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The big question for all of the companies that want to be the last mile: can they run sufficiently profitable businesses without classifying their workers as 10

The big question for all of the companies that want to be the last mile: can they run sufficiently profitable businesses without classifying their workers as 1099 employees? Mark my words: most of the "on-demand" startups that are relying on contract workers are not going to be able to defeat the misclassification lawsuits they're facing. Some might have the funds to delay the inevitable by strategically settling the first cases they're hit with, but the laws and legal precedents in this area are quite straightforward.

fasdf3asdf 11y ago
Most of the players in the industry are loudly (Uber) or quietly (everyone else) planning on eventually using fully automated delivery systems such as self-driving cars or UAVs, making the question moot.
rogerbinns 11y ago
I believe it will all end up owned by Uber (or similar) using self-driving cars. The vehicle is easily loaded at the supplier, and then you unlock a lockbox when it arrives to do the delivery. Dynamic pricing can be used to direct demand to low hours (eg delivery is $5 at midday but $2 at 2pm). The remaining question is how soon. A company trying to make use of a self driving vehicle for most hours of the day across a wide customer/usage base will find it far easier to spread the capital costs, than single purpose or single customer vehicles. There are also big advantages to having a larger fleet (economies of scale). Consequently the moment the self driving vehicles are somewhat practical, I expect massive attempts to corner the market for using them. (Human driven vehicles can still be used for trickier locations and journeys until the self driving tech matures.)
- robk 11y ago
  But cars don't work in many dense cities like in Europe and in NYC. You need cycles or scooters.
  - rogerbinns 11y ago
    What stops them being self driving? Dedicated delivery vehicles don't need to be designed around human comfort constraints.
    - snaily 11y ago
      Like Starship, who made the rounds last week: https://www.starship.xyz https://www.starship.xyz
- exelius 11y ago
  Automated delivery in the last mile is definitely the future, but it will be largely commoditized. Nothing in the value chain is especially difficult to do or requires proprietary technology outside of the vehicular platform. The maps all pull data from open source databases like OSV, and logistics networks have been operating successfully for decades. Regulation is going to be the thing holding everything back. I'm not talking about the disparate and protectionist taxi regulations that Uber just ignored until they were successful; I'm talking about real safety issues like air traffic control when everyone and their mother is flying things over populated areas. The regulatory environment around how all these drones will communicate needs to be developed and standardized -- that alone will take at least a decade because adequate bureaucracies need to be built up to develop, steward and enforce the regulations. Self-driving cars are even further off because they're going to be carrying human passengers. We're at a point where the technology has overrun our ability to regulate it, and there really are things that need to be regulated -- Who is liable if two drones crash over your house and damage your roof? Do you force drone operators to carry insurance to cover damages in the event of mechanical failure? How do drones report their position to each other to avoid collisions? What data formats, units and auditing is required when communicating with other drones? There are thousands of questions, and none of them have even made it into the sphere of political discourse, much less legislative action. Current politicians don't even understand this stuff, so we have to wait for people who do to become old enough to get elected. I'd say we're at least 15 years off from this future, if not 30. We'll probably see it happen elsewhere in the world much sooner than it will in the US and Europe. So any business starting up today will not be able to rely on self-driving cars or autonomous delivery to prop up their business model: it has to work with human delivery or it won't survive long enough to make it to the drone era. And for the ones who do, it'll become a race to the bottom with razor-thin margins.
  - rogerbinns 11y ago
    There is no need for drones. This future does not need to be a single big step. Even if 1% of journeys can be automated at the start, it will be worthwhile commercially and that 1% will relentlessly increase as regulation and technology allow. ie steady evolution instead of big bang revolution.
r00fus 11y ago
There are other successful exits than being completely profitable and sustainable. There's always the "bought out by player with bigger pockets and/or competition" ending? Are startup investors going back to profitability as their key measure? Some might hope so but I think traction and marketshare are far more visible right now...
dkrich 11y ago
Exactly. The reason UPS and FedEx ceded last mile mail and package delivery to the USPS is that they weren't interested in dealing with the complex logistics of last mile delivery. Its unpredictable and unprofitable. They are interested in the meaty part of mail delivery: charging customers $20 to carry an envelope across the country on a plane, which has a marginal cost approaching zero for them. Time will tell, but my theory on these last mile businesses that are springing up is that they are cramming into the market at precisely the places where there is the least money to be made, but offers the most convenience to customers. In other words, VC's are subsidizing luxuries that customers themselves have shown they won't pay for. This would be a great business if customers were willing to pay $20 to have food delivered, but the truth is that they aren't. At that point they will look for businesses that have delivery baked into the business model (ie, Dominos), or just go pick it up themselves. There seems to be an inherent assumption somewhere that these businesses that don't offer delivery are out of touch or not tech-savvy, but the article touched on an important point with this quote: “There were many pages of orders, not just one or two,” he says. Finally, when spotting this phenomenon at a Palo Alto macaroon store on day, Xu asked why these orders weren’t being delivered. The answer was that the owner has opened his bakery to bake, and not deliver stuff. He got similar answers from people in other businesses, ranging from toys to furniture, to restaurants. Maybe those businesses aren't interested in delivery for a reason. Just because you can build software for a smartphone doesn't mean the fundamental laws of P&L don't apply.
- Animats 11y ago
  FedEx lost on that issue in California and Kansas, with other states to follow.[1] [1] http://fedexdriverslawsuit.com/ http://fedexdriverslawsuit.com/
  - dkrich 11y ago
    I'm not sure which issue you're referring to. Both FedEx and UPS have a partnership with the USPS to have USPS deliver a large percentage of their parcels for which they pay a fixed rate. They deliver the parcels in bulk to a mail distribution facility and USPS brings them to your door. More detail can be found here: http://www.wsj.com/articles/u-s-mail-does-the-trick-for-fedex-ups-1407182247 http://www.wsj.com/articles/u-s-mail-does-the-trick-for-fede...
prawn 11y ago
I think they're all playing musical chairs to see who's left with a seat when the employees can be realistically replaced with automated delivery. Whether that's van, scooter, drone, etc.

fasdf3asdf 11y ago

Most of the players in the industry are loudly (Uber) or quietly (everyone else) planning on eventually using fully automated delivery systems such as self-driving cars or UAVs, making the question moot.

rogerbinns 11y ago

I believe it will all end up owned by Uber (or similar) using self-driving cars. The vehicle is easily loaded at the supplier, and then you unlock a lockbox when it arrives to do the delivery. Dynamic pricing can be used to direct demand to low hours (eg delivery is $5 at midday but $2 at 2pm). The remaining question is how soon. A company trying to make use of a self driving vehicle for most hours of the day across a wide customer/usage base will find it far easier to spread the capital costs, than single purpose or single customer vehicles. There are also big advantages to having a larger fleet (economies of scale). Consequently the moment the self driving vehicles are somewhat practical, I expect massive attempts to corner the market for using them. (Human driven vehicles can still be used for trickier locations and journeys until the self driving tech matures.)

robk 11y ago
But cars don't work in many dense cities like in Europe and in NYC. You need cycles or scooters.
- rogerbinns 11y ago
  What stops them being self driving? Dedicated delivery vehicles don't need to be designed around human comfort constraints.
  - snaily 11y ago
    Like Starship, who made the rounds last week: https://www.starship.xyz https://www.starship.xyz
exelius 11y ago
Automated delivery in the last mile is definitely the future, but it will be largely commoditized. Nothing in the value chain is especially difficult to do or requires proprietary technology outside of the vehicular platform. The maps all pull data from open source databases like OSV, and logistics networks have been operating successfully for decades. Regulation is going to be the thing holding everything back. I'm not talking about the disparate and protectionist taxi regulations that Uber just ignored until they were successful; I'm talking about real safety issues like air traffic control when everyone and their mother is flying things over populated areas. The regulatory environment around how all these drones will communicate needs to be developed and standardized -- that alone will take at least a decade because adequate bureaucracies need to be built up to develop, steward and enforce the regulations. Self-driving cars are even further off because they're going to be carrying human passengers. We're at a point where the technology has overrun our ability to regulate it, and there really are things that need to be regulated -- Who is liable if two drones crash over your house and damage your roof? Do you force drone operators to carry insurance to cover damages in the event of mechanical failure? How do drones report their position to each other to avoid collisions? What data formats, units and auditing is required when communicating with other drones? There are thousands of questions, and none of them have even made it into the sphere of political discourse, much less legislative action. Current politicians don't even understand this stuff, so we have to wait for people who do to become old enough to get elected. I'd say we're at least 15 years off from this future, if not 30. We'll probably see it happen elsewhere in the world much sooner than it will in the US and Europe. So any business starting up today will not be able to rely on self-driving cars or autonomous delivery to prop up their business model: it has to work with human delivery or it won't survive long enough to make it to the drone era. And for the ones who do, it'll become a race to the bottom with razor-thin margins.
- rogerbinns 11y ago
  There is no need for drones. This future does not need to be a single big step. Even if 1% of journeys can be automated at the start, it will be worthwhile commercially and that 1% will relentlessly increase as regulation and technology allow. ie steady evolution instead of big bang revolution.

r00fus 11y ago

There are other successful exits than being completely profitable and sustainable. There's always the "bought out by player with bigger pockets and/or competition" ending? Are startup investors going back to profitability as their key measure? Some might hope so but I think traction and marketshare are far more visible right now...

dkrich 11y ago

Exactly. The reason UPS and FedEx ceded last mile mail and package delivery to the USPS is that they weren't interested in dealing with the complex logistics of last mile delivery. Its unpredictable and unprofitable. They are interested in the meaty part of mail delivery: charging customers $20 to carry an envelope across the country on a plane, which has a marginal cost approaching zero for them. Time will tell, but my theory on these last mile businesses that are springing up is that they are cramming into the market at precisely the places where there is the least money to be made, but offers the most convenience to customers. In other words, VC's are subsidizing luxuries that customers themselves have shown they won't pay for. This would be a great business if customers were willing to pay $20 to have food delivered, but the truth is that they aren't. At that point they will look for businesses that have delivery baked into the business model (ie, Dominos), or just go pick it up themselves. There seems to be an inherent assumption somewhere that these businesses that don't offer delivery are out of touch or not tech-savvy, but the article touched on an important point with this quote: “There were many pages of orders, not just one or two,” he says. Finally, when spotting this phenomenon at a Palo Alto macaroon store on day, Xu asked why these orders weren’t being delivered. The answer was that the owner has opened his bakery to bake, and not deliver stuff. He got similar answers from people in other businesses, ranging from toys to furniture, to restaurants. Maybe those businesses aren't interested in delivery for a reason. Just because you can build software for a smartphone doesn't mean the fundamental laws of P&L don't apply.

Animats 11y ago
FedEx lost on that issue in California and Kansas, with other states to follow.[1] [1] http://fedexdriverslawsuit.com/ http://fedexdriverslawsuit.com/
- dkrich 11y ago
  I'm not sure which issue you're referring to. Both FedEx and UPS have a partnership with the USPS to have USPS deliver a large percentage of their parcels for which they pay a fixed rate. They deliver the parcels in bulk to a mail distribution facility and USPS brings them to your door. More detail can be found here: http://www.wsj.com/articles/u-s-mail-does-the-trick-for-fedex-ups-1407182247 http://www.wsj.com/articles/u-s-mail-does-the-trick-for-fede...

prawn 11y ago

I think they're all playing musical chairs to see who's left with a seat when the employees can be realistically replaced with automated delivery. Whether that's van, scooter, drone, etc.