As automakers continue to work on their strategies for the next generation of transportation, one of the biggies is making a change to its leadership structure. Ali Vahabzadeh, the CEO and co-founder of ride-sharing startup Chariot, which Ford acquired Chariot in September 2016, has left the company.
“We thank Ali for his passion and dedication to building Chariot into the growing mobility business it is today,” the company told TechCrunch in a statement. “We are glad he will continue to serve Chariot as a director on the Chariot board, and all wish him well in his next adventure.”
He has been replaced in the interim by Dan Grossman, who leads Microtransit for Ford Smart Mobility, while the company looks for a permanent person to lead Chariot.
It seems that Ali himself had quietly announced his departure two weeks ago, to no one’s notice — writing that he wanted to step away to pursue his next entrepreneurial venture.
But this may not be the full story. The person who originally provided the tip to TechCrunch alleges that Vahabzadeh was actually fired in early February after employees co-signed a letter to Ford’s CEO James Hackett complaining about toxic work culture and poor employee retention. Ford declined to comment on this. (We are also following up on this allegation. If you know something, you can send it anonymously to us via our tips page.)
Ford acquired Chariot in September 2016 as part of its efforts to build alternative transport services for people moving away from fully owning and driving their own vehicles.
It bases its service around a fleet of transit vans whose routes are aimed at commuters, and where what routes are offered is based on a “crowdsourced” vote.
The startup was launched at Y Combinator and had only raised around $3 million before Ford acquired it, reportedly for $65 million plus earn-outs.
Chariot started in San Francisco but has had its eye on growing. In January 2017 it announced plans to expand to another eight cities (it’s currently active in five in the US, including New York, Columbus, Austin-San Antonio and Seattle). As of this month it is now also in London with plans to expand elsewhere in Europe.
“We’re going to be super aggressive in expanding to multiple markets over the next year,” said Vahabzadeh in an interview with TechCrunch at the time of the acquisition. “It became very clear very early on that Chariot would be able to leverage Ford’s expertise in logistics and vehicle and operations to take Chariot and make this a global service, beyond just the Bay area.”
But growth has not been without hiccups. In October, Chariot had to halt service for a period in San Francisco after failing to pass a series of California Highway Patrol inspections.
In terms of competition, there are a number of other services looking to fill in the gap between private cars; taxis and other single-destination ride-hailing services; buses; trains; and your own legs. They include services like Uber Pool, startups like Via, and new services that appear to be emerging by the week, such as this new Smart Bus effort from Citymapper in London.
HTC’s smartphone and connected devices president and former CFO, Chialin Chang, has resigned. The move, spotted earlier by Engadget, was announced today and is effective immediately.
Chang joined the company in 2012 as CFO. He also previously ran HTC’s global sales business — before eventually becoming president of smartphones and connected devices in 2016.
HTC’s investor note specifies Chang is leaving for “personal career plan” reasons, and local press in Taiwan is reporting that Chang intends to set up his own AI startup.
HTC does not list a replacement for the position and did not respond when we asked about its plans for rehiring a smartphone chief. A company spokesperson provided the following statement on the news: “We can confirm Chialin Chang has resigned from his position as President of the Smartphone and Connected Devices Business at HTC. We thank him for his dedication to the Company for the last six years and wish him well in his future endeavours.”
Chang’s departure follows HTC transferring more than 2,000 of its best engineers to Google at the end of last month on the completion of a $1.1BN cooperation agreement between the pair, which was announced last fall — with Mountain View taking charge of many of the HTC engineers who worked on its Pixel devices.
In exchange HTC has a chunk of cash but the size of its engineering team has shrunk by about a fifth — and it’s now down a smartphone president to boot.
How it can go about reviving a smartphone business which has for years suffered lackluster earnings — on account of being outmanoeuvred and outgunned by faster and better resourced rivals — remains an open-ended question at this point. A glance at this statista graph amply illustrates the challenge.
In recent years HTC has been increasingly focused on its emerging VR business — under the Vive brand and in partnership with games publisher Valve. Though, in September, it said it remained committed to both VR and smartphones, including its U series of premium smartphones.
And it also said its collaboration with Google means it can continue to work with the engineers that now work for the Pixel maker.
Chairwoman and CEO Cher Wang is giving a keynote speech at the Mobile World Congress tradeshow later this month. But there will be no flashy HTC press conference — as was the norm in its smartphone heyday.
Indeed, it does not appear to have any flagship hardware launches in the pipe for MWC 2018. Though, once again, it will be demoing its Vive VR technology to delegates at the world’s biggest mobile show.
Featured Image: Joan Cros Garcia/Corbis/Getty Images
“He wouldn’t have to worry about sending a hookup a picture of his junk! And girls would be way more likely to send him racy photos if they disappeared.” That’s just a taste of juicy details found in “How To Turn Down A Billion Dollars: The Snapchat Story”, a new book coming out tomorrow from former TechCrunch reporter Billy Gallagher.
It illuminates how co-founder Reggie Brown actually came up with the idea of ephemeral messaging, how CEO Evan Spiegel kicked him out of the company, and how Snapchat went from LA high school toy to IPO.
You can read the most interesting chapter about Reggie’s marijuana-fueled eureka moment with the quotes above in an excerpt from the book published on TechCrunch this weekend: How Reggie Brown Invented Snapchat
Unlike most books about tech companies written by far removed authors, Gallagher chronicles Snapchat’s rise first-hand thanks to an unlikely coincidence. He was in the same Stanford fraternity as the startup’s co-founders. [Disclosure: so was I]. The sources this afforded Gallagher make The Snapchat Story a tale full of unflattering anecdotes and interpersonal drama that mirrors the way teens use the off-the-cuff app. Though not always polished or paced to perfection, the book makes you feel like you’re right there in the dorm room with Evan and Reggie.
Snapchat co-founders (from left): Reggie Brown, Bobby Murphy, Evan Spiegel
Here’s a look at some of the top scoops contained within:
Reggie came up with the idea for Snapchat’s disappearing messages to coax girls into sexting him while preventing evidence of his own affairs from permanently haunting him. He then recruited Evan to turn it into a real app, and they were supposed to split the company 50/50
Evan kicked Reggie out of the company after a drunken argument about Reggie’s contributions, and later a raging phone call where Evan was furious that he was listed as the last inventor out of the three co-founders in the Snapchat patent application Reggie filed
Snapchat blew up in Evan’s cousin’s LA high school after his mom told her about it. Her school-issued iPad banned Facebook so her and her friends downloaded Snapchat as a way to pass notes, and it took off from there.
Mark Zuckerberg first offered $60 million to buy Snapchat in 2012, but when Evan declined, Zuckerberg threatened Snapchat by showing him Facebook had already built a clone called Poke. Evan still refused, and Facebook launched Poke weeks later.
Evan seriously considered accepting Facebook’s $3 billion acquisition offer, at times favoring the 2013 deal in discussions with co-founder Bobby Murphy, but ultimately decided he couldn’t live out his days as a Facebook employee answering to someone else.
Beyond the big revelations, How To Turn Down A Billion Dollars gives deep insights into Spiegel’s secretive behavior. Reporting from inside Snapchat’s annual New Year’s Eve parties, Gallagher recounts how the company went from requesting “no photos” to confiscating people’s phones. But Gallagher acts as our lens, confirming how Taylor Swift was Spiegel’s date one year, and the two lorded over the bash from an elevated catwalk.
The Snapchat Story only stumbles when Gallagher gets too deep into the weeds. He tries to give readers a crash-course in venture capital with failed startup Clinkle as an example in a long tangent. Later the author gets lost in stats about sexting, and the intricacies of Snapchat’s Discover deals with publishers. As Spiegel gets more private, Gallagher’s sourcing wanes, relying instead on leaked emails that feel cold and clinical.
NEW YORK, NY – MARCH 2: (L to ) Snapchat co-founders Bobby Murphy, chief technology officer of Snap Inc., and Evan Spiegel, chief executive officer of Snap Inc., prepare to ring the opening bell as Thomas Farley, president of the NYSE, looks on, March 2, 2017 in New York City. Snap Inc. priced its initial public offering at $17 a share on Wednesday and Snap shares will start trading on the New York Stock Exchange (NYSE) on Thursday. (Photo by Drew Angerer/Getty Images)
But with his direct understanding of Snapchat as both one of its first users and now its biographer, Gallagher distills wisdom about the app’s true purpose. For teens, trends change fast, and Snapchat’s ephemeral nature means your personal brand is always a reflection of the now rather than the visual artifacts from when you aligned with a fad since passed.
Snapchat’s ideas have influenced society and social media in ways much bigger than its fledgling business. Readers trying to invent, invest in, or exploit the next great shift in consumer technology behavior would do well to read Gallagher’s dive into how the last one materialized.
TechCrunch’s Josh Constine: What should readers come away from your book thinking about Snapchat?
The Snapchat Story author Billy Gallagher: I think they’ll come away with an appreciation of how early Evan started thinking about Snapchat as much more than just a photo-sharing app and certainly a sexting app. Also, an appreciation for how much he did have this pretty brilliant insight on what was a simple straightforward idea. If you think about this idea of impermanence not as a toy and not as a method for sexting, but as a way of changing user behavior, I think it’s really fascinating.
I think also an understanding of who Evan is, why he and Snapchat are so closely linked, and why that’s going to be the case for the foreseeable future.
Constine: What do you think are the most important scoops or bits of color to come out of this book?
Gallagher: I think there’s a lot of fun stuff on the on the early days, surely color wise. I think there’s a lot on Evan and Bobby and Reggie and the early days and the work on Future Freshman and when they’re in school that hasn’t been covered much before. I think Snapchat has been covered primarily by the tech press and in short pieces that are on the here and now or a funding round or around the IPO. But when you look at the longer narrative, you connect the dots of the thing that Evan has said.
To give you an example, when he was on stage at TechCrunch Disrupt, he talked about Google Glass, and how Snap wasn’t going to build a Google Glass app because it felt invasive, like a gun pointed at you. And then a few years later they’re releasing Spectacles.
Constine: When people read that origin story and hear how Reggie really came up with this idea, and it was more that he just brought it to Evan and Evan kind of ran with it, how do you think it will change the readers’ perception of Evan?
Gallagher: I think it makes it clear Reggie really, really did have a role in this. You can argue about whether or not it’s ideas or execution that matter. But I think it’s not fair necessarily to say that all Reggie had was an idea, because he took it to the smartest guy, the best operator, the best executor he knew — Evan — and that was a brilliant move.
You know a lot of what venture capitalists tout as their value is bringing in the CEO or the key hire or this big partnership. So really what Reggie did was get the entire thing moving. A lot of people say the company wouldn’t be what it is today if he was still there, and he got $158 million, so I don’t think we can really feel too sorry for him. But on the other hand, Evan and Bobby are on the TIME 100 and they’re billionaires and they have all this influence on the world. I think the reader will have some empathy for Reggie and have some empathy that he isn’t around at the company anymore. It’s a makes you look at Evan as cold. At the same time if Reggie had stayed I think there’s the potential that the company would have died. It’s a really tough, tough situation that they definitely should have handled better.
Constine: How was it working with Snapchat on this? Did they push back much? Did they try to dispute facts?
Gallagher: They were actually pretty helpful as far as I could have expected them to be. They’re very secretive. Access to Evan and other executives is very heavily guarded, and so I knew at one point during the reporting when they told everyone not to talk to me. You could tell sometimes when I talked sources and then they’d say ‘oh actually they told me not to say anything.’ So access was an issue but I knew that going in. Mary Ritti [Snap’s VP of communications] was really helpful with fact checking, so yeah, they were pretty helpful at least beyond official access.
Constine: What’s the biggest question that you couldn’t answer in this book? Maybe something you were digging for but never found
Gallagher: I mean part of it is having wished I had some of the dialogue that can only be gotten if you have official access to Evan and Bobby — their private deliberations when they were considering these offers from Zuckerberg. But I think we were still able to get at a lot of how they’re motivated and why they did the things they did.
The biggest one that I come back to is why, once they realized they needed to terminate Reggie, why they went about it like breaking up your ex instead of as professional as Evan has been is business.
He makes two huge errors in a span of a few months when he forces Reggie out and changes all the passwords instead of going through it the right way by terminating him and coming to some sort of settlement that surely would not cost as much money. And then with Jeremy Liew atLightspeed when he accepts those terms that he later ranted and raved against, and it cost him a lot of money. So it ends up being $157 million for Reggie, and the terms in the deal they don’t want with Jeremy.
For as smart as Evan is and as much business savvy as he had early on he did make some pretty big mistakes. What I want to know is what were the talks he had with Bobby like when they forced Reggie out, and why was Bobby not able to bring him around and say ‘look, I understand this is an emotional event but this is a company now, not a student project, and we need to tie things up in an appropriate way.’
Constine: What’s your prediction for how Snap is going to fair in the future?
Gallagher: Well they just did well on their earnings, which was a good win for the company. It was big for morale. I’m pretty bullish on them, long-term, because I think they have a pretty defined downside as a really popular messaging app being used by 180 million people over day. They can build out the ad business. They’re doing some good things with these deals with wireless carriers that will help Android growth, so I think they have some good things going.
I think what’s going to be most interesting to watch this next year is what is Snapchat’s next chapter. Because for a while they were riding the brilliance of Stories and that was propelling a lot of things. But now Instagram has done a great job catching up to that and copying that, exceeding them there. And some other products they’ve had like Snap Maps are cool, but that isn’t a product at all on the same level as Stories in terms of importance and usefulness. So I think they need to figure out what is the next chapter here product-wise.
Reggie Brown carefully ran his fingers over the blunt, admiring its tightly rolled perfection. It was almost a shame to smoke such a work of art.
He leaned back on the couch in his Kimball Hall dorm room at Stanford University as he discussed the weekend’s social events with two of his former fraternity brothers, David and Zach.
The subject of the conversation moved on to the girls. A dreamy expression appeared on Reggie’s face.
“I wish I could send disappearing photos,” he mused, almost absentmindedly.
David and Zach laughed and agreed that it would be useful if photos disappeared, then turned to who was coming to their party that weekend. Reggie withdrew. He was thinking.
Through the haze of smoke, David and Zach’s chatter faded. Reggie focused on the usefulness of this new idea. A way to send disappearing pictures. He wouldn’t have to worry about sending a hookup a picture of his junk! And girls would be way more likely to send him racy photos if they disappeared.
Suddenly, he jumped up, and rushed down the hall to see if Evan Spiegel was around. Having both recently returned from studying abroad, and with their Kappa Sig lives now over, Evan and Reggie had moved into Kimball Hall, a dorm not far from Donner, where they had lived freshman year. Mulling his disappearing photos idea — how would he best explain it to Evan — Reggie’s topsiders barely touched the worn dark blue carpet as he surged down the hall in a half run/half walk.
Bursting into Evan’s room, Reggie exclaimed, “Dude, I have an awesome idea!” Even before Reggie finished explaining his idea, Evan lit up. He was immediately energized — almost intoxicated. It was just like all those nights of partying together, except they were drinking in Reggie’s idea.
“That’s a million-dollar idea!” Evan finally exclaimed.
Reggie felt relief and validation; more importantly, he felt hope. Even though Future Freshman had failed, Evan hadn’t given up his dream of starting the next transcendent tech company. He was the best operator Reggie knew, capable of taking this stroke of inspiration and making it a reality. And now they had an idea that actually seemed fresh and new. Unique.
The two friends excitedly discussed all of the celebrities whose nude photos had been leaked to the press. Their app would solve this problem! Evan gesticulated quickly and animatedly as he explained to Reggie how he could see people sending disappearing pictures back and forth. Most of us had barely moved past flip phones and BlackBerrys to iPhones at this point. And just as we moved from talking to texting to apps for everything else, people were starting to make the app transition for sex. Tinder would come out a year later, followed by a whole host of copycats. With this early photo-sharing idea, Reggie and Evan imagined a walled garden for couples to share intimate photos.
They would split the company 50/50, vote on everything, and divide equally any losses or gains they might see. Since Evan had more experience from running Future Freshman and other projects, he would be the CEO. Reggie would be the chief marketing officer.
But neither knew how to code well enough to make the app. They would need to recruit one of their friends to join them. They started a list of their fraternity brothers who had taken computer science courses. Most of the seniors that year were still economics majors heading off to Wall Street and the major consulting shops after graduation — it would be a few more years until most sought to make their fortunes in the Valley. But they came up with a couple names and headed off to the fraternity to recruit them.
Evan was a particularly persuasive salesman but he struggled to convince people with the initial pitches. The first two fraternity brothers he invited to join them said no.
Fortunately, Evan was not so easily deterred. And he had the perfect person in mind — his old Future Freshman cofounder, Bobby. Evan was sure he could convince Bobby to work on the app. He called Bobby and explained Reggie’s idea. But Bobby wasn’t convinced. Would people really want to use this? Evan nervously urged him that this idea was different from anything other people were working on. It wasn’t like Future Freshman where they would run into an army of competitors. They had learned a lot from their past two projects, and this was the most unique idea yet. Bobby, at last convinced, agreed to write the code, hoping the third time would be the charm for him and Evan.
Evan, Reggie, and Bobby’s first crack at the idea was dreadful: they created a clunky website where users uploaded a photo then set a timer for when the picture would disappear. They quickly realized it would be much easier and more private for users, and thus more widely used, if they built a mobile app instead of a website; to this day, Snapchat still does not offer a web product.
They sat around in their dorm room, debating how users should interact with their friends and what features would make people tell their friends to download it. Evan ran the group, making sure things were coming together on time and keeping everyone focused, while boisterous Reggie offered up ideas on all the different ways people would use the app. Bobby, much quieter and more reserved than the other two, kept the group grounded and generally agreed with Evan on the app’s direction.
Bobby put in eighteen-hour coding days for the next week to get them to a working prototype. Reggie came up with a name for the app: Picaboo, a riff on the childhood game Peek-a-boo. Evan designed the app’s interface, digitally mocking up what it would look like and how users would interact with it, so that Bobby could turn his visions into reality.
They finished a working prototype of Picaboo just days before final exams. They needed people to download the app, test it out, and hopefully tell their friends about it. Evan decided to approach his former fraternity brothers; despite having been kicked out, he was still friendly with most of the guys from his year, and they were still some of the most social people on campus. Evan needed the popular crowd to use this if it was going to catch on.
Evan quickly typed out a few lines about the app. He had told a lot of the guys about the idea before but not in such a broad, public way. He imagined people forwarding the email, downloading the app, and being instantly addicted. Facebook had launched a mere seven years earlier and ripped through Harvard like wildfire before spreading to other campuses, and then the world. The Stanford Daily wrote at the time about how many students were skipping classes because they were consumed with Facebook. Instagram had been downloaded over forty thousand times on the day of its initial release. Evan used an analytics platform called Flurry to track how many people downloaded the app, how often they used it, and how often they sent pictures to each other. It was time for the world to see Picaboo. Putting the finishing touches on the email, Evan hit send.
And then . . . nothing. It was a dud.
The fraternity brothers who downloaded the app that first week had fun with it, sending each other silly photos of themselves bored in class or pics of themselves partying. Even more so, it was cool because it was one of the first times they could hold something in their palms, on their phones, that one of their friends had built. But it wasn’t serious; it was just Evan’s little toy. A few dozen people had downloaded it and were toying around with it because their friends had created it. But they weren’t totally sure what it was and how they were supposed to use it. It was too early to call Picaboo a failure—the thing had just launched and barely worked. But it was far from the fairy-tale launch Evan had dreamed of.
Stanford Campus. Photo courtesy of Easyturn/istock
Evan was enrolled in a mechanical engineering class called “Design and Business Factors” that encouraged upperclassmen product design majors to create a prototype and business plan for an app or other product. The final project, presenting this prototype and business plan, was a third of the grade for the course. Reggie’s idea was much more intriguing than the ones Evan had been considering, so he adopted it for his class. While most of the other students worked in groups of three to five, Evan worked on his idea alone.
At the end of the class, everyone presented their prototypes to a panel of venture capitalists. There are dozens of entrepreneurship classes like this at Stanford, and while there is the allure of a team making it big, the vast majority of the students are just playing startup. If most startups fail, most of these class projects don’t even reach a stage where they can accurately be called a startup.
Like a school science fair, everyone put together a visual presentation to display on tables in the back. Each group sent a presenter to sell the judges on their project and receive feedback. Evan sat in the back of the classroom and watched his peers pitch their ideas. They ran the usual gamut from overpolished presentations by excited students seeking approval to underprepared undergrads just running out the clock until their turn was over. For the first time, Evan worried what other people would think about his app. The fraternity brothers enjoyed playing with it –surely Evan’s peers and these venture capitalists would understand the value of what he had been working so hard to build. They had to, right?
Finally, it was Evan’s turn. Showtime. He approached the front of the room like the entrance to a party, strutting confidently to show the crowd what he, Reggie, and Bobby had been working on tirelessly for the past six weeks. Confident and comfortable, Evan enthusiastically explained to the other thirty students, two professors, and half a dozen venture capitalists that not every photograph is meant to last forever. He passionately argued that people would have fun messaging via pictures.
The response? Less than enthusiastic.
Why would anyone use this app? “This is the dumbest thing ever,” seemed to be the sentiment underlying everyone’s tones. One of the venture capitalists suggested that Evan make the photos permanent and work with Best Buy for photos of inventory. The course’s teaching assistant, horrified, pulled Evan aside and asked him if he’d built a sexting app.
Phil Knight in a 1994 appearance on Charlie Rose
The scene was reminiscent of another Stanford student’s class presentation half a century earlier. In 1962, a student in Stanford’s Graduate School of Business named Phil Knight presented a final paper to his class titled “Can Japanese Sports Shoes Do to German Sports Shoes What Japanese Cameras Did to German Cameras?” Knight’s classmates were so bored by the thesis that they didn’t even ask him a single question. That paper was the driving idea behind a company Knight founded called Nike.
The VCs sitting in Evan’s classroom that day likely passed up at least a billion-dollar investment return. But it’s very easy to look at brilliant ideas with the benefit of hindsight and see that they were destined to succeed. Think about it from their perspective — Picaboo’s pitch was basically, “Send self-destructing photos to your significant other.” Impermanence had a creepy vibe to it, belonging only to government spies and perverts. With the benefit of hindsight, we can see that Facebook developed the conditions that allowed Snapchat to flourish. But it wasn’t at all obvious watching Evan’s pitch in 2011 that this was a natural rebellion against Facebook or that it would grow beyond our small Stanford social circle.
If anyone was searching for the next Facebook killer, they were hopefully looking at a little photo-sharing app called Instagram that had just raised Series A funding valuing the company at $25 million; it’s much more likely that they were looking at any number of apps or websites that have since died without your ever hearing of them.
In spite of this third failure to successfully pitch people on the idea, Evan remained undaunted. And as he hoped to keep Reggie and Bobby engaged and driving on the project, he told them that everyone really liked their idea.
Most of their peers were pursuing internships — or, in Bobby’s case, full-time jobs — at prestigious banks and big tech companies. But Evan and Bobby were used to ignoring the norms to chase their startup ideas. And Reggie was committed to it. Most importantly, they really liked the app. While primitive, it was fun to use. And they really believed that people would want to send pictures that deleted themselves, whether for sexting or otherwise.
The trio agreed to move south for the summer, to Evan’s dad’s house in Pacific Palisades. There, they would develop the app, gain users, and take their shot at becoming the next big Stanford startup. As they agreed on the logistics of the summer, Reggie felt his excitement grow. As long as he had Evan, nothing could go wrong.
Akamai, the Cambridge Massachusetts content delivery network and network services provider, announced they had laid off 400 people in their earnings call with analysts yesterday.
On the call, Akamai CEO Tom Leighton indicated that the 400 people represented 5 percent of the the company’s 8000 worldwide workforce. “As part of our effort to improve operational efficiency, we reduced headcounts in targeted areas of the business, most notably in areas tied to our Media business. Overall, we have removed about 400 positions or 5% of our global workforce,” Leighton told analysts.
He went onto to say that the layoffs actually began at the end of last year and have spilled over into this week. The company sees this as part of an effort to get leaner and cut costs, an effort that predates Elliott Management buying a 6.5 percent stake in the company in December.
Elliott has a history of being an activist investor and a reputation for pushing companies to make big changes. In this case though, it appears the company was trying to find ways to reduce costs even before Elliott entered the picture.
A company spokesperson added, “The reduction in workforce is one part of a series of decisions to reduce cost as we continue to invest in areas to position Akamai for long-term success.”
This is a point that Leighton also made as he tried to temper the layoffs with news that the company plans to invest in other areas “It’s important to note that while we’ve made reductions in some areas of the business, we are also investing in areas that can return greater value going forward,” he said. These include areas like security and Internet of Things, markets that are still developing and there is room to exploit.
The company actually had a decent quarter, beating analysts expectations with revenue rising 8% to $663 million. The company stock is up $4.65 this morning or 7.30 percent, as of this writing.
The UK government has announced a package of labor market reforms to respond to changes in working patterns including those driven by the rise of gig economy platforms and apps like Uber and Deliveroo.
It’s billing the move as an expansion of workers rights — saying “millions” of workers will get new day-one rights, as well as touting tighter enforcement of sick and holiday pay rights.
“We recognise the world of work is changing and we have to make sure we have the right structures in place to reflect those changes, enhancing the UK’s position as one of the best places in the world to do business,” said prime minister Theresa May in a statement.
“We are proud to have record levels of employment in this country but we must also ensure that workers’ rights are always upheld. Our response to this report will mean tangible progress towards that goal as we build an economy that works for everyone.”
The reforms — which the government has dubbed a ‘Good Work Plan’, saying it will for the first time be “accountable for good quality work as well as quantity of jobs” — follow rising criticism of conditions for workers in the gig economy, and a number of legal challenges including by a group of UK Uber drivers who used an employment tribunal in 2016 to successfully challenge the company’s classification of them as self-employed contractors.
It also follows a government-commissioned independent review of modern working practices, conducted by Matthew Taylor and published last summer. The government says it’s acting on all but one of the Taylor report recommendations.
(The one exception being changes to tax rates which, unsurprisingly given its prior U-turn, is confirmed as entirely off the table. “The employment status consultation makes very clear that changes to the rates of tax or NICs for either employees or the self-employed are not in scope,” it emphasizes on that.)
“The Taylor Review said that the current approach to employment is successful but that we should build on that success, in preparing for future opportunities,” said business secretary Greg Clark in a supporting statement. “We want to embrace new ways of working, and to do so we will be one of the first countries to prepare our employment rules to reflect the new challenges.”
The government claims it’s going further than Taylor’s recommendations — specifically by planning to enforce
vulnerable workers’ holiday and sick pay for the first time
a list of day-one rights including holiday and sick pay entitlements and a new right to a payslip for all workers, including casual and zero-hour workers
a right for all workers, not just zero-hour and agency, to request a more stable contract, providing more financial security for those on flexible contracts
The 2016 employment tribunal judgment that reclassified the group of UK Uber drivers as workers gave them entitlement to benefits such as holiday pay and sick pay.
The ruling also paves the way for other legal challenges to be brought by gig economy workers. And while Uber continues to appeal against it the company has also responded to rising legal risk and political pressure over gig economy working conditions by introducing some subsidized insurance products for workers on its platforms. So, in case law terms, the direction of travel for legal liabilities in this area seems fairly clear.
As well as tightening up the enforcement of workers rights, the government said it will be raising fines for employers that show “malice, spite or gross oversight”, as well as considering raising penalties for employers who have previously lost similar cases.
It will also be introducing a new naming — and, clearly, shaming — scheme for employers who fail to pay employment tribunal awards.
While the government is very clearly signaling an intent to bolster gig economy workers rights, plenty of questions about its reform plan remain at this stage — such as, for example, how it intends to define “vulnerable” workers, and how explicitly it will codify the planned changes and/or write them into law.
Responding to its announcement today unions were generally critical, arguing it’s not going far enough.
Govt response to Taylor Review still leaves 1.8 million workers excluded from key protections. And doesn't tackle hire and fire culture in the gig economy.
Some also accused the government of seeking to kick the problem into the long grass. In a response statement, IWGB union general secretary, Dr Jason Moyer-Lee, added: “Similar to the Taylorreview itself, the announcement is big on grandiose claims, light on substance.”
The reforms certainly lack detail at this stage — not least because the government has announced no less than four consultations to, as it puts it, “inform what the future of the UK workforce looks like” — so it’s not possible to determine what will be the final shape of employment law in this area. (Nor, therefore, assess impacts on gig economy platforms.)
Among the consultations announced today is one on employment status, and another on measures to increase transparency in the labor market — with the government committing to define ‘working time’ for flexible workers who find jobs through apps or online “so that they know when they should be being paid”.
How to define working time for gig economy workers who may be simultaneously logged onto multiple apps has been a bone of contention in legal challenges in this area. So the government providing clarity would certainly be welcome. Though how exactly it will clear up that issue when platforms and apps can be so variable remains unclear.
Discussing the overall reform plan, Sean Nesbitt, a litigator on employment issues at law firm Taylor Wessing, told us: “The government is looking to make a big statement about their commitment to reforming and making fit for purpose modern work for the 21st century but, although there’s a broad commitment and a big statement, there’s not too much detail as to what they’re proposing.
“I don’t think they are booting it into the long grass… I think there’s still a desire there to make a large correction. I don’t think it’s necessary a big change but a large correction to make sure the market understands how work is to be run in the UK.
“But I also think that, as is characteristic of this government, they’re cautious about rocking the boat and they’re trying to build consensus — so four separate consultations is a way of managing the risk that they take too strong a position and can’t deliver it.”
“Keeping up momentum is good,” he added. “But it’s hard for business to judge when implementation will occur and precisely what.”
Also today the government said it will work with industry “over the coming months” to look at ways to encourage the development of online tools for self-employed people — to “come together and discuss issues that are affecting them”. So more details should emerge soon.
“It is hard to see the detail of the shape. What we can see is that the government, like Taylor and like the parliamentary committee that made 11 recommendations recently, all intend to keep the three statuses of employee, worker and dependent contractor. So that shape we can see staying,” he told TechCrunch.
“There is then intended to be clarification as to how you tell the difference. That isn’t clear what that clarification will look like but I believe it will be based on existing case law — including of course, notably, the Uber litigation.”
“I feel there is quite a lot of certainty around the determining features of those three [employment] statuses are already,” he added. “Where I think the really useful piece could come is if the government regulates to define what working time is for platforms. They say they’re going to.”
Nesbitt points out that many platforms don’t accept the view that a worker being logged onto their app and waiting time constitutes ‘working’. So if the government were to legislate on it it could help inject a little more certainty into the gig economy — for players on both sides.
“The government could find a way forward and say well it isn’t necessary being logged on that’s the determining feature — you have to be actively working or at least committed to the exclusion of other opportunities,” Nesbitt suggested. “So they could find a way to do it — but it’s not clear when and how they’re going to do it.”
“The judge in the Uber case said… working time is when the driver for Uber is logged onto the app and is available for a ride. Now lots of other apps — your Deliveroos, your JustEats, your healthcare or beauty services apps, catering apps — will say obviously if they’re logged onto five of us, being logged on or available on its own can’t be working,” he continued.
“If you’re on JustEast or Deliveroo or a restaurant’s own waiting app, you’re not doing anything and you’re not excluding the others — especially if their terms of service don’t punish you for logging out or for not taking a job.
“It’s quite possible the government could legislate to say… it isn’t necessarily being logged on that’s the determining feature. You have to be actively working or at least committed to the exclusion of other opportunities. And I think that would enable both views to be upheld.”
“The judge in Uber basically said the key reason I say that being logged on for Uber counts as working time is essentially that they are so dominant in the market that it makes it very hard to take any other jobs without risk of falling foul of their benching provisions that log you out if you don’t take jobs. And because they are so dominant. Where there is more competition it may be that logging on is not to be considered working time,” he added.
The government’s timeframe for running its four consultations and firming up the shape of the reform isn’t clear. But such consultations rarely take less than three months — if not six.
By which time the next round of Uber’s appeal against the 2016 tribunal ruling will have reached the UK Appeals Court and there will likely be more case law for it to draw on to feed its thinking.
“What I don’t see in the government press release is any attempt to short circuit or override the litigation process,” added Nesbitt. “It’s almost as if this consultation process is designed to run in parallel to the court process — the sort of privatized testing of what the law is that Uber and the unions are engaged in.”
So don’t expect a more finely detailed employment law reform plan to emerge before fall.
In a town full of venture capital firms, Storm Ventures has made its mark with a singular focus on the enterprise. This week, the company announced it has taken on two freshly minted partners, Arun Penmetsa and Paul Willard, to continue the mission. They are doubling the number of partners with this announcement.
Penmetsa has been a principal at Storm for the last 3.5 years before being promoted to partner recently. Before joining Storm he worked as an engineer at Oracle and Google. Meanwhile, Willard, who was previously a partner at Subtraction Capital and has had stints as CMO at Atlassian and Practice Fusion also joined Storm as a partner this year.
The two men join a firm with over $800 million in assets under management and each brings real world experience working at successful enterprise companies
Willard says he felt like he found kindred spirits when started talking to the folks at Storm because their mission matched so well with his work helping young enterprise companies. “Part of the reason I came on board is I align so well with them,” Willard told TechCrunch.
As he pointed out, the company has been working with early-stage enterprise startups for the past 17 years and most VC firms in Silicon Valley are lacking that concentrated enterprise experience. “Everyone else might have a partner or two, but the enterprise is not the [primary] focus of their existence,” he said.
Penmetsa, who was hired by Storm out of graduate school at Stanford, has worked his way up the company the ladder the old fashioned way. He says working at a venture capital company that emphasizes the enterprise has its advantages. “Storm’s strategy is pretty focused on enterprise and enterprise SaaS companies. We focus on that one area, and spending more time in that area, we have some sense of how [enterprise] companies evolve. It’s not a blueprint, but patterns do emerge,” he explained.
In his role at Storm before the promotion, Penmetsa worked with a variety of enterprise startups including TruStar Technology, a security startup concentrating on threat information sharing and ShoCard, a blockchain identity startup. He plans to continue to looking at security, while also exploring digital healthcare as well.
Willard, who was an aerospace engineer at Boeing in the 1990s, has a passion for airline-related startups, and when he was at Subtraction he helped a number of companies including Zipline, which is building robot airplanes to deliver emergency supplies like blood and medicine and Boom, a company building a new generation of supersonic transport planes. He plans to bring that experience to bear at Storm as well. While he says that he is open to talking to any enterprise software startup, he has his eye on Robotics as a Service and drone companies in particular at the moment.
The two new partners are already on board and at work at Storm. Today marks the formal announcement of their hiring.