When Joanna McFarland co-founded HopSkipDrive in 2014, she thought she had discovered the perfect low-risk business model – contracting with school districts to provide safe and reliable ridesharing for students.
"I always said this is the most recession-proof business there is because it's schools and schools don't close," McFarland recalls. "But apparently it's not pandemic proof."
<p>With the raging coronavirus shuttering schools in most of the eight states it serves plus Washington D.C., McFarland says the company is bringing in "far less" than 20% of the revenue it did pre-pandemic. Though that's up from last Spring when revenue vanished practically overnight. </p><p>"2020 has been a year," McFarland said in a Zoom video interview last month. "I don't know what else to say."</p><p>McFarland attended The Wharton School for undergrad, and got an MBA at Stanford in 2005, before executive roles at OneWest Bank, AT&T Interactive and GM Consumer Finance. But nothing could prepare her for 2020.</p><p>"March, April and May was just crisis mode," McFarland remembers. "New information was coming in every single day. How do you possibly plan for next month or next quarter, let alone like tomorrow? How do you keep your team from freaking out?"</p><p>HopSkipDrive laid off 10% of its workforce in March, but thinking that schools would reopen by Fall, McFarland hoped to retain the bulk of her staff. The company received a $1.6 million Payroll Protection loan in April to retain 102 jobs – one of the largest given to an L.A. startup. </p><p>"That meant that we got to keep all of our operations team, our support team, our marketing team, our sales team," she said.</p><p>The funding ran out in August, and with most students still stuck at home, <a href="https://dot.la/hopskipdrive-the-ridesharing-app-for-kids-announces-layoffs-2646963481.html" target="_self">she laid off </a>60 people. Fewer than 50 employees remain.</p><p>"That was very, very difficult to do," McFarland said.</p>
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Joanna McFarland attended The Wharton School for undergrad, and got an MBA at Stanford in 2005, before executive roles at OneWest Bank, AT&T Interactive and GM Consumer Finance. But nothing could prepare her for 2020.
<p>It was a major setback for the once fast-growing startup, which was started by McFarland and two other L.A.-area working moms desperate for a safe way to ferry their overscheduled kids to and from school, soccer games and violin lessons — activities that now seem like the relics of a bygone era.</p><p>"With eight children between us, we were constantly struggling with the need to be in multiple places at once," McFarland said soon after launching. "We designed HopSkipDrive to be safe enough for our own kids to use, and in doing so, have developed a scalable transportation solution that has been game changing for families."</p>
<p>Before COVID-19, HopSkipDrive had been on a significant hiring spree, relocating its offices to the trendy ROW DTLA in the Arts District, where Spotify has its L.A. headquarters.<br/></p><p>HopSkipDrive <a href="https://dot.la/hopskipdrive-ridesharing-company-for-kids-doubles-fundraising-2645031261.html" target="_self">raised $22 million in late-stage funding</a> last February from two of L.A.'s most prominent venture firms, Greycroft and Upfront Ventures, to bring its total fundraising close to $45 million. (Upfront also got in on the 2015 seed round.)</p><p>"We're excited to invest in a L.A.-based company that's creating a whole new category and solving such a real problem for families," Upfront Ventures partner Greg Bettinelli <a href="https://www.globenewswire.com/news-release/2015/07/14/976673/0/en/HopSkipDrive-Raises-3-9-Million-to-Eliminate-the-Family-Carpool-Chaos.html" target="_blank">said in 2015.</a> "We see a real growth opportunity."</p><p>The timing of the most recent raise – a month before stay-at-home orders went into effect – proved fortunate in extending HopSkipDrive's runway when contracts dried up. Through it all, McFarland has given up trying to predict when students will be back in the classroom.<br/></p><p>"In times like this, you look at what you can control and you look at what you can't control and obviously we cannot control when schools open or don't open," McFarland said. </p><p>What she can effect is HopSkipDrive's slimmed down operation, which she says will pay dividends when things return to normal.</p><p>"It gives you time to take a step back and look at every single process and every single thing that you're doing and figure out how we would do this a little bit faster, a little bit better, a little bit more efficiently," McFarland said. "Ultimately, we have a much faster path to profitability when sales do return than we had before."</p><p>And McFarland, who has had to navigate the crisis while her kids have been at home, too, takes a degree of solace in the fact schools will reopen at some point. When that happens she thinks they will need HopSkipDrive more than ever because of a <a href="https://www.dispatch.com/story/news/education/2020/11/18/covid-coronavirus-worsens-bus-driver-shortages-nationwide-many-ohio-schools/6249556002/" target="_blank">nationwide bus driver shortage that has only gotten worse during the pandemic. </a></p><p>"They're going to need our help, and we're all gearing up for that," she said. "I'm excited for that day." </p>
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An appeals court granted Uber and Lyft a reprieve on Thursday, hours before the California rideshare giants were poised to make good on their threats to suspend operations in their home state.
The move would have left hundreds of thousands of drivers in one of their largest markets without employment during a global pandemic and passengers stranded. Alternative ridesharing operations are ready to roll, but before we get to that here's a run down of what happened.
<p>The appeals court's 11th hour decision enables the two Silicon Valley-based companies to continue operating — without classifying their drivers as employees - as the court weighs their appeal.</p><p>The planned suspension was the next step in a months-long saga that has played out in Sacramento and in the courts, as the two multi-billion-dollar companies have pushed back against a new law that requires them to classify their drivers as employees rather than independent contractors.</p><p>"The vast majority of drivers want to work independently, and we've already made significant changes to our app to ensure that remains the case under California law," an Uber spokesman told dot.LA on Thursday. "When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression."</p><p>Lyft's plan to suspend its operations by midnight came one week after a court granted a preliminary injunction, requiring Uber and Lyft to stop classifying their drivers as contractors.</p><p>In a <a href="https://www.lyft.com/blog/posts/ca-operations-update" target="_blank">blog post</a>, Lyft said that four out of five drivers do not support the court's revised employment model. The company also argued in its post, as it has in court, that "this change would also necessitate an overhaul of the entire business model — it's not a switch that can be flipped overnight."</p><p>Leaving California would be a political bet for the two companies hinging on jilted riders and drivers being upset enough to push for a change in the law in the future. </p><p>Such a bet has worked in some markets, notably in Austin, Texas. In 2016, Uber and Lyft left town in protest of a package of new rules and regulations that would require deeper background checks for drivers, including fingerprinting. After expensive lobbying and marketing campaigns at the Texas statehouse, Republican Gov. Greg Abbott signed a new law in 2017 that included background checks without fingerprinting. Uber and Lyft returned shortly thereafter.</p><p>Lyft is actively encouraging customers to vote yes on Prop. 22 in November, which would offer new benefits to drivers and exempt app-based ridesharing companies from having to classify drivers as employees.</p><p>Lyft and Uber said last week that they would likely pause business to comply with the order. Uber originally mentioned plans to continue running its food delivery service despite a potential suspension of its ridesharing service.</p><p>The reprieve for riders and drivers in the Golden State may be temporary. </p><p>For those worried about what may come, here are some alternative ridesharing options:</p><ul class="ee-ul"><li>Hail a ride or schedule one in advance with <a href="https://rideyellow.com/" target="_blank">RideYellow</a>, the app letting riders pay with cash or card for transportation across L.A. </li><li><a href="https://www.wingz.me/" target="_blank">Wingz</a>, once known for it's airport rides, has expanded its operations to offer around-town transportation.</li><li>For charter and party bus services, <a href="https://swoopapp.com/" target="_blank">Swoop</a> offers a range of vehicles depending on your destination and group size. </li><li>While carpooling to work is put on a temporary pause for many, <a href="https://www.takescoop.com/" target="_blank">Scoop</a>'s model links co-workers and neighbors traveling in the same direction. </li><li>With <a href="https://www.waze.com/en-GB/carpool/cities/US/Los%20Angeles?city=Los%20Angeles" target="_blank">Waze Carpool</a> users can choose carpool companies based on their profiles, star ratings and filters like co-workers only or same-gender. </li><li>Rides for children with vetted drivers are offered by both <a href="https://www.hopskipdrive.com/" target="_blank">HopSkipDrive</a> and <a href="https://www.kangoapp.co/" target="_blank">Kango</a> Each trip can be closely monitored through the app. </li><li><a href="https://www.blacklane.com/en/" target="_blank">Blacklane</a> offers a higher-end car service.</li><li>And while Lyft is taking a ridesharing hiatus, you can still access its scooters in Santa Monica and UCLA and rent a car through the Lyft app.</li></ul>
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The L.A. tech and startup community was active as ever this week. dot.LA chief host and correspondent Kelly O'Grady takes you through the key points of the top five headlines:
- Green Rush: The Incredible Rise and Fall of L.A.'s Genius Fund
- How the WeChat Ban Could Ripple Through California Tech
- Ridesharing App HopSkipDrive Announces Layoffs
- Watertower Ventures Closes $50M Second Fund
- With $5.25M Boost, Valence Aims to Redefine How Black Professionals Connect
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<small class="image-media media-caption" placeholder="Add Photo Caption...">Weekly Recap: Cannabis Cautionary Tale, the WeChat Ban, HopSkipDrive Does Lays Offs & Investing News</small>
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