Deliveroo raises $385M in new funding
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In my city, Nottingham. all the deliveroo people gather in Trinity Square waiting for jobs. There's obviously no special AI needed.
I do think though that it raises the issue that they should be paying for their own business premises and stop using our public spaces as their company waiting spots.
I hope that's some insight as to why it's attractive to some people. If you know anything more about Deliveroo or other places I could look for jobs I'd be grateful, as it would really aid my search.
As a side note, I despise the way it is called the "sharing economy"; it's no sharing at all, and I wish this term were reserved for ideas I regard as more noble, like the gift economy, or a model in which people chip in a certain amount to a shared product on a large scale (such as democratic management of the economy).
That being said, some people take these jobs because they're the only ones they can get. I don't know your circumstances, so I'm going to guess here, but from what you write it sounds like you have the safety net of your parents if things go wrong. While you study you may also have access to a student loan and/or support from your parents mandated by law (let's not get into an argument about how crappy student loans are, but at least they're an income during your studies). Since you're attending university, I might guess you're at an age where you don't yet care about paying into a pension. Again - making wild assumptions here - but if you don't have kids, you probably don't care if your work-life balance is skewed heavily towards studying and earning, at the expense of sleep and general health.
For some others, though, their job is all they have, and "gig economy" jobs are the only ones they can get. This creates the perfect environment for exploitative working practices, where dodgy loopholes are used to underpay and overwork staff, who can be dropped at an instant if the company needs to save money or if workers start to complain about conditions.
If Deliveroo and other gigs were worked by students in their free time, I don't think this would be such an issue. The problem is that, increasingly, people without safety nets are joining these companies and working effectively full time, and no longer just for occasional "gigs" a few times a week. That, in my book, requires that they are given the same rights as any other full time workers: holidays, sick pay, pension contributions, grievance procedures and other benefits.
People working in the gig economy deserve a safety net and also deserve better pay, but you can't solely blame Taskrabbit, Uber or Deliveroo for these issues.
It's also true that I don't need a job, but I'm being pressured to get one for the idea that my parents will at some point stop giving me money, and that I need something to put on my CV/resume (I don't think Deliveroo is all that impressive personally).
My other options are things like working in a fast food joint, or something like a cinema. But I don't know if I can do that and fit in my education at the same time plus have some free time to relax myself, play a video game or whatever. It's honestly worrying and I feel pushed into a corner by all this.
If you feel you aren't ready for programming professionally, you can try taking up SEO, content writing etc..
I don't know which subject you are pursuing but it might give more weight to your CV.
Btw, if you think of doing your own startup at some time in the future, then try to gather as much of sales experience as possible, even doing a door to door sales. I really wished I had done that in my student days..
The job was shitty in the sense that you had to try to sell junk computers and software and insurance to unsuspecting people for what felt like long hours and not much money, but I feel like the experience was ultimately worth it in many ways. I gained a work ethic, having to get up and be on time, wash and iron a uniform and take responsibility. I learned what it was like to be someone working there full time (and how it can destroy your soul). Again, for some people these jobs are all they can get. I also learned about the attitude of the average member of the public, which I think has given me some small insight into recent election results. I've got 5 years experience in retail sales in a complicated field (not just selling coffee or clothes) to put on my CV, which shows to employers in my profession that I have actually had what some call a "real" job, and all the life experience that goes with it.
I think it's worth judging a sales/delivery/misc job at such an early stage in your career as beneficial life experience, instead of only trying to find something relevant to your future career (if you can find a job that has both, though, then great!).
"Deliveroo seems like my best bet at the moment with flexible hours"
"I probably wouldn't be making any more than minimum wage elsewhere"
Do Deliveroo guarantee minimum wage for your time spent available, or do you effectively earn less than minimum wage, because you spend the majority of your time waiting for an order?
I can see why Deliveroo may appear attractive, but wonder whether the appeal might wear off once you have first-hand experience of their operation.
As a self employed rider you get 5.50€ per delivery, but have to pay health and social insurance yourself. Employees have to pay less than half of the total cost.
How much you sit around or compete with others depends on the shifts you take ..
It could be a pretty attractive job for someone that likes to take off-peak shifts and read or work on something else while having to do the occasional delivery in his home neighborhood.
It can get even nicer if one can log in from home. It does happen frequently, that no deliveries happen at all during shifts, so one really can focus on other projects while getting paid by deliveroo.
I honestly am surprised how deliveroo manages to keep the restaurants on board. They have to give more than 30% of the earnings to deliveroo, most restaurant owners are extremely annoyed and frustrated with the service and are already playing with the idea of pulling the plug again. Since recently deliveroo tries to force the cost for the paper bags onto the restaurants(13cents), which exacerbates the situation...
From an environmental perspective they are contributing to an enormous amount of garbage, the majority of containers are plastic and in the worst case styrofoam. As an example, riders sometimes have to drive by car for 5-8km because someone ordered a soup for 5€ (Plus 7€ to reach the minimum of 12€ and paid 2.90€ delivery fee on top of that).
This business model contributes to the convenience culture that we in the western world are celebrating and which is part-responsible for quite a few serious issues that we are now facing..
One thing deliveroo has going for them is that the people in charge are always very reasonable and friendly, treat their employees with respect and are quite forgiving. But I assume that this is simply because the whole system is very fragile and they know it. In my city there are always way too few drivers. It is apparent how desperately they need the drivers.
I was surprised to read about the funding, because i assumed the whole thing can't be sustainable in the long run.
They are now moving to a shift scheduling system which prevents too many riders being online competing for a low demand ("too many" being Deliveroo's definition, of course) and shifts that uncertainty to the riders, who have to log in at a specific time each week and try to book their desired shifts.
i spent so much time in college working to cover living expenses I had to drop out. thats a pretty stupid result.
It also looks like they're implementing a new scheduling system in a week, which will prevent there being too many riders active in an area, but that means they'll decide which riders get the first pick of the time slots they want.
As with any "sharing economy" company, expect to be "employed" on capricious and arbitrary terms. Go to some Deliveroo rider-specific web forums and you can understand a bit better.
Try a bunch of cities at 200m zoom in google maps.
They need combinatorial search and some travel time data, live re-search when new orders come in. For this to work well they need to predict new orders in advance, this means they need data on the spatial distributions of orders through time (which now they certainly have).
They practically need to solve a variant of a problem that Uber has. Their delivery drivers load much more "passengers" but have static pickup points (known restaurants so there's only variance in the delivery point, pickups are pretty much static).
It's an interesting problem to solve, given that this kind of logistics research is practically invisible and I can't name any papers that dealt with this problem in any advanced way.
If done properly, then they've solved the logistics problem for on-demand companies that have enough data.
If solution is some ad-hoc mutated monster then it is just a chance for someone else to get the other pieces of cake.
Calls for deep learning! Or using data from last week…
How is it ok to constantly have cars using these spaces for free? Using roads for free?
I think you misunderstand: that is the AI system decision. Had it been done by management committee of founders and optimization experts, everyone would have been staged in the most bizarre places around town, typically alone, which would have caused most of their delivery force to quit.
So where is Deliveroo's margin on that? There isn't one, and there's no way they can pay delivery drivers as actual employees (which the law will eventually catch up with by the way), even at minimum wage you'd need to cover £15+/hour to include holiday pay, sick pay, insurance and other standard benefits.
MAYBE, delivery drones / robots will arrive before the funding runs out, but I doubt it very much.
Still doesn't seem like a great deal for the consumer / restaurant. E.g. I'm paying £8.50 of a £22.50 order purely on delivery, and I don't even get table service...
Kind of ruins the moment though.
"We enable consumers to order a variety of entertainment, food and convenience products over the Internet for free delivery in under one hour. Our promise of under one hour delivery is designed to satisfy a consumer's desire for immediate gratification. We focus on selling frequently purchased, high margin items with well-known brand names. Additionally, we recently initiated a business-to-business service to enable select retailers to provide their customers with an expedited delivery option on a fee-for-service basis through our distribution networks."[2]
If you've never heard of Kozmo.com, it's because the company went bust. The business grew very quickly... but only as long as there was freshly raised capital coming in. When the flow of fresh capital stopped, the company couldn't find a way to become profitable.
Here are some articles chronicling Kozmo.com's swift rise and even swifter fall:
https://web.archive.org/web/20040821125230/http://www.manufa...
https://www.forbes.com/2000/06/22/mu3.html
Deliveroo doesn't look that different from Kozmo.com... or does it?
--
[1] http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-new...
[2] https://www.sec.gov/Archives/edgar/data/1075749/000091205700...
I guess how you execute matters, or something.
You have to love the new net economy, it's all about burning through investor cash while having the crappiest, unprofitable business model they can, but hey they have deep learning and algorithms!
Given they promise free delivery within an hour, 24/7, with no minimum order value, I reckon they’ll be gone within 6 months or so.
This was many decades ago (when people bought their news on dead tree) and a lot of inflation as happened since. I didn't see my paper round as a 'proper job', but I think the inflation adjusted rate comes out to at least double the £8 per hour that Deliveroo riders claim to make on Glassdoor. I didn't have to pay rent since I was living with my parents, my income was purely disposable.
Some numbers: late 1980's, my Sunday paper round took five hours and earned me £30 not counting tips. All done by bicycle. I also had a morning paper round and an after school round delivering the local paper. On the back of these 'gigs' I also had gardening, baby sitting and other jobs from my clients, making my childhood wages now seem positively 'over-paid' compared to what passes for 'gig economy' nowadays.
I believe my take of the newspaper sale was around 20% with a delivery charge of 5 pence. Bicycles were just for kids back then and working for pocket money (not paying taxes or expecting benefits like holiday pay) was okay given I was at school. Furthermore, all my work was chargeable, I was not waiting around for someone to click on an app.
From this perspective I find it crazy that this Deliveroo phenomenon has happened. I aspired to do more than ride around delivering stuff in all weathers. Fortunately I did move on to 'proper jobs'.
The Deliveroo drivers are kind of with the pigeons in terms of London's pecking order. Although 'gig' economy, they lack the opportunities my humble paper round offered for 'up-sells' plus there are some venture capitalists creaming off what should be their cut. How did it all come to this?
How can an investor, justify this as a solid investment when the gross margins are 0.7%?
I reached this conclusion shortly after Yo was valued at something like $10 million.
The challenge with startups is that you don't yet have a clear insight as to how their sales and marketing spend will evolve over time, so people are willing to invest in growth of revenue over those metrics.
What's more worrying is their gross margin percentage. Taking the revenue growth and sales and marketing expense and overall loss out of the equation, that margin percentage is going to make it extremely difficult to make a business model that works in the long term.
However, building a large revenue base helps to offset that, but we've also seen that play out negatively for companies in a similar position like Groupon.
I think with this valuation they will need considerable consecutive years of revenue growth to grow into that valuation meanwhile their losses are high and also increasing so really this funding round buys them the usual 12-18 months of runway.
Just-eat (worth 4.6B) connects people to shitty takeaways and has a terrible website. Deliveroo connects people to restaurants and provides the delivery service themselves, through bikers (here in London). They have taken this and spread throughout Europe.
They are going to (and are) completely canablising Just-eat who seemed to run out of stream and grind to a halt several years ago.
Stock price is higher than ever: http://www.londonstockexchange.com/exchange/prices-and-marke...
They are reporting good growth: http://www.cityam.com/256734/just-eat-reported-order-growth-...
I see lots of Deliveroo bikes around where I live in the centre of London, but they are basically non-existant when I go to other towns and cities.
Also, Deliveroo started up-scale -- they can't go down to selling cheap Chinese takeaway food, because it will hurt their image.
Just-Eat started at the low-end and are now moving up-scale without hurting their image. And even then, plenty of people prefer low-end Chinese food (I sure do).
1. Their website is really quite poor, and has been for years. Why the hell is the navigation so crap, and why can't I search for a specific food item?
2. They still haven't done anything about the prevalent and pervasive fake reviews.
Also, they cannot "move up-scale", their logo is associated with cheap food. Upscale restaurants don't want to put themselves on just-eat, next to the cheap low end places, nor do they want the just eat logo in their windows.
IMO it's the opposite of what you describe - it's way harder to go low-end to high-end. Just eat has to somehow convince people their brand isn't for bad food.and cheap takeaways, then market themselves at high-end places.
Deliveroo just needs to keep their high-end image, and then all the cheap places would throw themselves at Deliveroo to up their own image. No convincing required.
2) I can't comment on reviews -- don't know if that's true or if it's the same with Deliveroo.
3) I just opened Deliveroo in Angel. First is a donut shop... second is Pret A Manger... third is a wine store... then LEON and then Itsu. First on HungryHouse (owned by Just-Eat) is YouMe Sushi, followed by a bunch of independents (none very special but still independent and better than Pret/LEON/Itsu!). First on Just-Eat is Burger King to be fair, but that is then followed by indepdenents. McDonalds is first on Uber Eats. So I think Just-Eat is already equaling Deliveroo/Uber. Also I do see their logo everywhere.
Whenever I visit Oxford I always see lots of Deliveroo bikes driving around the city centre.
In the UK, Deliveroo originally differentiated primarily by only accepting high quality restaurants, rather than takeaways.
Just Eat, etc. may try to improve their image, offer remotely usable interfaces, clean up their offerings in terms of food quality, but I don’t think their reputation will ever recover to the point that anyone in London etc. would consider them above Deliveroo/Uber Eats.
Not sure how closely these views tally with others, but they are representative of my friends/peers.
I guess it’s just down to Deliveroo’s (sometimes quite annoying) strict rule of not delivering further than 2km, so depends on the density of restaurants.
I guess you're using it wrong. Most I know use it for a takeaway place they're already familiar with and use it as a convenient way to order rather than a way to discover new restaurants.
> In the UK, Deliveroo originally differentiated primarily by only accepting high quality restaurants, rather than takeaways.
Did it? Here in Nottingham Deliveroo are showing high quality restaurants like Five Guys, Burger King, Subway and Hooters.
I have also noticed that restaurants will almost always include their own menu with direct ordering information, so I’m not sure restaurants are super into the idea of shifting existing customers to another platform - not that this invalidates the use case at all, to be fair.
Yes it was like that originally. In densely populated, high-end parts of major cities, it generally still is like that (as mentioned in another comment of mine).
There has also been a recent major push by both Deliveroo and Uber Eats to onboard major nationwide chains, which don’t tend to maintain particularly good quality standards via delivery unfortunately. Some exceptions to this, but generally fast food translates to delivery services very poorly.
High quality restaurants? Around Edinburgh the 'highest quality' restaurant offered is Pizza Express.
Anyway, in London there are a lot better quality places on Deliveroo than pizza express.
But the real problem was deliveries. With just eat, the restaurant was in charge of the delivery. I found myself countless times wandering the streets around my block looking for the car of a delivery driver who didn't speak a word of english and was either too dumb or too lazy to get to the right place. Sort of defeats the purpose of a delivery.
Deliveroo did two things right: they took the burden of the delivery away from the restaurant and do it well, and they enlist quality restaurants, as opposed to the local kebab shop.
Oh, they totally can if the margins work. Just look at Uber which started as a black car service.
Low margins are harder to pull off but are much more stable and easier to scale.
Why don't they just offer all restaurants, sort of like postmates did (does?).
Just like Uber and so many others this only works because for some reason turning paid work into something that is not even self-sustaining suddenly is accepted.
Does nobody have ethical issues with seeing value in devaluing people?
They charge £2.50 per delivery. If they were paying couriers minimum wage I assume they'd be able to make money off it still.
I think that price probably includes the high risk that the self-employed status will be rescinded.
They'll definitely still be able to make money after a change in status.
Edit: Thinking about it, if I order pizza for £20, the company adds £2.50 for delivery. So £8.50 is being spent on delivery (?) .. a normal taxi is about £5 for that trip; an Uber or similar must be cheaper still?
a normal taxi is about £5 for that trip;
an Uber or similar must be cheaper
[1] https://motherboard.vice.com/en_us/article/9a3vye/uber-true-...
The cost of sales and operating expenses seem non-sensical. What are Uber's cost of sale? What are it's operating expenses? How are they different?
If Uber takes a 20% cut, the only cost of sale I can't see is credit card costs. Everything else - including servers - is just an operating expense.
More than likely the lifetime value of a ride sharing customer is huge, so rather than subsidising riders, they are likely front loading acquisition costs, and hoping to make it back in lifetime value. That seems to me a pretty darned solid strategy.
I think they are having issues then with scaling out - I've used Deliveroo a grand total of 3 times, all for restaurants that I know are about a mile from my house, every time Deliveroo have been 45-60 minutes after their estimated time, the food was cold and it would literally have been quicker to walk to the restaurant, eat, and walk home. Anecdata I know but I don't see how they can make it work without hiring a lot more people. And this business can only work financially if they don't.
Companies are going to innovate but what we are witnessing now is innovation that under the current market economy ) this innovation "devalues" people. Perhaps the solution is better legislation and regulation of business to support this new, growing, and likely inevitable shift towards a gig economy and the people who operate within the sphere.
The "gig economy" scam must be stopped before it's too late. It is not "innovation", but pure exploitation.
As for automation, tax robots and distribute the profits to the people made jobless by them.
(Not sure if that's an international thing - here in NL the delivery people use bikes and have branded backpacks)
There may be some kind of rule around consistent branding, but I have never seen it enforced.
So while it is cheap from a customer's perspective someone else is footing the bill. Once they run out of investor's money someone has to pay for it.
In India, drivers are already demanding more bonuses. They went on strike: https://yourstory.com/2017/02/bengaluru-drivers-indefinite-s...
Now they are building their own ride hailing app: https://yourstory.com/2017/03/disappointed-ola-uber-drivers-...
It's hard to survive on very low wages. That's one reason we have a social safety net. Many argue that it should be the company's responsibility to pay their workers higher wages and not society's responsibility to take care of unskilled members of society. However, this is not a realistic option in all cases because some fraction of these jobs would cease to exist if higher wages are mandated as not all customers will be willing to pay higher prices. In the food delivery case it's a large fraction of customers and the business will probably cease to exist.
The fundamental problem here is that our economy is becoming more advanced and more and different skills are being required to be able to provide value to society and many people don't have the required skills. There are only a few things that can happen in this scenario: society educates low skill residents to prepare them for more valuable jobs, low skill residents work in low value jobs, low skill residents are unemployed. We should make the education option available and highly encouraged. We should provide for necessities like nutrition, safety, shelter that many young people are lacking that prevent them from availing themselves of educational opportunities. However, in the case that people aren't willing or able to complete the education required for jobs requiring a highly educated workforce, I think it's better that people have the option of working in lower value jobs rather than effectively outlawing it. This does not mean these workers should be treated as having low value beyond being paid low wages. There should be worker protections, customers should treat workers with respect, etc.
It would be better for the world if we had more people working in more valuable jobs like science, medicine, technology, etc. and fewer in food delivery. But raising wage regulations to the point that Deliveroo's business model is no longer sustainable probably just means that its workers are unemployed and people have fewer food delivery options.
At risk of getting into a discussion about UBI and tax doctrine, is that a bad thing?
The business doesn't have a right to exist. If it can't operate without paying its staff below-subsistence wages, why should it (or the VCs who provide it funding) expect the state (read: other taxpayers) to subsidise that?
Regarding your second point I'd argue the money would be better diverted to providing the education to raise the overall skill level of the economy rather than enabling people to work menial jobs that will (in the case of Deliveroo, Uber, et al) be automated away anyway.
I think it's better to be employed and increasing your value/skill set in the job market than living off welfare. You can't move up the ladder if you don't develop skills.
Alleging that people "voluntarily chose" to work in gig economy jobs ignores both the significant anti-welfare rhetoric from politicians and (perhaps particularly in the West) cultural push towards employment ("protestant work ethic"), and your own/the GP's points that a number of the people working there are doing so through a shortage of alternatives.
On the other hand, we need to be careful not to throw the baby out with the bathwater; a push (in the UK, the Labour party have been particularly vocal) to ban zero-hours contracts has risks to the ability of people who need the flexibility (students being the obvious example) to find work which suits.
> I think it's better to be employed and increasing your value/skill set in the job market than living off welfare
They're not mutually exclusive; in this case both happen (although it's debatable to what extent Deliveroo et al develop anyone's skill set). Equally, the money spent topping up the wages of the low paid could be redirected to providing education.
> a number of the people working there are doing so through a shortage of alternatives
Right? Maybe I'm missing what you're saying. But possibly people are willing to pay for goods only at a certain price and if the price was bumped up, those services simply wouldn't be bought. And those jobs wouldn't exist. It doesn't necessarily mean better paying jobs will fill in the gap.
> the money spent topping up the wages of the low paid could be redirected to providing education.
Who's money? The consumers money? Or the VC's money? Are you saying through taxation because I thoroughly disagree.
It's also not as straightforward as you are implying - just having an education does not mean there will be jobs there to greet you after you are done. To make that happen you need to make the environment friendly to job creators - those willing to take the risk and start their own company.
By "state subsidy" I mean the state topping up the employee's wages, through for example Working Tax Credits (in the UK) or food stamps and Medicaid (in the US). If it wasn't for those and the push towards working at any cost, my thesis was that these companies would have to pay more (either in terms of actual money or benefits) or have trouble finding people to make their business operate.
> Who's money? The consumers money? Or the VC's money? Are you saying through taxation because I thoroughly disagree.
Taxpayers, because of the first part of this reply. I'm not talking about additional taxation here, I'm talking about money that's currently spent on benefits for the low paid that wouldn't be spent if they weren't low paid.
> > a number of the people working there are doing so through a shortage of alternatives
> Right? Maybe I'm missing what you're saying. But possibly people are willing to pay for goods only at a certain price and if the price was bumped up, those services simply wouldn't be bought. And those jobs wouldn't exist. It doesn't necessarily mean better paying jobs will fill in the gap.
It was a reply to you saying "voluntarily chose to be employed by that service" and the general theme whenever low pay comes up of "well, they can just get other/more jobs" (see also: the McDonald's CEO saying "just get a second job" [1]).
My original comment in this thread did mention UBI, so the alternative isn't necessarily "let's magic high-paying jobs out of thin air" :)
Also, these jobs (and also higher paid ones) are going to go away because of automation. Uber are explicitly aiming for that goal. At some point, the issue of what's going to happen to those employees has to be dealt with by society and politicians.
> It's also not as straightforward as you are implying
I may have made it sound otherwise but I'm well aware that the problem is nothing like straightforward. Waaaaay back at the beginning I warned about unintended consequences.
> To make that happen you need to make the environment friendly to job creators - those willing to take the risk and start their own company.
This doesn't seem relevant - is your implication that if businesses are required to pay wages such that their staff aren't having to also claim state benefits for food, that's somehow not conducive to founding businesses?
I do, however, agree that the conditions have to be right for entrepreneurship, with the reservation that "business friendly" lately seems to be synonymous with "minimal regulation/tax".
1: https://www.salon.com/2013/07/17/mcdonalds_suggested_budget_...
I also have strong objections to the notion of unskilled work here. Any kind of work requires training and skills, and I think you should never take the high road of having better education. It's in general 40 hours of your life time for any job you do. Coming back to that... is it realistic that all people having higher income now pay for food deliveries so that some companies can make money? I doubt it. That questionable both from economic and ethical viewpoints.
Regarding the advance of our economy I can not agree. We are basically recessing to 19th century trades and valuation of work. Just because things are IT based mostly now that does not make up a more advanced economy. Looking at laws, work practices, standards, I dare to say: we are actually watching the whole of mankind failing to take the next step.
We've made it to value of an individuals work, now we're killing that where instead we could also be asking us if our actual views on working and monetary compensation make sense.
From my point of view (and I've been on the crazy low and high paid side), it does not. As does compensating low paid jobs from all tax payers money instead of simply putting companies out of business if they can not sustain themselves.
If there was any kind of bike based delivery service in my city that allowed me to work casually, I would do it just for an excuse to go out and dodge traffic on a bike a few evenings a week.
I wonder if they did this for many 'secondary' markets to try to beat the big players or if AU is just a weird case.
I tend to prefer apps where the restaurants themselves look after the delivery, EatNow is a good example. They can charge a little more for delivery, and therefore seem to be willing to deliver further away. And presumably, it's probably a little fairer on the delivery guys as they got an actual job rather than just an app.
So how they derive such a valuation is very much at odds with actualities.
"We are making the world a better place by battling first-world temporary hunger in tandem with the lazy-person mobility crisis."
Deliveroo generates significant revenue and is a business/brand that consumers are passionate about. The bet investors are making is that their gross margin can increase quickly.
Expect they're doing close to £300m of revenue now, so a 6.5x rev>valuation multiple is punchy but fair.
Also, I think people were surprised or amazed that they had no core profitability. Especially when it's likely COGS will go up with more and more regulation around their gig economy employees
I ordered off Deliveroo in Sydney Australia, and they advertise on AdWords against individual restaurant names. If the Diliveroo brand is strong, and that AdWords click made me a Deliveroo customer, that is a win. If I always search and they always pay, this may prove problematic long term.
That's the equation - if $X upfront + $y ongoing < lifetime value then you have a chance at profitability, assuming you can get overheads under control / can scale up the offering with minimal growth in overheads (the classic 2X revenue, 1.5X costs model).
They all need the metrics they're working with to hold and the outcome for all of them is likely to be drastic for all of them.
Perhaps they're hoping efforts by Uber and others in the same boat will work together in helping mould the market and become aligned with society's efforts/need to create Universal Basic Income for everyone. If UBI is to come into play then other metrics must shift too.
The reward we give people for innovation will have to be at par with what's reasonable - and the peaks and valleys will more or less flatten out. The people who will be most innovative can use their own funds to trickle into future innovations that will be operated efficiently, e.g. Elon Musk.
Perhaps there will no longer be VC firms in the future, and it will be individuals that invest through crowdfunding platforms. What would likely be a great hybrid model is crowdfunding platform but with VC firms - syndicate-like - except where an individual could allocate $5/month into the fund, perhaps only allowing individuals to invest with a monthly cap, so no one individual or organization can have some bizarre incentive or goal towards swaying the decision makers of the fund, etc.
I'd argue the pros of getting $1 from a million people is far better than $1mm from a few. The most successful crowdfunding platforms right now, because they're VC-backed and thus have those same pressures on them, have to charge an unreasonable fee - which is unnecessary pressure on the projects that are trying to get funded. The alternative right now is feeding into the VC system who expect relatively short-term high profits - which then only allows platforms that charge an excessive amount to become dominant; and this does cause more efficient efforts by others to not be able to survive as easily - something I'm sure they're aware of as part of how they can get ahead with their model.