Smart Talk On Uber and the Sharing Economy

From the Financial Times:

Uber driver case poses questions for ‘sharing economy’

A tremor passed through the foundations of the “sharing economy” this week after it emerged that ride-hailing app Uber had lost a case before California’s Labor Commissioner’s Office.

For the venture capitalists who have rushed to back them, a big attraction of such companies has been their ability to act as simple middlemen in a market that matches people looking to buy a service with others who are providing it

But the labour commissioner in Uber’s home state had other ideas. In a case involving a single driver seeking reimbursement of expenses, it ruled that the company should have taken on the full responsibilities of an employer.

The ruling highlighted a potential Achilles heel in the business models of the internet companies which have sought to become marketplaces for independent contractors. From delivery start-ups such as Instacart to odd-job service TaskRabbit, they have pitched themselves as simple internet platforms, taking a slice of the transactions they help arrange.

If Uber were forced to grant full employee status to the burgeoning army of freelance workers who look to its mobile app for work, the higher costs would put a dent in one of the consumer internet’s most profitable new business models.

It could also alter the pay and job security prospects of millions of workers. Their ranks could be significant: ten years from now, 200m unemployed or part-time workers are likely to be making extra cash by taking piecemeal work through online services like this, according to McKinsey, the professional services firm.

Uber sought to brush off the decision as an isolated case that would not have any standing as a precedent in the California legal system. It also pointed out that decisions in five similar cases elsewhere had gone in its favour — though it also lost a sixth, in Florida. But labour law experts said it would not be so easy to distance itself from the consequences of the decision.

Jonathan Handel, a lecturer at USC Gould law school, said the company’s reaction was “a little bit like whistling past the graveyard”. The decision “doesn’t set a precedent that binds the courts, but it does indicate the way the labour commissioner would go if it received further cases from Uber drivers”....MORE

I particularly like the last sentence of the article:

...“I’d be nervous if I was one of the last investors in,” Mr King said, referring to a previous investment round earlier this year.

Similar to the monomaniacal thinkingt in our intro to "Mathematical Model Explains Why All Hipsters Look the Same":

This and the rabbit post below are an attempt to distract Uber's late investors, the currently-being-raised series F and February's series E Uber investors, from the earlier news out of California.
The series A guys, First Round, Benchmark et al. should still be okay.  
(they ponied up $11 million at a $60 million valuation)

See also:
"Why Uber's $50 Billion Valuation Could Burst the Tech Bubble"