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Uber Claims It Won’t Need To Change Its Business Despite Landmark Gig-Worker Law

Uber says it does not expect to make any changes to the way it classifies drivers in California, despite a landmark bill passed by California lawmakers on Wednesday that effectively requires businesses across industries to reclassify independent contractors as employees. Instead, Uber says it is prepared to fight any legal challenges in court and has set aside an additional $30 million for a ballot measure to provide workers with other benefits.

“We expect we will continue to respond to claims of misclassification in arbitration and in court as necessary, just as we do now,” Tony West, Uber’s chief legal officer, told reporters during a press call on Wednesday.

Uber’s argument hinges on the belief that it will meet the standards of the stricter employment test set forth by the bill. California lawmakers passed Assembly Bill 5 on Wednesday, which largely requires companies to convert independent contractors to employees if their work is part of the company’s main business or the company exerts control over their work.

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Uber argues its main business is not drivers and rides, but being a “technology platform for several different types of digital marketplaces.” It also allows drivers to be signed into multiple services, from Lyft to food delivery companies, at once. Because the company believes its workers will still be classified correctly under the new measure, West said Uber will not be automatically reclassifying drivers to be employees in January, when the measure is likely to take effect.

Both Uber and Lyft stock closed in the green on Wednesday on the news that Governor Gavin Newsom, who had already promised to sign the ball, remains in talks with the companies, as first reported by the Wall Street Journal.

Uber’s defiant stance is a throwback to its earliest days of ride-hailing where it made similar arguments that existing laws around taxis and transportation also didn’t apply to its business. There were a lot of lawsuits and a lot of compromises, but Uber eventually tried working through the regulatory red-tape (once it recognized it was there in the first place.)

The employment status of its workers has also been a long-standing fight, and one that the company is clearly anticipating to continue to fight in court. The “gig economy” was largely built off companies from Uber to TaskRabbit to DoorDash utilizing independent employees who could set their own schedules, but didn’t receive benefits like healthcare.

West made it clear that he doesn’t think Uber should be exempt from the rules – the company just doesn’t believe the new bill would result in any change to its employment workforce. “Just because the test is hard, it doesn’t mean we will not be able to pass it,” West said. If anyone disagrees with them, including cities, they would have to challenge Uber directly in court. The company has repeatedly faced court cases, often settling with drivers, but not changing their employment status.

As part of its response, Uber is also coordinating with its rival Lyft to propose a new ballot measure that would offer better benefits for their independent contractor workforce, including a base pay rate. The companies had tried to float it as a compromise during the bill talks, but AB5 passed regardless.

Lyft, who also committed $30 million to the ballot measure, said the state had “missed an important opportunity” when it came to regulating the space.

“The fact that there were more than 50 industries carved out of AB5 is very telling,” Lyft said. “We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need.”

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I’m a San Francisco-based staff writer for Forbes with a focus on Uber, the sharing economy, and startups. I previously worked for Business Insider, Gigaom, and Wired. I also spent a year as newspaper designer for Gannet. I’m a native of Atlanta, Georgia and a proud graduate from Indiana University’s journalism school. Email me story tips at bcarson [at] forbes.com or follow me on Twitter @bizcarson.

Source: Uber Claims It Won’t Need To Change Its Business Despite Landmark Gig-Worker Law

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It’s Not About Ideas. Do What Amazon, Netflix, Uber And AirBnb Did, Head For A Blue Ocean

In this July 1, 2014 photo, Dollar Shave Club CEO and co-founder Michael Dubin poses for photos at the company's headquarters in Venice, Calif.  (AP Photo/Jae C. Hong)

If you want to become an entrepreneur but don’t know where to start, relax. It’s not about ideas, it’s about understanding and researching current industries that have not innovated their products or services and have a large customer market. If you think about what Netflix, Amazon, Uber and AirBnb did, you can clearly see, they created nothing new in terms of products. So, what did they do? They changed the “game” in an industry that was not being innovative and was ripe for disruption. In other words, they headed for a “blue ocean” made famous by management thought leaders W. Chan Kim and Renee Mauborgne in their perennial bestseller, Blue Ocean Strategy.

Blue Ocean Strategy is an approach that challenges everything that you thought you knew about the requirements for entrepreneurial success. Blue Ocean Strategy can be summarized in a nutshell: the best way to beat the competition is to make the competition irrelevant. Imagine that the marketplace is comprised of two sorts of oceans: red oceans and blue oceans.

To discover an elusive blue ocean, Kim and Mauborgne recommend that businesses consider what they call the Four Actions Framework to reconstruct buyer value elements in crafting a new innovation wave. The framework poses four key questions:

  • Raise: What factors should be raised well above the industry’s standard?
  • Reduce: What factors were a result of competing against other industries and can be reduced?
  • Eliminate: Which factors that the industry has long competed on should be eliminated?
  • Create: Which factors should be created that the industry has never offered?

If you think about it, lets review what these market leaders did with Blue Ocean Strategy in mind. Amazon did not build bookstores but built an enterprise infrastructure to have access to one million book titles and competed well with Borders and Barnes & Noble. Netflix did not use stores in their business model to compete with Blockbuster; instead they focused on customer service. Uber did not even try to buy cars and compete with the independent taxi companies, they created a mobile app. AirBnb does not own homes or hotels, instead they redefined the travel experience by uniting existing property owners onto a common easy-to-use platform.

Uber CEO Dara Khosrowshahi, third from left, takes a photograph as he attends the opening bell ceremony at the New York Stock Exchange, as his company makes its initial public offering, Friday, May 10, 2019. (AP Photo/Richard Drew)

Uber CEO Dara Khosrowshahi, third from left, takes a photograph as he attends the opening bell ceremony at the New York Stock Exchange, as his company makes its initial public offering, Friday, May 10, 2019. (AP Photo/Richard Drew)

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Existing marketplaces with lots of competitors live in crowded, shark-ridden red oceans. Red oceans are characterized by multiple firms offering similar products competing mostly on price. Think Target versus Wal-Mart, Sony versus Samsung.  Meanwhile, blue oceans are characterized by untapped market space, demand creation, and the opportunity for highly profitable growth.

In recent years, Dollar Shave Club took on Gillette by offering subscription-based access to razors at a better cost and service. As a potential entrepreneur, just examine large industries or product lines and see if customers are happy with their current choices. Wherever you find customers are not ecstatic, dig deeper. A few years back, Chobani did the same thing to yogurt by offering Greek yogurt, more protein and less sugar. None of these examples showcase a completely new, never heard of before product. But all these companies either innovated the current product in the marketplace or they offered a simple innovation or twist to the business model for their company. In almost every case, the customer is happier with the new company or product. That means they were dissatisfied before these companies came along.

If you want to get a jumpstart on surfacing an opportunity, pay attention to something new you see (craft beer, organic pet food, cloud storage, etc.) and do some research.  Or go to places where you can observe people: malls, airports, universities and just walk around. See what people are doing and not doing. Don’t look for anything in particular, just observe. Another option is to walk through Target or Wal-Mart and slowly walk up and down the aisles. Look for current products that seem over priced or they don’t exactly make the customer ecstatic. Then research how big that industry category actually is. If it’s billions, keep going. Run a few of your best “opportunities” through the Blue Ocean Strategy framework of raise, reduce, eliminate and create.

The founders of Skullcandy did something similar by walking through Target to spot their earphone opportunity. If you want to be an entrepreneur, you have to solve a problem in a big marketplace. To spot a problem, go looking. Once you find some problems, use Blue Ocean Strategy to innovate a solution and perhaps you will create a billion dollar company.

You can read more about what Bernhard has to say on his website and follow him here on his Linked In

I am the Director at the Lavin Entrepreneurship Center, San Diego State University. I oversee all of the center’s undergraduate and graduate experiential programs.

Source: It’s Not About Ideas. Do What Amazon, Netflix, Uber And AirBnb Did, Head For A Blue Ocean.

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