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tzier
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- I'm a former CPA and founder of Zen99, which built tax tools for independent contractors like Uber drivers. So this is my forte :)
You're right that it's not cut and dry, and can't be. There are too many specifics to take into account. For example, if you're a part time worker at Whole Foods, you don't get to write off your commute to and from work. But as an Uber driver, there are ways you can do this so you pay less in taxes, which can make your take home more than the WF worker. Neither of them get benefits bc part time employees don't have to be given benefits (note: not sure on what WF policies are, but that's a true statement for part time employees in general).
- This ultimately comes down to the debate between capitalism vs socialism - if people are still driving at lower rates, then we weren't at a market equilibrium. But should they have basic coverages?
I expect the ODE to become a huge topic for the 2016 election, since (at a high level) it's a manifestation of the Republican vs Democratic platforms.
- If their costs had been 20% higher, they still would have priced others out of the market by using VC money to subsidize (as they still do now). Technically their prices were higher than cabs, since they were only black cars for the first two years.
I personally never take cabs anymore even if they're cheaper, the Uber experience is 10x better IMO. The only time I'll consider it is when I use Flywheel on NYE to avoid surge pricing.
- Portion of payroll taxes is ~7.5%, plus an extra 2.5-10% for workers comp/etc depending on your rates.
If they had to reclass as employees, they would just raise prices to end consumer 10-20% to compensate (or fund it via other's money like they're doing now to price out rest of market).
They'd also put a cap on hours per week so drivers couldn't drive more than 30 hours per week. Companies aren't legally required to give benefits to part-time workers (up to 30 hours).
The big draw of independent contractors is that you've just converted labor from a fixed cost to a variable cost. There are tons of Uber/Lyft drivers (namely, anyone not doing it full-time, which is the majority of drivers) who prefer this since they can drive as much or as little as they want.
- > One thing I'd like to know is whether people doing lyft or über full time do on average better or worse than their yellowcab counterpart.
A good indicator is that most cab drivers (at least in SF) have switched over to Uber. The only ones who aren't doing Uber either (a) got low reviews on Uber and kicked off the platform or (b) have some odd loyalty to cab companies (e.g. maybe they're a part owner in a medallion).
Most taxi cab drivers are treated more poorly than Uber/Lyft drivers. They have to drive to a centralized location to pick up / drop off the car, don't have their own car to take care of, have to pay a per day fee that they don't always pay back if they don't get enough business, etc.
- Former CPA and Zen99 founder here.
Home care givers are a special case under US tax code that requires them to be employees [1]. As honorable (yuk yuk) as it is that Honor is making them employees, they would have the worst case out of all the on-demand companies.
Uber, for example, can point to nearly all taxi drivers being independent contractors. Honor would have to point to other home care individuals, who are either employees of a staffing agency or employees of the family (note: there are surely families who aren't complying).
Based on IRS code + the reasons brought against Uber/etc, Honor would have a very low chance of winning the lawsuit.
Overall, I do think making on-demand workers employees is a potentially smart move to differentiate. Having the best workers will be the key to winning longer term, because these are service companies enabled by tech, not tech companies. Code has no feelings; people do. Right now Uber is winning ridesharing because it has the most volume and hence most money making opportunities for drivers; but Lyft is putting up a fight almost purely because they treat their drivers better.
[1] https://www.irs.gov/Businesses/Small-Businesses-&-Self-Emplo...
- Same Day ACH has been in the works for a while; however, a payments expert I spoke with said all the big banks are opposing it since (a) they make more on wires, as mentioned, and (b) most of them have in-house same day transfers, so it's an argument for opening multiple accounts with them vs at different institutions.
https://www.nacha.org/content/same-day-ach
The electronic financial system in the US is an embarrassment, to be honest. Instant transfers have existed in other countries for years. The only platforms that allow instant payments require (a) holding money in their bank account (e.g. your Venmo balance) and (b) the companies to comply with incredibly stringent money transmitter laws.
From what I've heard, Stripe doesn't make much from CC transactions (hence why almost all providers are at the same pricing). ACH costs fractions of a penny, so even if they only make $5 it's nearly 100% profit.
[Note: I'm not a payments expert so would love if someone who is could (in)validate all the above.]
- 1099 classification is not very defensible - see FedEx $228M settlement in just CA. Obama said that he thinks a third class of workers is just a watered down version of W-2 protections. Since we're likely going to see a Democratic president, they're going to be more W-2 friendly than 1099 friendly (though hopefully also technology friendly).
Point being...under existing regulations, Uber/Lyft drivers are probably W-2s. But Uber/Lyft are lobbying hard for an alternative, and will probably succeed in changing minds about it faster than the government can move to crack down.
- HIPAA basically requires a bunch of safeguards to be in place if you fall under its regulations. So if a prescription delivery company (like ScriptDash, NimbleRX, etc) want to send a delivery person with a prescription, the driver needs to be HIPAA certified. Otherwise the company would be in massive trouble for violating HIPAA requirements.
It's not a common enough use case for Uber/Lyft's consumer facing services, so I don't think it's wise for them to get into it; they're better going after UberEATS/etc opportunities. The idea would be ridesharing for businesses who have more strict requirements, kind of like Box vs Dropbox.
FWIW, you still deal with the difficult people operations aspect of ridesharing in that case (drivers are hard to recruit and manage, and are city specific), so I'd probably go after outsourcing the logistics platform for businesses with existing delivery mechanisms. E.g. bring UPS's 'no left turns' technology to companies that can't develop it internally.
- Sidecar doesn't get enough credit for starting the rideshare movement. (Uber started the mobile-calling movement, but were black cars and TNC compliant until they started UberX.)
Sidecar was often were piloting products a half year before Uber and Lyft implemented them (ridesharing, Shared Rides, etc). I think Uber and Lyft won since (a) Uber was first and had an extra 2 years of brand recognition already, and (b) Lyft had superior marketing in their early days (bright pink mustaches, mandatory fist bumps). As Uber/Lyft raised more money, they caught up more - though Sidecar was still first in a lot of products (Sidecar Deliveries, having HIPAA compliant drivers, etc.)
If I were them, I would explore the niche of regulation-friendly drivers - e.g. HIPAA certified drivers. They've already started doing this, but I'm sure their consumer facing product has bogged down product development and such. The Medium post isn't clear on if they're laying off team and such, does anyone know?
Edit: I would also explore using their logistics infrastructure and making it available to any businesses that have their own delivery fleets, but don't know how to optimize them. There was a Techstars co doing this (https://routific.com/) but I imagine Sidecar is much further along.
- 20 points
- 3 points
- 392 points
- 63 points
- I doubt this is a response to ADP; ADP is a horrible product, and Zenefits knew they could make a better solution (like ZenPayroll/Gusto). They've probably been working on this for a year, to be honest, given the requirements for payroll providers and syncing with the IRS/etc.
What's more interesting is that the payroll is free only if the company manages everything else HR related in Zenefits. Talk about lock-in.
- At first I thought "high price" was related to the treatment of workers on these platforms, or the perils of the workers who flock to them. Less intriguing now that it's just complaining about the markups on goods.
The item prices are relatively clear, and obviously carry a markup for convenience. Same as buying a mattress through a physical store vs Casper - more players in supply chain means more markups. A user can decide if the convenience is worth the markup. Manual entry systems sometimes lead to mistakes, but will disappear as databases become more complete.
- Looking for some feedback on a project! If you're willing:
1. What other uses can you see for this? (e.g. a 'Burningman essentials' list)
2. What channels should we incorporate other than Amazon (e.g. Overstock.com)?
3. We've heard feedback that 5% isn't appealing enough. What percentage would be appealing? Would Amazon credit be more appealing?
4. Are you currently a consumer of these products (vitamins, cosmetics, etc)? If so, how did you decide on those products and where do you normally buy them from? What inspires you to try a new product?
5. If you made a Vitabee plan, would you be comfortable posting on your social media / sharing with your friends? Why or why not? [Not asking you to make one - just seeing if people are comfortable recommending]
- 7 points
- This is difficult due to ACA regulations. For example, Pact (formerly GymPact) was trying to give people discounts on Blue Shield of CA health insurance premiums for going to the gym. A provision/update in the ACA made this illegal about a year ago; not sure if it's changed since then.
That said, it seems likely that insurance premiums will eventually be tied to real time health data, like Metromile is doing for car insurance.
- Oscar Health is actually an insurer. They're trying to win by (a) better marketing and (b) using tech (like free fitness tracker) to reduce their loss ratio.
I've heard their innovation was also in pre-paying facilities for services. The collection rate for facilities from insurers is abysmal, so Oscar can negotiate a substantial discount by paying up front. Same idea as if you go to an MRI facility and offer them cash up front - they sometimes give discounts up to 75%. (Note: not 100% sure Oscar does this, I heard from investor and don't have time to research.)
Zenefits (free HR, monetize by being insurance broker) prints money in the US, despite the recent bad PR.