DoorDash Says Its Own Pay Model Is a Risk To Its Business In Public Filing (vice.com) 34
An anonymous reader shares an excerpt from a report via VICE: Like other gig work giants, DoorDash has admitted in its IPO documents that its own business model -- and the way it treats and pays workers -- are major "risks" to its business. In its S-1 filing with the Securities and Exchanges Commission, there's little to no evidence DoorDash can achieve let alone sustain profitability (in fact, that it may never be profitable is another "risk"), and lots of evidence that its business model is largely based on taking advantage of both restaurants and drivers.
Included in "risks" are the two following statements, which are wonders to behold: "Our success, or perceived success, and increased visibility may also drive some businesses that perceive our business model negatively to raise their concerns to local policymakers and regulators. These businesses and their trade association groups or other organizations may take actions and employ significant resources to shape the legal and regulatory regimes in jurisdictions where we may have, or seek to have, a market presence in an effort to change such legal and regulatory regimes in ways intended to adversely affect or impede our business and the ability of merchants, consumers, and Dashers to use our platform." What this means is that restaurants might want DoorDash to take less of a cut from their commission, which is understandable. Even with cuts to DoorDash's commission rates during the pandemic, many restaurants are still struggling to scrape by.
And then there's this, which explicitly says the company's own pay model for drivers is a risk to its further existence: "Our ability to provide a cost-effective local logistics platform is also dependent on Dasher pay, which is a significant cost and subject to a number of risks..." That's a mouthful, but says that DoorDash's pay model for delivery drivers is algorithmic, which leads to an "inconsistency in earnings" which is likely to piss off both its workforce and its customers to the point where it may be challenged both in court and by regulators, and reported on in the media. This problem is even worse when you consider the labor patterns of gig companies: they require a large reserve of idle labor to keep wait times low and to fight extremely high turnover rates, but they also rely on a core of full-time gig workers to do the vast majority of work. As a result, the workers hurt the most by this "inconsistency in earnings" are the most precarious and vulnerable workers who rely on DoorDash to make ends meet.
Included in "risks" are the two following statements, which are wonders to behold: "Our success, or perceived success, and increased visibility may also drive some businesses that perceive our business model negatively to raise their concerns to local policymakers and regulators. These businesses and their trade association groups or other organizations may take actions and employ significant resources to shape the legal and regulatory regimes in jurisdictions where we may have, or seek to have, a market presence in an effort to change such legal and regulatory regimes in ways intended to adversely affect or impede our business and the ability of merchants, consumers, and Dashers to use our platform." What this means is that restaurants might want DoorDash to take less of a cut from their commission, which is understandable. Even with cuts to DoorDash's commission rates during the pandemic, many restaurants are still struggling to scrape by.
And then there's this, which explicitly says the company's own pay model for drivers is a risk to its further existence: "Our ability to provide a cost-effective local logistics platform is also dependent on Dasher pay, which is a significant cost and subject to a number of risks..." That's a mouthful, but says that DoorDash's pay model for delivery drivers is algorithmic, which leads to an "inconsistency in earnings" which is likely to piss off both its workforce and its customers to the point where it may be challenged both in court and by regulators, and reported on in the media. This problem is even worse when you consider the labor patterns of gig companies: they require a large reserve of idle labor to keep wait times low and to fight extremely high turnover rates, but they also rely on a core of full-time gig workers to do the vast majority of work. As a result, the workers hurt the most by this "inconsistency in earnings" are the most precarious and vulnerable workers who rely on DoorDash to make ends meet.
Shirking labor law isn't a sound business model (Score:2)
Whodathunk it eh?
At least they were honest in their IPO filing.
Re: Shirking labor law isn't a sound business mode (Score:2)
Re: (Score:3)
While TFA's concerns about DD's profitability and regulatory environment may be legit, the mandatory hypothetical pessimism of the "risks" section of an SEC filing is hardly smoking gun proof.
How unusual is this? (Score:3)
I don't read a lot of SEC filings (only rarely, when I'm chasing down some specific information) so I don't know how common it is for a company's business model to be a threat to its business. I would imagine, though, that it comes more frequently for "disruptive" businesses which are trying to shake up the status quo. For good and/or ill, we tend to end up with protectionist laws over time due to a combination of lobbying on the one hand, and politicians trying to look busy on the other.
Re: How unusual is this? (Score:5, Interesting)
Re: How unusual is this? (Score:2, Informative)
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Pixel 2 has one of the worst keyboard and auto correct!
Wait, there was a sequel?
https://en.wikipedia.org/wiki/... [wikipedia.org]
Oh! No "s"!
Never mind!
Re:How unusual is this? (Score:5, Informative)
I don't know how common it is, but the reason that they're doing it is twofold: 1) it's true, and 2) acknowledging it in this way makes it pretty difficult for a shareholder lawsuit to prevail later, if this risk is realized.
Re:How unusual is this? (Score:5, Informative)
I don't know how common it is, but the reason that they're doing it is twofold: 1) it's true, and 2) acknowledging it in this way makes it pretty difficult for a shareholder lawsuit to prevail later, if this risk is realized.
It's very common. Two of the companies I follow release lists of risks associated with their business model every quarterly report. Things like "dependent on a relative few clients", "business and revenue subject to decline due to pandemics", etc.
It's almost so tediously long that it negates itself, like the myriad of contradictions from a prescription medicine.
Re: (Score:2)
S-1 filings, in particular, tend to have wording like this for all types of businesses going IPO that paint the impression that the business might fail at any moment.
For example, when Visa (the credit card processor) filed their S-1 in 2007, it was full of grave existential risks like:
"If Visa U.S.A. or Visa International is found liable in certain other lawsuits that have been brought against them or if we are found liable in other litigation to which we may become subject in the future, we may be forced t
Proft = uSA (Score:4, Insightful)
Re: Proft = uSA (Score:1)
Try being transparent (Score:2)
I doubt you could get VC for this, but what about radical transparency? Publish on your site what everything costs you, what you pay each worker, and break down the costs to the customer in the app. Show them exactly what they're paying for. Many of us actually want to pay workers a fair wage, so we'll pay for the service that treats workers well. Some people don't have the luxury or the ethics to pay for this extra service, I get it, so there will always be a low-cost alternative trying to undercut. But wh
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OK, here's a real breakdown from one of my favorite vegan places:
Food cost: $19
Food cost after markup*: $26
Delivery service network fee: $2.86
Delivery Fee: $2.99
Total Paid by customer: $31.85
Delivery cost to customer: $12.85 (+tip)
Amount paid to Dasher: ~$3 (23% of fees collected from customer)
Amount paid to Restaurant: $18.20
Profits for DoorDash: $10.65 (56% of retail)
Now do you see why they don't do that? The idea that there's no profits, and that the drivers and restaurants must be ripped off
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So this would probably have to be paired with a company that, like Costco, has a decent but not immoral markup on products. If you say that your new delivery service company wants to take a 12.5% profit, I think people would say, "hey, okay, that makes sense, I'm willing to pay for that". And one of the nice things about a model like that is that it's effectively unassailable. You never have to worry about costs cutting into your margin; if people were willing to pay for that margin before, they'll keep pay
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Sadly Uber just proved it isn't (Score:2, Insightful)
It makes me nervous. I'm about 90% certain that labor law enforcement factored heavily into my company's decision to hire me, which radically improved my pay and benefits. I'd be willing to bet money that if most
Long term the goal's going to be to pay us all piecemeal, and maybe even with c
Re: (Score:2, Insightful)
Uber didn't "buy a law" or get powers to "rewrite labor law". They convinced a (59%-41%) majority of Californian voters that the state legislature screwed up when the legislature decided to make California unlike the rest of the country in drawing the line between employees and independent contractors.
In the real world, the theory of the firm [slashdot.org] holds firm. (I'll be here all weekend, tip your waiter.)
Re: (Score:2)
by buying a law in California that let's them rewrite labor law and proving that if you drop $400 million you can get workers to slit their own throats.
Even if Uber bought a law how does that change anything? The law just lets them keep doing what they were already doing. And that was set on fire $2bn of investor's money every quarter.
You can't buy a law that makes you magically profitable.
apparently the writer has never read sec filings b (Score:2)
The filings list many possible risks to avoid future lawsuits. They generally include stuff like "customers may cease to buy our products" and "competitors may be more successful" among others.
Yes, and especially anything unusual (Score:3)
You're right. There's always the list of risks that management now aware of. If you have an empty list of risks, that indicates you're telling investors that there are no risks that management is aware of. Which would be securities fraud for any business because there are always risks. That's why investors in a business get a better return than investing in US savings bonds - because they are taking a risk.
In addition to the boilerplate, it always calls out whatever is different about this business versus
Underpaid + "freedom" = underpaid (Score:5, Interesting)
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dumpster fire (Score:3)
Our business is a dumpster fire, please give us money and be complicit in a tilted employment market that takes advantage of drivers. Let's go screw over our favorite restaurants too.
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Not surprising, but honest at least (Score:2)
While they're not as predatory as, say, payday lenders or rent-to-own stores, these gig economy places are all definitely taking advantage of people. They love to tout that their workforce is free to do whatever they want, work as much or as little as they want, etc. But the reality is that all they're doing is externalizing the cost of goods sold to "independent contractors" who aren't in a position to do much about it.
It's surprising that DoorDash is even mentioning this in their IPO filing...my assumptio
Poor writing or deliberately misleading? (Score:3)
Re: (Score:2)