Less than two weeks ahead of the election, Uber and Lyft are hitting new roadblocks after pouring money into a ballot measure intended to protect their business model.
On Thursday, a California appeals court put that strategy into question when it upheld an earlier ruling that the ride-hailing companies must classify their workers as employees instead of independent contractors. The court ruling won't take effect for 30 days, adding even more pressure on the ride-hailing companies' Proposition 22.
<p> Later that day, a group of California Uber drivers <a href="https://www.washingtonpost.com/technology/2020/10/22/uber-prop22-suit/" target="_blank">filed a lawsuit</a> against Uber alleging the company is engaged in illegal political coercion by constantly sending them pro-Prop 22 in-app alerts. The suit asks for $260 million in penalties.</p><p>
Uber, Lyft, Postmates and other app-based delivery giants have pumped over $180 million into Prop 22 to keep their drivers from needing to be reclassified as employees. Experts say if it fails, labor costs for the companies could jump 20 to 30%.
</p><p>
The barrage of cash has been spent on in-app messages, commercials and text messages about how drivers would lose flexibility and health care if the measure doesn't pass. The companies also say prices and delivery wait times for customers would skyrocket.
</p><p>
If it passes, gig workers wouldn't be entitled to protections including paid sick leave, overtime pay, and other benefits laid out in California's recently passed AB5 law.
</p>
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After completing a costly renovation less than a year ago, the once high-flying e-scooter unicorn Bird Rides has put its airy and sleek Santa Monica offices up for sublease, dot.LA has learned. Prior to the pandemic, Bird was looking at tripling its local footprint, but now with a local workforce numbering less than half what it was before the pandemic and those who remain working from home indefinitely, the company is dramatically downscaling.
The move comes as Fidelity Investments filed a disclosure Friday with the SEC revealing it has marked down the value of its Bird investment by 17% since the beginning of the year.
<p>
Bird would not respond to questions sent by dot.LA, including whether it was attempting to unload its entire headquarters. But, the 79,019 square feet being offered appears to represent most — if not all — of the company's Santa Monica footprint. Former employees say it would be difficult to imagine splitting up two-story space, which could not be less suited to social distancing requirements.
</p><p>
"Bird had finished a massive expansion of that office space back in November of last year, which only doubled down on the 'openness' of the office," said the former employee who asked not to be named because they had to sign a nondisclosure agreement. "I don't see a conceivable way where they'd only be able to sublease a part of it and not all of it."
</p><p>
Bird spent several million dollars on network infrastructure and over a million dollars on furniture alone in last year's expansion, according to another former employee. The renovation opened up new desks, a number of new conference rooms, and a large kitchen with two buffet-style central islands where the company brought in daily catered lunches for employees from Halal Guys, Fresh Corn Grill and My Taco Guy on Taco Tuesday. </p><p>"Overall it was a really nice space," remembers a business operations employee who was laid off in March. "It kind of sucks things went down the way they did and remote work became mandatory."</p><p>
Bird <a href="https://www.inc.com/magazine/201902/will-yakowicz/bird-electric-scooter-travis-vanderzanden-2018-company-of-the-year.html" rel="noopener noreferrer" target="_blank">became the fastest company in history</a> to reach unicorn status in 2018. Shortly after that, it achieved a $2 billion valuation in less than a year. But in March, it abruptly laid off 406 employees <a href="https://dot.la/bird-layoffs-meeting-story-2645612465.html" target="_self">via a Zoom call that former employees described as dystopian</a>. Headquarters was particularly hard hit, with the layoffs reducing the staff by more than half.
</p><p>"Given the pandemic, Bird employees are currently working from home and the company is not currently utilizing the space," said a source at the company not authorized to talk on the record but who is close to the matter. The source portrayed the move as a reaction to the pandemic rather than indicative of anything about the company's financial performance.</p><div id="c0124" class="rm-shortcode" data-rm-shortcode-id="89746299600013857310569d177f914b"><blockquote class="twitter-tweet twitter-custom-tweet" data-twitter-tweet-id="1313693418023841792" data-partner="rebelmouse"><div style="margin:1em 0">Lime and Bird offices https://t.co/NgB5I2VbPE</div> — EB (@EB)<a href="https://twitter.com/EllliotttB/statuses/1313693418023841792">1602043892.0</a></blockquote></div><h2>Pandemic Hits E-Scooters</h2><p>
The pandemic occurred at the worst possible time for e-scooter companies. They typically bring in little revenue in the cold winter months, recouping their investment in warmer weather. But in March, they had to pull their fleets and close down operations just as they would normally be returning to city streets. Cash-starved Lime, a Bird competitor that has also put up its offices for sublease, <a href="https://electrek.co/2020/05/06/lime-valuation-drops-uber-investment-electric-scooters/" rel="noopener noreferrer" target="_blank">was forced to raise new capital at 79% discount from its last round in May.</a>
</p><p>
Bird has the fortune of being better capitalized and in late January, the company raised another $75 million of Series D2 funding at a $2.77 billion valuation. But Dan Hoffer, managing director of Autotech Ventures, an early-stage venture firm focused on transportation, thinks Bird also might eventually be forced to raise a down round. He has long been skeptical that the company's unit economics can justify its lofty valuation.
</p><p>
"Our position is being validated right now as investors get wiped out and their companies recapped," Hoffer said. "In an environment in which multiples are retracting, having raised at a very high valuation is not always a good thing."
</p><p>
As a private company, Bird does not have to share its financials, which is why Fidelity's markdown is revealing. But the company has maintained that in many ways, <a href="https://www.bird.co/blog/empty-streets-effect-pandemic-unexpected-lesson-life-after-cars/" rel="noopener noreferrer" target="_blank">the pandemic has been a positive</a> as people eschew crowded buses and subways and cities use the crisis as a way to rethink city streets and prioritize scooters over automobiles. <a href="https://www.bird.co/blog/scooter-riders-making-comeback-riding-longer-than-ever/" rel="noopener noreferrer" target="_blank">It is seeing riders take longer trips</a> than they did before the pandemic and consolidation in the industry could be good for Bird, which is the market leader.
</p><p>
Early investors including Mark Suster, Upfront Ventures managing partner, say they remain bullish on Bird and that the company has done a good job of reducing expenses.
</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<a href="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMyNzAxMS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY0OTMzNjIzNX0.NAVwcRDJBrWm4AJUqXsQjBBHW_sXwPVq0naKKYCiReU/img.png?width=980" target="_blank"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMyNzAxMS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY0OTMzNjIzNX0.NAVwcRDJBrWm4AJUqXsQjBBHW_sXwPVq0naKKYCiReU/img.png?width=980" id="382f5" class="rm-shortcode" data-rm-shortcode-id="f3218d1b9b09140bdcc19bd0bf3d52e2" data-rm-shortcode-name="rebelmouse-image" /></a>
<small class="image-media media-caption" placeholder="Add Photo Caption...">How Bird Could Benefit From a Post-COVID World</small>
<small class="image-media media-photo-credit" placeholder="add photo credit...">
<a href="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMyNzAxMS9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTY0OTMzNjIzNX0.NAVwcRDJBrWm4AJUqXsQjBBHW_sXwPVq0naKKYCiReU/img.png?width=980" target="_blank">assets.rebelmouse.io</a>
</small>
</p><p>
"The unit economics are already very positive," Suster said before headquarters was listed. "We have narrowed our losses because capital is harder to raise right now in the micro-mobility market."
</p><p>
Inside Bird, the latest move to get rid of headquarters is seen by some as a way to further trim expenses and prepare the company for an IPO or exit. The company has been able to continually improve its unit economics – each scooter model is less expensive and more durable – so cutting administrative costs is crucial.
</p><h2>Expansion Plans Halted</h2><p>
Before the pandemic, Bird was said to be on the hunt for up to 300,000 square feet of office space for a new corporate headquarters - more than tripling its current size, according to Michael Soto, research director at Savills, a commercial real estate advisory firm.
</p><p>
Soto says Bird is certainly not alone in trying to unload costly unused office space. The company's neighbor, Edmunds.com, has been attempting to sublease 195,000 square feet at the headquarters it opened <a href="https://www.edmunds.com/car-news/edmunds-coms-new-headquarters-makes-a-splash-on-silicon-beach.html" rel="noopener noreferrer" target="_blank">to great fanfare in 2016</a> and Beachbody, a provider of fitness and weight-loss programs, is trying to shed 135,000 square feet in Santa Monica. (Beachbody did not respond to a request for comment. An Edmunds spokeswoman said the company has more square footage than it needs and noted that it was considering a sublease before the pandemic.)
</p><p>
"It's tough right now," said Soto. "There's just too much uncertainty in the economy so most companies are putting off signing deals unless they have to. And for those companies who are signing deals, there's a lot of kick-the-can-down-the-road short-term deals because a lot of companies aren't comfortable locking in a long-term financial commitment right now, especially since they don't know what they'll look like post-COVID or even if they'll keep their employees working from home."
</p><p>
One exception is Netflix, a major beneficiary of the stay-at-home economy, <a href="https://therealdeal.com/la/2020/09/22/netflix-inks-giant-lease-in-burbank-for-first-dedicated-animation-studio/" rel="noopener noreferrer" target="_blank">which signed a lease last month</a> for 171,000 square feet to house its first dedicated animation studio in Burbank. LegalZoom also recently extended its 50,000 square feet lease in Glendale. But overall, just 1.6 million square feet of office space was leased in the third quarter in Los Angeles, a decline of 18% from the previous quarter and a 61% dropoff year over year, according to Savills.
</p><p>
"As long as uncertainty over COVID remains, overall leasing activity will continue to be low," Soto said. "That doesn't mean there aren't or won't be larger leases being signed over the short-term, but I really think those will continue to be the exception rather than the rule."
</p><p>
Bird moved into its current headquarters at the Colorado Center in 2018, <a href="https://therealdeal.com/la/2018/08/07/spreading-its-wings-e-scooter-startup-bird-inks-lease-at-colorado-center/" rel="noopener noreferrer" target="_blank">signing a lease for 58,000 square feet,</a> which it later expanded to 72,019 square feet. Other tenants include Hulu, Goop, and EHarmony.
</p><p>
Bird's<a href="https://pbs.twimg.com/media/EjstMVqVoAAWd7f.jpg" rel="noopener noreferrer" target="_blank"> listing</a> says renters can occupy the space until either the end of 2023 or until next September, which is around the time Bird can execute a lease termination option, according to a source familiar with the matter.</p>
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In an Amazon-driven ecommerce world, it's hard to fathom just how time-consuming it can be for retailers like Lay-Z-Boy to ship their inventory across the country.
Even though one-click ordering and GPS tracking are commonplace for consumers, the trucking and logistics industry that brings merchandise from around the world to store shelves relies largely on phone calls, personal relationships and Excel.
A slew of tech-fueled companies from NEXT Trucking to ZUUM are trying to modernize the $1.2 trillion transportation industry, made up largely of small fleets that serve manufacturers to large multinational enterprises.
<p>"We created a Priceline for trucking," said Matt Tabatabai, co-founder and COO of ZUUM. "Everything you can think of [in the trucking industry] is super old school and low tech."</p><p>ZUUM isn't targeting the FedEx and Amazon fleets, but the 2,000 trucking companies in the U.S. with over 20 trucks each and the 700,000 with under 20.</p><p>Tabatabai founded ZUUM in 2016 with logistics executive and CEO Mustafa Aziz to do just that. The company already counts Home Depot, Tyson and Staples among their clients and it just scored a $8.58 million seed round that it will use to expand its reach. </p><p>The round bumps their total funding to $12.58 million at a time when global supply chains are reeling from slowed business and shipping operations. </p><p>ZUUM's app connects the three main players involved in long-haul freight — shippers, brokers and carriers — through what it calls a "logistics-super-platform." It sets pricing rates for shipments and can connect shippers with vetted truckers. </p><p>"Some software solutions exist but they do unitary things and charge an arm and a leg for it," Tabatabai said. </p><p>ZUUM's target customers are mid-market retailers and small trucking companies, which Tabatabai calls their bread and butter. </p><p>The software also automates the process: billing, payment, managing drivers and tracking shipments. Companies can also use their system to calculate freight quotes and schedule trucks.</p><p>The idea is one that companies like Uber Freight and Convoy have run with in recent years. Tabatabai said ZUUM operates a lot like NEXT Trucking, the venture-backed "FreightTech" company that laid off 20% of its workforce in March, as dot.LA <a href="https://dot.la/next-trucking-laysoff-20-of-workforce-reversing-fast-growth-2645018098.html" target="_self">reported</a>.</p><p>Tabatabai said ZUUM stands out from competitors because it isn't "another Silicon Valley tech company," His team understands firsthand what makes freight so complex.</p>
<img lazy-loadable="true" src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDUwNzgwNy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyNDU3ODk1OH0.XfCoGUGdBhPzx0-dpPD5aeYJKqM7W0OQcmt6TbGwWMc/image.jpg?width=980" id="ae7cc" class="rm-shortcode" data-rm-shortcode-id="d81c97e006cbd42ca6b223b4ad11de0c" data-rm-shortcode-name="rebelmouse-image" />
Matt Tabatabai is co-founder and COO of ZUUM.
<p>While most digital freight marketplaces try to eliminate brokers to save costs, ZUUM believes brokers are essential because they already have the connections.</p><p><span></span>"The trucking industry can't be automated overnight," he said. "That human element has got to be there for some time."</p><p>Brokers emerged in the 1980s to help companies importing goods connect with trucking companies. Tabatabi said these brokers typically call truckers to find a match for their clients.</p><p>The company helps them transition to online operations through its "broker in a box" feature. </p><p>CEO Azizi came from the brokerage industry before launching ZUUM in 2016 with Tabatabai, who previously worked on the tech side of shipping.<br></p><p>"There's been this trend of trying to automate everything and I'm not going to name the city that ends with Valley," Tabatabai said. "Our industry is too complex for that."</p><p>Tabatabai expects the industry to keep digitizing. Eventually, he said, AI will take over many of these tasks, but rushing into that change would be a mistake, which he said the industry learned when autonomous trucks entered the market.</p>
<p><br/>The raise comes during ongoing tensions between the U.S. and China that have led to a dip in imports at California ports. Companies have started to reroute supply chains from China to countries in Southeast Asia with ports on the East Coast instead of the West.</p><p>The money they've raised will go towards tech operations, sales and marketing. The recent round was backed by investors including Estes Express Lines, Plug and Play Ventures, SAIC Ventures and Holman Growth Ventures.<br/></p><p><em>This post has been updated with new information about ZUUM's target market. </em></p>Related Articles Around the Web
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