gig workers
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Catch takes hold of $12M to provide benefits that aren’t tied to employers
Catch is working to make sure that every gig worker has the health and retirement benefits they need.
The company, which is in the midst of moving its headquarters to New York, sells health insurance, retirement savings plans and tax withholding directly to freelancers, contractors or anyone uncovered.
It is now armed with a fresh round of $12 million in Series A funding, led by Crosslink, with participation from earlier investors Khosla Ventures, NYCA Partners, Kindred Ventures and Urban Innovation Fund, to support more distribution partnerships and its relocation from Boston.
Co-founders Kristen Anderson and Andrew Ambrosino started Catch in 2019 and raised $6.1 million previously, giving it a total of $18.1 million in funding.
It took the Catch team of 15 nearly two years to get approvals to sell its platform in 38 states on the federal marketplace. Anderson boasts that only eight companies have been able to do this, and three of them — Catch included — are approved to sell benefits to consumers.
“More companies are not offering healthcare, while more people are joining the creator and gig economies, which means more people are not following an employer-led model,” Anderson told TechCrunch.
The age of an average Catch customer is 32, and in addition to current offerings, they were asking the company to help them set up income sources, like setting aside money for taxes, retirement and medical leave without having to actively save.
When the global pandemic hit, many of Catch’s customers saw their income collapse 40% overall across industries, as workers like hairstylists and cooks had income go down to zero in some cases.
It was then that Anderson and Ambrosino began looking at partnership distribution and developed a network of platforms, business facilitation tools, gig marketplaces and payroll companies that were interested in offering Catch. The company intends to use some of the funding to increase its headcount to service those partnerships and go after more, Anderson said.
Catch is one startup providing insurance products, and many of its competitors do a single offering and do it well, like Starship does with health savings accounts, Anderson said. Catch is taking a different approach by offering a platform experience, but going deep on the process, she added. She likens it to Gusto, which provides cloud-based payroll, benefits and human resource management for businesses, in that Catch is an end-to-end experience, but with a focus on an individual person.
Over the past year, the company’s user base tripled, driven by people taking on second jobs and through a partnership with DoorDash. Platform users are also holding onto five times their usual balances, a result of setting more goals and needing to save more, Anderson said. Retirement investments and health insurance have grown similarly.
Going forward, Anderson is already thinking about a Series B, but that won’t come for another couple of years, she said. The company is looking into its own HSA product as well as disability insurance and other products to further differentiate it from other startups, for example, Spot, Super.mx and Even, all of which raised venture capital this month to provide benefits.
Catch would also like to serve a broader audience than just those on the federal marketplace. The co-founders are working on how to do this — Anderson mentioned there are some “nefarious companies out there” offering medical benefits at rates that can seem too good to be true, but when the customer reads the fine print, they discover that certain medical conditions are not covered.
“We are looking at how to put the right thing in there because it does get confusing,” Anderson added. “Young people have cheaper options, which means they need to make sure they know what they are getting.”
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YC-backed Heru raises $1.7M to build software services for Latin American gig workers
Given the attention that TechCrunch pays to Y Combinator’s Demo Days, we also try to keep tabs on the same startups as they scale and raise more capital. Yesterday we covered YC Winter 2020 participant BuildBuddy, for example. Today we’re taking a look at Heru, a startup based in Mexico City that is announcing a $1.7 million raise after taking part in YC’s Summer 2019 session.
The pre-seed round was led by Mountain Nazca, and participated in by Magma Partners, Xtraordinary Venture Partners, Flourish Ventures, YC itself and a handful of angels. The investment was raised in two pieces: a $500,000 check in February and the other $1.2 million closing a few weeks ago.
Heru wants to provide software-based services for gig workers in Mexico, and eventually other countries. Its founders, Mateo Jaramillo and Stiven Rodríguez Sánchez, are both ex-Uber employees, which is how they wound up in Mexico from their native Colombia.
But Heru didn’t have a straightforward path to existence. The founding duo told TechCrunch their original idea, something similar to OYO, was what they went through Y Combinator and initially raised money for. But after finding OYO already in their target market, the company took three months to rethink and, keeping investors on board, pivoted to Heru.
Heru is a package of software products aimed at delivery drivers and the like, helping provide insurance, credit and tax preparation support. The tax element is key, as the company’s founders explained to TechCrunch that Mexico now expects independent workers to file taxes on a monthly basis. Folks need help with that, so Heru built them a tool to do so.
There’s competition to that element of its product, Heru said, noting that there are accountants in the market that will do the work for $25 to $30. Heru’s tax service, in contrast, costs a smaller $5 each month (100 pesos). Insurance is another $5 each month for accident-related coverage. The startup worked with an insurance provider to build what it describes as a “tailor-made” policy for gig workers who need low-cost coverage.
The founding duo, via the company.
Heru is not only targeting Uber drivers and their like, however. The company noted that it also wants to support freelancers more broadly, a population that is much larger than the three million gig workers it counts in the Mexican market.
The company’s app has been soft-launched in the market for a few weeks, with the startup now making more noise about its existence. According to its founders, around 1,200 users were accepted during its test period. Another 20,000 are in line.
Among its early user base, customers are buying on average 1.2 Heru products, a number that I’ll track as the startup scales.
Heru’s app is neat, its market large and the need it is serving material. But in the background of the software story is a brick-and-mortar tale. The startup, in addition to building its app, put together a number of so-called “Heru Casas,” places where gig workers can recharge their phones and use a bathroom. You need the app to enter a Heru Casa, helping the startup find early users.
Currently all Heru Casas are located in Mexico City. The startup is not sure about expanding that part of its efforts to more cities where its app may attract users. Why? It’s hard to scale physical build-outs, it told TechCrunch. Software is much better for quick expansion, and as that’s the name of the startup game, holding off on more physical locations could make good sense until the company can raise more capital.
Heru has big plans to double-down its product work, and eventually add more countries to its roster. The Latin American market is a ripe place for startups to shake things up. Let’s see how quickly Heru can make its mark.
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Malaysian on-demand work platform GoGet lands $2 million Series A
GoGet, a Malaysian on-demand work platform, announced today that it has raised a $2 million Series A led by Monk’s Hill Ventures. The platform currently has 20,000 gig workers, who are called “GoGetters,” and has onboarded 5,000 businesses, including Lazada Malaysia, IKEA Malaysia, Foodpanda and flower delivery service BloomThis.
While Malaysia has other on-demand work platforms, including Supahands and Kaodim, each has its own niche. Supahands focuses on online tasks, while Kaodim offers professional services like home repairs, catering and fitness training. GoGet is more similar to TaskRabbit, with GoGetters performing errands or temp work like deliveries, moving large items, catering at events, data entry and office administration.
Chief executive officer and co-founder Francesca Chia founded GoGet in 2014. The startup decided to focus on gig workers because there is a labor gap in ASEAN (Association of Southeast Asian Nations) countries, she told TechCrunch.
“Today, the majority of ASEAN’s labor market are low- to middle-skilled, and the majority are not protected with job security, future career paths and financial services such as insurance and savings,” she said. “At the other end of the spectrum, over 70% of employment in ASEAN are from SMEs, who seek to scale without scaling full-time costs, and find it difficult to train and maintain a reliable pool of staff.”
GoGet wants to bridge the gap by connecting businesses with verified flexible workers, she added. GoGetters are able to switch between different categories of work, which Chia said gives the ability to learn new skills. Companies are provided with management features that include the ability to create a list of GoGetters they want to work with again and tools for recruiting, training and payment.
The Series A will be used to expand GoGet in Malaysia. One of the things many companies whose business models revolve around the gig economy need to grapple with as they scale include workers who are frustrated by uneven work, low pay and the lack of benefits they would receive as full-time employees. In California, for example, this has resulted in a political battle as companies like Uber, DoorDash and Lyft try to roll back legislation that would force them to classify more gig workers as full-time employees.
Chia said GoGet’s “vision is to bring flexible work to the world in a sustainable manner.” Part of this entails giving GoGet’s gig workers access to benefits like on-demand savings and insurance plans that are similar to what full-time employees receive. GoGet’s platform also has career-building features, including online trainings and networking tools, so workers can prepare for jobs that require different skill sets.
While GoGet’s short-term plan is to focus on growth in Malaysia, it eventually plans to enter other ASEAN countries, too.
In a press statement about the investment, Monk’s Hill Ventures co-founder and managing partner Kuo-Yi Lim said, “The nature of work is being redefined as companies and workers seek both flexibility and fit. This trend has been accelerated by the pandemic, as businesses are transforming in response and require more elastic workforce. GoGet provides a community of motivated and well-trained workers, but more importantly, its platform extends the corporate people management systems to ensure quality, compliance and seamless workflow.”
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Shipt shoppers are organizing a walkout in protest of new pay model
Shipt shoppers are organizing a handful of actions in protest of Shipt’s new pay structure that began rolling out this month. The first action is happening from Saturday, Oct. 17 through Oct. 19, when workers are calling on their fellow Shipt shoppers to walk out and boycott the company. Organizers are asking for shoppers not to schedule any hours or accept any orders during that time.
“Our goal is to draw attention to the fact that this pay scale really does affect shoppers and regardless of Shipt’s position of it taking into account effort and benefitting shoppers, we are finding it is the opposite on both fronts,” Willy Solis, a Shipt shopper in Dallas and lead organizer at Gig Workers Collective, told TechCrunch. “It’s not holding up to the true reality. We are getting paid less for more effort.”
Shipt shoppers also plan to stage a direct action at Target’s corporate headquarters in Minneapolis, Minnesota on Monday, October 19. During the action, shoppers plan to read letters written to Shipt CEO Kelly Caruso that describe how the pay changes have impacted them.
“We have communicated to shoppers that we have learned a lot in the six years we have been in business,” Shipt spokesperson Molly Snyder told TechCrunch in a statement. “Our previous pay model was a commission model that paid based on the cost of the basket or the order. We know how much effort goes into shopping and delivering and believe that we should compensate for that effort. The new model accounts for that effort by factoring in things like the order complexity, what market it is in and the day and time of week. Shoppers will always see the pay range for the shop, the address where they would need to deliver it, a list of all of the items in the shop and the delivery window timeframe. Shoppers can choose whether or not they want to accept an order.”
Shipt shoppers have been speaking out against this new pay model since earlier this year, after Shipt started testing this new pay structure. In February, a Shipt shopper from Kalamazoo told me they were losing about 30% or more of their regular pay as a result of the change.
According to Target-owned Shipt, it’s doing this to “better account for the actual effort it takes to complete and deliver orders,” Shipt wrote in the Shipt Shopper Hub. That means the new pay model takes into account estimated drive time from the store to the customer’s door, how many items are in the order, location, peak shopping windows and more. But Shipt isn’t sharing an exact formula for calculating pay because “each metro has unique characteristics that can affect the shopping experience.”
On the blog, Shipt also points to how similarly priced orders might pay differently as a result of the effort it takes. For example, if the order total is $100 but is only one item versus 30 items, the latter order scenario would take more effort. That means the shopper would get paid more for that order with more items. But Solis said that’s an anomaly and that the majority of shoppers don’t receive orders like that.
“To base an entire pay structure off of an anomaly like that is really concerning,” he said.
Meanwhile, Solis said he’s found discrepancies between the way Shipt talks about its formula for calculating pay. In July, Shipt published a blog post about shop time. In it, the company laid out how it thinks about things like the location of the item, size of store and more. In the original post, which has since been updated, Shipt said it did not take into account checkout time, nor was it trying to gain insight about it.
Image Credits: Willy Solis/Screenshot
After shoppers expressed frustration about it in a Facebook group, Solis noticed that Shipt deleted that part from its blog post.
Image Credits: Willy Solis/Screenshot
“They literally said they are not interested in taking into account checkout times, which is a considerable amount of time shoppers spend in stores,” Solis said.
Update 11:30 am PT: Shipt has since said it does take into account waiting and checkout times, the spokesperson said.
“In fact, when a shopper begins shopping an order, that time is logged in our system and we capture the time spent on the order — including the full check out process — all the way through the shopper or driver marking the order delivered,” Snyder said. “We had heard from some readers that the blog post, which was theoretical in nature, was causing confusion. That post was not a description of our current models that estimate shop time and pay, but it was an academic exercise, as the author clearly stated in the opening. But we understand why others may have misunderstood, which is why we made the change.”
Shipt shoppers have staged actions before, but Solis said this one is receiving the most support to date. As part of the call-to-action, Gig Workers Collective is also asking Shipt shoppers to spread the word to at least five other workers they know.
“We are continuing to listen to shopper feedback, but can tell you that we are consistently seeing increasing numbers of shoppers putting themselves on the schedule to shop, accepting, shopping and delivering orders,” Snyder said.
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Lana has launched in Latin America to be the one-stop shop for gig workers’ financial needs
Lana, a new startup based in Madrid, is looking to be the next big thing in Latin American fintech.
Founded by serial entrepreneur Pablo Muniz, whose last business was backed by one of Spain’s largest financial services institutions, BBVA, Lana is looking to be the all-in-one financial services provider for Latin America’s gig economy workers.
Muniz’s last company, Denizen, was designed to provide expats in foreign and domestic markets with the financial services they would need as they began their new lives in a different country. While the target customer for Lana may not be the same middle to upper-middle-class international traveler that he had previously hoped to serve, the challenges gig economy workers face in Latin America are much the same.
Muniz actually had two revelations from his work at Denizen. The first — he would never try to launch a fintech company in conjunction with a big bank. And the second was that fintechs or neobanks that focus on a very niche segment will be successful — so long as they can find the right niche.
The biggest niche that Muniz saw that was underserved was actually in the gig economy space in Latin America. “I knew several people who worked at gig economy companies and I knew that their businesses were booming and the industry was growing,” he said. “[But] I was concerned about the inequalities.”
Workers in gig economy marketplaces in Latin America often don’t have bank accounts and are paid through the apps on which they list their services in siloed wallets that are exclusive to that particular app. What Lana is hoping to do is become the wallet of wallets for all of the different companies on which laborers list their services. Frequently, drivers will work for Uber or Cabify and deliver food for Rappi. Those workers have wallets for each service.
(Photo by Cris Faga/Pacific Press/LightRocket via Getty Images)
Lana wants to unify all of those disparate wallets into a single account that would operate like a payment account. These accounts can be opened at local merchant shops and, once opened, workers will have access to a debit card that they can use at other locations.
The Lana service also has a bill pay feature that it’s rolling out to users, in the first evolution of the product into a marketplace for financial services that would appeal to gig workers, Muniz said.
“We want to become that account in which they receive funds,” he said. “We are still iterating the value proposition to gig economy companies.”
Working with companies like Cabify, and other, undisclosed companies, Lana has plans to roll out in Mexico, Chile, Peru and, eventually, Colombia and Argentina.
Eventually, Lana hopes to move beyond basic banking services like deposits and payments and into credit services. Already hundreds of customers are using the company’s service through the distribution partnership with Cabify, which ran the initial pilot to determine the viability of the company’s offering.
“The idea of creating Lana was initially tested as an internal project at Cabify,” Muniz wrote in an email. “Soon Cabify and some potential investors saw that Lana could have a greater impact as an independent company, being able to serve gig economy workers from any industry and decided to start over a new entrepreneurial project.”
Through those connections with Cabify, Lana was able to bring in other investors like the Silicon Valley-based investment firm Base 10.
“One of the things we’ve been interested in is in inclusion generally and in fintech specifically,” said Adeyemi Ajao, the firm’s co-founder. “We had gotten very close to investing in a couple of fintech companies in Latin America and that is because the opportunity is huge. There are several million people going from unbanked to banked in the region.”
Along with a few other investors, Base 10 put in $12.5 million to finance Lana as it looks to expand. It’s a market that has few real competitors. Nubank, Latin America’s biggest fintech company, is offering credit services across the continent, but most of their end users already have an established financial history.
“Most of their end users are not unbanked,” said Ajao. “With Lana it is truly gig workers… They can start by being a wallet of wallets and then give customers products that help them finance their cars or their scooters.”
The ultimate idea is to get workers paid faster and provide a window into their financial history that can give them more opportunities at other gig economy companies, said Ajao. “The vision would be that someone can plug in their financial information for services. If they’re working for Rappi and have never been an Uber driver and they want to be an Uber driver, Lana can use their financial history with Rappi to offer a loan on a car,” he said.
That financial history is completely inaccessible to a traditional bank, and those established financial services don’t care about the history built in wallets that they can’t control or track. “Today if you’ve been a gig worker and you go to a bank, that’s worth nothing,” said Ajao.
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How gig economy giants are trying to keep workers classified as independent contractors
Now that 2020 has started, Uber, DoorDash and Lyft are taking additional steps to undermine a new California law that would help more gig workers qualify as full-time employees. These moves entail product changes, lawsuits and ramped-up efforts to get a ballot initiative in front of voters that would roll back the new legislation.
Let’s start with the most recent development; yesterday, Uber sent a note to users announcing that it’s getting rid of upfront pricing in favor of estimated prices, unless they’re Uber Pool rides.
“Due to a new state law, we are making some changes to help ensure that Uber remains a dependable source of flexible work for California drivers,” Uber wrote in an email to customers. “These changes may take some getting used to, but our goal is to keep Uber available to as many qualified drivers as possible, without restricting the number of drivers who can work at a given time.”
Uber says it also has to discontinue rewards benefits like price protection on a route and flexible cancellations for trips in California. For drivers, that means they won’t see estimated earnings and drivers in surge arteas will no longer see fixed dollar amounts.
“AB5 threatens to restrict or eliminate opportunities for independent workers across a wide spectrum of industries, including trucking, freelance journalism and ridesharing,” an Uber spokesperson told TechCrunch. “As a result of AB5, we’ve made a number of product changes to preserve flexible work for tens of thousands of California drivers. At the same time, we’ve put forward a progressive package of new protections for drivers, including guaranteed minimum earnings and benefits, so voters can choose to truly improve flexible work in November.”
While Uber is essentially saying this is something the company must do, it’s worth noting that this is not some requirement of the new law; this is Uber’s attempt to beef up its case that it’s legally allowed to classify drivers as independent contractors. Since much of the rationale for determining whether or not a worker is an employee comes down to control, removing upfront fares and ditching penalties for rejecting fares could help Uber make a case that its drivers are operating on their own accord.
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Labor leaders and startup founders talk how to build a sustainable gig economy
Over the past few years, gig economy companies and the treatment of their labor force has become a hot button issue for public and private sector debate.
At our recent annual Disrupt event in San Francisco, we dug into how founders, companies and the broader community can play a positive role in the gig economy, with help from Derecka Mehrens, an executive director at Working Partnerships USA and co-founder of Silicon Valley Rising — an advocacy campaign focused on fighting for tech worker rights and creating an inclusive tech economy — and Amanda de Cadenet, founder of Girlgaze, a platform that connects advertisers with a network of 200,000 female-identifying and non-binary creatives.
Derecka and Amanda dove deep into where incumbent gig companies have fallen short, what they’re doing to right the ship, whether VC and hyper-growth mentalities fit into a sustainable gig economy, as well as thoughts on Uber’s new ‘Uber Works’ platform and CA AB-5. The following has been lightly edited for length and clarity.
Where current gig companies are failing
Arman Tabatabai: What was the original promise and value proposition of the gig economy? What went wrong?
Derecka Mehrens: The gig economy exists in a larger context, which is one in which neoliberalism is failing, trickle-down economics is proven wrong, and every day working people aren’t surviving and are looking for something more.
And so you have a situation in which the system we put together to create employment, to create our communities, to build our housing, to give us jobs is dysfunctional. And within that, folks are going to come up with disruptive solutions to pieces of it with a promise in mind to solve a problem. But without a larger solution, that will end up, in our view, exacerbating existing inequalities.
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Instacart shoppers are organizing a nationwide protest
Instacart has long been at odds with its shoppers — the people who go to the grocery store on behalf of customers. From November 3-5, thousands of Instacart shoppers plan to protest with three demands. They want Instacart to change the default tip amount to at least 10%, ditch the service fee and commit to always giving 100% of the tip to the shopper.
“We did not arrive at the 10% figure arbitrarily, rather this is what the default tip amount was back when I and many others started working for Instacart,” Vanessa Bain, an Instacart shopper wrote on Medium this week. “We are simply demanding the restoration of what was originally promised.”
In order to get as many participants as possible, Bain told TechCrunch it suggests each person shares the details of the protest with at least five shoppers in person.
“We are fortunate enough to have pockets of a centralized work space in grocery stores where we can connect with fellow workers,” Bain said.
Back in 2016, Instacart removed the option to tip in favor of guaranteeing its workers higher delivery commissions. About a month later, following pressure from its workers, the company reintroduced tipping. Then, in April 2018, Instacart began suggesting a 5% default tip and reduced its service fee from a 10% waivable fee to a 5% fixed fee.
“We take the feedback of the shopper community very seriously and remain committed to listening to and using that feedback to improve their experience,” an Instacart spokesperson told TechCrunch.
This protest is on the heels of a class-action lawsuit over wages and tips, as well as a tipping debacle where Instacart included tips in its base pay for shoppers. Instacart, however, has since stopped that practice and provided shoppers with back pay. Though, Fast Company recently reported that Instacart delivery drivers’ tips are mysteriously decreasing.
But it’s a new day for gig economy workers — at least in California. Last month, California Governor Gavin Newsom signed into law gig worker protections bill AB-5. This legislation will make it harder for gig economy companies to classify their workers as 1099 independent contractors when it goes into effect in January. The victory came after gig workers made their voices heard through protests and other direct actions.
What’s clear at this point is that workers are refusing to stay silent and are more than willing to advocate for themselves. Organizers of the Instacart protest have outlined three ways for shoppers to get involved. The more active approach would entail shoppers signing up for as many hours as possible from November 3 -5, but keep letting the batches time out. The more passive approach entails not signing up for any hours at all, and not accepting any on-demand batches.
“What’s driving us to do this is a perpetual tug of war shoppers have been engaged in with Instacart for over three years now,” Bain said. “We’ve held actions annually to maintain the pressure and continue the momentum of our organizing. Right now, workers are in the worst financial position we have ever been in. The introduction of algorithmic pay, coupled with their rolling out of On Demand batches (instant offers that don’t require being on schedule to accept) have led to variability in pay, and the decline of pay to unprecedented levels.”
*This story has been updated with comment from Bain.
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