Repeatedly breaking the law, allowing thousands of evictions, lowering your taxes, repealing state labor laws, and abusing your workers seems like a recipe for immense wealth these days.
Both Airbnb and Doordash have had hugely successful IPOs in the past few weeks, making their founders immensely rich.
Ron Conway, an early investor in Airbnb, also saw an increase in his net worth.
A protest against Airbnb.
Let’s take a closer look at this.
Doordash contributed $ 48 million to the campaign to pass Prop. 22, which repealed California labor law and allowed delivery companies such as Uber and Lyft not to treat their drivers as employees.
When it went public, the company’s net worth rose to $ 72 billion and raised $ 3.4 billion in cash.
So $ 48 million was a cheap price.
Yes, the fate of his workers was a central issue for Doordash. In the company’s S1 filing, which is required if a company wants to sell shares on Wall Street, I noticed the following:
Our compensation model for dashers, especially with regard to tips for dashers, has previously resulted in negative publicity, lawsuits and regulatory inquiries and can continue to do so. …
While we claim that dashers who use our platform are independent contractors, there is a risk that dashers will be classified as employees under federal or state law. As explained below, we have been and continue to be involved in numerous litigation related to Dasher classification. Since the California Supreme Court’s 2018 ruling in Dynamex Operations West, Inc. v Superior Court, the volume of these proceedings has increased. or Dynamex, including a San Francisco District Attorney lawsuit filed in June 2020.
Even with the 2020 California Election Initiative and related laws passed, such initiatives and laws could still be challenged and the subject of litigation. In addition, we may face additional challenges in classifying Dashers using our platform as independent contractors as other states in which we operate are considering passing similar laws or regulations. A reclassification of Dashers or delivery service providers as employees via a local logistics platform could require us to revise our pricing methods and the payment model to take into account such a change in the Dasher classification and to make other significant internal adjustments to ensure a transition from to consider Dasher into an employment position that would adversely affect our business, financial and earnings position
The passage of Prop. 22 clearly convinced investors that the threat of fair labor – that is, paying drivers a minimum wage and benefits, and covering their social security and disability – was not enough to dampen the share price.
The message: if you can raise enough money to break the labor code, you will reap huge profits from Wall Street.
Then there is Airbnb.
This is a company that was founded on a business model that was against local laws in almost every community it operated in. Every single Airbnb listing in San Francisco has been illegal for years. The company did not pay hotel taxes for years.
Under the administration of the late Mayor Ed Lee, the city did nothing to enforce its laws against short-term rent. The biggest contributor to Ed Lee’s election was Conway, who raised around $ 600,000.
He also raised or set up six pieces to get Sup. David Chiu elected to the State Assembly over Sup David Campos.
Chiu carried the legislation that legalized Airbnb in San Francisco. Mayor London Breed was the sixth vote that made this possible. Campos was against it.
Conway raised money and pushed for Breed to be elected mayor.
That was of course a lot for Conway: As one of the first investors, he earned many millions with the Airbnb IPO.
Getting rid of the pesky local regulations was a concern of Airbnb’s initial public offering. From the S1:
Since we started our business in 2008, there have been and are legal and regulatory developments that affect the business with short-term rents and shared flats. Hotels and groups affiliated with hotels have committed, and are likely to continue to use, various lobbying and political efforts to enforce stricter regulations for our business in local and national jurisdictions. Other private groups like homeowners, landlords, and condominium and neighborhood associations have put in place contracts or regulations purporting to prohibit or otherwise restrict short-term rentals, as well as rental agreements between landlords and tenants, home insurance policies, and mortgages can prevent or limit the ability of hosts to use their spaces to list. In Europe, a group of mayors from 22 cities (including Amsterdam, Barcelona and London) met with the European Commission to seek increased regulatory scrutiny over them
to short-term rental platforms. These and other groups cite concerns about affordable housing and over-tourism in large cities, and some states and local governments have implemented or considered rules, ordinances, or regulations for short-term property rentals and / or housing sharing. These rules include ordinances restricting or prohibiting hosts from short-term rentals, setting annual caps on the number of days hosts can share their homes, requiring hosts to register with the municipality or city, or hosts the Require permission before offering short term rentals. In addition, some jurisdictions consider short term rental or shared accommodation to be “hotel use” and claim that such use is a conversion of a residential property to a commercial property that requires a permit process. Macroeconomic pressures and public order concerns could continue to lead to new laws and regulations or the interpretation of existing laws and regulations that limit the ability of hosts to share their spaces. If any law, regulation, rule, or agreement materially discourages or discourages hosts in certain jurisdictions from sharing their property, it would have a material adverse effect on our business, results of operations, and financial condition.
But don’t worry: with enough money and political influence, all of these problems can be solved.
It doesn’t matter that thousands of San Francisco renters lost their homes while Airbnb operated illegally and its hosts turned former apartments into illegal hotel rooms.
Never mind that during a pandemic, people desperate to pay the rent work for illegal wages, drive take-out meals to restaurants with no health insurance, no disability, and no job stability.
It was all in the interests of an ultimate IPO that would make some people like Ron Conway very rich.
And elected officials in San Francisco, supported by Ron Conway, allowed it.
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