Spotify is going after podcasts in a major way in 2019.
The music streaming service today confirmed that it has snapped up two podcast networks — Gimlet and Anchor — in undisclosed deals. But that’s not all, the firm said it has plans to spend a further $400-$500 million “on multiple acquisitions in 2019” to get even deeper into the space.
The Gimlet is said to be upwards of $200 million, according to Recode — which broke news of the deal last week — but it isn’t yet clear how much the company has spent on Anchor, which helps podcasters record their shows and then distribute them online.
The deals are a major push for Spotify, but the writing has been on the wall for those paying attention. We reported last month from CES that is going after podcasting this year. The company has been going after exclusive shows — at CES it added “Unbothered” from journalist Jemele Hill — while it is also working on specialist ad units around its podcast network.
We’ve heard Spotify talk a big game on ‘the future of radio’ before, but this time around it is putting money behind its ambitions. The big strategy, beyond catering to the growth of podcasts, is to develop a new channel for consumption of its core business as Courtney Holt, the head of Spotify Studios, told us in January.
“People who consume podcasts on Spotify are consuming more of Spotify — including music,” Holt said. “So we found that in increasing our [podcast] catalog and spending more time to make the user experience better, it wasn’t taking away from music, it was enhancing the overall time spent on the platform.”
That also includes a much more personal and tailored approach to content, which is important given that Spotify offers a catalog of over 40 million tracks.
“Think about what we’ve done around music,” Brian Benedik, VP and Global Head of Advertising Sales at Spotify, told TechCrunch. “The more understanding you have around the music you stream, the more we can personalize the ad experience. Now we can take that to podcasts.”
As more organizations move to cloud-based IT architectures, a startup that’s helping them secure that data in an efficient way has raised some capital. vArmour, which provides a platform to help manage security policies across disparate public and private cloud environments in one place, is announcing today that it has raised a growth round of $44 million.
The funding is being led by two VCs that specialise in investments into security startups, AllegisCyber and NightDragon.
CEO Tim Eades said that also participating are “two large software companies” as strategic investors that vArmour works with on a regular basis but declined to name them. (You might consider that candidates might include some of the big security vendors in the market, as well as the big cloud services providers, as two possibilities.) This Series E brings the total raised by vArmour to $127 million.
When asked, Eades said that the company would not be disclosing its valuation. That lack of transparency is not uncommon among startups, but perhaps especially should be expected at a business that operated in stealth for the first several years of its life. However, according to PitchBook, vArmour was valued at $420 million when it last raised money, a $41 million round in 2016.
That would put the startup’s valuation at $464 million with this round, if everything is growing at a steady pace, or possibly more if investors are keen to tap into what appears to be a growing need.
That need might be summarised like this: we’re seeing a huge migration of IT to cloud-based services, with public cloud services set to grow 17.3 percent in 2019. A large part of those deployments — for companies typically larger than 1,000 people — are spread across multiple private and public clouds.
This, in turn, has opened a new front in the battle to secure data. “We believe that hybrid cloud security is a market valued somewhere between $6 billion and $8 billion at the moment,” said Eades.
Many organizations are storing information and apps across multiple locations — between seven and eight data centers on average for, say, a typical bank, Eades said — and while that may help them hedge bets, save money and reach some efficiencies, but the lack of cohesion also opens to door to security loopholes.
“Organizations are deploying multiple clouds for business agility and reduced cost, but the rapid adoption is making it a nightmare for security and IT pros to provide consistent security controls across cloud platforms,” said Bob Ackerman, Founder and Managing Director at AllegisCyber, in a statement. “vArmour is already servicing this need with hundreds of customers, and we’re excited to help vArmour grow to the next stage of development.”
vArmour is among the companies — Cisco and others are also competing with it — that are providing a platform to take something that is somewhat messy — disparate security policies covering disparate containers and apps — and handle it in a more cohesive and neat way by providing a single way to manage and provision compliance and policies across all of them. This not only helps to manage the data but potentially can help halt a breach by letting an organization put a stop in place across multiple environments.
“From my experience, this is an important solution for the cloud security space,” said Dave DeWalt, founder of NightDragon, in a statement. “With security teams now having to manage a multitude of cloud estates and inundated with regulatory mandates, they need a simple solution that’s capable of continuous compliance. We haven’t seen anyone else do this as well as vArmour.”
Eades said that the big change in the last couple of years for vArmour is that, as cloud services have grown in popularity, it has been putting in place a self-service version of the main product, which it sells as the vArmour Application Controller, aimed at smaller organizations. It’s also been leaning heavily on channel partners (Telstra, which led its last round, is one strategic of this kind) to help with the heavy lifting of sales.
vArmour isn’t disclosing revenues or how many customers it has at the moment, but Eades said that it’s been growing at 100 percent each year for the last two. At this rate, he says that plan will be to take the company public in the next couple of years.
Global investor SparkLabs is adding another business line after it announced a new consultancy division that’s aimed at working with Fortune 500 companies and other global corporates keen to deepen their position in tech.
Best known for its funds — which cover global deals, a crypto vehicle and a Korea-based fund — and over half a dozen accelerator programs worldwide, the organization is responding to interest it has fielded from LPs, corporates and other businesses keen to tap into its network and insights, SparksLabs Group co-founder Jimmy Kim told TechCrunch.
“We’ll be providing research reports on certain key industries and doing key networking and introductions into startups of their interest,” he said in an interview. “Initially, there will be a handful of staff and then we’ll just scale from there.”
SparkLabs Foundry will be headquartered in San Francisco but it will tap into the group’s global reach, including offices in markets like Singapore and Korea, and insight from a portfolio of more than 220 startups across its various activities.
Kim explained that, particularly for corporations based in Asia, simply opening an office in Silicon Valley doesn’t guarantee that they walk into the right networks for deal flow or gain key insight. That’s where SparkLabs is hoping to make a difference, and it expects that frontier tech including machine learning, blockchain, security and AI will be major focuses.
The new venture will be lead by some familiar faces. Scott Sorochak, a long-time mentor with the firm, recently joined from Blarney Ventures, and his team includes chief business officer Jaeson Ma, who co-founded SparkLabs portfolio startup 88Rising. Its list of advisors includes names like Sid Anand, PayPal’s chief data engineer, ex Procter & Gamble CTO Bruce Brown and smart oven startup Brava’s CEO Jon Pleasants.
Amazon’s formidable presence in the world of retail stems partly from the fact that it’s just not a commerce giant, it’s also a tech company — building solutions and platforms in house that make its processes, from figuring out what to sell, to how much to have on hand and how best to distribute it — more efficient and smarter than those of its competition. Now, one of the startups that is building retail technology to help those that are not Amazon compete better with it, has raised a significant round of funding to meet that challenge.
Relex — a company out of Finland that focuses on retail planning solutions by helping both brick-and-mortar as well as e-commerce companies make better forecasts of how products will sell using AI and machine learning, and in turn giving those retailers guidance on how and what should be stocked for purchasing — is today announcing that it has raised $200 million from TCV. The VC giant — which has backed iconic companies like Facebook, Airbnb, Netflix, Spotify and Splunk — last week announced a new $3 billion fund and this is the first investment out of it that is being made public.
Relex is not disclosing its valuation but from what I understand it’s a minority stake, which would put it at between $400 million and $500 million. The company has been around for a few years but has largely been very capital efficient, raising only between $20 million and $30 million before this from Summit Partners, with much of that sum still in the bank.
That lack of song and dance around VC funding also helped keep the company relatively under radar, even while it has quietly grown to work with customers like supermarkets Albertson’s in the US, Morrisons in the UK and a host of others. Business today is mostly in North America and Europe, with the US growing the fastest, CEO Mikko Kärkkäinen — who co-founded the company with Johanna Småros and Michael Falck — said in an interview.
While the company has already been growing at a steady clip — Kärkkäinen said sales have been expanding by 50 percent each year for a while now — the plan now will be to accelerate that.
Relex competes with management systems from SAP, JDA and Oracle, but Kärkkäinen said that these are largely “legacy” solutions, in that they do not take advantage of advances in areas like machine learning and cloud computing — both of which form the core of what Relex uses — to crunch more data more intelligently.
“Most retailers are not tech companies, and Relex is a clear leader among a lot of legacy players,” said TCV general partner John Doran, who led the deal.
Significantly, that’s an approach that the elephant in the room pioneered and has used to great effect becoming one of the biggest companies in the world.
“Amazon has driven quite a lot of change in the industry,” Kärkkäinen said (he’s very typically Finnish and understated). “But we like to see ourselves as an antidote to Amazon.”
Brick-and-mortar stores are an obvious target for a company like Relex, given that shelf space and real estate are costs that these kinds of retailers have to grapple with more than online sellers. But in fact Kärkkäinen said that e-commerce companies (given that’s also where Amazon primarily operates too) have been an equal target and customer base. “For these, we might be the only solution they have purchased that has not been developed in house.”
The funding will be used in two ways. First, to give the company’s sales a boost especially in the US, where business is growing the fastest at the moment. And second, to develop more services on its current platform.
For example, the focus up to now has been on demand forecasting, Kärkkäinen said, and how that effects prices and supply, but it would like to expand its coverage also to labor optimisation alongside that; in other words, how best to staff a business according to forecasts and demands.
Of course, while Amazon is the big competition for all retailers, they potentially also exist as a partner. The company regularly productizes its own in-house services, and it will be interesting to see how and if that translates to Amazon emerging as a competitor to Relex down the line.
French company Chauffeur-Privé is going to expand aggressively over the next couple of years. That’s why the company is changing its name to Kapten — a name that sounds less French.
“We wanted to share with you a very important piece of news,” Kapten co-founder and CEO Yan Hascoet said in a press conference. “We changed our name while keeping the same positioning.”
Kapten is one of the leading ride-sharing players in France and recently launched in Lisbon (2 million users in France, 80,000 users in Lisbon). The company is going to launch in Geneva next week and London in the coming weeks. By 2020, Kapten should be in 15 major cities.
Kapten within Intelligent Apps
As a reminder, Daimler AG acquired a majority stake in Chauffeur-Privé/Kapten back in December 2017. Daimler AG and BMW Group later merged their mobility service businesses into a single entity called Intelligent Apps.
Kapten confirmed that Intelligent Apps will become Jurbey. Intelligent Apps’ free-floating services, parking services, charging services and itinerary apps will merge to simplify the product offering.
But Intelligent Apps’ ride-sharing services (Chauffeur-Privé, mytaxi, Clever Taxi and Beat) won’t merge for now.
“It seems obvious that there will be some consolidation in five years in one way or another,” Hascoet said. “But this is not on today’s agenda.”
Hascoet thinks that the ride-sharing space is still extremely competitive and there’s room for growth. It seems smarter to keep multiple services for now to see how it plays out in the coming years. Kapten is thinking about integrating Intelligent Apps’ scooter service Hive in its app though.
A new name and some new features
Kapten is also using today’s rebranding to launch an aggressive advertising campaign. The company will spend “millions of euros.”
There will be some tweaks to the service as well. The minimum price is now €6 instead of €8 just like on Uber. Kapten will compensate that change by paying drivers the equivalent of an €8 ride for the time being. Eventually, Kapten wants drivers to generate as much revenue with €6 rides. In all cases, Kapten takes a 20 percent cut on each ride.
Drivers are also getting new features starting today. Free waiting time has been lowered from 5 minutes to 3 minutes, which should help drivers waste less time. There’s also a new feature to go back home and accept rides on the way.
The company also used this opportunity to share some numbers. Over the past 7 years, the company managed to attract 2 million clients and 200 companies who generated 20 million rides in total. In 2018 alone, Kapten handled 7.5 million rides with an average price of €17 to €18. It currently works with 22,000 drivers and 250 employees. Kapten will hire around 100 employees in 2019.
Kapten has generated $54.9 million in revenue in 2016, $113 million in 2017 and $180.8 million in 2018 (€48.6 million, €100 million, €160 million respectively). Kapten wants to multiply its revenue by 5 by 2020.
In its announcement video, Kapten also differentiated its service from Uber by saying that they’ll keep paying taxes in local markets where they operate. The company wants to be the good guy, let’s see if that’s enough to capture some market share.
Rovio’s efforts to diversify beyond its Angry Birds franchise is getting a little investment boost today. The company announced that Japan’s NTT Docomo is taking a stake in Hatch, a Rovio subsidiary that describes itself as the “Netflix of gaming”, providing subscribers with a rotating mix of freemium games from a mix of publishers, with the option of paying a single monthly fee for a wider mix.
Docomo and Rovio are not discussing the size or value of the stake, but a spokesperson for Rovio told TechCrunch that prior to this deal, Hatch was 80 percent owned by Rovio and 20 percent by Hatch personnel. He didn’t specify who had sold shares to Docomo in this latest transaction.
The deal will cover not just investment to expand the Hatch platform and number of games on offer — currently the selection numbers over 100 — but to bring Hatch specifically to the Japanese market.
This will include, starting next week (February 13), a soft launch of Hatch on Android devices in the country, as well as prominent placement of Hatch on Docomo’s Android TV service, sweetening the deal with three-month free trials of the Premium tier.
The Android TV offering is a key OTT play for Docomo. Known primarily as one of the country’s biggest mobile carriers (and, historically, a trail blazer in mobile services, setting the pace for how much was building in the world of mobile content globally in the earliest days of mobile phones), like other network service providers, Docomo has been hit hard by the huge wave of services that bypass carriers and strike billing deals directly with consumers.
Hatch will be one more feather in Docomo’s cap to try to lure more people to its service, which can be subscribed to and paid for by way of Docomo’s ‘d Account’, an iTunes-style platform that people can use regardless of which network carrier they contract with.
Like Netflix, Amazon and other OTT video streaming plays, the concept behind Hatch is to offer a mix of games from various publishers, as well as developing its own selection of games in house that it hopes will be popular enough to help differentiate the service from the rest of the field.
That is critical, because Hatch and Rovio are not the only ones vying for the title of “Netflix for gaming.” Other formidable hopefuls include Amazon, Microsoft, Apple, Google, and perhaps maybe even Netflix itself.
The current selection of games on Hatch include Monument Valley, Space Invaders Infinity Gene and Hitman GO, with a new game called Arkanoid Rising — “a bold new reimagining of the arcade classic produced in association with Japanese gaming legends TAITO” — coming in the spring, which will be “the first Hatch Original exclusive to the platform.”
Down the line, there will also be collaborations to develop eSports events and more titles, Rovio said.
The move is a natural one for Hatch, given gaming culture and how strong it is in Japan.
“Japan is the world’s third largest games market and where the video games industry as we know it was born. In this extremely competitive market we couldn’t be happier to work with a partner like Docomo to help take our vision of cloud gaming mainstream,” says Juhani Honkala, Hatch founder and CEO, in a statement. “Docomo’s leading contributions to 5G technology and infrastructure and commitment to amazing new 5G-enabled services make the company an ideal strategic partner in Japan, and we look forward to a long and fruitful collaboration.”
“We are excited to work together with Hatch, a great example of the new type of consumer services, which can bring out its potential towards the 5G era,” added Takanori Ashikawa, Director, Consumer Business Department of Docomo, in a separate statement. “Hatch’s vision for cloud gaming changes the way people play and discover games, and our shared goal to enrich the everyday lives of our customers makes Hatch an excellent strategic partner for the long term.”
Since its lacklustre public debut in September 2017, Rovio has been facing a lot of growth challenges, in part because of strong competition in the gaming industry and the company’s over-reliance on a nearly ten-year-old franchise amid a bigger industry shift to new tastes in games — marked by the rise of streamed, multiplayer titles like Fortnite.
In that context, a different focus by way of Hatch, with a little financial help from NTT, could be the bet that helps catapult Rovio to a new level of the gaming playing field.
The price of competing with e-commerce giants Alibaba and JD.com is immense. That’s evidenced by challenger Pinduoduo, commonly known as PDD, which is raising more than $1 billion in fresh capital just six months after it went public.
The company announced plans to sell 37 million shares in a move that will raise over $1 billion, going potentially as high as $1.25 billion if underwriters exercise their full share purchase option. The secondary event will also see a number of existing backers sell a portion of their stock, those sellers including Sequoia China, Lightspeed China and Banyan, according to a filing.
Founded in September 2015 by ex-Googler Colin Huang, it adds a social twist to e-commerce by offering discounts for shoppers who gang up with friends or family to make group orders. That’s resonated in particular with consumers, who tend to be female, the company said. PDD claims 385.5 million active buyers with an annual GMV of RMB 344.8 billion, or $250.2 billion, as of Q3 2018.
That’s helped it make a dent in China’s e-commerce market, which is dominated by Tencent and Alibaba, although it has come at some cost. PDD isn’t profitable, and it isn’t likely to be for some time. Since going public, it has recorded net losses of RMB 6.49 billion ($981.4 million) in Q2 and RMB 1.10 billion ($159.9 million) in Q4.
Yes, there has been heady growth, revenue in Q4 surged by 697 percent year-on-year to reach RMB 3.37 billion ($491.0 million), but the corresponding operating loss increased five-fold.
Huang has described his business as a combination of Costco and Disney, which signifies “value-for-money and entertainment combined.” In a letter to shareholders, he emphasized that his vision will require a decade before it begins to reach its potential.
“It is not easy to take the leap of faith believing in such an unconventional company, which strives to meet both economic and social needs of users, and to make a positive impact to the society. The pursuit and focus of our long-term vision and intrinsic value may not always translate into near-term profits. Instead, we hope to show you the true colors of our company no matter how bumpy or rough the numbers may seem to be. We ask you to ride the journey with us for the long term. We believe it will be wonderful,” he wrote.
Raisin, the pan-European fintech marketplace for savings and investment products, is disclosing that it has raised $114 million in Series D funding. Existing investors Index Ventures, PayPal, Ribbit Capital and Thrive Ventures all participated in the round, which brings the total raised to date to $200 million.
Tellingly, the fast-growing Berlin fintech says it plans to use the new capital for “strategic acquisitions” and further internationalisation. Although available to customers across the EU from the get-go, Raisin had dedicated market launches in the Netherlands and the U.K. last year, seeing the company expand beyond Germany. It plans to add at least two additional international markets this year.
Originally founded in 2013, Raisin set out to open up the savings deposit market in Europe by taking advantage of EU-wide banking regulation, which goes someway to creating a financial services single market. Specifically, the problem the startup solves is that saving deposit rates differ not only from one local bank offer to another but more noticeably across Europe as a whole.
The Raisin marketplace lets you shop around and compare different rates European-wide. However, the key difference to a comparison site is that, via its own bank partner, the company offers consumers a single interface that includes account opening and anti-money laundering checks, making it easy to switch and continually ensure you get a competitive interest rate.
For the banks that integrate with the Raisin marketplace, especially smaller and midsize banks, they get exposure to customers across Europe that might otherwise never be reached. It also gives them potential access to many more deposits, which helps with their own balance sheet lending and scale.
To that end, Raisin says that it has brokered more than $11 billion in deposits for its 62 partner banks. It claims more than 160,000 customers from 31 different European countries, and says that to date Raisin has helped savers earn $90 million in interest.
Meanwhile, Raisin says the new “infusion” of capital will enable the fintech to strengthen its position as the preeminent online platform that gives Europeans access to the “single financial market” for savings.
Comments Raisin CEO and co-founder Dr. Tamaz Georgadze: “We want to break through unnecessary barriers to profitable saving and share the benefits of open markets – with both consumers and banks. Our central aim is to give savers and financial institutions the ‘Schengen experience’ for banking. Our first five years demonstrate that, indeed, Raisin stands for the saving and investing of the future”.
“We hear you that it didn’t accurately show the year’s key moments, nor did it reflect the YouTube you know. We’ll do better to tell our story in 2019,” Wojcicki wrote.
Wojcicki also mentioned important issues like Article 13, proposed legislation in the European Union nicknamed the “meme ban” for its potentially chilling effect on user-generated content and monetization. Many creators saw their revenue hurt during “Adpocalypse” last year after YouTube introduced new policies to placate advertisers.
Intended to keep ads from running in front of videos with objectionable content, creators said the policies also resulted in the demonetization of many videos without a clear reason. But the letter is unlikely to address the concerns of creators who are still trying to recover revenue or gain a better understanding of how YouTube’s policies are enforced.
For example, Wojcicki repeated the statistic that the number of YouTube creators “earning five or six figures in the last year grew more than 40 percent,” which the platform has said since at least December 2017, when Adpocalypse began. (That month, Bloomberg published a story that said YouTube claimed channels making six figures or more in revenue had increased 40 percent over the last year).
But YouTube doesn’t provide much more detail than that and though Wojcicki said that number is proof that creators are “creating the next generation of media companies and we’re thrilled to see how much the YouTube creator economy is thriving,” researchers have found that a very thin sliver of YouTubers ever make it into that revenue bracket.
For example, a professor at Germany’s Offenburg University of Applied Sciences found last year that breaking into the top three percent of most-viewed channels on YouTube might bring in advertising revenue of about $16,800 a year. Those at the very top, or top one percent, often earn revenue through other deals like sponsorships, making it even more difficult to estimate how much of their revenue comes from advertising on YouTube.
Wojcicki also did not address the fact that YouTube has been kicking off many channels that were part of multi-channel networks (MCN), often used by creators who don’t to deal directly with YouTube AdSense.
Videos are removed because they may be at risk of violating YouTube’s terms of service, but creators and MCNs have complained about the lack of transparency into how they are enforced.
Wojcicki acknowledged the communication issues and said YouTube had taken steps to improve it. YouTube Studio, to provide more insight into how videos are performing, will be available to all creators this year. YouTube is also now more responsive on social media channels. Wojcicki said it has increased the number of its responses by 50 percent and made response times 50 percent faster.
Wojcicki also noted that monetization “remains a pain point” for many creators. “Just as a reminder, we started last year with many of our largest advertisers paused because of brand safety concerns,” she wrote.
“We worked incredibly hard to build the right systems and tools to make sure advertisers feel confident investing in YouTube, and most are now back,” she continued. “On the creator side, we’ve been improving our classifiers so that we make the right monetization decision for each video,” adding that YouTube has increased the accuracy of its monetization icon system (which gives creators details about why a video has been monetized or not) by 40 percent and made it easier for creators to appeal decisions.
But she conceded that YouTube still has more work to do. Part of that effort includes giving creators other potential revenue streams, like YouTube Music and YouTube Premium, which has expanded to 29 countries from five at the beginning of 2019. It also lowered the subscriber threshold for channel memberships, which allows viewers to purchase memberships, to 30,000 from 100,000.
The “meme ban”
YouTube creators and other people who rely on the platform as a source of revenue in the EU will have an extra set of headaches to deal with next year. Last September, the EU Parliament voted to back Article 13 of the European Union Directive on Copyright in the Digital Market. Nicknamed the “meme ban” because it would mandate sites with large amounts of user-generated content to take down content that infringes on copyright, the legislation’s vague wording has led to concerns about how it would be enforced.
For YouTube in particular, Article 13 means that it would have automatically scan and filter user uploads for copyright violations, but it is unclear if its existing Content ID system would be enough for it to comply. Although memes and parodies are protected by laws in many countries, upload filters still aren’t advanced enough to differentiate between copyright violations and memes. Article 13’s opponents worry that this can have a chilling effect. Wojcicki wrote last year that it could potentially shut down the ability of millions of people to upload to YouTube and threaten “thousands of jobs” in the EU. YouTube is campaigning for the legislation to be reworded.
In today’s letter, Wojcicki said videos about the issue have been viewed “hundreds of millions of times,” but added that policymakers “lacked an understanding of the European creator community’s impact and size.”
“I shared with legislators the huge economic benefit you all bring to your home countries,” she said. “In France alone, we have more than 190 channels with more than 1 million subscriptions, with the number of E.U. channels reaching that milestone up 70% year over year.”
Instacart is facing another class-action lawsuit pertaining to the way it pays its independent contractors, NBC News reports. Instacart guarantees its workers at least $10 per job, but workers are alleging Instacart offsets wages with tips from customers.
The suit alleges Instacart “intentionally and maliciously misappropriated gratuities in order to pay plaintiff’s wages even though Instacart maintained that 100 percent of customer tips went directly to shoppers. Based on this representation, Instacart knew customers would believe their tips were being given to shoppers in addition to wages, not to supplement wages entirely.”
Instacart has had a rocky relationship over the years with its drivers and shoppers. In 2016, Instacart removed the option to tip in favor of guaranteeing higher delivery commissions. About a month later, following pressure from shoppers, the company reintroduced tipping.
In 2017, Instacart settled a $4.6 million suit regarding claims that the company misclassified its personal shoppers as independent contractors, and also failed to reimburse them for work expenses. As part of the settlement, Instacart was required to change the way it described a service fee, which many people mistakenly thought meant tip. Then, last April, Instacart began suggesting a 5 percent default tip.
In addition to the lawsuit, workers have taken to Reddit and other online forums to speak out against Instacart’s paying practices. Since introducing a new payments structure in October, which includes things like payments per mile, quality bonuses and customer tips, workers have said the pay has gotten worse — far below minimum wage. In one case, Instacart paid a worker just 80 cents for over an hour of work. Instacart has since said it was a glitch — caused by the fact that the customer tipped $10 — and has introduced a new minimum payment for orders. So, Instacart paid the worker $10.80, but just 80 cents of it came from Instacart.
“In other words, Instacart is now confirming what workers have been saying since the change in pay structure: that the company is actually using customers’ tips to pay workers’ wages,” Working Washington, a workers’ organization that represents nearly 2,000 Instacart shoppers, wrote on its blog. “When a customer tips up-front, it doesn’t mean extra money for the worker. Instacart just pays the worker less to make up for it.”
While Instacart has said this was an edge case, Working Washington says this has happened in other cases. In another case, Instacart paid a worker just $7.26 (including cost of mileage) for over two hour’s worth of work.
“Obvious explanation: the customer tipped $25,” the organization writes.
It’s not totally clear how widespread this issue is, but it does not appear to be an anomaly, according to Working Washington.
“My sense is that the pay cuts are pretty much universal — workers pretty consistently reporting getting 25% or so less after the change,” Sage Wilson, an organizer at Working Washington, told TechCrunch. “The taking tips part they have admitted is policy for smaller jobs but we have seen good evidence that it extends further than that. We have a page with some collected screenshots here: https://www.workingwa.org/instacart/receipts.”
