Tech Snapshot | Lyft, Uber, Airbnb, Facebook | Aug 17 - 20
Last week was a whirlwind for both ride-hailing companies. A California statute (AB-5) issued in 2019 became a landmark case that sought to grant more labor protections for independent contractors, including qualifying them as employees and guaranteeing them minimum wage, sick leave, and worker’s compensation. AB-5 makes it harder for companies to save money by keeping some workers as independent contractors, which is an integral aspect of the business model for ride-hailing apps like Lyft and Uber. After failing to classify their drivers as employees, both companies were prepared to cease operations in California starting at midnight on August 20. Then on Wednesday, August 19, a few hours before the stroke of midnight, an appeals court allowed both companies to continue operating (with drivers as independent contractors).
Both companies are fighting to make themselves exempt from AB-5, and registered voters in California will vote in November (Prop 22) to determine whether Lyft and Uber will be exempt from AB-5 or not. If exempt, drivers will continue to be classified as independent contractors and not receive company benefits (note that neither company is making a profit even with the current business model). If not exempt, Lyft and Uber will most likely hire fewer drivers and increase fares. Or they may cease operations in California, the largest economy in the U.S.
The San Francisco-based home rental company surprisingly announced last Wednesday that
they will file for IPO with the U.S. Securities and Exchange Commission.
COVID-19 severely impacted the travel industry, with the company laying off 25% of its workforce and its valuation dropping from $31B to $18B from March to April. Airbnb has lost $400M and raised $2B in equity and debt to weather out the COVID storm. Bookings did improve in June and July; being under quarantine for a few months has caused people to get the travel itch, and Airbnb has shifted its focus to marketing local and intimate travel destinations for users.
Once Airbnb goes IPO, they will be famous for being a company that went public during uncertain economic times.
Facebook will be unifying the messaging platform to allow cross-messaging among FB Messenger, Instagram, and Whatsapp. Facebook knows that not all users use all 3 platforms on a regular basis, Facebook is working to rebuild its infrastructure to provide seamless communication between all 3 platforms. This new model is currently in beta test with select users.
Facebook acquired Instagram for $1B in 2012, and Whatsapp in 2014 for $19B.
Alibaba rival and fellow online e-commerce titan, JD.com, branched its own healthcare unit called JD Health, which is a platform for 30-minute pharmacy delivery. With a valuation for $7B, JD Health announced it raised $830M from Hillhouse Capital and will use such funds for Series B financing.
Supply chain optimization is essential for consumers worldwide to receive their goods as swiftly as possible. Enterprise intelligence company Craft has closed Series A with $10M led by High Alpha Capital. Craft plans to build a “supply chain intelligence platform.” Craft plans to expand its offices in San Francisco, London, and Minsk and grow remote teams of engineering, sales, marketing, and operations.
Craft’s solution to the lack of visibility into complex global supply chains is a proprietary data platform, API, and access portal that integrates into existing enterprise workflows. Craft’s platform also comes pre-deployed with data from thousands of financial sources that are refreshed using machine learning and human validation. Craft claims its revenue has grown threefold in 2020.
Coding schools have been on the rise even before quarantine, and in post-covid times with people staying at home and pondering their next careers, coding schools have been thriving. Lambda School runs virtual 9-month and 18-month computer science courses for $30,000. And you won’t have to start paying them back until you land a job that makes at least $50,000.
Lambda School raised $74M from Gigafund, and is aiming to be profitable. The company claims to have 3,000 virtual students. Lambda School offers certificates and not accreditations, though students who graduate from accredited universities don’t necessarily come out with a solid education that is suited for the modern world. There is some criticism about their deferred payment model and the risk Lambda School incurs if/when students drop out of the program before completion. Lambda School claims they will use the funds to meet the growing demand for their platform.
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Research contributed by Stephanie Heinsohn