Let's start with this question: Is Doordash exploiting delivery drivers? Are Grubhub, Postmates, Uber Eats and others taking advantage of independent contractors?
I can't get inside Tony Xu's head or read Matt Maloney's mind, so to say whether or not they are absolutely intentionally exploiting, that's outside my Non-God paygrade. But I can tell you my evaluation of it is. I do think they are predatory. I will say I do believe they are exploiting the independent contractor status and I do believe it's wrong.
And….. yet I still deliver for them. What's up with that?
Exploitation by Doordash, Grubhub, Postmates, Uber Eats.
Earlier this week, I wrote a post asking if Doordash drivers were really only paid $1.45 per hour. There have been a few articles circulating that make that claim. I basically called out the reports.
The reports were about a study that looked at what DOORDASH was paying per hour after factoring in taxes, finding it came to $1.45 per hour. Notice the key words here: DOORDASH WAS PAYING. This was NOT a study of what Doordash drivers are making, it's what PART of what they are making comes from Doordash.
I didn't have an issue with the study. My beef was with the reporting. Salon and Gizmodo and others spun that to say that Doordash couriers are MAKING only $1.45 per hour. They don't mention anywhere in their stories that this study doesn't factor tips. Folks, this is no different than saying a waiter who brought in $50 per hour in tips is only making $2.13 per hour. So my beef is more on the inaccuracy and sloppiness of the reports
But this brings out the issue of exploitation.
I received a very thoughtful email in response to the article. One of the things he said was “In my opinion there is absolutely no way to view it as anything other than exploitation- of the drivers, the restaurants, their wait staff, and the customers and I think that customers would want to know the unethical practices that their patronage is supporting. I also feel that no one, who works as hard as we do- making tons of money for the higher ups, should be disrespected, dismissed, and have to wonder if they’ll make enough tip money on every job to get through the week. I feel that it’s wrong on all levels.”
His concerns are fair. I do believe there is exploitation going on. Pure and simple.
Independent contractor status and exploitation.
The question is… exactly WHAT is the exploitation?
I do have a problem with the victim mentality around some of the exploitation. I'll get into that soon enough. Here's the thing: I don't have an issue with the gig economy idea at all. I like the idea that you can pick up a few side things to earn some money. Oh man, how I wish that were so easily available twenty years ago. And when you get right down to it, I think if you force people to be employees, you're going to kill that.
We're running a business and Doordash (or any of the others) is our customer. If a person walks into a high end steakhouse like Ruth's Chris and offers $2 for the prime rib, the restaurant isn't going to be exploited. That's because the restaurant is going to say no. So I have trouble saying that anyone making a certain earnings rate as a business owner is being exploited.
Where these gig companies are exploitative is the large scale use of that independent contractor relationship. Ultimately what they are doing is taking advantage of people who are going into this thinking they are getting a job.
Exploiting the contractor status more than the contractors themselves
Here is how all of the delivery companies frame the relationship: “We are not delivery companies. We are merely technology companies that bring restaurants, customers, and couriers together.”
When you frame it that way, the natural extension of that is “and they get to work it out among themselves.”
I'm okay with the use of contractors if that's the case. But we all know it isn't.
The exploitation is happening in lying about the contractor relationship
THIS is where the problem lies, and this is where I feel these companies are exploiting or even worse. We all know that's not how the relationship works. Most of the people signing up are not doing so with that kind of thing in mind. I'm pretty convinced that most contractors think there's still a sort of employee relationship going on. These companies know that and they're fine with that, in fact , that's what they WANT.
Think about this: When have you ever been introduced to a restaurant or a customer and you work out the details yourselves? When have you ever taken a deliver through these platforms where the DELIVERY FEE was paid by either the restaurant OR the customer. Yes, the customer tips you, but it's understood on all sides that's over and above.
The problem is in the details of how it all works
Who pays you? How is the pay structured? You get paid by Doordash or Grubhub or Postmates or Uber Eats. You get paid based on a formula that has nothing to do with what the customer pays.
Who's selling the food here? On the vast majority of these deliveries, where are the customers placing their order? Not directly with the restaurant. With Doordash. With Grubhub or all the others. THAT doesn't look to me like just connecting all these people. They are selling the food, they are charging the restaurant, they are charging the customer and they are choosing and directing the courier.
Tell me how that's just a tech company and not a delivery company?
And the problem is how they relate to the
employee, ummmm, contractor.
Does this look anything like a business looking for other businesses to contract with? It looks a heck of a lot like an employment ad, doesn't it?
These companies recruit as though they are hiring employees, and this is a huge problem. They slip just enough language into the contract to satisfy the requirements, but they certainly don't go overboard in making clear what the relationship is.
There's a reason they don't.
There are no guarantees when you run a business. No one can require the customer to buy from you. You could make a profit, you could make nothing. That's part of the deal when you are an independent contractor.
You can't get enough people to deliver all those orders when you frame it honestly. I guarantee that if people totally understood what they were getting into, they wouldn't sign up for it.
So they soften the language. They post ads like the one above. Heck, Grubhub even throws out their hourly guarantee to make it look more like a job. If you are really putting people in touch like that, you would frame the hiring process that way. How they do it right now is a lie.
They WANT you to think it's an employee relationship
They just don't want to pay for it.
And that's where the other problem comes in, and that's where the exploitation happens. They want you to accept a percentage of orders. They find ways to punish you if you don't, or if nothing else they float the word out there that you CAN get punished if you don't. I don't know how many times I've heard people told that they can be deactivated for acceptance rate – but it's never put in writing. I believe whole heartedly that's intentional. They are always testing the limits of what they can get away with in controlling us.
They HAVE to do it. They're not getting the work done, and they have to figure out a way to do it. In episode 51 I talked about this a lot that a lot of the reason they are struggling is they are losing customers. That's because their service is so terrible. And the thing is, you can't make the logistics work well when everyone is a contractor. So they know this, they try to manipulate and intimidate people into thinking like employees to try to solve these issues. But they aren't willing to pay up.
Does this mean WE are exploited?
Only if you let yourself.
I do think a lot of drivers are exploited. That doesn't mean being a driver automatically means being exploited. There's a difference.
The ones being exploited are the ones who are willing to act and think like employees and who walk into this THINKING they are owed a minimum. THAT is happening at a large scale. And I believe it's intentional. THAT is what makes it exploitation.
I'm like a lot who despise the exploitation. Where I differ from many is, I have a hard time feeling too sorry for anyone who IS getting exploited. Because if you are, YOU let it happen.
Exploited contractors have some responsibility in this.
Didn't you read the contract? If not, why should anyone feel sorry for you?
Did you PAY attention to the part in the contract that said you are an independent contractor? Why should I feel sympathy if you didn't?
Did you understand what that means to BE an independent contractor? Did you realize that it means you're operating a business? If not, why the hell not? Why didn't you research what it was you were signing on for? Again… no sympathy here.
Be accountable for your decisions
What I'm saying doesn't remove responsibility from the gig companies. Wrong is wrong. But we're big boys and girls here, sometimes we need to put on our big person pants and take some responsibility for ourselves.
When you own a business, there are no guarantees. There is risk. You get no minimum wage and non one owes you a thing. I'm repeating myself some but it bears repeating. If you start a business in a market or industry that doesn't support your business, you go out of business and it's no one else's fault. That is the risk you signed on for when you agreed to be a business.
It doesn't matter if you think it's fair. YOU SIGNED UP FOR THIS. If you didn't pay attention to what you signed up for, what right do you have now to change the game? If you took that $2 order, that's on you. And if you continue to spin your wheels when the market (such as your customers) doesn't support it) that's on you. No one is holding a gun to your head. YOU agreed that you were running a business.
How to avoid being exploited by Grubhub, Postmates, Doordash, Uber Eats and other Gig companies.
You take this as it is. It IS a business. Treat it like one.
Whether it should be is a different topic. I think the independent contractor model is unsustainable for what they want to do and the market's starting to show that.
The issue is, YOU. ARE. RUNNING. A. BUSINESS.
The only way you can avoid being exploited is to embrace that fact and treat it like it is a business. And to think with a business owner mindset. That involves a few things.
Understand that you are running a business.
I can hammer this all day. There are no guarantees. No one can be forced to buy your product or service. You could make great money. You could take a bath. That's what being a business owner means.
No one is going to take care of you. Nothing is owed to you. There is no entitlement to being an business owner. You are completely and totally on your own. That's the difference between working for someone else and working for yourself.
There's a reality to being a business owner and not having those guarantees that sucks. But there's freedom with it too. In the end, YOU get to make a choice whether to start a business. Once you grasp that reality, recognize the shortfalls and decide you are okay with that, it's easier to move on to the next things.
I'm going to tell you it's incredibly freeing moving from being a victim to being the one responsible.
Because the thing is, when you become the business owner, you can't be the victim.
But that also means that when you become the business owner, that puts you in control.
You hear me talk a lot about Gary Vee (Veynerchuk). His media company employees over a thousand people but he has the attitude that anything that goes wrong is his fault. If an employee makes a mistake, it's his fault for either hiring them, not training them well enough, or not firing them when he knew they couldn't cut it. I heard someone comment that was a depressing outlook and Gary replied no, just the opposite. He's happier as a result. He has the mindset that he's in control and HE has the power to make things better.
If you're not making money, take responsibility. You're doing something wrong, you aren't accepting the right orders, you aren't efficient enough, or maybe you just went into business in a market where the business isn't sustainable. When you take responsibility, it's virtually impossible to be the victim. Because your mindset won't allow you to be victimized
How often do I need to beat this drum? YOU are the boss. Act that way.
Grubhub isn't your boss. Doordash is not your employer. Postmates and Uber Eats are not your masters. THEY ARE YOUR CUSTOMERS. THAT changes the power in the relationship. CLAIM that power.
If what they offer isn't enough, you have the right to say no. So SAY NO. YOU need to be the one in control here. You make the decisions here.
How does a business owner look at it with the customers? They can't make the customer pay more, but can you afford to sell for less? Or is that customer just too cheap? YOU have the right to say no – someimtes it's best to fire the customer.
So you rely less on the customer, and find others. You develop the mix that works for you. Or you figure out that the business model doesn't work. But YOU make that decision as well. Hey, businesses close every day. Sometimes moving on is very simply taking control.
When you are the boss, there are no guarantees. But as the boss you have more control over the ability to improve.
BE. THE. BOSS.
How Do You Put an End to Exploitation?
In the article I told you about earlier, I said the company that studied Doordash pay had an agenda. Someone took issue with that and I said it's okay that they have an agenda. They SHOULD have an agenda, otherwise what's the point?
The thing is, I have an agenda as well. Maybe it's not all that far off from that of the that organization. I think we got our start for the same reason: Do something about the exploitation. Their approach is to try to force gig companies to work under the fair labor laws. I totally get that.
Or, we beat them at their own game…
My response is to encourage you to take control. Understand who you are and embrace it. If you're going to agree to be a business then for gosh sakes, BE a business owner. Take control. Be the one in control.
I think taking that control can also force change. The business model on its face is not a sustainable one. It can only work if people ALLOW themselves to be exploited.
If every single contractor treated this as they would any other business, it would change things. Make decisions based on your business, not on what you are told. Set your price. Say no. And sadly, sometimes when that means you get no business, do the smart thing a business owner should do and close up shop.
That sounds cruel. But as a business owner, you know going in that that's the reality.
If you're not willing to treat it like you would any other business, don't agree to be a business owner in the first place.
How would that change anything?
I think every single one of these companies is teetering. None of them are profitable. Grubhub and Uber stock holders are on the verge of revolt. Doordash and Postmates are getting real nervous because they can't go public when they're bleeding cash as bad as they are. If investor money dries up, they will go under.
It's a house of cards that's already about to collapse.
I don't see it getting better. Part of the problem is, none of them can keep customers. That's because they can't enough get drivers to take the bad orders.
People blame the cherry pickers. The people who are saying no to orders that make no business sense are doing what business owners should do. It's the people who feel an obligation to take everything to keep the company afloat that are bailing them out and protecthing them from their own bad business model.
If you say no to horrible offers, fewer orders are delivered. Okay, maybe they quit giving you offers all together. Fine, you close up shop. But if every single business owner they contract with TREATED it like they were business owners and did the same thing, those orders wouldn't get delivered. They'd have nowhere near enough couriers to handle the demand.
And then they either pay enough to make it worth doing business with them, or they switch to an employee model, or they fold.
That's the way it should be. We shouldn't be propping up a bad business model.
And we shouldn't operate a bad business model either. Treat this like a business, run it well, run it profitably.
No one can exploit you when you take control.