Author: Megan Rose Dickey

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Human Capital: The battle over the fate of gig workers continues

Welcome back to Human Capital, where we unpack the latest in tech labor and diversity and inclusion. This week, we’re looking at the latest developments in the battle over the classification of gig workers, the rise of labor unions in tech and and Instagram’s latest move to be woke.

Human Capital will soon be available as a newsletter. Be sure to sign up here.

Gig Work

Both sides of Prop 22 are going full steam ahead in their efforts to sway California voters. Uber, Lyft, Instacart and DoorDash each committed another $17.5 million to Yes on Prop 22 last Friday, according to a late contributions filing. 

As of August 24, the Yes on 22 campaign had contributed just north of $110 million while the No on 22 campaign had put $4.6 million into its efforts. The latest influx of cash brings Yes on 22’s total contributions to more than $180 million. Of all the measures on this November’s ballot, Yes on Prop 22 has received the most contributions, according to California’s Fair Political Practices Commission. 

Bastian Lehman, CEO of Postmates, also penned an op-ed on CNN about gig workers and how there needs to be a third classification of workers, which is essentially what Prop 22 is pushing. 

Meanwhile rideshare drivers took to the streets of Oakland, Calif. to protest Uber’s ads and Prop 22. 

All this Prop 22 activity comes amid a lawsuit brought forth by California Attorney General Xavier Becerra and a handful of local city attorneys that seeks to force Uber and Lyft to classify their drivers as employees. In Lyft’s sworn statement addressing how Lyft would go about transitioning its drivers from independent contractors to employees, CEO Logan Green said the company might cease operations in all or parts of California if forced to reclassify drivers, according to the San Francisco Chronicle. 

Tech unions

This year has marked a new wave of organizing among tech workers. Unions, which act as a sort of intermediary between workers and their employers, advocate on behalf of employees for better wages, working conditions and other benefits through collective bargaining. Among full-time wage and salary workers, union members had weekly earnings of $1,095, compared to $892 for non-union members in 2019, according to the U.S. Bureau of Labor Statistics.

In February, Kickstarter employees voted to form a union after months of what appeared to be union busting at the hands of Kickstarter leadership. In September 2019, Kickstarter fired two people who were actively organizing the union. Now, the National Labor Board has found merit that Kickstarter unlawfully fired those two people. 

Kickstarter’s successful organizing made it become the first major tech company in the U.S. to unionize and joined OPEIU Local 153. Then, one month later, collaborative coding platform Glitch voted to unionize with Code-CWA.*

Now, at least ten tech companies are actively trying to unionize, according to Grace Reckers, the lead northeast union organizer of OPEIU, told TechCrunch. Part of what’s driving this increased interest in unions is the abuse of data and privacy by tech giants.

“Employees are seeing that they don’t actually have control of how the products they make are being used,” she said. “Even though most of the messaging in Silicon Valley is about creating a better world for us, making our lives easier and innovating, it also moves under the philosophy of move fast and break things.”

And “breaking things” can lead to things like employee layoffs, misuse of data or separation of families, Reckers said.

“Workers want control over how products are being created, and control of how those tools are being used,” she said. “People are realizing it’s not just about their immediate workplaces but also their impacts on local communities or global communities.”

Stay Woke

Instagram announced a new Equity team to work on “better understanding and addressing bias in our product development” the experiences people have on Instagram, Adam Mosseri, Instagram lead, wrote. Part of the responsibilities of that team include creating fair and equitable products, as well as ensuring algorithmic fairness. According to a job posting for an equity and inclusion product manager, the team will be fully focused on equity and inclusion, and “creating the most equitable experience for our global communities.”

Instagram desperately needs an effective team in this area. In June, some Instagram influencers posted photos of themselves in Blackface in a misguided attempt to support the Black Lives Matter movement. Meanwhile, Black people have reported harassment on the platform and fears of being shadowbanned.

Instagram is also looking to hire its own diversity lead. According to the job posting, the director of diversity and inclusion will be responsible for increasing and retaining people from diverse backgrounds, among other things. Facebook has had a head of diversity in place since 2013, but given how big of a company Facebook has become, it seems worthwhile to have a diversity leader specifically focused on Instagram.

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*Disclosure: My partner works at Glitch.

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Instagram is building a product equity team and hiring a director of diversity and inclusion

Instagram announced some changes it’s making that are geared toward advancing equity within its workplace. The changes come after Instagram in June spoke about elevating, rather than suppressing Black voices in light of the killing of George Floyd.

“More than ever, people are turning to the platform to raise awareness for the racial, civic, and social causes they care about,” Adam Mosseri, head of Instagram, wrote in a blog post. “It’s a big part of why we committed in June to review the ways Instagram could be underserving certain groups of people. We have a responsibility to look at what we build and how we build, so that people’s experiences with our product better mirrors the actions and aspirations of our community.”

For starters, the Facebook-owned company has created an Equity team to work on “better understanding and addressing bias in our product development” the experiences people have on Instagram, Mosseri wrote. Part of the responsibilities of that team include creating fair and equitable products, as well as ensuring algorithmic fairness. According to a job posting for an equity and inclusion product manager, the team will be fully focused on equity and inclusion, and “creating the most equitable experience for our global communities.”

Instagram is also looking to hire its own diversity lead. According to the job posting, the director of diversity and inclusion will be responsible for increasing and retaining people from diverse backgrounds, among other things. Facebook has had a head of diversity in place since 2013, but given how big of a company Facebook has become, it seems worthwhile to have a diversity leader specifically focused on Instagram.

Instagram says it has also updated its policies around implicit hate speech, such as depictions of blackface or stereotypes about Jewish people. Instagram says it will also now disable accounts that make serious rape threats, instead of just removing the content.

On the verification front, Instagram has also expanded its criteria to include more Black, LGBTQ+ and Latinx media. Instagram has also stopped automatically prioritizing verification for accounts with high followings.

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Human Capital: Workers are upset about labor practices, and Amazon and Apple are on the defensive

Happy Labor Day and welcome back to Human Capital, where we unpack the latest in tech labor, and diversity, equity and inclusion. Human Capital will soon be available as a newsletter. Sign up here so you don’t miss it when it drops!

This week, we’re looking at Pinterest’s newest edition to its DEI team, a California bill that seeks to increase racial diversity at the board level, Amazon’s messy week and a court decision forcing Apple to pay its workers for time spent in security screenings.

But first, a quick history of Labor Day, which was first celebrated on September 5, 1882 in New York City following a proposal by the Central Labor Union in the city. On that day, between 10,000 to 20,000 workers took unpaid time off to march from NYC’s city hall to Union Square in what became the first Labor Day parade.

In the time between the first Labor Day parade and when it became a federal holiday in 1894, railroad workers went on strike after George Pullman laid off hundreds of employees and cut wages by 30 percent for those who remained. In May 1894, workers walked out and their union, the American Railway Union, called for a boycott on Pullman train cars. Shortly after, the group representing Chicago’s railroad companies called on the federal government to help shut down the strike. Once federal troops arrived in Chicago, the strike turned deadly as the National Guard killed as many as 30 people.

The troops left in July and, that same month, Labor Day became a national holiday to be celebrated the first Monday in September every year. The strike ended in early August. It’s a complicated history, but it shows labor struggles have been at the heart of American capitalism since the country’s inception (slavery). Now, more than 100 years after the first Labor Day, workers are still fighting for better protections, pay and working conditions.

Stay Woke

Pinterest brings on new head of inclusion and diversity

As Pinterest grapples with some internal unrest over claims of racial and gender discrimination, the company has brought on a new head of inclusion and diversity. Its last head of diversity, Candice Morgan, quietly left earlier this year for venture firm GV. 

Tyi McCray, the company’s new global head of inclusion and diversity, previously worked at Airbnb where she held a few different roles. She began as Airbnb’s interim director of Diversity and Belonging before becoming a diversity strategy lead and ultimately, a government affairs and strategic partnerships lead.

McCray will report directly to Pinterest CEO Ben Silbermann. This marks the first time Pinterest is having a head of diversity report directly to the CEO, rather into HR. Facebook did something similar earlier this year when it began having its chief diversity officer, Maxine Williams, report directly to Facebook COO Sheryl Sandberg. But Facebook still fell short of having Williams report directly to CEO Mark Zuckerberg.

Diversity advocates for years have been calling for heads of diversity to report directly to the CEO. Many companies, however, have yet to do that. More often, tech companies have their heads of diversity report into the head of HR.

California may soon require more diversity at the board level

The tech industry has been under scrutiny for its lack of diversity for years now. Some progress has been made in terms of representation of Black and brown folks within companies, but not always at the leadership level. AB979, which is heading to California Governor Gavin Newsom’s desk, aims to accelerate diversity at the board level.

The bill would require public companies based in California to have at least one board member from an underrepresented group. If signed into law, the bill would also require companies with between four to nine directors to have at least two board members be from an underrepresented group. For boards with nine or more directors, the bill would require a minimum of three people from an underrepresented group.

The bill defines an individual from an underrepresented community as someone who self-identifies as Black, Latinx, Asian, Pacific Islander, Indigenous and/or as gay, lesbian, bisexual or transgender.

This bill seeks to build on top of preexisting law that went into effect in 2018 that mandated publicly held corporations based in California would have a minimum of one female director on its board by the end of 2019. By the end of 2021, companies with five or more directors must have a minimum of two female board members while companies with six or more directors must have at least three female board members.

The 99%

Amazon is a mess

Amazon found itself under scrutiny again over its labor practices. It started when reports surfaced that Amazon was looking to hire an intelligence analyst. Specifically, Amazon in a job posting said it was seeking someone who would inform higher-ups and attorneys “on sensitive topics that are highly confidential, including labor organizing threats against the company.” 

Amazon swiftly took down that job post, saying it was “not an accurate description of the role – it was made in error and has since been corrected,” Amazon spokesperson Maria Boschetti said in a statement to TechCrunch. While Amazon did not give a specific revised description, the company said the role is meant to support its team of analysts that focus on external events, like weather, large community gatherings or other events that have the potential to disrupt traffic or affect the safety and security of its buildings and the people who work at those buildings. 

However, that same day, Vice reported Amazon had been spying on workers for years to monitor for any potential strikes or protests. Amazon has since said it will stop using its social media monitoring tool.

“We have a variety of ways to gather driver feedback and we have teams who work every day to ensure we’re advocating to improve the driver experience, particularly through hearing from drivers directly,” Boschetti said in a statement. “Upon being notified, we discovered one group within our delivery team that was aggregating information from closed groups. While they were trying to support drivers, that approach doesn’t meet our standards, and they are no longer doing this as we have other ways for drivers to give us their feedback.”

Amazon did not comment on how long it had been monitoring closed Facebook groups.

Meanwhile, Bloomberg reported some Amazon Flex drivers have resorted to hanging smartphones in trees in order to get more work in Chicago.

Apple owes its retail workers backpay for time spent in security screenings

Apple has had intense security practices for some time now. Part of that has meant requiring workers to go through security screenings before leaving the store at the end of their shifts. 

The case dates back all the way to 2015, when a group of Apple retail workers in California filed a class-action suit arguing they should be paid while waiting for their bags to be searched.

From the ruling:

Employees estimate that the time spent waiting for and undergoing an exit search pursuant to the Policy typically ranges from five to twenty minutes, depending on the manager or security guard’s availability. Some employees reported waiting up to forty-five minutes to undergo an exit search. Employees receive no compensation for the time spent waiting for and undergoing exit searches, because they must clock out before undergoing a search pursuant to the
Policy.

In February, CA Supreme Court ruled in favor of the plaintiffs. But a US District judge later granted Apple’s request for a summary judgment since some workers part of the class were not required to go through searches since they didn’t bring bags or devices to work. This week, however, an appeals court ruled that it wasn’t relevant if workers did or did not bring their devices or bags to work. Now, Apple must pay more than 12,000 class members for time spent waiting for security screenings.

Apple did not respond for our request for comment.

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Explore micromobility’s next opportunities at TC Sessions: Mobility

Micromobility, like many other industries, has faced a lot of uncertainty this year. Many shared electric scooter operators paused their services in the earlier days of the COVID-19 pandemic, but resumed operations after putting some safety measures into place. Meanwhile, some industry analysts have pointed to micromobility as a savior for cities where public transit is suffering as a result of low ridership.

Although there have been many layoffs and consolidation across the market, micromobility as a technological tool may be poised to come out of this year stronger than before. And despite the over-saturation companies in the micromobility market, there are still opportunities for new players.

That’s what we’ll be exploring at TC Sessions: Mobility with Tortoise Co-founder Dmitry Shevelenko, Elemental Excelerator Director of Innovation, Mobility Danielle Harris and Superpedestrian VP of Strategy and Policy Avra van der Zee.

Tortoise Co-founder and President Dmitry Shevelenko 

Given the volume of micromobility operators in the space today, Tortoise aims to make it easier for these companies to more strategically deploy their respective vehicles and reposition them when needed. Using autonomous technology in tandem with remote human intervention, Tortoise’s software enables operators to remotely relocate their scooters and bikes to places where riders need them, or, where operators need them to be recharged.

On an empty sidewalk, Tortoise may employ autonomous technologies, while it may rely on humans to remotely control the vehicle on a highly trafficked city block. Shevelenko will walk us through his company’s approach to building an operating system for micromobility providers.

Elemental Excelerator Director of Innovation, Mobility Danielle Harris

Given the challenges the COVID-19 pandemic has created in cities, there is room for electric bikes and scooters to provide alternative transportation options to cities. Additionally, there is growing interest in charging stations as well as the direct-to-consumer market, as society still grapples with ways to live among a deadly virus.

Harris, who used to work as an innovation strategist for San Francisco’s Municipal Transportation Agency’s Office of Innovation, has a a plethora of knowledge about how startups can best work with cities and provide them with relevant and effective mobility solutions.

Superpedestrian VP of Strategy and Policy Avra van der Zee

Superpedestrian first came on the scene with its vehicle diagnostics platform for shared electric scooters. This year, the company launched its own electric scooter provider, LINK, in partnership with Zagster. Avra van der Zee, who came on board to Superpedestrian after working at JUMP, is tasked with ensuring Superpedestrian continues to work well with cities in providing them micromobility services that fit their needs.

At TC Sessions: Mobility, you’ll hear from these experts about what’s next in micromobility.

Get your tickets for TC Sessions: Mobility to hear from these thought-leaders along with several other fantastic speakers from Waymo, Lyft, Nuro and more. Tickets are just $145 until September 4 at 11:59 p.m. PDT, with discounts for groups, students and exhibiting startups. We hope to see you there!

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Building paths to funding for Black female founders

Amid a racial justice reckoning following countless events of police brutality (justice for Breonna Taylor), it’s high time companies and investors in the tech industry do more than just say “Black Lives Matter,” but show that Black lives matter. As Human Utility CEO Tiffani Ashley Bell aptly put it, “Make the hire, send the wire!”

Black women are underfunded and under-appreciated in tech. Since 2009, Black women have received just .06% of all venture funding, according to digital undivided’s 2018 report. That’s despite a 50% increase in new Black women-owned businesses from 2014 to 2019, according to American Express.

When Founder Met Funder, an All Raise event for Black female founders (BFFs), aims to foster community and fuel more investment in BFFs. In its second year, When Founder Met Funder featured Incredible Health Co-founder and CEO Iman Abuzeid, Slutty Vegan founder and CEO Pinky Cole, Y Combinator CEO Michael Seibel, Cake Ventures Founding Partner Monique Woodard and others.

“It was very important for us to be able to give different ranges of talks,” Domonique Fines, co-creator of the event, told TechCrunch. “I wanted people to see there are Black women founders out there. They might not all have the same path, but just because you don’t have the same path, it doesn’t mean you won’t have that same success.”

Domonique Fines, All raise Director of Engagement and co-creator of When Founder Met Funder. Image credit: All Raise

Before joining All Raise, Fines spent a few years at Y Combinator as the Silicon Valley accelerator’s director of events.

“As the batches got larger and larger, I started seeing less and less Black women,” Fines told TechCrunch.

In Y Combinator’s most recent batch of startups, 9% of the founders were women and 16% of companies had a female founder, while 4% of the founders were Black and 6% of the companies had a Black founder. Y Combinator, however, did not break out stats for Black female founders.

“And for me, it was super important to give them the experience to be in a space where they felt comfortable talking to people in a space where they can simply ask questions and not feel any type of way about it. And I just noticed I actually hadn’t seen that.”

When Fines would come home to Oakland after a YC event, there would be a lot of Black women around, she said. But for the Black female founders elsewhere, there just wasn’t a space for them to go where they could “feel comfortable asking the question they needed the answer to without feeling like they’re less than,” Fines said.

That was her passion, Fines said. Meanwhile, Megan Holston-Alexander of Andreessen Horowitz’s Cultural Leadership Fund and Planet FWD Founder Julia Collins were already volunteering at All Raise as Fines joined All Raise from YC.

“So it was one of those things where we just kind of put all of our heads together,” Fines said. “We wanted to make sure that we could do something that’d be super tactical and useful, but also make it not just an event. It’s an experience and we want to make sure that Black women are just getting the help they need all year-round.”

In addition to the event, a Slack group formed this year to help determine the next steps for the community. Some of the ideas floating around right now are founder bootcamps, adding more speakers to the event, facilitating better networking and workshops. But it’s ultimately up to the group’s collective conscience.

“I’m planning on polling them to find out exactly what the need is right now,” Fines said. “And then it just changes every day, like depending on what’s going on in the world. It’s one of those things where we just want to make sure that what we’re doing for them is super useful.”

Additionally, Fines envisions hosting smaller classes on fundraising and deck building.

“It’s one of those things that people need a lot of assistance with,” she said. “But they also need someone that’s going to be truthful and honest with them about it.”

Seibel touched on that element of honesty in his chat with Collins during the event. He told a story about what it was like when he was fundraising for his startup.

“When I started doing startups, it was 2006 and there weren’t many people who looked like any of us that were doing startups,” he told the audience. “I think what you would’ve expected was overt discrimination but actually I got something else, which was no feedback.”

He went on to say that people were afraid to be critical of him, for fear of being perceived a certain way.

“People were afraid of being critical with me,” he said.

That’s partly why Seibel says he’s become the type of person who will tell founders what everyone is thinking.

“Agree with it or disagree with it, I want you to have a good mental model of what people are thinking and not saying,” Seibel said.

Throughout the day, there were 120 founders and 40 VCs at the event. The next step for Fine is to get their consent to give their contact info to venture capitalists.

“I noticed a lot of VCs definitely want to continue the conversations but I want to make sure that all of the founders feel comfortable with that as well,” Fine said.

Next week, Fine plans to send out the poll to founders to better understand their needs and where to take the initiative from here.

“I want to make sure that we still keep our community tight knit,” Fine said. “I want them to continue to push and keep talking about it because this is not something that’s going to be an easy breezy thing. It’s going to be ongoing and forever.”

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Workplace management startup Legion raises $22 million

Legion, an artificial intelligence driven platform for workplace management, has raised a $22 million series B round led by Stripes with participation from Workday Ventures and others.

Legion is designed to help employers better manage their hourly workforces by automating certain decisions, like how much labor to deploy to meet the needs of the company and when to schedule workers. Taking into account demand forecasting, labor optimization and the preferences of employees, Legion then generates a schedule that “ensures employees are able to work when they prefer to work,” Legion CEO Sanish Mondkar told TechCrunch. “These are all important problems to solve in the overall puzzle of labor management.”

Legion sells its platform to mid-sized to larger enterprise customers, including Soulcycle, Philz and Dollar General. Its largest customer has more than 1,000 employees on the platform. Meanwhile, the COVID-19 pandemic has highlighted the need for something like Legion, Mondkar said. So perhaps it’s no wonder why the company has onboarded more than 18,000 new locations since April, Mondkar said.

“In the service industry, COVID has been challenging for many businesses and they anticipate the challenge not to be over anytime soon, even as things start going back to normal,” Mondkar said. “They anticipate labor budgets to be under pressure for a long time and consumer demand might take a while to come back.”

Image Credits: Legion

Given Legion’s forecasting model is based on machine learning, the company has spent a lot of time modifying its approach to demand forecasting to better account for the various new scenarios that have emerged from the pandemic,” Mondkar said.

“This machine learning approach of forecasting now has to be hyper localized to every data set and what that city is going through,” he said.

Legion has also rolled out new features designed for the times of COVID, such as contact tracing, identification of healthy versus quarantined workers and a streamlined way to quickly communicate to employees any changes.

For employees whose employers use Legion, they are able to use the Legion app to define how they want to work, and set their preferred hours, shift lengths and store locations. Legion’s algorithm then tries to match the preferences of employees with the needs of the business.

“Conventional wisdom in this industry for a long period of time has been, ‘If I optimize labor more, I can squeeze more out of them and get them to do  to optimize labor more,'” Mondkar said. “Things like flexibility almost seem contrary to that goal. People think if they let employees pick flexible hours, that will counter their goal of getting more labor efficiency. Our goal is to prove that’s not right and that you can ensure both of them thrive simultaneously.”

Legion says its customers can expect at least a 10x return on investment, which can come in the form of efficient labor deployment, optimized labor and employee retention. For many Legion customers, Mondkar said the company has been able to reduce churn by 30-50%.

“The addressable market for what we do is very large,” Mondkar said. “It’s about how do you manage labor fundamentally in a way that provides you business efficiency but also enables happy employees. We want to focus on that two-sided issue.”

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There’s a growing movement where startup founders look to exit to community

Traditional roadmaps for startups center around this idea of the exit. Oftentimes, the ideal exit in the minds of startups and venture capitalists goes one of two ways: IPO or acquisition by another company.

But there are other ways for startups to exit that could potentially bring more value to a larger variety of stakeholders. Exit to Community (E2C), a collaborative working project led by the University of Colorado Boulder’s Media Enterprise Design Lab and Zebras Unite, explores ways to help startups transition investor-owned to community ownership, which could include users, customers, workers or some combination of all stakeholders. Today, the group released a digital and physical zine designed to serve as an introduction to Exit to Community.

“The purpose of the zine is to provide an initial roadmap to all of the aspects of the conversation that need to happen so we can save founders pain in recognizing and validating they’re in the wrong fit and we need to co-create what does fit,” Zebras Unite co-founder and zine co-author Mara Zepeda told TechCrunch. “It’s not a silver bullet. It’s not like there’s this other perfect thing that everyone needs to do. I describe it as running a Cambrian explosion of experiments in order to figure out what this future is. It’s not just one thing. That’s how what we’re doing is really different. Sometimes there are these niche products or movements that pop up and say, “this is the answer. There isn’t one answer for this moment.” 

These alternative exit models also have the potential to to open the door for founders in other markets, E2C co-organizer Nathan Schneider told TechCrunch. He pointed to tiphub, a company focused on Africa and the African Diaspora, that had been looking for alternative ways to support founders given there isn’t a huge mergers and acquisitions market in Africa.

“Because of the infrastructure that exists in the financial market, we don’t have the same set of realities that a very active VC industry does in Europe or the U.S.,” tiphub Partner Chika Umeadi told TechCrunch. “There’s just not as much private equity activity or M&A activity. We believe we have a strong hypothesis for how we can manufacture companies quickly, but we still need to build the other side of the market. There are companies that are valuable, but we now have to think about alternative methods of exiting.”

Already, there are a handful of examples out there of what exiting to community can look like. Buffer, a social media management platform, bought out its investors in 2018 because it became “clear that Buffer had become less of a fit for VC funding,” Buffer CEO and co-founder Joel Gascoigne wrote in a blog post at the time.

Then, in 2019, SEO and Conductor bought back its content marketing company from WeWork. Now, the company is majority employee-owned.

“It was a dream that we always had that we would own the company and we gave a huge amount of ownership to all the people and now the company is almost entirely employee-owned,” Conductor CEO Seth Besmertnik told me earlier this year. “And now we have everything we want to go and make our mission a reality.”

Outside of the tech industry, E2C points to Organically Grown Company, an organic produce distributor based in Oregon that transitioned from an employee- and grocer-owned operation into a community-owned one.

“These types of glimpses suggest that it’s possible,”Schneider said.

For investors, while IPOs and acquisitions can elicit high returns, not all of the startups in their portfolios will be candidates.

“Their current exit options limit what kind of returns and outcomes they can see for their portfolio companies,” Schneider said. “If a startup ends up not being a candidate for an IPO or acquisition, E2C can still help them get their money back, or get a decent return. There’s also a class of investors trying to thread the needle of financial return with social return, and are looking for models that can help facilitate that.”

Beyond the zine, the next step is to crate a peer learning cohort of founders who are exploring some of these options. Down the road, the hope is to create standard documents for startups that make it easy for founders to pursue these alternative paths.

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Human Capital: ‘People were afraid of being critical with me’

Welcome back to Human Capital, where we break down the latest in labor, and diversity and inclusion in tech. This week, we’re looking at the launch of the Diversity Riders initiative in venture capital and how it can go further, Instacart’s labor practices and some alternative, more inclusive approaches to running a startup. Also, Y Combinator CEO Michael Seibel recently shared a compelling anecdote about his experience as a Black founder raising money back in 2016.

Justice for Jacob Blake and Breonna Taylor.

 

Stay Woke

Diversity Riders commitment needs to go further

Earlier this week, Act One Ventures launched a new diversity and inclusion initiative called The Diversity Term Sheet Rider for Representation at the Cap Table. The purpose of the Diversity Rider is to increase the number of Black and other underrepresented investors in deals by making them co-investors. 

Already, firms like Greycroft Partners, First Round Capital, Maveron, Fifth Wall, Plexo Capital and Precursor Ventures have committed to it. What that means is firms will include boilerplate language in their standard term sheets:

In order to advance diversity efforts in the venture capital industry, the Company and the lead investor, [Fund Name], will make commercial best efforts to offer and make every attempt to include as a co-investor in the financing at least one Black [or other underrepresented group including, but not limited to LatinX, women, LGBTQ+] check writer (DCWs), and to allocate a minimum of [X]% or [X] $’s of the total round for such co-investor.

This is certainly a good step on the road to creating additional wealth opportunities for Black, Latinx and Indigenous people, as well folks from other underrepresented groups in tech. However, a stronger step would be to remove the parts about “best efforts” and “make every attempt” because, as it’s currently written, the commitment hedges on rather subjective conditions. Instead, the following would be better:

In order to advance diversity efforts in the venture capital industry, the Company and the lead investor, [Fund Name], will make commercial best efforts to offer and make every attempt to include as a co-investor in the financing at least one Black [or other underrepresented group including, but not limited to LatinX, women, LGBTQ+] check writer (DCWs), and to allocate a minimum of [X]% or [X] $’s of the total round for such co-investor.

Y Combinator CEO Michael Seibel on raising funding as a Black founder

At All Raise’s second annual event for Black female founders, When Founder Met Funder, Planet FWD CEO Julia Collins interviewed YC CEO Michael Seibel about his experience in tech and tips for founders. 

“When I started doing startups, it was 2006 and there weren’t many people who looked like any of us that were doing startups,” he told the audience. “I think what you would’ve expected was overt discrimination but actually I got something else, which was no feedback.”

He went on to say that people were afraid to be critical of him, for fear of being perceived a certain way. 

“People were afraid of being critical with me,” he said. 

That’s partly why Seibel says he’s become the type of person who will tell founders what everyone is thinking. 

“Agree with it or disagree with it, I want you to have a good mental model of what people are thinking and not saying,” Seibel said. 

Gig Work

Instacart is under fire again 

Instacart shoppers, via Gig Workers Collective, made their voices heard again this week. In light of the wildfires and other anticipated climate change-related disasters, Instacart workers want the company to provide disaster pay at a daily rate equal to the average rate of daily pay, including tips, over the previous 30 days for each day Instacart’s operations are shutdown. Additionally, GWC wants Instacart to shut down its operations in markets where a city has declared a state of emergency or issued evacuations.

The demands came shortly after Instacart agreed to distribute $727,985 among some San Francisco-based Instacart workers as part of a settlement pertaining to health care and paid sick leave benefits.

Meanwhile, Instacart is also facing a new lawsuit from DC’s attorney general over its “deceptive” service fees. The suit seeks restitution for consumers who paid those service fees, as well as back taxes and interest on taxes owed to D.C.

Alt VC

Tech cooperatives have the potential to upset wealth inequality 

We began exploring earlier in the year the case for cooperative startups, where workers and users have the opportunity to gain true ownership and control in a company, and where any profits that are generated are returned to the members or reinvested in the company.

The way many tech companies are built today don’t need to be that way. Start.coop, a tech accelerator for cooperatives, is trying to help build this new future. This week, Start.coop, received a $150,000 commitment to help fund two new classes of startups per year. Start.coop invests $15,000 in each startup and all graduates become shareholders in Start.coop, which is a cooperative itself that distributes ownership among workers, investors, advisors and startups that go through the accelerator.

Start.coop founder Greg Brodsky previously told me:

Technology has disrupted almost every part of the economy. It’s disrupted the gig economy, gaming, shopping and how to book hotels. But the one thing that the technology sector has not been willing to touch is ownership itself. That is, who gets rich and who benefits from the growth of these companies. That really hasn’t changed. In some ways, the tech sector is just recreating the wealth inequality in every other part of the economy.

There’s more to an exit than IPOs and acquisitions 

Meanwhile, the folks behind the Exit to Community movement are gearing up to release a zine outlining startup paths to outcomes other than IPOs and acquisitions. E2C is a working project that explores ways to help startups transition investor-owned to community ownership, which could include users, customers, workers or some combination of all stakeholders. 

“The purpose of the zine is to provide an initial roadmap to all of the aspects of the conversation that need to happen so we can save founders pain in recognizing and validating they’re in the wrong fit and we need to co-create what does fit,” Zebras Unite co-founder and zine co-author Mara Zepeda told TechCrunch. “It’s not a silver bullet. It’s not like there’s this other perfect thing that everyone needs to do. I describe it as running a Cambrian explosion of experiments in order to figure out what this future is. It’s not just one thing. That’s how what we’re doing is really different. Sometimes there are these niche products or movements that pop up and say, “this is the answer. There isn’t one answer for this moment.” 

Be on the lookout for a deeper-dive into this next week. For now, here’s some additional reading on the topic.

Don’t miss

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Hear from Lyft, Cruise, Nuro and Aurora about the road ahead for driverless vehicles

Autonomous vehicles have yet to become mainstream, but companies like Lyft, Cruise, Nuro and Aurora are still fighting the good fight. The AV space has always faced its share of regulatory and development hurdles, but this year brought a new set of hurdles with the COVID-19 pandemic.

At TechCrunch Sessions: Mobility, we’ll hear from Cruise, Lyft, Nuro and Aurora about where they’re at in their respective journeys to public deployment and how they’ve navigated the year.

Cruise Director of Government Affairs Prashanthi Raman 

Earlier this year, before the world blew up, Cruise received a permit in California to begin transporting passengers. Cruise also began focusing more on hardware earlier this year. That all came after Cruise had already scrapped its plans to launch a robotaxi service in 2019. In the throws of the COVID-19 pandemic, Cruise laid off 8% of its workforce in May in an attempt to cut costs. As part of the restructuring, Cruise said it would double down on its engineering efforts.

Meanwhile, Cruise still has its eyes set on public deployment, which is where the expertise of Raman comes in. It’s her job to help Cruise navigate the murky regulatory waters of autonomous vehicles.

Nuro Chief Legal & Policy Officer David Estrada 

Nuro, an autonomous delivery startup, takes a slightly different approach to autonomous vehicles. Instead of transporting people, Nuro transports goods. In April, Nuro received a permit to begin driverless testing in California. The startup, which raised $940 million from SoftBank’s Vision Fund last year, aims to deliver groceries and other goods to customers at scale.

Estrada, who previously led legal and policy operations at Bird and government relations at Lyft, is no stranger to playing ball with regulatory agencies. It’s up to him to ensure Nuro gains the trust of the public by proving the company’s commitment to safety and the law.

Lyft Self-Driving Platform Director Jody Kelman

Lyft first began testing its autonomous vehicles in California in late 2018. The company had to pause those operations earlier this year as a result of the pandemic, but resumed testing in late June.

That same month, Lyft began using data from its ride-hailing app to build 3D maps, better understand human driving patterns and improve simulation tests for the company’s autonomous vehicle program.

As part of Lyft’s go-to-market strategy, it has partnered with a number of companies. A key partner for Lyft has been Aptiv, which as of February, provided 100,000 paid rides on the Lyft app.

“We’ve got something here,” Kelman said at the time to TechCrunch’s Kirsten Korosec. “This is really a blueprint for what future mobility partnerships can look like.”

Aurora Senior Manager of Government Relations Melissa Froelich

Aurora, which launched back in 2017, had been developing a full-stack solution for self-driving vehicles that prioritized robotaxis. That changed in October 2019, when Aurora began focusing more on trucks and logistics and declared trucks would be the company’s first commercial product.

Trucking comes with its own bag of worms, but folks seem to believe that AV trucking has a clearer path to profitability. In July, Aurora expanded into Texas to test commercial routes. At TC Sessions: Mobility, Froelich will discuss how Aurora is navigating the autonomous trucking space and the challenges it faces.

Get your tickets for TC Sessions: Mobility to hear from these thought-leaders from Nuro, Lyft, Cruise and Lyft, along with several other fantastic speakers from Porsche, Waymo, Lyft and more. Tickets are just $145 for a limited time, with discounts for groups, students and exhibiting startups. We hope to see you there!

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Instacart faces lawsuit from DC Attorney General over ‘deceptive’ service fees

Instacart is facing a lawsuit from Washington, D.C. Attorney General Karl A. Racine that alleges the company charged customers millions of dollars in “deceptive service fees” and failed to pay hundreds of thousands of dollars worth of sales tax. The suit seeks restitution for customers who paid those service fees, as well as back taxes and on interest on taxes owed to D.C.

The suit specifically alleges Instacart misled customers regarding the 10% service fee to think it was a tip for the delivery person from September 2016 to April 2018.

“Instacart tricked District consumers into believing they were tipping grocery delivery workers when, in fact, the company was charging them extra fees and pocketing the money,” Racine said in a statement. “Instacart used these deceptive fees to cover its operating costs while simultaneously failing to pay D.C. sales taxes. We filed suit to force Instacart to honor its legal obligations, pay D.C. the taxes it owes, and return millions of dollars to District consumers the company deceived.”

This is not the first time Instacart has faced legal issues over its service fees. 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. Even when Instacart clarified the language, the suit alleges Instacart still buried the option to tip.

“In this respect, Instacart’s checkout design compounded
consumers’ tendency to confuse the service fee with a shopper tip,” the suit alleges.

This lawsuit comes as Instacart is facing uncertainty in California over the way it classifies some of its shoppers and delivery people. Despite a new law going into effect in January that clearly lays out what type of workers should and should not be classified as independent contractors, Instacart has yet to classify its workers as employees. Instead, Instacart, along with Uber, Lyft and DoorDash, are backing a ballot measure, Prop 22, that seeks to keep their workers classified as independent contractors.

TechCrunch has reached out to Instacart and will update this story if we hear back.