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November 14, 2020 01:00 pm

DoorDash Says Its Own Pay Model Is a Risk To Its Business In Public Filing

An anonymous reader shares an excerpt from a report via VICE: Like other gig work giants, DoorDash has admitted in its IPO documents that its own business model -- and the way it treats and pays workers -- are major "risks" to its business. In its S-1 filing with the Securities and Exchanges Commission, there's little to no evidence DoorDash can achieve let alone sustain profitability (in fact, that it may never be profitable is another "risk"), and lots of evidence that its business model is largely based on taking advantage of both restaurants and drivers. Included in "risks" are the two following statements, which are wonders to behold: "Our success, or perceived success, and increased visibility may also drive some businesses that perceive our business model negatively to raise their concerns to local policymakers and regulators. These businesses and their trade association groups or other organizations may take actions and employ significant resources to shape the legal and regulatory regimes in jurisdictions where we may have, or seek to have, a market presence in an effort to change such legal and regulatory regimes in ways intended to adversely affect or impede our business and the ability of merchants, consumers, and Dashers to use our platform." What this means is that restaurants might want DoorDash to take less of a cut from their commission, which is understandable. Even with cuts to DoorDash's commission rates during the pandemic, many restaurants are still struggling to scrape by. And then there's this, which explicitly says the company's own pay model for drivers is a risk to its further existence: "Our ability to provide a cost-effective local logistics platform is also dependent on Dasher pay, which is a significant cost and subject to a number of risks..." That's a mouthful, but says that DoorDash's pay model for delivery drivers is algorithmic, which leads to an "inconsistency in earnings" which is likely to piss off both its workforce and its customers to the point where it may be challenged both in court and by regulators, and reported on in the media. This problem is even worse when you consider the labor patterns of gig companies: they require a large reserve of idle labor to keep wait times low and to fight extremely high turnover rates, but they also rely on a core of full-time gig workers to do the vast majority of work. As a result, the workers hurt the most by this "inconsistency in earnings" are the most precarious and vulnerable workers who rely on DoorDash to make ends meet.

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