Earlier this week down in Los Angeles, I led a panel discussion as part of the Rutberg Wireless conference (agenda here). This was a fun breakout because I’m good friends with everyone on the panel and have been investing in and writing the space. On the panel we had Tri from Munchery, Kevin from Shyp, Sean from Zirx (valet parking), and Basti from Postmates. All CEO/founders who are deep into this space. Here’s a brief snapshot of the themes that came up in the hourlong discussion:
Contractor vs Employee Status: This issue has been in the news, discussed on Twitter, and reached the Supreme Court. At Munchery, drivers are brought on as part-time employees. At other companies, their contractors work with other services too, but the startups go to lengths to collect and offer benefits (like health club memberships) to their contractors. Basti from Postmates also raised a great point in highlighting that there’s a generational change as well, in that some people don’t want the trappings of a full-time job but prefer the flexibility and control of working for an on-demand startup.
Horizontal vs. Vertical Consumer Demand: Some folks seem to think eventually all of these services will consolidate under one brand (like an Uber), but I don’t believe that and the data for some of these companies proves that. The issue, of course, is — who can stay independent long enough, and this is where things get into the unit economics of each business and where they make their margins, not just how much in margin. More on this below.
Threats From Incumbents vs. From Startups: I’m sure all of these startups get asked “What if Amazon or Google do this?” Usually it’s a throwaway question but in this case, these incumbents are putting real money and resources into delivery. No one was really worried about these bigco’s, however; instead, they were more worried about startups who can come into the market with little barriers to entry and undercut prices to gain share. More on this below, too.
VC-fueled Services In NYC & Bay Area: We talked about how VC money was fueling and subsidizing this activity (and parking, and shipping, and etc.) but that it’s OK because the best execution and models win and get the chance to spread across the country.
Why So Much Activity In Food? Food is a daily active use case. On any given weekday, I can order Sprig or Spoonrocket for lunch in SF, and when I’m back home in the Valley, order dinner delivered to me by DoorDash, Instacart, OrderAhead, Postmates, and maybe even Square. Eventually, the winners here can maybe turn into platforms and/or deliver other things, too.
On-Demand Services In Unlikely Places: This is the part that surprised me the post. I live in an early stage startup bubble and don’t often interact with bigco’s. The bigco’s that were in our session were definitely interested in what types of on-demand services they could offer. This was interesting because it seemed like while we think of the space as overheated, there are more and more non-sexy opportunities out there for founders to go after that aren’t just pure consumer. Kevin had a great line to sum it up — that with mobile in today’s economy, the bar for a customer experience is so high, it creates opportunities for founders to create new experiences. In way, it’s just that simple.