Deliveroo raises $385M in new funding(techcrunch.com)
techcrunch.com
Deliveroo raises $385M in new funding
https://techcrunch.com/2017/09/24/deliveroo-raises-385m/
146 comments
To be fair, a few motorbikes/bicycles temporarily waiting next to each other is not such a big deal to me in comparison to the fact that roughly half of every street in every big city in the UK is dedicated to parked cars. Putting aside the apparently shitty working conditions at gig economy companies like Deliveroo (which I dearly hope will be resolved with all the recent bad publicity around Uber and co), I like the idea of sharing the delivery services previously provided by individual restaurants between all. This is at least one positive aspect of the "sharing economy", which will hopefully also reduce the number of parked cars clogging up our roads.
You say that Deliveroo has shitty working conditions and I probably don't disagree (I know nothing of them), but I'm a second year university student and I'm being pressured to find a job by my parents while I'm here; Deliveroo seems like my best bet at the moment with flexible hours; I probably wouldn't be making any more than minimum wage elsewhere anyway.
I hope that's some insight as to why it's attractive to some people. If you know anything more about Deliveroo or other places I could look for jobs I'd be grateful, as it would really aid my search.
As a side note, I despise the way it is called the "sharing economy"; it's no sharing at all, and I wish this term were reserved for ideas I regard as more noble, like the gift economy, or a model in which people chip in a certain amount to a shared product on a large scale (such as democratic management of the economy).
I hope that's some insight as to why it's attractive to some people. If you know anything more about Deliveroo or other places I could look for jobs I'd be grateful, as it would really aid my search.
As a side note, I despise the way it is called the "sharing economy"; it's no sharing at all, and I wish this term were reserved for ideas I regard as more noble, like the gift economy, or a model in which people chip in a certain amount to a shared product on a large scale (such as democratic management of the economy).
That's the crux of this whole gig economy debate - for some people, these kinds of jobs are ideal: zero hours contracts, with the ability to work more or less depending on what else is going on in your life.
That being said, some people take these jobs because they're the only ones they can get. I don't know your circumstances, so I'm going to guess here, but from what you write it sounds like you have the safety net of your parents if things go wrong. While you study you may also have access to a student loan and/or support from your parents mandated by law (let's not get into an argument about how crappy student loans are, but at least they're an income during your studies). Since you're attending university, I might guess you're at an age where you don't yet care about paying into a pension. Again - making wild assumptions here - but if you don't have kids, you probably don't care if your work-life balance is skewed heavily towards studying and earning, at the expense of sleep and general health.
For some others, though, their job is all they have, and "gig economy" jobs are the only ones they can get. This creates the perfect environment for exploitative working practices, where dodgy loopholes are used to underpay and overwork staff, who can be dropped at an instant if the company needs to save money or if workers start to complain about conditions.
If Deliveroo and other gigs were worked by students in their free time, I don't think this would be such an issue. The problem is that, increasingly, people without safety nets are joining these companies and working effectively full time, and no longer just for occasional "gigs" a few times a week. That, in my book, requires that they are given the same rights as any other full time workers: holidays, sick pay, pension contributions, grievance procedures and other benefits.
That being said, some people take these jobs because they're the only ones they can get. I don't know your circumstances, so I'm going to guess here, but from what you write it sounds like you have the safety net of your parents if things go wrong. While you study you may also have access to a student loan and/or support from your parents mandated by law (let's not get into an argument about how crappy student loans are, but at least they're an income during your studies). Since you're attending university, I might guess you're at an age where you don't yet care about paying into a pension. Again - making wild assumptions here - but if you don't have kids, you probably don't care if your work-life balance is skewed heavily towards studying and earning, at the expense of sleep and general health.
For some others, though, their job is all they have, and "gig economy" jobs are the only ones they can get. This creates the perfect environment for exploitative working practices, where dodgy loopholes are used to underpay and overwork staff, who can be dropped at an instant if the company needs to save money or if workers start to complain about conditions.
If Deliveroo and other gigs were worked by students in their free time, I don't think this would be such an issue. The problem is that, increasingly, people without safety nets are joining these companies and working effectively full time, and no longer just for occasional "gigs" a few times a week. That, in my book, requires that they are given the same rights as any other full time workers: holidays, sick pay, pension contributions, grievance procedures and other benefits.
Companies like Uber and Deliveroo have become a full-time job of last resort for many people, even though they may have been intended only as part-time gigs. Isn't it technically society's fault, and not Deliveroo's or Uber's, that no other full-time employment exists?
People working in the gig economy deserve a safety net and also deserve better pay, but you can't solely blame Taskrabbit, Uber or Deliveroo for these issues.
People working in the gig economy deserve a safety net and also deserve better pay, but you can't solely blame Taskrabbit, Uber or Deliveroo for these issues.
That's true, I have my parents if things go wrong; the thing is that before I started university last year my parents convinced me not to get a student maintenance loan (i.e what pays for my living expenses and rent). Instead I get a sum of money at the start of each month and that's supposed to subsist for the utilities in the house where I live and any other expenses I have, except rent which my parents pay. I have no children or dependents nor do I pay any taxes.
It's also true that I don't need a job, but I'm being pressured to get one for the idea that my parents will at some point stop giving me money, and that I need something to put on my CV/resume (I don't think Deliveroo is all that impressive personally).
My other options are things like working in a fast food joint, or something like a cinema. But I don't know if I can do that and fit in my education at the same time plus have some free time to relax myself, play a video game or whatever. It's honestly worrying and I feel pushed into a corner by all this.
It's also true that I don't need a job, but I'm being pressured to get one for the idea that my parents will at some point stop giving me money, and that I need something to put on my CV/resume (I don't think Deliveroo is all that impressive personally).
My other options are things like working in a fast food joint, or something like a cinema. But I don't know if I can do that and fit in my education at the same time plus have some free time to relax myself, play a video game or whatever. It's honestly worrying and I feel pushed into a corner by all this.
I was in a very similar situation to you a few years ago when I went to university. I had a summer job working in PC World before I started, and I was lucky enough to transfer to the shop in my university city. I worked Wednesday evenings for 4 hours (16:00 to 20:00) and Saturdays (09:00 to 18:00) which gave me 12 hours income a week at a little above minimum wage at the time, or about £300/month. Essentially, it paid my rent and my student loan could cover everything else. Later when I entered my honours year I dropped down to just Saturdays.
The job was shitty in the sense that you had to try to sell junk computers and software and insurance to unsuspecting people for what felt like long hours and not much money, but I feel like the experience was ultimately worth it in many ways. I gained a work ethic, having to get up and be on time, wash and iron a uniform and take responsibility. I learned what it was like to be someone working there full time (and how it can destroy your soul). Again, for some people these jobs are all they can get. I also learned about the attitude of the average member of the public, which I think has given me some small insight into recent election results. I've got 5 years experience in retail sales in a complicated field (not just selling coffee or clothes) to put on my CV, which shows to employers in my profession that I have actually had what some call a "real" job, and all the life experience that goes with it.
I think it's worth judging a sales/delivery/misc job at such an early stage in your career as beneficial life experience, instead of only trying to find something relevant to your future career (if you can find a job that has both, though, then great!).
The job was shitty in the sense that you had to try to sell junk computers and software and insurance to unsuspecting people for what felt like long hours and not much money, but I feel like the experience was ultimately worth it in many ways. I gained a work ethic, having to get up and be on time, wash and iron a uniform and take responsibility. I learned what it was like to be someone working there full time (and how it can destroy your soul). Again, for some people these jobs are all they can get. I also learned about the attitude of the average member of the public, which I think has given me some small insight into recent election results. I've got 5 years experience in retail sales in a complicated field (not just selling coffee or clothes) to put on my CV, which shows to employers in my profession that I have actually had what some call a "real" job, and all the life experience that goes with it.
I think it's worth judging a sales/delivery/misc job at such an early stage in your career as beneficial life experience, instead of only trying to find something relevant to your future career (if you can find a job that has both, though, then great!).
Seems like you are interested in programming. Why don't you try some job in that lines, like an internship or if that's too early, some freelancing like in upwork?
If you feel you aren't ready for programming professionally, you can try taking up SEO, content writing etc..
I don't know which subject you are pursuing but it might give more weight to your CV.
Btw, if you think of doing your own startup at some time in the future, then try to gather as much of sales experience as possible, even doing a door to door sales. I really wished I had done that in my student days..
If you feel you aren't ready for programming professionally, you can try taking up SEO, content writing etc..
I don't know which subject you are pursuing but it might give more weight to your CV.
Btw, if you think of doing your own startup at some time in the future, then try to gather as much of sales experience as possible, even doing a door to door sales. I really wished I had done that in my student days..
If you've got any experience or interest in programming, I'd recommend having a stab at Google Summer of Code[0].
[0] - https://developers.google.com/open-source/gsoc/
[0] - https://developers.google.com/open-source/gsoc/
"Deliveroo seems like my best bet at the moment with flexible hours"
"I probably wouldn't be making any more than minimum wage elsewhere"
Do Deliveroo guarantee minimum wage for your time spent available, or do you effectively earn less than minimum wage, because you spend the majority of your time waiting for an order?
I can see why Deliveroo may appear attractive, but wonder whether the appeal might wear off once you have first-hand experience of their operation.
(Situation in Germany)
It depends on whether you are driving for them as a self employed driver or an employee. As an employee you earn 9€/hour minimum, some get 10€/h .. tips are an extra of 0-5€/h .. you are required 60 hours minimum per month.
As a self employed rider you get 5.50€ per delivery, but have to pay health and social insurance yourself. Employees have to pay less than half of the total cost.
How much you sit around or compete with others depends on the shifts you take ..
It could be a pretty attractive job for someone that likes to take off-peak shifts and read or work on something else while having to do the occasional delivery in his home neighborhood.
It can get even nicer if one can log in from home. It does happen frequently, that no deliveries happen at all during shifts, so one really can focus on other projects while getting paid by deliveroo.
I honestly am surprised how deliveroo manages to keep the restaurants on board. They have to give more than 30% of the earnings to deliveroo, most restaurant owners are extremely annoyed and frustrated with the service and are already playing with the idea of pulling the plug again. Since recently deliveroo tries to force the cost for the paper bags onto the restaurants(13cents), which exacerbates the situation...
From an environmental perspective they are contributing to an enormous amount of garbage, the majority of containers are plastic and in the worst case styrofoam. As an example, riders sometimes have to drive by car for 5-8km because someone ordered a soup for 5€ (Plus 7€ to reach the minimum of 12€ and paid 2.90€ delivery fee on top of that).
This business model contributes to the convenience culture that we in the western world are celebrating and which is part-responsible for quite a few serious issues that we are now facing..
One thing deliveroo has going for them is that the people in charge are always very reasonable and friendly, treat their employees with respect and are quite forgiving. But I assume that this is simply because the whole system is very fragile and they know it. In my city there are always way too few drivers. It is apparent how desperately they need the drivers.
I was surprised to read about the funding, because i assumed the whole thing can't be sustainable in the long run.
As a self employed rider you get 5.50€ per delivery, but have to pay health and social insurance yourself. Employees have to pay less than half of the total cost.
How much you sit around or compete with others depends on the shifts you take ..
It could be a pretty attractive job for someone that likes to take off-peak shifts and read or work on something else while having to do the occasional delivery in his home neighborhood.
It can get even nicer if one can log in from home. It does happen frequently, that no deliveries happen at all during shifts, so one really can focus on other projects while getting paid by deliveroo.
I honestly am surprised how deliveroo manages to keep the restaurants on board. They have to give more than 30% of the earnings to deliveroo, most restaurant owners are extremely annoyed and frustrated with the service and are already playing with the idea of pulling the plug again. Since recently deliveroo tries to force the cost for the paper bags onto the restaurants(13cents), which exacerbates the situation...
From an environmental perspective they are contributing to an enormous amount of garbage, the majority of containers are plastic and in the worst case styrofoam. As an example, riders sometimes have to drive by car for 5-8km because someone ordered a soup for 5€ (Plus 7€ to reach the minimum of 12€ and paid 2.90€ delivery fee on top of that).
This business model contributes to the convenience culture that we in the western world are celebrating and which is part-responsible for quite a few serious issues that we are now facing..
One thing deliveroo has going for them is that the people in charge are always very reasonable and friendly, treat their employees with respect and are quite forgiving. But I assume that this is simply because the whole system is very fragile and they know it. In my city there are always way too few drivers. It is apparent how desperately they need the drivers.
I was surprised to read about the funding, because i assumed the whole thing can't be sustainable in the long run.
They used to work on an hourly rate plus per delivery rate, which was most likely simply funded by VC capital and never sustainable, and they always intended to move to a per delivery rate. Legally in the UK, they have always claimed their riders are "self employed" meaning minimum wage laws don't apply.
They are now moving to a shift scheduling system which prevents too many riders being online competing for a low demand ("too many" being Deliveroo's definition, of course) and shifts that uncertainty to the riders, who have to log in at a specific time each week and try to book their desired shifts.
They are now moving to a shift scheduling system which prevents too many riders being online competing for a low demand ("too many" being Deliveroo's definition, of course) and shifts that uncertainty to the riders, who have to log in at a specific time each week and try to book their desired shifts.
From what I've heard, they require you to accept a certain amount of shifts of certain types (like weekday afternoon shifts, or weekend night shifts which are the busiest) and they have a very excessive mandatory "equipment deposit charge".
It also looks like they're implementing a new scheduling system in a week, which will prevent there being too many riders active in an area, but that means they'll decide which riders get the first pick of the time slots they want.
As with any "sharing economy" company, expect to be "employed" on capricious and arbitrary terms. Go to some Deliveroo rider-specific web forums and you can understand a bit better.
It also looks like they're implementing a new scheduling system in a week, which will prevent there being too many riders active in an area, but that means they'll decide which riders get the first pick of the time slots they want.
As with any "sharing economy" company, expect to be "employed" on capricious and arbitrary terms. Go to some Deliveroo rider-specific web forums and you can understand a bit better.
Look into work-study opportunities on campus. You may be able to find a job which is connected to your major.
this can also be a really good opportunity to develop a relationship with interesting faculty.
i spent so much time in college working to cover living expenses I had to drop out. thats a pretty stupid result.
i spent so much time in college working to cover living expenses I had to drop out. thats a pretty stupid result.
Their logistics solution is just not as advanced as it can be. That's just common startup logic, the hardest problem will be solved with more money and good people and SV network has good people.
They need combinatorial search and some travel time data, live re-search when new orders come in. For this to work well they need to predict new orders in advance, this means they need data on the spatial distributions of orders through time (which now they certainly have).
They practically need to solve a variant of a problem that Uber has. Their delivery drivers load much more "passengers" but have static pickup points (known restaurants so there's only variance in the delivery point, pickups are pretty much static).
It's an interesting problem to solve, given that this kind of logistics research is practically invisible and I can't name any papers that dealt with this problem in any advanced way.
If done properly, then they've solved the logistics problem for on-demand companies that have enough data.
If solution is some ad-hoc mutated monster then it is just a chance for someone else to get the other pieces of cake.
They need combinatorial search and some travel time data, live re-search when new orders come in. For this to work well they need to predict new orders in advance, this means they need data on the spatial distributions of orders through time (which now they certainly have).
They practically need to solve a variant of a problem that Uber has. Their delivery drivers load much more "passengers" but have static pickup points (known restaurants so there's only variance in the delivery point, pickups are pretty much static).
It's an interesting problem to solve, given that this kind of logistics research is practically invisible and I can't name any papers that dealt with this problem in any advanced way.
If done properly, then they've solved the logistics problem for on-demand companies that have enough data.
If solution is some ad-hoc mutated monster then it is just a chance for someone else to get the other pieces of cake.
Your dismissal of a non SV company's innovation is embarrassing for you. The tech here is as good or better as anyone in the Valley.
Sorry if I was unclear, I had no intention to imply that their innovation is weak, or that SV has anything to do with that. It's pretty clear they have access to SV network, despite being based in London.
When I left there a year ago there was not much innovation going on, just kowtowing to marketing/design.
> For this to work well they need to predict new orders in advance
Calls for deep learning! Or using data from last week…
Calls for deep learning! Or using data from last week…
Similar at Angel, London. They gather at the shell petrol station; also for some strange reason pretty much all of them speak brazilian portuguese.
Is that strange because they aren't Brazilian?
They are Brazilians with paulistas accent. It's strange that they are, all, Brazilians.
As a Brazilian it makes sense to me, Brazil economy just keeps getting worse and worse, a lot of Brazilians are moving abroad chasing some opportunities. London is very famous as a destination for them, before there was Deliveroo I knew some people who did a lot of construction work because a lot of firms would hire them even if they don't have the proper visa, I assume you can do the same with Deliveroo.
> I do think though that it raises the issue that they should be paying for their own business premises and stop using our public spaces as their company waiting spots.
How is it ok to constantly have cars using these spaces for free? Using roads for free?
How is it ok to constantly have cars using these spaces for free? Using roads for free?
Yep same in Bristol. They remind me of a loitering Bōsōzoku biker gang - scooters, similar outfits, alternative hair etc. eyeballing passersby.
> In my city, Nottingham. all the deliveroo people gather in Trinity Square waiting for jobs. There's obviously no special AI needed.
I think you misunderstand: that is the AI system decision. Had it been done by management committee of founders and optimization experts, everyone would have been staged in the most bizarre places around town, typically alone, which would have caused most of their delivery force to quit.
I think you misunderstand: that is the AI system decision. Had it been done by management committee of founders and optimization experts, everyone would have been staged in the most bizarre places around town, typically alone, which would have caused most of their delivery force to quit.
To be fair Nottingham city centre is tiny, and Trinity Square is bang in the middle. It's obviously a market that would not benefit from some fancy AI system.
Tiny? It's a bit more compact than other cities, but it's certainly not tiny. It's also damn hilly, which the riders can't enjoy much.
Try a bunch of cities at 200m zoom in google maps.
Try a bunch of cities at 200m zoom in google maps.
[deleted]
Currently there is a £2.50 fee for deliveries in London with Deliveroo. Even with extreme optimization a Deliveroo rider can't possibly make more than 3-4 "proper" deliveries in an hour (food gets cold fast! And when it gets returned deliveroo & the restaurant suffers) so maybe they can generate around £10/hour in revenue for Deliveroo. Then you need to take out costs for the driver, development, marketing, integration withe restaurants, etc.
So where is Deliveroo's margin on that? There isn't one, and there's no way they can pay delivery drivers as actual employees (which the law will eventually catch up with by the way), even at minimum wage you'd need to cover £15+/hour to include holiday pay, sick pay, insurance and other standard benefits.
MAYBE, delivery drones / robots will arrive before the funding runs out, but I doubt it very much.
So where is Deliveroo's margin on that? There isn't one, and there's no way they can pay delivery drivers as actual employees (which the law will eventually catch up with by the way), even at minimum wage you'd need to cover £15+/hour to include holiday pay, sick pay, insurance and other standard benefits.
MAYBE, delivery drones / robots will arrive before the funding runs out, but I doubt it very much.
I have no doubt Deliveroo gets a percentage cut on the cost of the food, too. That can really add up all by itself.
Deliveroo take 30% (or at least did when a restaurant I ran looked in to it) and you can't charge extra according to their terms
Similar food delivery services get around 8-12% of each order afaik.
Don’t they get a discount on the food? That’s how a lot of the other services make it...
Looks like from the comments below they can take out 30% of the cost of the food. Assuming average of £20/order, that's £6/order, which could work.
Still doesn't seem like a great deal for the consumer / restaurant. E.g. I'm paying £8.50 of a £22.50 order purely on delivery, and I don't even get table service...
Still doesn't seem like a great deal for the consumer / restaurant. E.g. I'm paying £8.50 of a £22.50 order purely on delivery, and I don't even get table service...
At least where I live, typically the food that is served via deliveroo is not at all the same quantity or quality as what you get for the same price in the restaurant, so that further is unfair to the consumer.
Part of the idea is that you were already paying that £6, or more, in advertising costs the restaurant pays and that Deliveroo is more efficient at customer acquisition than the average restaurant is.
I think it's also about how you don't need the front of house elements for a delivery order. No need for extra real estate for tables, wait staff, etc. All you need is a kitchen, someone to cook the food and the ingredients.
That might be the theory. In practice, even if I click the "only on Deliveroo" option, I'm looking at a list of restaurants that spend a fortune on premises and their own marketing campaigns (including at chain level); they're selling on Deliveroo not because they don't already have high marketing and premises costs (to pass on) but because they're really not expecting enough takeaway orders to justify running their own delivery operation.
I think restaurants would be happy to pay 30% for new customer, but for subsequent orders, Deliveroo should take smaller cuts. I wonder if something like this part of agreement.
Exactly. It broadens your target market. Channel takes ~1/3rd in the software industry...
Delivery start-ups appear to be built to race to IPO, much like music start-ups. There is no intent to make profit.
Do people really return their food? I usually vote with my feet. I walked away from just eat precisely because this sort of experience.
For deliveroo I just call them and they resend the food and give a credit on your account.
Kind of ruins the moment though.
Kind of ruins the moment though.
All these new delivery startups remind me of Kozmo.com, which raised quite a bit of money from high-profile investors (including Fred Wilson and Amazon[1]) and even filed for an IPO in 2000. Kozmo.com described itself this way in its IPO filing:
"We enable consumers to order a variety of entertainment, food and convenience products over the Internet for free delivery in under one hour. Our promise of under one hour delivery is designed to satisfy a consumer's desire for immediate gratification. We focus on selling frequently purchased, high margin items with well-known brand names. Additionally, we recently initiated a business-to-business service to enable select retailers to provide their customers with an expedited delivery option on a fee-for-service basis through our distribution networks."[2]
If you've never heard of Kozmo.com, it's because the company went bust. The business grew very quickly... but only as long as there was freshly raised capital coming in. When the flow of fresh capital stopped, the company couldn't find a way to become profitable.
Here are some articles chronicling Kozmo.com's swift rise and even swifter fall:
https://web.archive.org/web/20040821125230/http://www.manufa...
https://www.forbes.com/2000/06/22/mu3.html
Deliveroo doesn't look that different from Kozmo.com... or does it?
--
[1] http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-new...
[2] https://www.sec.gov/Archives/edgar/data/1075749/000091205700...
"We enable consumers to order a variety of entertainment, food and convenience products over the Internet for free delivery in under one hour. Our promise of under one hour delivery is designed to satisfy a consumer's desire for immediate gratification. We focus on selling frequently purchased, high margin items with well-known brand names. Additionally, we recently initiated a business-to-business service to enable select retailers to provide their customers with an expedited delivery option on a fee-for-service basis through our distribution networks."[2]
If you've never heard of Kozmo.com, it's because the company went bust. The business grew very quickly... but only as long as there was freshly raised capital coming in. When the flow of fresh capital stopped, the company couldn't find a way to become profitable.
Here are some articles chronicling Kozmo.com's swift rise and even swifter fall:
https://web.archive.org/web/20040821125230/http://www.manufa...
https://www.forbes.com/2000/06/22/mu3.html
Deliveroo doesn't look that different from Kozmo.com... or does it?
--
[1] http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-new...
[2] https://www.sec.gov/Archives/edgar/data/1075749/000091205700...
This one reminds me of groupon, the discounts they must ask for can't really be profitable to the business or drive much business to anyone. Otherwise the restaurants would just hire their own dedicated delivery person.
You have to love the new net economy, it's all about burning through investor cash while having the crappiest, unprofitable business model they can, but hey they have deep learning and algorithms!
You have to love the new net economy, it's all about burning through investor cash while having the crappiest, unprofitable business model they can, but hey they have deep learning and algorithms!
Amusingly, something quite similarly along those lines launched fairly recently - http://etefy.com
Given they promise free delivery within an hour, 24/7, with no minimum order value, I reckon they’ll be gone within 6 months or so.
Given they promise free delivery within an hour, 24/7, with no minimum order value, I reckon they’ll be gone within 6 months or so.
I work for a company worth billions. I've talked to entrepreneurs who "already tried the idea" for the sort of business I work at.
I guess how you execute matters, or something.
I guess how you execute matters, or something.
Among other reasons Kozmo failed a) prior to smartphones and b) when there were less people using the internet.
Broadband didn't exist in the year 2000. It is fair to call that the pre-internet era.
Is the company you work for actually profitable?
More profitable than the company that guy runs.
I had better pay when I was delivering newspapers as a teenager.
This was many decades ago (when people bought their news on dead tree) and a lot of inflation as happened since. I didn't see my paper round as a 'proper job', but I think the inflation adjusted rate comes out to at least double the £8 per hour that Deliveroo riders claim to make on Glassdoor. I didn't have to pay rent since I was living with my parents, my income was purely disposable.
Some numbers: late 1980's, my Sunday paper round took five hours and earned me £30 not counting tips. All done by bicycle. I also had a morning paper round and an after school round delivering the local paper. On the back of these 'gigs' I also had gardening, baby sitting and other jobs from my clients, making my childhood wages now seem positively 'over-paid' compared to what passes for 'gig economy' nowadays.
I believe my take of the newspaper sale was around 20% with a delivery charge of 5 pence. Bicycles were just for kids back then and working for pocket money (not paying taxes or expecting benefits like holiday pay) was okay given I was at school. Furthermore, all my work was chargeable, I was not waiting around for someone to click on an app.
From this perspective I find it crazy that this Deliveroo phenomenon has happened. I aspired to do more than ride around delivering stuff in all weathers. Fortunately I did move on to 'proper jobs'.
The Deliveroo drivers are kind of with the pigeons in terms of London's pecking order. Although 'gig' economy, they lack the opportunities my humble paper round offered for 'up-sells' plus there are some venture capitalists creaming off what should be their cut. How did it all come to this?
This was many decades ago (when people bought their news on dead tree) and a lot of inflation as happened since. I didn't see my paper round as a 'proper job', but I think the inflation adjusted rate comes out to at least double the £8 per hour that Deliveroo riders claim to make on Glassdoor. I didn't have to pay rent since I was living with my parents, my income was purely disposable.
Some numbers: late 1980's, my Sunday paper round took five hours and earned me £30 not counting tips. All done by bicycle. I also had a morning paper round and an after school round delivering the local paper. On the back of these 'gigs' I also had gardening, baby sitting and other jobs from my clients, making my childhood wages now seem positively 'over-paid' compared to what passes for 'gig economy' nowadays.
I believe my take of the newspaper sale was around 20% with a delivery charge of 5 pence. Bicycles were just for kids back then and working for pocket money (not paying taxes or expecting benefits like holiday pay) was okay given I was at school. Furthermore, all my work was chargeable, I was not waiting around for someone to click on an app.
From this perspective I find it crazy that this Deliveroo phenomenon has happened. I aspired to do more than ride around delivering stuff in all weathers. Fortunately I did move on to 'proper jobs'.
The Deliveroo drivers are kind of with the pigeons in terms of London's pecking order. Although 'gig' economy, they lack the opportunities my humble paper round offered for 'up-sells' plus there are some venture capitalists creaming off what should be their cut. How did it all come to this?
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Money Quote:
"Deliveroo grew a lot in 2016, with revenue up 611 per cent to £129 million. But losses were up too — a 300 per cent increase to £129 million. However, the figure to really watch is the food delivery company’s gross margin percentage, which sat at just 0.7 per cent."
How can an investor, justify this as a solid investment when the gross margins are 0.7%?
How can an investor, justify this as a solid investment when the gross margins are 0.7%?
It's been clear to me for a while that valuations lack any rational basis.
I reached this conclusion shortly after Yo was valued at something like $10 million.
I reached this conclusion shortly after Yo was valued at something like $10 million.
There still is money to be made in a bubble. Just gotta find some greater fool to sell the shares to and book that capital gain. Which usually (at the end of the road) ends up being a pension fund.
300 percent growth to £129M is impressive growth and those stats are 9 months old, so if they have been able to continue to increase their revenue growth they maybe ending 2017 with £250MM+ which would be about an 8-10x multiple on their 2017 year end revenue which isn't that outrageous.
The challenge with startups is that you don't yet have a clear insight as to how their sales and marketing spend will evolve over time, so people are willing to invest in growth of revenue over those metrics.
What's more worrying is their gross margin percentage. Taking the revenue growth and sales and marketing expense and overall loss out of the equation, that margin percentage is going to make it extremely difficult to make a business model that works in the long term.
However, building a large revenue base helps to offset that, but we've also seen that play out negatively for companies in a similar position like Groupon.
I think with this valuation they will need considerable consecutive years of revenue growth to grow into that valuation meanwhile their losses are high and also increasing so really this funding round buys them the usual 12-18 months of runway.
The challenge with startups is that you don't yet have a clear insight as to how their sales and marketing spend will evolve over time, so people are willing to invest in growth of revenue over those metrics.
What's more worrying is their gross margin percentage. Taking the revenue growth and sales and marketing expense and overall loss out of the equation, that margin percentage is going to make it extremely difficult to make a business model that works in the long term.
However, building a large revenue base helps to offset that, but we've also seen that play out negatively for companies in a similar position like Groupon.
I think with this valuation they will need considerable consecutive years of revenue growth to grow into that valuation meanwhile their losses are high and also increasing so really this funding round buys them the usual 12-18 months of runway.
For those wondering about these numbers, Deliveroo has a great concept, solid execution and huge brand recognition.
Just-eat (worth 4.6B) connects people to shitty takeaways and has a terrible website. Deliveroo connects people to restaurants and provides the delivery service themselves, through bikers (here in London). They have taken this and spread throughout Europe.
They are going to (and are) completely canablising Just-eat who seemed to run out of stream and grind to a halt several years ago.
Just-eat (worth 4.6B) connects people to shitty takeaways and has a terrible website. Deliveroo connects people to restaurants and provides the delivery service themselves, through bikers (here in London). They have taken this and spread throughout Europe.
They are going to (and are) completely canablising Just-eat who seemed to run out of stream and grind to a halt several years ago.
What makes you think Just-Eat ran out of steam "years ago"?
Stock price is higher than ever: http://www.londonstockexchange.com/exchange/prices-and-marke...
They are reporting good growth: http://www.cityam.com/256734/just-eat-reported-order-growth-...
I see lots of Deliveroo bikes around where I live in the centre of London, but they are basically non-existant when I go to other towns and cities.
Also, Deliveroo started up-scale -- they can't go down to selling cheap Chinese takeaway food, because it will hurt their image.
Just-Eat started at the low-end and are now moving up-scale without hurting their image. And even then, plenty of people prefer low-end Chinese food (I sure do).
Stock price is higher than ever: http://www.londonstockexchange.com/exchange/prices-and-marke...
They are reporting good growth: http://www.cityam.com/256734/just-eat-reported-order-growth-...
I see lots of Deliveroo bikes around where I live in the centre of London, but they are basically non-existant when I go to other towns and cities.
Also, Deliveroo started up-scale -- they can't go down to selling cheap Chinese takeaway food, because it will hurt their image.
Just-Eat started at the low-end and are now moving up-scale without hurting their image. And even then, plenty of people prefer low-end Chinese food (I sure do).
Entirely anecdotal, but my perception of Just Eat, Hungry House, etc. is of consistently crap takeaway food. I do not, and will not, order from them. Their reviews are completely untrustworthy - you literally never know what you’re going to get. There is no image to hurt - they’re the lowest of the low.
In the UK, Deliveroo originally differentiated primarily by only accepting high quality restaurants, rather than takeaways.
Just Eat, etc. may try to improve their image, offer remotely usable interfaces, clean up their offerings in terms of food quality, but I don’t think their reputation will ever recover to the point that anyone in London etc. would consider them above Deliveroo/Uber Eats.
Not sure how closely these views tally with others, but they are representative of my friends/peers.
In the UK, Deliveroo originally differentiated primarily by only accepting high quality restaurants, rather than takeaways.
Just Eat, etc. may try to improve their image, offer remotely usable interfaces, clean up their offerings in terms of food quality, but I don’t think their reputation will ever recover to the point that anyone in London etc. would consider them above Deliveroo/Uber Eats.
Not sure how closely these views tally with others, but they are representative of my friends/peers.
Agree. And I stopped using just eat when they required me to solve a captcha every time I wanted to order something.
But the real problem was deliveries. With just eat, the restaurant was in charge of the delivery. I found myself countless times wandering the streets around my block looking for the car of a delivery driver who didn't speak a word of english and was either too dumb or too lazy to get to the right place. Sort of defeats the purpose of a delivery.
Deliveroo did two things right: they took the burden of the delivery away from the restaurant and do it well, and they enlist quality restaurants, as opposed to the local kebab shop.
But the real problem was deliveries. With just eat, the restaurant was in charge of the delivery. I found myself countless times wandering the streets around my block looking for the car of a delivery driver who didn't speak a word of english and was either too dumb or too lazy to get to the right place. Sort of defeats the purpose of a delivery.
Deliveroo did two things right: they took the burden of the delivery away from the restaurant and do it well, and they enlist quality restaurants, as opposed to the local kebab shop.
Get off your high horse for few minutes.
High quality restaurants? Around Edinburgh the 'highest quality' restaurant offered is Pizza Express.
High quality restaurants? Around Edinburgh the 'highest quality' restaurant offered is Pizza Express.
I was living in Edinburgh when Deliveroo launched there. It’s a city full of superb restaurants, many of which are on Deliveroo.
Which serves higher quality food than the 200 generic chicken and kebab houses on Just Eat.
Anyway, in London there are a lot better quality places on Deliveroo than pizza express.
Anyway, in London there are a lot better quality places on Deliveroo than pizza express.
As someone who's just moved from Sydney to London, I've found the overall quality of 'restaurants' on Deliveroo and Uber Eats to be much much lower in the UK. A lot more scrappy takeaway chicken places, for example.
It seems to be quite dependent on the location. In places with fewer restaurants, they do seem to have dropped the barrier a little and allowed on more takeaway style places. In places like Shoreditch though, it’s just hundreds of top notch restaurants.
I guess it’s just down to Deliveroo’s (sometimes quite annoying) strict rule of not delivering further than 2km, so depends on the density of restaurants.
I guess it’s just down to Deliveroo’s (sometimes quite annoying) strict rule of not delivering further than 2km, so depends on the density of restaurants.
> Their reviews are completely untrustworthy - you literally never know what you’re going to get. There is no image to hurt - they’re the lowest of the low.
I guess you're using it wrong. Most I know use it for a takeaway place they're already familiar with and use it as a convenient way to order rather than a way to discover new restaurants.
> In the UK, Deliveroo originally differentiated primarily by only accepting high quality restaurants, rather than takeaways.
Did it? Here in Nottingham Deliveroo are showing high quality restaurants like Five Guys, Burger King, Subway and Hooters.
I guess you're using it wrong. Most I know use it for a takeaway place they're already familiar with and use it as a convenient way to order rather than a way to discover new restaurants.
> In the UK, Deliveroo originally differentiated primarily by only accepting high quality restaurants, rather than takeaways.
Did it? Here in Nottingham Deliveroo are showing high quality restaurants like Five Guys, Burger King, Subway and Hooters.
I don’t think it’s super fair to say that attempting to use features for one of its intended use-cases is using it wrong.
I have also noticed that restaurants will almost always include their own menu with direct ordering information, so I’m not sure restaurants are super into the idea of shifting existing customers to another platform - not that this invalidates the use case at all, to be fair.
Yes it was like that originally. In densely populated, high-end parts of major cities, it generally still is like that (as mentioned in another comment of mine).
There has also been a recent major push by both Deliveroo and Uber Eats to onboard major nationwide chains, which don’t tend to maintain particularly good quality standards via delivery unfortunately. Some exceptions to this, but generally fast food translates to delivery services very poorly.
I have also noticed that restaurants will almost always include their own menu with direct ordering information, so I’m not sure restaurants are super into the idea of shifting existing customers to another platform - not that this invalidates the use case at all, to be fair.
Yes it was like that originally. In densely populated, high-end parts of major cities, it generally still is like that (as mentioned in another comment of mine).
There has also been a recent major push by both Deliveroo and Uber Eats to onboard major nationwide chains, which don’t tend to maintain particularly good quality standards via delivery unfortunately. Some exceptions to this, but generally fast food translates to delivery services very poorly.
By ran out of steam I mean:
1. Their website is really quite poor, and has been for years. Why the hell is the navigation so crap, and why can't I search for a specific food item?
2. They still haven't done anything about the prevalent and pervasive fake reviews.
Also, they cannot "move up-scale", their logo is associated with cheap food. Upscale restaurants don't want to put themselves on just-eat, next to the cheap low end places, nor do they want the just eat logo in their windows.
IMO it's the opposite of what you describe - it's way harder to go low-end to high-end. Just eat has to somehow convince people their brand isn't for bad food.and cheap takeaways, then market themselves at high-end places.
Deliveroo just needs to keep their high-end image, and then all the cheap places would throw themselves at Deliveroo to up their own image. No convincing required.
1. Their website is really quite poor, and has been for years. Why the hell is the navigation so crap, and why can't I search for a specific food item?
2. They still haven't done anything about the prevalent and pervasive fake reviews.
Also, they cannot "move up-scale", their logo is associated with cheap food. Upscale restaurants don't want to put themselves on just-eat, next to the cheap low end places, nor do they want the just eat logo in their windows.
IMO it's the opposite of what you describe - it's way harder to go low-end to high-end. Just eat has to somehow convince people their brand isn't for bad food.and cheap takeaways, then market themselves at high-end places.
Deliveroo just needs to keep their high-end image, and then all the cheap places would throw themselves at Deliveroo to up their own image. No convincing required.
1) Maybe mobile has a higher conversion rate and higher order value? Having a bad website would force people to mobile. Here are some screenshots of Just-Eat and Deliveroo's websites: https://imgur.com/a/9dWna -- Deliveroo hides search filters away, and has 2 wine shops first. Do you really think that Deliveroo's website is better, looking at these screenshots side-by-side? :)
2) I can't comment on reviews -- don't know if that's true or if it's the same with Deliveroo.
3) I just opened Deliveroo in Angel. First is a donut shop... second is Pret A Manger... third is a wine store... then LEON and then Itsu. First on HungryHouse (owned by Just-Eat) is YouMe Sushi, followed by a bunch of independents (none very special but still independent and better than Pret/LEON/Itsu!). First on Just-Eat is Burger King to be fair, but that is then followed by indepdenents. McDonalds is first on Uber Eats. So I think Just-Eat is already equaling Deliveroo/Uber. Also I do see their logo everywhere.
2) I can't comment on reviews -- don't know if that's true or if it's the same with Deliveroo.
3) I just opened Deliveroo in Angel. First is a donut shop... second is Pret A Manger... third is a wine store... then LEON and then Itsu. First on HungryHouse (owned by Just-Eat) is YouMe Sushi, followed by a bunch of independents (none very special but still independent and better than Pret/LEON/Itsu!). First on Just-Eat is Burger King to be fair, but that is then followed by indepdenents. McDonalds is first on Uber Eats. So I think Just-Eat is already equaling Deliveroo/Uber. Also I do see their logo everywhere.
> I see lots of Deliveroo bikes around where I live in the centre of London, but they are basically non-existent when I go to other towns and cities.
Whenever I visit Oxford I always see lots of Deliveroo bikes driving around the city centre.
Whenever I visit Oxford I always see lots of Deliveroo bikes driving around the city centre.
Yes. Same in the (little, Midlands) city of Worcester, and some decent enough restaurants too. If they've cracked Worcester then they're very far from being London-only.
> they can't go down to selling cheap Chinese takeaway food, because it will hurt their image
Oh, they totally can if the margins work. Just look at Uber which started as a black car service.
Oh, they totally can if the margins work. Just look at Uber which started as a black car service.
Deliveroo in Brighton has KFC and McDonalds alongside their “high-end” restaurants. This, along with not having user ratings for outlets, has really made me question how good the other outlets really are.
While I've never heard of either of these companies (maybe because I'm american?), it seems like wider selection is better than "up-scale" food. Delivery on top of expensive food is a once a month prospect; cheap food delivered cheaply is a daily prospect. To put this another way, I've spent the vast majority of money on uber on uner x, not uber black cars.
Low margins are harder to pull off but are much more stable and easier to scale.
Why don't they just offer all restaurants, sort of like postmates did (does?).
Low margins are harder to pull off but are much more stable and easier to scale.
Why don't they just offer all restaurants, sort of like postmates did (does?).
Anecdotal, but I know loads of my people in my age group that use Just Eat. I know none that use Deliveroo. I don't really have a problem with their website either, if I want some fast food it's quick and easy.. And I get the option to pay with cash on delivery or card.
UberEats has largely won my business in Edinburgh. The app is nicer, the drivers more likely to find me without going to the wrong place first, and it lets me decide whether to tip after the food arrives.
Would it be fair to say that the valuation is based on the back of Just-eats valuation?
Another unicorn that can only exist because it uses fake self-employment to turn their workforce into a cheaper one.
Just like Uber and so many others this only works because for some reason turning paid work into something that is not even self-sustaining suddenly is accepted.
Does nobody have ethical issues with seeing value in devaluing people?
Just like Uber and so many others this only works because for some reason turning paid work into something that is not even self-sustaining suddenly is accepted.
Does nobody have ethical issues with seeing value in devaluing people?
While I strongly agree with your overall sentiment it's worth noting that this is not a new startup-developed characteristic. The people driving FedEx delivery trucks to your office are independent contractors too.
Fedex settled for hundreds of millions of dollars for misclassifying Ground delivery truck drivers as independent contractors.
http://mobile.reuters.com/article/amp/idUSKCN0Z229Q
http://mobile.reuters.com/article/amp/idUSKCN0Z229Q
Some Fedex Ground routes are awarded to independent companies, as in a local company that bids on the region or route. But it's not all Fedex deliveries and I can't vouch for every company that has one of theses routes as to the employment status of their drivers. And as far as I know, Fedex is not giving our Ground routes to individual contractors. And as far as I know Fedex Express is not handled by any outside contractors. Express and Ground are essentially 2 separate businesses within Fedex.
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While I agree this self-employed farce has to stop, the service itself is good. Previously takeaways were all the more greasy options, the deliveroo options are nicer food and it's aimed at a different market segment. It allows venues access to a market that was previously denied to them because they couldn't justify running their own delivery service full-time.
They charge £2.50 per delivery. If they were paying couriers minimum wage I assume they'd be able to make money off it still.
I think that price probably includes the high risk that the self-employed status will be rescinded.
They charge £2.50 per delivery. If they were paying couriers minimum wage I assume they'd be able to make money off it still.
I think that price probably includes the high risk that the self-employed status will be rescinded.
While I agree this self-employed farce has to stop, the service itself is good
I think they are having issues then with scaling out - I've used Deliveroo a grand total of 3 times, all for restaurants that I know are about a mile from my house, every time Deliveroo have been 45-60 minutes after their estimated time, the food was cold and it would literally have been quicker to walk to the restaurant, eat, and walk home. Anecdata I know but I don't see how they can make it work without hiring a lot more people. And this business can only work financially if they don't.
I think they are having issues then with scaling out - I've used Deliveroo a grand total of 3 times, all for restaurants that I know are about a mile from my house, every time Deliveroo have been 45-60 minutes after their estimated time, the food was cold and it would literally have been quicker to walk to the restaurant, eat, and walk home. Anecdata I know but I don't see how they can make it work without hiring a lot more people. And this business can only work financially if they don't.
Deliveroo also take 30% of the food sale so I always assumed the £2.50 went to the rider, which seems like decent amount.
Wow, 30%? So restaurants that use deliveroo I should be able to ask for at least a 20% discount for collecting food? Sounds like Groupon's modus, once the restaurants realise they're giving away such a large part of their profits surely they stop using them? Isn't it cheaper to have your own delivery people?
Edit: Thinking about it, if I order pizza for £20, the company adds £2.50 for delivery. So £8.50 is being spent on delivery (?) .. a normal taxi is about £5 for that trip; an Uber or similar must be cheaper still?
Edit: Thinking about it, if I order pizza for £20, the company adds £2.50 for delivery. So £8.50 is being spent on delivery (?) .. a normal taxi is about £5 for that trip; an Uber or similar must be cheaper still?
a normal taxi is about £5 for that trip;
an Uber or similar must be cheaper
[1] https://motherboard.vice.com/en_us/article/9a3vye/uber-true-...
The source of that article - https://www.nakedcapitalism.com/2016/11/can-uber-ever-delive... - makes no sense to me.
The cost of sales and operating expenses seem non-sensical. What are Uber's cost of sale? What are it's operating expenses? How are they different?
If Uber takes a 20% cut, the only cost of sale I can't see is credit card costs. Everything else - including servers - is just an operating expense.
More than likely the lifetime value of a ride sharing customer is huge, so rather than subsidising riders, they are likely front loading acquisition costs, and hoping to make it back in lifetime value. That seems to me a pretty darned solid strategy.
The cost of sales and operating expenses seem non-sensical. What are Uber's cost of sale? What are it's operating expenses? How are they different?
If Uber takes a 20% cut, the only cost of sale I can't see is credit card costs. Everything else - including servers - is just an operating expense.
More than likely the lifetime value of a ride sharing customer is huge, so rather than subsidising riders, they are likely front loading acquisition costs, and hoping to make it back in lifetime value. That seems to me a pretty darned solid strategy.
Yeah, I forgot to say that. 30% is very similar to just eat's take too. Seeing as the minimum order is invariably £10, the minimum take for deliveroo is £5 per order, but I'm guessing it's usually more like £7-£10.
They'll definitely still be able to make money after a change in status.
They'll definitely still be able to make money after a change in status.
Where have you got that 30% number from? I am pretty sure it was around 10% four years ago in most parts of western Europe and it would surprise me seeing it tripled.
Oh yeah, no idea why I got 30% stuck in my head.
Are they going to make people use their local restaurant 30% more? Otherwise it's just eating the restaurant's profits (pardon the pun).
30% to remove the tables & waiting staff (plus toilets, waiting area) for those customers? Seems like a decent deal.
Only if you never want to eat out or be waited on now and again.
Delivering food is not a high value activity. Most people are only willing to pay a few dollars to have food delivered to them. If you raise the cost of employing low skill workers then many of these business models cease to exist.
It's hard to survive on very low wages. That's one reason we have a social safety net. Many argue that it should be the company's responsibility to pay their workers higher wages and not society's responsibility to take care of unskilled members of society. However, this is not a realistic option in all cases because some fraction of these jobs would cease to exist if higher wages are mandated as not all customers will be willing to pay higher prices. In the food delivery case it's a large fraction of customers and the business will probably cease to exist.
The fundamental problem here is that our economy is becoming more advanced and more and different skills are being required to be able to provide value to society and many people don't have the required skills. There are only a few things that can happen in this scenario: society educates low skill residents to prepare them for more valuable jobs, low skill residents work in low value jobs, low skill residents are unemployed. We should make the education option available and highly encouraged. We should provide for necessities like nutrition, safety, shelter that many young people are lacking that prevent them from availing themselves of educational opportunities. However, in the case that people aren't willing or able to complete the education required for jobs requiring a highly educated workforce, I think it's better that people have the option of working in lower value jobs rather than effectively outlawing it. This does not mean these workers should be treated as having low value beyond being paid low wages. There should be worker protections, customers should treat workers with respect, etc.
It would be better for the world if we had more people working in more valuable jobs like science, medicine, technology, etc. and fewer in food delivery. But raising wage regulations to the point that Deliveroo's business model is no longer sustainable probably just means that its workers are unemployed and people have fewer food delivery options.
It's hard to survive on very low wages. That's one reason we have a social safety net. Many argue that it should be the company's responsibility to pay their workers higher wages and not society's responsibility to take care of unskilled members of society. However, this is not a realistic option in all cases because some fraction of these jobs would cease to exist if higher wages are mandated as not all customers will be willing to pay higher prices. In the food delivery case it's a large fraction of customers and the business will probably cease to exist.
The fundamental problem here is that our economy is becoming more advanced and more and different skills are being required to be able to provide value to society and many people don't have the required skills. There are only a few things that can happen in this scenario: society educates low skill residents to prepare them for more valuable jobs, low skill residents work in low value jobs, low skill residents are unemployed. We should make the education option available and highly encouraged. We should provide for necessities like nutrition, safety, shelter that many young people are lacking that prevent them from availing themselves of educational opportunities. However, in the case that people aren't willing or able to complete the education required for jobs requiring a highly educated workforce, I think it's better that people have the option of working in lower value jobs rather than effectively outlawing it. This does not mean these workers should be treated as having low value beyond being paid low wages. There should be worker protections, customers should treat workers with respect, etc.
It would be better for the world if we had more people working in more valuable jobs like science, medicine, technology, etc. and fewer in food delivery. But raising wage regulations to the point that Deliveroo's business model is no longer sustainable probably just means that its workers are unemployed and people have fewer food delivery options.
> If you raise the cost of employing low skill workers then many of these business models cease to exist.
At risk of getting into a discussion about UBI and tax doctrine, is that a bad thing?
The business doesn't have a right to exist. If it can't operate without paying its staff below-subsistence wages, why should it (or the VCs who provide it funding) expect the state (read: other taxpayers) to subsidise that?
Regarding your second point I'd argue the money would be better diverted to providing the education to raise the overall skill level of the economy rather than enabling people to work menial jobs that will (in the case of Deliveroo, Uber, et al) be automated away anyway.
At risk of getting into a discussion about UBI and tax doctrine, is that a bad thing?
The business doesn't have a right to exist. If it can't operate without paying its staff below-subsistence wages, why should it (or the VCs who provide it funding) expect the state (read: other taxpayers) to subsidise that?
Regarding your second point I'd argue the money would be better diverted to providing the education to raise the overall skill level of the economy rather than enabling people to work menial jobs that will (in the case of Deliveroo, Uber, et al) be automated away anyway.
I think it is a bad thing if a useful service could not exist - and people who voluntarily chose to be employed by that service cannot have access to those jobs.
I think it's better to be employed and increasing your value/skill set in the job market than living off welfare. You can't move up the ladder if you don't develop skills.
I think it's better to be employed and increasing your value/skill set in the job market than living off welfare. You can't move up the ladder if you don't develop skills.
In the case of Deliveroo, if it can't exist without significant state subsidy then the business model needs revision. This is the same logic that applies to any business that fails to make enough money to continue operating; a startup which asked developers to work for free (or even below-market wages, gambling with equity aside) in order to reduce its costs would be laughed out of the door, it's hard to see why this is any different.
Alleging that people "voluntarily chose" to work in gig economy jobs ignores both the significant anti-welfare rhetoric from politicians and (perhaps particularly in the West) cultural push towards employment ("protestant work ethic"), and your own/the GP's points that a number of the people working there are doing so through a shortage of alternatives.
On the other hand, we need to be careful not to throw the baby out with the bathwater; a push (in the UK, the Labour party have been particularly vocal) to ban zero-hours contracts has risks to the ability of people who need the flexibility (students being the obvious example) to find work which suits.
> I think it's better to be employed and increasing your value/skill set in the job market than living off welfare
They're not mutually exclusive; in this case both happen (although it's debatable to what extent Deliveroo et al develop anyone's skill set). Equally, the money spent topping up the wages of the low paid could be redirected to providing education.
Alleging that people "voluntarily chose" to work in gig economy jobs ignores both the significant anti-welfare rhetoric from politicians and (perhaps particularly in the West) cultural push towards employment ("protestant work ethic"), and your own/the GP's points that a number of the people working there are doing so through a shortage of alternatives.
On the other hand, we need to be careful not to throw the baby out with the bathwater; a push (in the UK, the Labour party have been particularly vocal) to ban zero-hours contracts has risks to the ability of people who need the flexibility (students being the obvious example) to find work which suits.
> I think it's better to be employed and increasing your value/skill set in the job market than living off welfare
They're not mutually exclusive; in this case both happen (although it's debatable to what extent Deliveroo et al develop anyone's skill set). Equally, the money spent topping up the wages of the low paid could be redirected to providing education.
What is the state subsidy Deliveroo is receiving? If they are receiving one, then sure I don't agree with it. If it's the VC's that are wasting their own money, I see nothing wrong with that.
> a number of the people working there are doing so through a shortage of alternatives
Right? Maybe I'm missing what you're saying. But possibly people are willing to pay for goods only at a certain price and if the price was bumped up, those services simply wouldn't be bought. And those jobs wouldn't exist. It doesn't necessarily mean better paying jobs will fill in the gap.
> the money spent topping up the wages of the low paid could be redirected to providing education.
Who's money? The consumers money? Or the VC's money? Are you saying through taxation because I thoroughly disagree.
It's also not as straightforward as you are implying - just having an education does not mean there will be jobs there to greet you after you are done. To make that happen you need to make the environment friendly to job creators - those willing to take the risk and start their own company.
> a number of the people working there are doing so through a shortage of alternatives
Right? Maybe I'm missing what you're saying. But possibly people are willing to pay for goods only at a certain price and if the price was bumped up, those services simply wouldn't be bought. And those jobs wouldn't exist. It doesn't necessarily mean better paying jobs will fill in the gap.
> the money spent topping up the wages of the low paid could be redirected to providing education.
Who's money? The consumers money? Or the VC's money? Are you saying through taxation because I thoroughly disagree.
It's also not as straightforward as you are implying - just having an education does not mean there will be jobs there to greet you after you are done. To make that happen you need to make the environment friendly to job creators - those willing to take the risk and start their own company.
> What is the state subsidy Deliveroo is receiving? If they are receiving one, then sure I don't agree with it. If it's the VC's that are wasting their own money, I see nothing wrong with that.
By "state subsidy" I mean the state topping up the employee's wages, through for example Working Tax Credits (in the UK) or food stamps and Medicaid (in the US). If it wasn't for those and the push towards working at any cost, my thesis was that these companies would have to pay more (either in terms of actual money or benefits) or have trouble finding people to make their business operate.
> Who's money? The consumers money? Or the VC's money? Are you saying through taxation because I thoroughly disagree.
Taxpayers, because of the first part of this reply. I'm not talking about additional taxation here, I'm talking about money that's currently spent on benefits for the low paid that wouldn't be spent if they weren't low paid.
> > a number of the people working there are doing so through a shortage of alternatives
> Right? Maybe I'm missing what you're saying. But possibly people are willing to pay for goods only at a certain price and if the price was bumped up, those services simply wouldn't be bought. And those jobs wouldn't exist. It doesn't necessarily mean better paying jobs will fill in the gap.
It was a reply to you saying "voluntarily chose to be employed by that service" and the general theme whenever low pay comes up of "well, they can just get other/more jobs" (see also: the McDonald's CEO saying "just get a second job" [1]).
My original comment in this thread did mention UBI, so the alternative isn't necessarily "let's magic high-paying jobs out of thin air" :)
Also, these jobs (and also higher paid ones) are going to go away because of automation. Uber are explicitly aiming for that goal. At some point, the issue of what's going to happen to those employees has to be dealt with by society and politicians.
> It's also not as straightforward as you are implying
I may have made it sound otherwise but I'm well aware that the problem is nothing like straightforward. Waaaaay back at the beginning I warned about unintended consequences.
> To make that happen you need to make the environment friendly to job creators - those willing to take the risk and start their own company.
This doesn't seem relevant - is your implication that if businesses are required to pay wages such that their staff aren't having to also claim state benefits for food, that's somehow not conducive to founding businesses?
I do, however, agree that the conditions have to be right for entrepreneurship, with the reservation that "business friendly" lately seems to be synonymous with "minimal regulation/tax".
1: https://www.salon.com/2013/07/17/mcdonalds_suggested_budget_...
By "state subsidy" I mean the state topping up the employee's wages, through for example Working Tax Credits (in the UK) or food stamps and Medicaid (in the US). If it wasn't for those and the push towards working at any cost, my thesis was that these companies would have to pay more (either in terms of actual money or benefits) or have trouble finding people to make their business operate.
> Who's money? The consumers money? Or the VC's money? Are you saying through taxation because I thoroughly disagree.
Taxpayers, because of the first part of this reply. I'm not talking about additional taxation here, I'm talking about money that's currently spent on benefits for the low paid that wouldn't be spent if they weren't low paid.
> > a number of the people working there are doing so through a shortage of alternatives
> Right? Maybe I'm missing what you're saying. But possibly people are willing to pay for goods only at a certain price and if the price was bumped up, those services simply wouldn't be bought. And those jobs wouldn't exist. It doesn't necessarily mean better paying jobs will fill in the gap.
It was a reply to you saying "voluntarily chose to be employed by that service" and the general theme whenever low pay comes up of "well, they can just get other/more jobs" (see also: the McDonald's CEO saying "just get a second job" [1]).
My original comment in this thread did mention UBI, so the alternative isn't necessarily "let's magic high-paying jobs out of thin air" :)
Also, these jobs (and also higher paid ones) are going to go away because of automation. Uber are explicitly aiming for that goal. At some point, the issue of what's going to happen to those employees has to be dealt with by society and politicians.
> It's also not as straightforward as you are implying
I may have made it sound otherwise but I'm well aware that the problem is nothing like straightforward. Waaaaay back at the beginning I warned about unintended consequences.
> To make that happen you need to make the environment friendly to job creators - those willing to take the risk and start their own company.
This doesn't seem relevant - is your implication that if businesses are required to pay wages such that their staff aren't having to also claim state benefits for food, that's somehow not conducive to founding businesses?
I do, however, agree that the conditions have to be right for entrepreneurship, with the reservation that "business friendly" lately seems to be synonymous with "minimal regulation/tax".
1: https://www.salon.com/2013/07/17/mcdonalds_suggested_budget_...
If most people are not willing to pay a sustainable price for delivering food, they have to cook or walk to the restaurant. It is not the task of social services to pay for that.
I also have strong objections to the notion of unskilled work here. Any kind of work requires training and skills, and I think you should never take the high road of having better education. It's in general 40 hours of your life time for any job you do. Coming back to that... is it realistic that all people having higher income now pay for food deliveries so that some companies can make money? I doubt it. That questionable both from economic and ethical viewpoints.
Regarding the advance of our economy I can not agree. We are basically recessing to 19th century trades and valuation of work. Just because things are IT based mostly now that does not make up a more advanced economy. Looking at laws, work practices, standards, I dare to say: we are actually watching the whole of mankind failing to take the next step.
We've made it to value of an individuals work, now we're killing that where instead we could also be asking us if our actual views on working and monetary compensation make sense.
From my point of view (and I've been on the crazy low and high paid side), it does not. As does compensating low paid jobs from all tax payers money instead of simply putting companies out of business if they can not sustain themselves.
I also have strong objections to the notion of unskilled work here. Any kind of work requires training and skills, and I think you should never take the high road of having better education. It's in general 40 hours of your life time for any job you do. Coming back to that... is it realistic that all people having higher income now pay for food deliveries so that some companies can make money? I doubt it. That questionable both from economic and ethical viewpoints.
Regarding the advance of our economy I can not agree. We are basically recessing to 19th century trades and valuation of work. Just because things are IT based mostly now that does not make up a more advanced economy. Looking at laws, work practices, standards, I dare to say: we are actually watching the whole of mankind failing to take the next step.
We've made it to value of an individuals work, now we're killing that where instead we could also be asking us if our actual views on working and monetary compensation make sense.
From my point of view (and I've been on the crazy low and high paid side), it does not. As does compensating low paid jobs from all tax payers money instead of simply putting companies out of business if they can not sustain themselves.
Is it even cheap? Uber's cost is more than what it seems:
https://motherboard.vice.com/en_us/article/9a3vye/uber-true-...
So while it is cheap from a customer's perspective someone else is footing the bill. Once they run out of investor's money someone has to pay for it.
In India, drivers are already demanding more bonuses. They went on strike: https://yourstory.com/2017/02/bengaluru-drivers-indefinite-s...
Now they are building their own ride hailing app: https://yourstory.com/2017/03/disappointed-ola-uber-drivers-...
So while it is cheap from a customer's perspective someone else is footing the bill. Once they run out of investor's money someone has to pay for it.
In India, drivers are already demanding more bonuses. They went on strike: https://yourstory.com/2017/02/bengaluru-drivers-indefinite-s...
Now they are building their own ride hailing app: https://yourstory.com/2017/03/disappointed-ola-uber-drivers-...
I was a bicycle messenger for a little under a year a little over a decade ago. While the pay was shit, it was the most fun I ever had working a job. It didn't even feel like a job, it felt like a big game.
If there was any kind of bike based delivery service in my city that allowed me to work casually, I would do it just for an excuse to go out and dodge traffic on a bike a few evenings a week.
If there was any kind of bike based delivery service in my city that allowed me to work casually, I would do it just for an excuse to go out and dodge traffic on a bike a few evenings a week.
Are gig economies the problem (and the companies that create them) or are they an inevitability? I''d argue the latter, especially as the wave of automation that is foreseeable in the very near future will displace more people.
Companies are going to innovate but what we are witnessing now is innovation that under the current market economy ) this innovation "devalues" people. Perhaps the solution is better legislation and regulation of business to support this new, growing, and likely inevitable shift towards a gig economy and the people who operate within the sphere.
Companies are going to innovate but what we are witnessing now is innovation that under the current market economy ) this innovation "devalues" people. Perhaps the solution is better legislation and regulation of business to support this new, growing, and likely inevitable shift towards a gig economy and the people who operate within the sphere.
It's a problem if they are flouting employment law in order to "innovate".
> and likely inevitable shift towards a gig economy
The "gig economy" scam must be stopped before it's too late. It is not "innovation", but pure exploitation.
As for automation, tax robots and distribute the profits to the people made jobless by them.
The "gig economy" scam must be stopped before it's too late. It is not "innovation", but pure exploitation.
As for automation, tax robots and distribute the profits to the people made jobless by them.
What would "tax robots" entail? Fixed amount per machine? A percentage of profits per machine? Is there a concrete proposal you have in mind?
It feels as if the devaluation and irony is pushed further by Uber using the profits from human workers to invest in autonomous vehicles which will directly eliminate the same workers. Deliveroo doesn't seem to currently invest in robotics research, but other companies such as https://www.starship.xyz/for-businesses/ are pursuing autonomous delivery.
It's even worse than Uber. With Uber, at least you can drive for multiple companies at the same time. If you want to bike for both Deliveroo and, say, Foodora you need to first go home and swap one branded backpack for the other.
(Not sure if that's an international thing - here in NL the delivery people use bikes and have branded backpacks)
(Not sure if that's an international thing - here in NL the delivery people use bikes and have branded backpacks)
In the UK, it’s very common to see riders with a wide mix of differently branded clothing, bikes, boxes, etc. Very common for them to be working for Uber Eats, Deliveroo, Jinn, Etefy, etc. all at the same time
There may be some kind of rule around consistent branding, but I have never seen it enforced.
There may be some kind of rule around consistent branding, but I have never seen it enforced.
I've never seen this but that is really interesting. I'm surprised they don't prevent them from doing that but I'm glad that they don't
And when they want to increase their margins, guess who's gonna get cut !? The long game is to replace all manual work with self driving/flying drones. But for that to ever happen, those who are now carrying out manual work need to demand more, so it becomes economical to actually replace them.
What have Deliveroo done differently to be more successful than the food delivery startups that came before?
They beat everyone else, including UberEats, to the AU market. I think them and Foodora were the first two, but they won and UberEats just relied on their brand to muscle in. Both share the market pretty evenly ehre, from what I can tell.
I wonder if they did this for many 'secondary' markets to try to beat the big players or if AU is just a weird case.
I wonder if they did this for many 'secondary' markets to try to beat the big players or if AU is just a weird case.
In SA, I've really not had any luck with Deliveroo outside of the CBD - it only seems to work if you're right on top of the restaurants. UberEats seems a little better, but it still really restricts how far away from a restaurant you can be, I moved one suburb over (3km?) and lost access to about 10 restaurants that were in my old suburb.
I tend to prefer apps where the restaurants themselves look after the delivery, EatNow is a good example. They can charge a little more for delivery, and therefore seem to be willing to deliver further away. And presumably, it's probably a little fairer on the delivery guys as they got an actual job rather than just an app.
I tend to prefer apps where the restaurants themselves look after the delivery, EatNow is a good example. They can charge a little more for delivery, and therefore seem to be willing to deliver further away. And presumably, it's probably a little fairer on the delivery guys as they got an actual job rather than just an app.
Only the inner suburb markets though. Once you're >10km out of the city center it's all Menulog and UberEats, with a smattering of people using EatNow.
In Reading where I used to live all they did was link me up with restaurants I actually want to eat at but can't because of kids or work or whatever instead of just disgusting quality pizza/curry/chinese/fried chicken joints
Nothing, they just managed to convince more investors to continue pouring tens and hundreds of millions in the hole of their losses, while others were rightfully let to die.
Was just reading about them only the other day and how they are losing money: http://www.bbc.co.uk/news/business-41347817
So how they derive such a valuation is very much at odds with actualities.
So how they derive such a valuation is very much at odds with actualities.
Hmm, if that surprises you I have some bad news about the rest of the startup industry...
Is this last-mile delivery funding thing beginning again or the first one didn't stop ? It hurt everyone except the founders.
It sounds like in addition to delivery services where margins seem pretty tight, they offer cloud kitchen services that partnering restaurants can use to expand.
why are they valued in billions? how profitable can an app that facilitates food delivery become? restaurant still has to charge for their food, customer still wants to pay minimum and the delivery person still needs to get paid. what innovation is this app bringing that will cut costs by so much that it will make billions in profit?
Jesus, ANOTHER one of these? Why does this space get so much attention from startups?
"We are making the world a better place by battling first-world temporary hunger in tandem with the lazy-person mobility crisis."
"We are making the world a better place by battling first-world temporary hunger in tandem with the lazy-person mobility crisis."
Alternative headline: for $385M, investors buy option for a large stake in Deliveroo if they don't surpass a valuation 'over $2B.'
Not very sustainable unicorn is it ?
Like Pets.com never happened
Very different. Pets.com in Y1: revenue $600k USD, advertising spend $11.5m.
Deliveroo generates significant revenue and is a business/brand that consumers are passionate about. The bet investors are making is that their gross margin can increase quickly.
Expect they're doing close to £300m of revenue now, so a 6.5x rev>valuation multiple is punchy but fair.
Deliveroo generates significant revenue and is a business/brand that consumers are passionate about. The bet investors are making is that their gross margin can increase quickly.
Expect they're doing close to £300m of revenue now, so a 6.5x rev>valuation multiple is punchy but fair.
£128.56m in sales last year, and a loss of £129m. So very much curious how they managed such a valuation without over-hype.
For a crowd who presumably work in startups, folks on here are always weirdly surprised by how this works. Generate vast revenue, reach scale, cut central costs. (To be clear, Deliveroo's challenge seems to be cost of sales.)
Well, it's a pretty huge loss (more than revenue!
Also, I think people were surprised or amazed that they had no core profitability. Especially when it's likely COGS will go up with more and more regulation around their gig economy employees
Also, I think people were surprised or amazed that they had no core profitability. Especially when it's likely COGS will go up with more and more regulation around their gig economy employees
Depends what you think the lifetime value of a customer is, plus what the ongoing cost to retain them is.
I ordered off Deliveroo in Sydney Australia, and they advertise on AdWords against individual restaurant names. If the Diliveroo brand is strong, and that AdWords click made me a Deliveroo customer, that is a win. If I always search and they always pay, this may prove problematic long term.
That's the equation - if $X upfront + $y ongoing < lifetime value then you have a chance at profitability, assuming you can get overheads under control / can scale up the offering with minimal growth in overheads (the classic 2X revenue, 1.5X costs model).
I ordered off Deliveroo in Sydney Australia, and they advertise on AdWords against individual restaurant names. If the Diliveroo brand is strong, and that AdWords click made me a Deliveroo customer, that is a win. If I always search and they always pay, this may prove problematic long term.
That's the equation - if $X upfront + $y ongoing < lifetime value then you have a chance at profitability, assuming you can get overheads under control / can scale up the offering with minimal growth in overheads (the classic 2X revenue, 1.5X costs model).
If you look at these companies in silos then it seems like they could be legitimate, however once you look at the context of other similar companies who are hoping to be the winner - and that's the only way they can success and the outcome isn't sustainable for any of them (unless their goal is to exit via the public markets and give the loss to them or some big money VCs).
They all need the metrics they're working with to hold and the outcome for all of them is likely to be drastic for all of them.
Perhaps they're hoping efforts by Uber and others in the same boat will work together in helping mould the market and become aligned with society's efforts/need to create Universal Basic Income for everyone. If UBI is to come into play then other metrics must shift too.
The reward we give people for innovation will have to be at par with what's reasonable - and the peaks and valleys will more or less flatten out. The people who will be most innovative can use their own funds to trickle into future innovations that will be operated efficiently, e.g. Elon Musk.
Perhaps there will no longer be VC firms in the future, and it will be individuals that invest through crowdfunding platforms. What would likely be a great hybrid model is crowdfunding platform but with VC firms - syndicate-like - except where an individual could allocate $5/month into the fund, perhaps only allowing individuals to invest with a monthly cap, so no one individual or organization can have some bizarre incentive or goal towards swaying the decision makers of the fund, etc.
I'd argue the pros of getting $1 from a million people is far better than $1mm from a few. The most successful crowdfunding platforms right now, because they're VC-backed and thus have those same pressures on them, have to charge an unreasonable fee - which is unnecessary pressure on the projects that are trying to get funded. The alternative right now is feeding into the VC system who expect relatively short-term high profits - which then only allows platforms that charge an excessive amount to become dominant; and this does cause more efficient efforts by others to not be able to survive as easily - something I'm sure they're aware of as part of how they can get ahead with their model.
They all need the metrics they're working with to hold and the outcome for all of them is likely to be drastic for all of them.
Perhaps they're hoping efforts by Uber and others in the same boat will work together in helping mould the market and become aligned with society's efforts/need to create Universal Basic Income for everyone. If UBI is to come into play then other metrics must shift too.
The reward we give people for innovation will have to be at par with what's reasonable - and the peaks and valleys will more or less flatten out. The people who will be most innovative can use their own funds to trickle into future innovations that will be operated efficiently, e.g. Elon Musk.
Perhaps there will no longer be VC firms in the future, and it will be individuals that invest through crowdfunding platforms. What would likely be a great hybrid model is crowdfunding platform but with VC firms - syndicate-like - except where an individual could allocate $5/month into the fund, perhaps only allowing individuals to invest with a monthly cap, so no one individual or organization can have some bizarre incentive or goal towards swaying the decision makers of the fund, etc.
I'd argue the pros of getting $1 from a million people is far better than $1mm from a few. The most successful crowdfunding platforms right now, because they're VC-backed and thus have those same pressures on them, have to charge an unreasonable fee - which is unnecessary pressure on the projects that are trying to get funded. The alternative right now is feeding into the VC system who expect relatively short-term high profits - which then only allows platforms that charge an excessive amount to become dominant; and this does cause more efficient efforts by others to not be able to survive as easily - something I'm sure they're aware of as part of how they can get ahead with their model.
But chewy.com sold for $3b so what's your point?
In my city, Nottingham. all the deliveroo people gather in Trinity Square waiting for jobs. There's obviously no special AI needed.
I do think though that it raises the issue that they should be paying for their own business premises and stop using our public spaces as their company waiting spots.