tzier

$0.575/mi isn't a good indicator of actual cost. It's a method the IRS created to reduce the complexity of tracking all car expenses separately (good for both taxpayer and IRS). In most cases it's very generous. For example:

* ~$0.30 is for gas, but if you're driving a fuel efficient Prius then your actual per mile cost is lower ($3.00/gal / 50mpg = $0.06/mi; though offset by battery replacement cost, don't know how much that costs or how often) * If your car is over 5 years old, you wouldn't be able to claim depreciation on it. But the standard mileage rate includes depreciation, so you're getting to deduct additional cost if your car is >5 years and you use the standard mileage rate.

That's not to say wear and tear isn't a significant cost...just that your actual cost is usually much lower than the standard mileage rate.

Keep in mind, being an employee doesn't automatically entail the "benefits" people think of (e.g. health insurance). Instacart is only allowing their in-store employees to work up to 30hrs/week, since that's the cutoff for having to provide health insurance.

The real costs are (1) employer's share of FICA taxes (7.5%) and (2) workers compensation (which can get expensive in certain industries, though likely not outrageous for delivery).

Uber also does this now, where they take a lower commission to encourage driving more hours.

Just to clarify: only Instacart's in-store shoppers are employees (and only in a few cities right now), since most of those are shift based roles ('shifts' screams employees under the law). I wouldn't be surprised if they shifted delivers to employees too though, since:

1. It's going to be incredibly difficult to maintain two worker systems (I imagine this played into Shyp's decision as well).

2. They probably have enough volume/data to figure out their busy times, so can get close enough to matching supply/demand. Vs. ridesharing, where demand is too sporadic (e.g. weather, events, etc) and surge pricing is better at finding market equilibrium.

Most of the value is in the site. You don't see people fundraising for their friend's family on Kickstarter - it's known as being a hub for products.

Venmo's situation is also different, since they use ACH to move money (very cheap). GoFundMe might accept credit cards, which means there are industry standard processing fees of roughly $0.30 + 2.9%. (It's in best interest for GoFundMe, Tilt, etc. to push users towards debit card payments since the associated fees are lower.)

Agreed that everything in any media source (not just from Uber) should be taken with a grain of salt :)

Technically, Uber is not "lying" here. They're just talking gross wages, before driving expenses. Cab salaries are lower because the cab companies assume some of the costs of driving and build them into the daily/weekly cab lease fee (keep in mind almost all taxi drivers are independent contractors in the US).

And agreed on your last point. The questions/issues are much larger than Uber, which we bring up at the end of the post. Why are these jobs appealing to people? Maybe they're indicative of more systemic problems, and we should focus our efforts on things like improving the US education system so that more individuals have access to higher paying jobs.

Why would Uber want to incentivize drivers during high demand periods, versus just taking that additional money themselves? The driver has little bargaining power as an employee, so would be forced to work Uber-defined shifts anyway. Uber has enough data now to get pretty close to market equilibrium if they schedule drivers.

Agreed on flexibility being more important when it's not the primary source of income. 'Different drivers have different needs and desires' is really the takeaway here.

And agreed. It's unfortunate that the sharing / on-demand economy are just now bringing light to the nearly 40% of the workforce that is contract/contingent labor. Honestly, I don't think most people appreciate the significant implications the Uber/Lyft lawsuits might have on the labor markets.

It's a mix. Most know they have tax obligations and want to pay them, but are overwhelmed with figuring out how much and how to pay.

Not a ton know about smaller tricks, like writing off health insurance premiums (hence why people pay accountants).

We're trying to help with both at Zen99, e.g. with all of our free resources at www.tryzen99.com/learn

Keep in mind Uber has reported that 80% of their drivers don't do it full time (http://techcrunch.com/2015/01/22/uber-study/).

Also, as minimum wage increases, then those employee jobs become more appealing, so theoretically the market rate for contractors would also increase in order to keep it a viable option. Though don't forget other benefits; many drivers value the flexibility more than anything.

Very valid point. My point was just to dispel the myth that "employees automatically make more".

I could get into things like (a) how most Uber drivers get to write off $0.575/mi as an expense when they actually only incur actual costs of $0.20/mi, (b) how contractors get to write off other things employees don't (like health insurance premiums), etc, but explaining those clearly in a single blog post is difficult.

Also, keep in mind this post completely ignores opportunity cost, which is arguably the most important aspect and one that is incredibly unique to each individual.

+1. The media has gone wild with the "Uber drivers are employees" headline since it sells. The reality is that this is an individual case from basically an arbitration board. The most important point is that it affects public perception, which will potentially skew the jurors' thoughts in the actual lawsuits against Uber/others.

100% agree on "willingness to reach out" solving most problems.

However, people should at least be aware that humans rely on heuristics [1] to make sense of the world. In a positive sense, this means we don't have to stop and determine what a door handle is and what it will do every time we see one. In a negative sense, it leads to stereotypes that are usually incorrect.

Being aware of these will at least bring your attention to things you otherwise might have overlooked, such as having clean writing/grammar (conveys a sense of professionalism) or modifying your body language.

[1] http://en.wikipedia.org/wiki/Heuristic

+1...just make sure you ship before everyone forgets about you :). I've heard 10% conversion from signup list isn't unrealistic when products finally ship.

See Philosophical #1 - at idea stage, you should focus on these things instead since you likely don't have a product/traction. (You may if you've hacked/MVP'd something.)

If you have a track record of building products with traction, definitely discuss that as well (falls into the 'why you're the right team to execute').

Appreciate the kind words!

Good point, I could have made that clearer. Wasn't meant to be specific to "meanness", more so just personality. This can obviously be complicated by things like language barriers/etc, so isn't a catch-all.

In general, the point was that humans usually make subconscious judgments before they even start talking to you; at the least, you should be aware of this.

For those interested in more advice on actual application/interview, our friends at Aptible wrote a great post on that here: https://www.aptible.com/blog/y_combinator.html

Batchmate of Aptible here (Zen99) - this information is spot on! Great guide by Chas and team.

All good points. (1) and (2) are easy fixes. (3) is on the way. And (4) is definitely coming soon - we won't just be for CA/NY.

Tristan (CEO) here. Article went out right before we had a few hours of meetings, but I'll be around for the afternoon replying to any feedback!

Spot on.

Noted! We're definitely excited to help solve this pain point. Nice to know that users would be willing to pay for it - I think that makes the "free" even more compelling.

The low margins mean you have to make it up on massive volume. The two best ways to do this: focus on recurring customers, and make your providers more active on your platform (due to high acquisition and onboarding costs, respectively). The companies that succeed will do both (e.g. eBay with their PowerSellers).

A "warning" typically just leads to analysts eating hours (not recording all the hours they actually worked), especially for fixed fee projects.

From a hiring perspective: if you're at a start-up, take advantage of the trend and try to hire these people who want out after their 2-3 years. They know how to get stuff done in crunch periods and are still young enough where their creativity hasn't been (totally) crushed. Bonus points for a former Big 4 auditor--they tend to have the same work ethic but without the entitlement. [1]

Disclaimer: former Big 4 auditor but used to run a finance org, so have tons of friends in both (many of which have made the transition)

[1] Bit of a stereotype here, but most i-bankers get used to the huge salaries and massive expense budgets, which auditors and tech startups don't have.

Update: Lyft is apparently already doing this through a "Trust and Safety" fee [1], but doesn't seem to be catching much flack for it.

[1] http://www.lyft.me/help?article=1263247

Article leaves out important point: they raised their commission from 5% back to 20% at the same time as the implementation of the $1 safe fee [1]. (They had dropped their commission to 5% in January with the price drop [2].)

This is a pretty big bet on their part that they've locked drivers into the Uber platform through enough volume/earnings.

[1] http://www.forbes.com/sites/markrogowsky/2014/04/18/did-uber... [2] http://blogs.wsj.com/digits/2014/01/09/uber-cuts-price-on-so...