizations Gig Workers Rising and Mobile Workers Alliance announced that a caravan of Uber and Lyft drivers will drive from SoCal through San Francisco to Sacramento, next Monday, August 26 through Wednesday, August 28th. Over 200 drivers in more than 75 cars plan to drive south to north, with more drivers joining along the way, to take dramatic action in advocating for California State Legislature bill AB5, and for a drivers union. 

With AB5 almost certain to pass the CA Senate, this coming week presents a crucial moment in the history of gig work and tech more broadly: an opportunity for drivers to demonstrate the efficacy of 21st century labor modes of organizing, even as Uber and Lyft continue ramping up efforts to kill AB5, drop pay rates, and generally mistreat drivers.

For the first time, drivers will use their sole work tool, their cars, to demonstrate publicly (and likely disruptively, though I have no knowledge of the precise actions planned at this time) at key locations like outside Uber’s HQ in downtown San Francisco and the Capitol steps in Sacramento.

I recently had the chance to speak with Annette Rivero, one of the drivers and an organizer of the protest efforts. At the time we spoke, I didn’t know anything about Annette, not even whether she would allow me to use her last name. But this 37-year-old mother of five, a straight-A student and full-time-plus Lyft/Uber driver, told me the story of her life and career, without hesitation, even as it raised what I worried could be the possibility of retaliation against her and her colleagues.

As Annette opened up to me about drivers work conditions and their mental and physical health struggles, I found myself thinking that her family’s story puts human faces on and likely represents the trendline of an industry that, in only a decade, has moved a hundred billion dollars and given new meaning to the word “disrupt.”

I hope everyone with a stake in these issues – whether you work in tech or VC or just occasionally use your smartphone to summon a ride – will read her words and think about where all of us are headed, together.

67402994 1566413612992

Annette Rivero. Image via Annette Rivero

Greg Epstein: Annette, thank you very much for taking the time to talk with me for this TechCrunch series exploring technology and ethics, and what it might mean to use technology ethically and humanistically today. Can you share your full name or is that not something that you’re comfortable sharing? Either way is fine.

Annette Rivero: My name’s Annette Rivero.

Epstein: How old are you?

Rivero: I am 37.

Epstein: And what do you do for your work that you’re connected with what we’re speaking about?

Rivero: I drive for both Uber and Lyft .

Epstein: How long have you been doing that?

Rivero: About two years.

Epstein: Full-time, or how does your schedule work?

Rivero: Right now I’m driving full-time, so I drive about eight to nine hours and I try to drive every day.

Epstein: Seven days a week?

Rivero: Yes.

Epstein: You’ve been trying to do that for a long time?

Rivero: All summer I’ve been really trying. I mean, of course things happen and there’s always one or two days maybe where I don’t get to, but it’s definitely my goal because I only make $150 a day. So, if I miss a day, I try to work longer on the other days.

Epstein: That’s about 60 hours a week or so.

Rivero: Yeah.

Epstein: Wow. You’re a very hard worker, Annette.

Rivero: Oh, thanks.

Epstein: And you live somewhere in California?

Rivero: I live in San Jose, so South Bay area.

Epstein: So, you’re driving 60 hours a week or so, working for a tech company not far from the global epicenter of tech.

Rivero: That’s right.

Epstein: You must get a fair number of tech people in your car with you.

Rivero: Yes, I do.

Epstein: I’ll ask you more about yourself in a moment, but please tell me what you’re involved in and how we got connected for this interview.

Rivero: Around April, or May, I got involved with a group called Gig Workers Rising. I was very frustrated with some of the things going on between me and Uber. I was looking for somebody I could confide in, exchange stories, because I felt very alone, so I signed up with their Facebook group. They invited all their new members to a conference call, which I joined, and then from there they invited us to do a health survey to talk about the problems that we have with our health as far as rideshare goes. From there I’ve been at pretty much every action and meeting.

What we’re trying to do is let everyone know what’s going on. What the drivers are going through, the decreases in pay in contradiction to the increases in rates, and really let people know that they’re kind of manipulating the system to gain profits, but they’re taking those profits from people by paying extremely low rates.

Epstein: You mentioned a health survey: how are you doing health-wise?

Rivero: [When] that was all happening, I was extremely stressed; my anxiety was through the roof and I was probably pretty depressed because my situation was looking very bleak. They had already cut the surge at the end of last year, which probably cut rates about 40% at least. Then in the beginning of this year they cut the bonuses. A combination of those things cut the money I was making per week by two thirds. I was making about $1,500 working probably less than 40 hours. And now I work about 60 hours and I’m making barely a thousand dollars. I do feel better [now], but I think I feel better because I have a community of drivers that I work with and I talk to on a daily basis. And I am working on this project to bring light to the situation. I feel more empowered than I did before.

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Image via Working Partnerships USA / Jeff Barrera

Epstein: Feeling empowered and being connected with people who are working together for the same cause is, generally speaking, a positive factor in health. I’m glad to hear that.

Rivero: Yeah.

Epstein: Can you tell me about the demonstration you’re about to participate in?

Rivero: Right now we’re preparing for an action to unite all the drivers in California from the north end to the south end and in the middle, which is something we haven’t been able to demonstrate yet. But [we are] going to show it’s not just one area.

We may have differences but we have one thing that’s the same and that is dissatisfaction with the way things are going with rideshare right now. Everything that’s going on is not okay and all drivers across the state have just had it. They’re just done with what’s going on. So, without giving too many details, we will be in pretty big cities throughout the state and we will be making sure that we’re seen.

Epstein: At this point it’s been announced you’ll be stopping in L.A., San Francisco and Sacramento.

Rivero: As far as what we will do in those cities, we want to keep that under wraps. But yes, we are caravaning from LA to Sacramento, and at each stop we will take an action, not just with the [driver] community but other important people in those cities.

Epstein: Sounds like whatever actions you and your colleagues are going to take are going to be the sorts of things that have never quite happened before. People interested in this issue are probably going to want to see what you all are going to do next week, huh?

Rivero: Yeah, definitely. And our message is definitely focused on not just legislators but the Senate and then Governor Newsom, because they’re our next targets — to get their attention, let them know what’s going on and how we feel. We know they’ve already heard some, but we’re trying to really drill it in.

Epstein: Gig Workers Rising is working specifically on this bill, California AB5, with regard to the status of employees and independent contractors and what rights and obligations companies like Uber and Lyft have towards contractors like yourself. What do you want to say about the bill in particular?

Rivero: All [AB5] is doing is defining even more what it means to be an employee and what it means to be an independent contractor. It doesn’t do anything else in my opinion. If there was something on the table about creating the appropriate protections, that applied more to gig workers for lack of a better word, I’m sure everybody would be looking at that.

But there isn’t, so this is what we have. And instead of having people working without protections and for extremely low labor costs, we have to do something. Because there’s a lot of people out there who are barely making it, barely surviving, can’t even put food on the table, can’t even afford healthcare.

And these companies should be held accountable for it. They should be held responsible for it.

It’s their responsibility as a business owner to give back to the community, not just take from the community. Redefining these two things is just going to help make that happen.

Epstein: I don’t mind saying I completely agree with you. If these companies want to exist, they don’t just have a right to exist purely to make their executives rich. We, the people, can take that right away from them by forcing them to shut down, unless they can show that their business model is actually decent for the human beings involved in it.

Rivero: Right. I wish more people felt the way you just worded that. People just don’t understand the power they have.

Epstein: Would you feel comfortable sharing a bit more about yourself, like who you are beyond working for Lyft and Uber, and how you got involved in driving for them originally?

Rivero: I basically worked in healthcare for about 14 years. I’m one of those people where I work hard and it doesn’t matter how much money I make, as long as the work makes me feel good. I work really hard. Throughout the years, I’ve learned many things about healthcare billing.

So, I got to a place where I was doing various things in one position, but didn’t feel like I was getting paid what I should have been paid, even though that’s contradictory to what I just said. I felt like I could be a manager and make more money so I can take care of my kids, send them to school.

And my parents are getting older. So I was thinking, I can also help both of my parents start to retire, because they’re not getting younger and they’re getting sicker.

So, I made a very scary decision to leave my job at Stanford where I was making about $80,000 a year. I decided to go back to school. Some people call me crazy, but I just feel like I’m worth more than that, and I think I could’ve made more than that. So I went back to school full-time to get my degree in business management.

FB IMG 1566413270651 1566413533542

Annette Rivero. Image via Annette Rivero

Epstein: When was this?

Rivero: This was about two and a half years ago.

Epstein: So, you were making $80,000 a year or so working in the healthcare system at Stanford University Hospital, essentially? Before that had you gone to college or no?

Rivero: No.

Epstein: And you grew up in the San Jose area, or somewhere else?

Rivero: Half of my life, I grew up in San Jose and then the other half I grew up in a small town called Hollister, an hour South of here. I always wanted to go back to school and it was just such a big thing for me and then I just felt like it was now or never.

Because the situation I was in, we lived in an apartment that was affordable and I had money saved up. It wasn’t impossible. But once I started driving about six months in, or maybe within those first six months, I started to notice a subtle decrease in pay, and it was so subtle, you could hardly tell.

Epstein: You started driving while you were going to school full-time, to put yourself through school?

Rivero: Mm-hmm.

Epstein: Wow.

Rivero: I only had to work about six hours a day.

Epstein: Only! You were working six hours a day and then you would go to class or study?

Rivero: Yeah. And I was only working like four, maybe five days, making more money then than I’m making now. And the classes I did take, I did get straight A’s, so thank you. It was possible. It’s not like something I made up or fabricated. And a lot of people were doing it.

I can’t tell you how many people I’ve met who drove and were going to school or went on elaborate vacations, making extra money off of Uber and Lyft. But you can’t do that now. It’s not possible.

Epstein: You were driving five, six hours a day, studying and getting straight A’s, and did you have a family?

Rivero: One of our kids is already grown, but we have four that we’re raising.

Epstein: What does your partner do during the day?

Rivero: He is a warehouse manager for a plumbing company; he works anywhere from eight to 12 hours a day.

Epstein: You are obviously both extremely hard workers, trying to better your lives. This is very impressive.

Rivero: Thank you.

Epstein: Tell me how it started to get worse.

Rivero: To break it down a little bit, when you first start on, they give you really great bonuses. Then, little by little, they make changes to your bonus amount.

They’ll either lower the amount that you receive or they’ll increase the rides. So gradually you don’t notice, but the amount extra you’re getting per ride is lowering.

After that, [rates] started to decrease, and surge rates changed. What they used to do is a multiplier So, if there is a ride I usually do that I can make $8 off of and there was a surge during that time, then it would say ‘times two.’ That means I would make $16 off of that ride.

Today, they put a dollar amount instead; let’s say they just put $2. That means that I’m only going to make an extra $2 on that eight, from making $16 during surge to $10 during surge. And a majority of rides are during those times of surge, before work and school, when everyone’s trying to get somewhere, after work and school when everyone’s trying to get home, or on weekends when everybody’s partying.

Epstein: Which means drivers like you have to work at some of the times when it would be most convenient to be with your families. I just last week did another column largely about the effects of people having to be constantly available that way.

Rivero: Right. I can’t always work those times because I need to be with my family. So, instead of making a little more money during those times when it’s busier, I have to work slow times and make less money. But the reason we’re making less money is because the system is oversaturated with drivers, and that’s been done intentionally.

They were giving out really large bonuses to get drivers on board. I recruited my dad and made $500 for recruiting him. They’re constantly having new drivers recruited and now they have so many drivers, they don’t have to pay a surge anymore.

Because there’s more than enough drivers on the road at all times. Which brings me to another point, which is they’re charging riders for high demand rates when it’s not even necessary because they have so many drivers on the road. They don’t need to charge high rates. There’s somebody around the corner.

Epstein: I stopped using Uber for ethical reasons, but I use Lyft. I live someplace where it’s really hard to get from my house to work with public transportation and I work three or more jobs while spending a lot of time with my young kid, so I’m constantly running from one place to another and I definitely don’t have time to park a car.

it’s amazing: no matter where I am, or when, there’s always a car within a few minutes. And I take all these rides and almost never get the same driver twice. And I go to other cities or states, even remote areas: there are Lyft drivers everywhere.

It’s amazing how many people, like yourself, they’ve put out onto the road. What is that like for you? What have you heard from colleagues or friends through Gig Workers Rising, about what this is like for them?

Rivero: A couple of friends can’t afford their medication. One of them has high blood pressure. I could lose a friend because he can’t afford his high blood pressure medicine, because he doesn’t make enough. But he doesn’t qualify for Medi-Cal because we have to file all that money we’re paying Uber and Lyft on our taxes.

It looks like we’re making all this money, but we’re not. I have another friend who had kidney failure last year because drivers don’t want to drink water. They don’t want to have to stop to go to the bathroom because then that stops them from making money.

GWR UberIPO 050819 4

Image via Working Partnerships USA / Jeff Barrera

Epstein: What do you do about stopping to go to the bathroom, Annette?

Rivero: When I drop the kids off in the morning at 7:15, I’ll have one coffee and I’ll probably have to go to the bathroom once. So I’ll stop either at a Starbucks, a grocery store, or a Target. Then I don’t eat until I get home, which is when I pick up the kids at 3:45 and then I take them home.

Epstein: So, you’re driving around all that time on one or two coffees, no water, and no food?

Rivero: That’s right.

Epstein: First of all, I’m concerned for you. It’s not particularly healthy to sit in a car for eight or nine hours a day. Do you stretch much?

Rivero: Yeah. Sometimes I’ll get out of the car. When people need help, I’ll get out and help them. If I’m-

Epstein: I’m always telling my drivers to get up and stretch because it’s really bad for a person to sit without even stretching their legs for eight, nine hours a day. But then… I say this with a smile and I actually really trust you, you seem like an amazing person. But, are you being safe out there? I mean, all those hours without eating or hydrating, that doesn’t seem like the best mindset to be driving in.

Rivero: I have a goal, every day, to make $150. [Recently,] at the end of [the night] I needed 30 more dollars, and I was like, “Okay, I’m tired and I want to stop.” But I wasn’t at the point where I was dangerously tired. When I say dangerously tired, I mean I have a migraine, my eyes are getting blurry, or I’m so tired I’ve made a mistake, like I was at the light and I could have turned right but I just wasn’t paying attention.

Something small like that. I’ve never caused an accident. I’m not irresponsible in that way, but I notice the subtle things about myself when I know it’s time to go home.

But yeah, without a doubt there are drivers out there who are driving beyond that moment when they realize they shouldn’t be driving. They’re driving anywhere from 10, maybe 14, maybe even 16 hours a day.

And the ones sleeping in their car don’t really sleep. How do you sleep in your car?

Epstein: Are a lot of drivers sleeping in their cars, in your experience?

Rivero: I know a lot of drivers sleep in their car.

Epstein: How do you know that?

Rivero: Well, friends. My dad sleeps in his car. My dad’s too proud to come sleep at my house, but he’ll stay in his car. And he’s not sleeping.

Epstein: Why? Because he doesn’t have someplace to go?

Rivero: He lives in Los Banos, about an hour and a half away. Not only that, he can’t really afford the gas to keep going back and forth every night.

Epstein: Right — if you’re driving Lyft or Uber, almost by definition you can’t afford to live in a high rent area, but of course most rides are in high rent areas. So almost by design, most of the drivers are living far away from where they’re working, and when you get them so exhausted that they can’t drive home, it sounds like they’re essentially living out of their cars for how many days a week.

Rivero: Exactly. I also know another person who, from the loneliness of sleeping in their car and just the loneliness of not talking to anybody, because drivers don’t talk to each other really. He became-

Epstein: Yeah. And there’s even this new… What is the mode again for Uber?

Rivero: Oh, the quiet mode?

Epstein: Can I just say that I find that disgusting? You’re going to make me work for how much? And then you’re going to act like you have the right to just tell me I’m a nuisance to you and don’t talk to you?

Rivero: I understand sometimes people want to just not say anything, but it’s the way that it’s been done that’s terrible. It’s really about why can’t people communicate and just say, “You know what? I’m so sorry but I’m exhausted today. I had a really long day,” or whatever.

You don’t even have to explain. You just have to say, “Do you mind if we just not conversate right now? Just not up for it.”

Epstein: Yes. Suck it up and use your words to say that you don’t want to use your words, bro.

Rivero: Exactly. And that’s how we’re treated on a daily basis from, not all riders, but there are riders that treat us that way.

Epstein: Anyway, I interrupted you earlier. We were talking about you and other drivers risking their health, some people risking the health of others on the road. People certainly putting their mental health at risk is something that I hear here: there’s a lot of loneliness, isolation.

Rivero: The person I was talking about that was lonely actually had a drug addiction: coke. And the coke was initially to stay awake, then became a bad habit because they were lonely and depressed and then they couldn’t stop.

Epstein: And that person’s still out there driving?

Rivero: Not at the moment. Money all went to the coke and they couldn’t pay the bills. Got a ticket, lost a license.

Epstein: Still, what I’m hearing is that these kinds of situations that people are being put into make that kind of story, and its dangers, more likely.

Rivero: Yes. Yes.

GWR UberIPO 050819 5

Image via Working Partnerships USA / Jeff Barrera

Epstein: So, now you’re part of a group taking action to try to bring about some change. What do you most want people to think about and feel when they see you and your fellow drivers, your fellow gig workers, your fellow human beings driving across the state of California and demonstrating next week?

Rivero: I want everybody to think about where they work and to imagine that one day they walk in and their boss tells them, “We’re going to make you an independent contractor today. Congratulations. You get to set your own schedule. You get to have the flexibility you want, but we’re no longer going to pay you your benefits, your retirement plan, or anything else we gave you as an employee.”

Because I have security guards in my building at home, who are independent contractors, who I thought were employees collecting benefits. Companies like Bench, who provide accounting and bookkeeping services, [have] admitted they want to provide the cheapest and fastest service possible.

What that’s going to do is put businesses out of business in [those industries], and they’re not going to be the last. So, I want people to think about their jobs; they could be next if we don’t put a stop to [the current practices of] Uber and Lyft, because they’re the example of where we’re going.

Epstein: There are certainly many billions of dollars involved in Uber and Lyft and a lot of relatively wealthy people feel that they have something riding on the success of those companies.

Is there anything else that you want to share in gearing up for these actions next week?

Rivero: Just that AB5 doesn’t take away anybody’s flexibility, it’s the companies that take away the flexibility. Because I know that that’s something that everyone’s stuck on right now, and it’s a lie. There’s no truth to it.

Epstein: The last question I ask at the end of all of my TechCrunch interviews about technology and ethics is, how optimistic are you about our shared human future? About the future that we all share together, as human beings?

Rivero: That’s a day by day question because I feel like things change so much. Some days it just feels like we go five steps back. Right now, in my world, we’ve gone way back. It’s just evolving. So I really can’t give a defined answer.

Epstein: That’s a good answer, regardless. Thank you very much.



How even the best marketplace startups get paralyzed

19:03 | 13 August

Josh Breinlinger Contributor
Josh is a Managing Director at Jackson Square Ventures, an early stage venture capital firm with $245 million under management, where he focuses his investments in early stage marketplaces.

Over the past 15 years, I’ve seen a pernicious disease infect a number of marketplace startups. I call it Marketplace Paralysis. The root cause of the disease is quite innocent and seemingly harmless. Smart people with good intentions fall victim to it all the time. It starts when a platform has sufficient scale — such that there is a good amount of data on things like performance, quality rankings, purchase rates, and fill ratios. What a platform implements as a result of that data, and how it’s received by their user base, is what can lead to marketplace paralysis.

In this post, I will detail what Marketplace Paralysis is and what startups can do to avoid it. Before I get into the nitty-gritty, here’s a snapshot of the lessons you’ll learn by reading this post:

  1. Segment and focus on high-value users
  2. Remember the silent majority
  3. Modify company goals to include quality components
  4. Empower small, autonomous teams

The easiest way to explain Marketplace Paralysis is with a hypothetical example. So allow me to introduce you to Labor Marketplace X (LMX).

Equipped with the aforementioned data, the well-intentioned product managers at LMX will think about policies or features to try and improve a KPI, like fill ratio or job success rate. They might craft a policy that would separate users into two tiers.

Tier 1 gets a shiny gold star next to their name, along with extra pay, bonuses, and preferred job access. Tier 2 gets standard pay and standard job access. They’ve done their homework and feel this will benefit the marketplace.

So, they build the feature. They launch it and make an announcement to their users. And then… a revolt!


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