Over the past few years, gig economy companies and the treatment of their labor force has become a hot button issue for public and private sector debate.
At our recent annual Disrupt event in San Francisco, we dug into how founders, companies and the broader community can play a positive role in the gig economy, with help from Derecka Mehrens, an executive director at Working Partnerships USA and co-founder of Silicon Valley Rising — an advocacy campaign focused on fighting for tech worker rights and creating an inclusive tech economy — and Amanda de Cadenet, founder of Girlgaze, a platform that connects advertisers with a network of 200,000 female-identifying and non-binary creatives.
Derecka and Amanda dove deep into where incumbent gig companies have fallen short, what they’re doing to right the ship, whether VC and hyper-growth mentalities fit into a sustainable gig economy, as well as thoughts on Uber’s new ‘Uber Works’ platform and CA AB-5. The following has been lightly edited for length and clarity.
Where current gig companies are failing
Arman Tabatabai: What was the original promise and value proposition of the gig economy? What went wrong?
Derecka Mehrens: The gig economy exists in a larger context, which is one in which neoliberalism is failing, trickle-down economics is proven wrong, and every day working people aren’t surviving and are looking for something more.
And so you have a situation in which the system we put together to create employment, to create our communities, to build our housing, to give us jobs is dysfunctional. And within that, folks are going to come up with disruptive solutions to pieces of it with a promise in mind to solve a problem. But without a larger solution, that will end up, in our view, exacerbating existing inequalities.
Tabatabai: What is the most immediate issue in the gig economy that needs to be tackled?
Mehrens: Worker voice. The problem is that every time you use one of these apps and a worker picks you up, that worker is managed by an algorithm and has no relationship to their coworkers, boss, or the area where profits are being earned.
And so they have no leverage, no ability to bargain when 60% of their wages go to the company and they don’t understand why. And so worker voice is the most important thing. Giving workers a way to aggregate their power and a seat at the table.
The role of the incumbent gig companies and tech giants
Tabatabai: In recent years, have you seen an increased willingness of the large incumbent gig economy and tech companies to address these issues or other worker rights issue in the valley broadly?
Mehrens: Yes, I think so. I was a community organizer [in the Valley] for 10 years, and now I do union organizing. 10 or 15 years ago, I think it was a very different scenario. Coming out of the Great Recession, you look at the economic data, it was not a real comeback for most folks. The gig companies talk about flexibility, but as you know, the flip side of flexibility is really stability.
What people want is stable lives. So they can be with their kids on the weekend, and they can have fun, and they can have health care. The reason they need flexibility is only because other jobs aren’t paying and companies know that.
And you can see that, because when we sit down with CEOs, they will say for my well-paid workforce, housing is a huge issue. And I’m like, ‘Yeah, for my folks too.’ And so for example, it was an imperative when we launched Silicon Valley rising four years ago, that we had to leverage the power of labor, the power of public policy and the power of workers for housing issues. Because you can win somebody a 7% raise in wage increase but then it gets eaten up by a 50% rent increase in one year.
And the companies are responding, we’re both seeing companies start to allow workers like janitors and food service workers to have unions, where four years ago they didn’t [have them.] Shout out to Cisco and Facebook, they are two of the best on that issue. And you see companies starting to engage with folks like us on the housing crisis and their role as technology corporations, which is something that just wouldn’t have happened 15 years ago.
Managing hyper-growth mentalities and the role of VC
Tabatabai: Is there an inherent conflict with the Valley’s hyper-growth mentality? How can one manage growing very quickly while also being aware of potential externalities? What is the role of venture capital in sustainable gig economy companies?
de Cadenet: I actually just had an amazing conversation with a female VC yesterday about integrity and ethics. And we talked about this because Girlgaze is a mission-based company and what that means is we have a very specific focus and lens, but we still are a for-profit company. And so I think the VC community is still getting used to the idea that you can be a company that has a mission but is also a for-profit. So there’s an education piece and there’s a discomfort with that still…
And so that’s a check that we will stay away from. And I have been very clear with all of our investors out the gate, I say ‘There is some business that we will not take. You have to be okay with that because if we take that business, 1) I’m not going to be your CEO anymore. 2) My team will leave and 3) that’ll be the end of our company because the mission of closing the gender gap is what drives everything.’
And so it could be seen as a conflict, but ultimately, we know having more women in the workplace is good for ROI. So we leave some checks on the table, but we maintain the integrity and the health of the company and long term that is way healthier.
Tabatabai: Is there an increased willingness on the part of VCs to slow or grow more flexible on the growth and return timeline
de Cadenet: There are some institutional investors that would not be the right fit for us. They would not like us, we would not like them, it would not be a good match. What I will say is that there are more and VCs who have their own lens. I’ve found people who believe in what we’re building, and who don’t have a traditional growth timeline.
And by the way, we’re scaling insanely fast. We did 10x in revenue from last year to this year. So it’s not like we’re not [growing fast], but we’re just being mindful about who we engage with to do that. And I think when you’re honest about what your company is, the people who also align with that are the ones who are excited to put their money in and are excited to help you grow it, knowing that there are these issues that will need to be addressed.
Gig startups in creative or non-traditional industries
Tabatabai: We don’t often associate gig economy companies with the creative industry. How did you find that opportunity and what are the differences in building gig economy companies that deal with the creative industries?
de Cadenet: There’s a big gap and no one’s doing it. I’ve been a creative my whole life and I’ve been extremely aware of this very low glass ceiling that I couldn’t get up off the ground. And that’s why I came up with the idea for Girlgaze, because there is not another marketplace that has aggregated the hundreds of thousands of Gen Z and next-generation creatives into one place and helped get them into the workplace. No one was doing it.
I’m also the mother of two Gen Z kids and I was thinking about how there hasn’t been focus on this next generation and how they are going to be in the workforce. So let’s get them into the workforce and let’s aggregate people in one place to make it easy for companies to hire them. And when dealing with a creative community — I am a creative, so I understand the mentality. But I saw the opportunity because no one was doing it and I always wondered why. And so rather than wonder why I just did something about it.
Thoughts on ‘Uber Works’
Tabatabai: Uber recently announced the creation of Uber Work, with which they’ll be expanding outside of ride-sharing and into other areas of the workforce. What are your thoughts on Uber getting more involved in the broader labor market?
Mehrens: Clearly, they’re trying to figure out how to make some money, but it’s not a surprise. Because drivers themselves are organizing and saying, ‘Hey, this is actually a really messed up situation,’ folks are starting to think about how we regulate this work? What should be the rules for this kind of work?’
And because of that, they’re going to not just do what they’re currently doing, but they’re going to move into [other areas.] Uber Works is going to be a temp agency and one thing we know about temping is it’s another way to separate workers from where profits are centered and to isolate workers.
And so it’s sort of just another way for them to enter a creative relationship with its workforce. And they’re going to continue to do that until we rewrite the rules of the economy and until we make sure we’re going to treat these workers as employees.
Pros and cons of CA bill AB 5, and the role of regulation
Tabatabai: What are your thoughts on bills like California AB 5 that focus on guaranteeing benefits or full-time status for gig workers?
Mehrens: California has now said, ‘We’re going to treat these workers as employees. You’ve got to figure out what that means for you, but we’re going to treat them like employees.’ Which does not mean they can’t have a flexible work schedule, that is a total lie. There are plenty of W2 workers who get to set their own schedules. But it does mean they’re going to have to pay into workers comp and do UI and figure it out.
de Cadenet: Now, I’ll tell you as a company that’s based in Los Angeles, for little startups, it’s a substantial shift. And I have friends who are founders who have really young startups, and they’re really torn because they want to provide everything they can, but they also are like ‘Now I can’t keep half my team on because I need that overhead money to now go to paying for benefits because of the laws that have changed.’
And now listen, this law went into effect three or four weeks ago, so I’m just curious whether it’s going to ultimately be in the best interest. But for younger companies, there are multiple people I know who have let half their workforce go now.
Mehrens: And I am not saying it’s not without its contradictions and these new rules are wholly insufficient to actually fix the sector. It does not do enough, in my view to give the workers power and a voice on the job.
And I do think one thing to remember with AB 5 is these rules came out of a Supreme Court case called Dynamex that happened 13 or 14 years ago. Dynamex employees today are still independent contractors.
AB 5 doesn’t force anyone to reclassify their workers. All it says is that if a case goes to the state, ‘We’re going to say that you have figure out how to give the workers health care, give the workers rights’, but only the employer can decide whether to W2 them.
de Cadenet: Right, but if the law has those three questions you asked and if you answer yes to them, then you are obligated to do so or you are breaking the law.
Mehrens: Yes and so the question is can we create a process through which workers themselves are at the table and get help to solve this problem.
Tabatabai: How can startups navigate a very dynamic and fast-moving regulatory environment and how are governments working to sort of create a more startup-friendly environment within the gig economy sector?
de Cadenet: CA is not that startup-friendly. I have friends that have moved their companies to other states, just because of the tax benefits, and because of the support that the government gives them from basing their business out of that state. That’s legislation and that’s someone that cares about it enough, who is affected by it enough to bother to take those causes up.
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