Ethics Bio Articles


This is the first story in a Re/code Special Series about the new instant gratification economy. In five days of stories, photos and videos, we’ll explore the explosion of tech startups that cater to our every need and desire, on demand.


I’m working from home in San Francisco, and the granola bar I had for breakfast wears off just after 12:15 pm. I open up the SpoonRocket app on my phone and select a chicken tamale and a mint smoothie.

Six minutes later, there’s a car in my driveway. I flail to find some flip-flops and go downstairs to greet the driver, who pulls my order from an insulated bag and cooler in his passenger seat. It’s not like he has a whole pantry in there; I picked two of the four items on the SpoonRocket menu that day.

The tamale is $8, the smoothie $6, delivery is included, and it has already been charged to the credit card I loaded into the app.

I’m back at my laptop before the clock has ticked past seven minutes.

And the tamale? It’s good. But it’s more than I needed to eat for lunch. I resolve to take a walk so I don’t fall into a food coma. The dangers of the world being delivered to your doorstep.

tamalepooffafafa

Sean Lyons is a 23-year-old bike messenger. He just got a degree in photography, and while he’s saving up money to travel to photograph wildlife, he spends his days biking around New York City.

Carrying two iPhones that beep out assignments throughout the day, Lyons works for four different app-enabled bike-courier services: WunWun, UberRush, Zipments and Petal by Pedal. He does about 25 to 30 deliveries per day, which adds up to about 50 miles, including the commute.

When he first got started last year, Lyons tried working for traditional bike-courier services where he would make $3 per delivery. “It was outrageous,” he says. “They treat you like an animal.”

Some of the newer services Lyons works for are subsidized. When it first started, Uber was giving away free courier service for its UberRush local delivery trial. Lyons says that demand has dropped a bit since the initial promos wore out.

WunWun — which has the insane premise of deliveries from any store or restaurant in Manhattan within an hour, for free — keeps Lyons the busiest.

Lyons claims WunWun’s system of working for tips, which are suggested within the app at 30 percent, somehow actually works. “You never really get snubbed out on a tip,” he says.

By literally working his butt off, Lyons thinks he will make between $45,000 and $60,000 this year.

Bike messenger Sean Lyons

Anthony Quintano for Re/code Bike messenger Sean Lyons

When Tony Xu started his restaurant-delivery service, DoorDash, in the ritzy California suburb of Palo Alto, a mentor asked him how much money he thought local residents would spend on on-demand food in a year.

“I don’t know, maybe a million dollars?” Xu answered.

DoorDash is now just over one year old. Palo Alto revenue is already more than 10 times Xu’s estimate. One in five households in the city has placed an order, and multiple restaurants will make more than $500,000 in DoorDash revenue this year.

“People say this space is ‘hot’ or crowded — that wasn’t the case when we started. It wasn’t obvious a year ago,” Xu says, as he personally dropped off a lunch order of two rice dishes to a woman in a Palo Alto apartment complex, 34 minutes after she placed the order.

“If people wanted it so badly, why did it not exist?” he says. “It was too darned expensive, and it was not sustainable. Even in 2010, a business like ours would be incredibly difficult to start because not enough sections of the population had smartphones.”

Still, Xu will admit that Palo Alto might not be the most representative test market in the world. As we drive to pick up the delivery, we pass three Teslas parked in a row in the shopping-center parking lot. “Only in Palo Alto,” he says.

DoorDash co-founder and CEO Tony Xu

Vjeran Pavic for Re/code DoorDash co-founder and CEO Tony Xu

But it’s bigger than Palo Alto. It’s bigger than San Francisco or New York. Take all these stories together and the larger point is: The business of bringing people what they want, when they want it, is booming.

A decade ago, we got iTunes, and the ability to buy a song bought and delivered with the push of a button. Then Facebook helped us stay in touch with our spread-out friends and family from the comfort of our couch. Then Netflix DVDs started coming over the air instead of to our mailboxes. Now it’s not just Web pages that we can load up instantly, it’s the physical world.

Not to neglect the important historical contributions of pizza joints and Chinese restaurants, but the groundwork for what you might call the instant gratification economy was laid by Amazon, which spent years building up its inventory, fulfillment infrastructure and, most importantly, customer expectations for getting whatever they want delivered to their doors two days later.

Then Uber came along and established the precedent of a large-scale marketplace powered by independent workers and smartphones. After that started to work, every pitch deck in Silicon Valley seemed to morph overnight into an “Uber for X” startup.

On the one hand, this is a positive development. As startups merge online expectations with offline reality, the Internet is becoming more than a glowing screen drawing us away from the real world. On the other hand, instant gratification tempts us to be profoundly lazy and perhaps unreasonably impatient.

Over the course of the week, Re/code’s special series on this new instant gratification economy will explore:


To see the instant gratification economy in action, check out this video report produced by Re/code’s Vjeran Pavic, where we visit and ride along with DoorDash, Instacart, Munchery and Deliv.


Two immediate questions arise about this new generation of instant gratification companies. Is there demand for what they offer? And can the people fulfilling the growing demand create sustainable businesses? Neither of these have been adequately proven yet.

For me today, it’s an open question of whether I’m living in the on-demand future, or living in a venture capital-subsidized only-in-San-Francisco bubble that will inevitably fall apart. But for better or worse, the offline world around us is becoming more instant through the power of technology.

As for whether there’s demand, forces are converging to fulfill the notion of what some pundits label “IWWIWWIWI.” That is, “I want what I want when I want it.” It’s not the easiest acronym to get your tongue around — but it’s pretty to look at, and it’s right on the money.

Psychologist and consumer expert Kit Yarrow’s new book, “Decoding the New Consumer Mind,” is all about IWWIWWIWI.

Yarrow thinks we’ve become conditioned for impatience by technology like Internet search and smartphones. “Today, we have almost no tolerance for boredom,” she told me. “Our brains are malleable, and I think they have shifted to accommodate much more stimulation. We’re fascinated by newness, and we desire to get the new thing right away. We want what we want when we want it.”

whywaitwithcar2

Where does instant gratification go, beyond food and package delivery? It’s an on-demand world, so I resolve to live in it. Now.

I give Washio a whirl — it’s Uber for laundry and dry-cleaning — but they mess up my first order, and I really don’t mind walking my rare load of dry-cleaning around the corner.

I would try Homejoy — that’s Uber for housecleaning — but that feels like cheating on the lovely couple who have been cleaning my apartment regularly for years.

I hear about Glam Squad — makeup and blowouts on demand, at your home — but only after I fill out all my info do they tell me they’re only available in New York.

Then a new service (or maybe it’s a really good performance-art piece?) goes viral: ManServants will deliver a man on demand who will meet your every need, chivalrously and non-sexually. There’s a wait list.

How about one of the “Uber for massages” companies that are sprouting up? I know of at least two: Zeel and Unwind.me. Zeel has a mobile app, so I try it first. At 4:10 I put in a same-day request. At 4:20 I’m confirmed for a 5:30 appointment at my house.

Someone had told me the day before that one way to think about all this instant gratification stuff is that it basically brings rich-people benefits to the average person.

In his view, the magic of Uber and services modeled on Uber is that they help you value your time the way a rich person would, without spending your money the way a rich person would.

With that in mind, I rush home for my first-ever in-home massage (price tag: $129 including tax and tip for an hour — not particularly cheap). A Giants game is clogging the streets around my office, and I have to let a few packed-to-the-gills trains pass by before there’s one with standing room.

The massage therapist beats me to my house, which is a total mess. I jam furniture against the walls to make space for her table and throw dirty clothes behind a door. None of this is very relaxing.

Toni, the massage therapist, points out that at the end of the massage, I don’t have to leave, fight traffic, find parking, or face the real world.

It’s a good point. I take some deep breaths and enjoy it. Toni tells me that I may have bad posture, but I’m a good breather.

likemagicfafafa

Fiction has been singing the promise of wish fulfillment for years. In “The Arabian Nights,” Aladdin summons genies with a ring and a lamp and uses them to become rich, then court a princess and foil her marriage to someone else.

On late-’60s TV, an astronaut and an ad exec were simultaneously bedazzled and bedeviled by the mischievous wish-granting powers of their in-house genie and witch, respectively, on “I Dream of Jeannie” and “Bewitched.” Hyper-efficient cartoon mom of the future Jane Jetson served her family choices of beef stroganoff, fried chicken or pizza, from the vending machine at the dining room table. “Star Trek’s” replicator generated food for Kirk, Spock and the Enterprise crew from subatomic particles via voice command.

For decades, books and TV shows planted seeds of desire for instant gratification in impressionable minds. But across many of these stories about suburban genies and witches, magic wands and technology of the future, there’s a shadow side to getting what you want when you want it. The princesses always seem to run out of wishes before they get what they really need. Their greed is their doom.

“Don’t care how, I want it nooow,” sings greedy little Veruca Salt, right up until she falls into Willy Wonka’s garbage chute, never to be seen again.

The mythical virtue of self-control is backed up by science, too. There’s a famous psychology study where 4-year-olds were offered one marshmallow immediately, or two if they could wait by themselves for 15 minutes. It turned out that the kids who could delay gratification of their marshmallows got higher SAT scores as teenagers and were less obese 30 years later.

In Pixar’s wistful animated sci-fi story “Wall-E,” the people of the future zoom around in hovering chairs in a climate-controlled dome, with robots refilling their sodas. Their bodies are so flabby they can’t even stand. It’s the ultimate incarnation of the couch potato.

What is going on here? And why is it happening now? Is this just a bubble of optimism around regular offline businesses dressed up as technology startups?

The simple explanation — it’s all about mobile. But not in the way you might think.

For a consumer, many of these experiences live on the phone. You open an app, press a button, a taco appears. In many cases, you could do the same thing from your desktop browser, with fewer rounded-edged icons.

The most important reason that this is happening now is that workers have smartphones. After a briefer-than-brief application process, companies like Uber hand out phones to workers — or just give them an app to download onto their personal devices — and suddenly, for better or worse, they’ve got a branded on-demand service.

Over and over again, startups in the instant gratification space tell me that the most crucial part of their arsenal is an app to help remote workers receive assignments, schedule jobs and map where they are going.

In large part because they are powered by a mobile workforce, instant gratification startups avoid much of the hassle and expense of building physical infrastructure.

Shervin Pishevar

SherpaVentures Shervin Pishevar

“Remote controls for real life” is how venture capitalist Matt Cohler described mobile apps like Uber and the food-delivery service GrubHub two years ago — because their simple interfaces summon things to happen in the physical world.

Today, that real-life remote control feels even more like a magic wand. At a lunch meeting, investor Shervin Pishevar pulls out his phone, opens the Uber app and sets his location to Japan. “If I push this button right now,” he marvels, “I’m going to move metal in Tokyo.”

Pishevar and I are having lunch at a restaurant called Show Dogs in San Francisco, where he says the two best items on the menu are the fried chicken and the maple sausage. He orders both.

The woman at the cash register tells us there will be at least a 20-minute wait for our food. We look around at the nearly empty restaurant. The delay is because of all the delivery orders, the cashier explains. As we wait, we watch as couriers lean their bikes outside, fill up their soft-sided insulators with fried chicken and sausage and head back into the city to make deliveries — maybe faster than we’ll get our lunches on site.

Pishevar, who has invested in more than 20 on-demand startups, including TaskRabbit, Postmates, Cherry, Getaround, Shyp, Munchery, SpoonRocket, Order Ahead, Pro.com and Fluc, holds the popular Silicon Valley mindset that the Uber model can be replicated for all sorts of things.

He describes this as a boomerang back to a village economy. After years of trends toward suburbs, big-box stores and car ownership, smartphones could be helping us get back to where we came from. The combined forces of urbanization, online commerce and trust mean that people can efficiently share goods and services on a local level, more than ever before.

A study by Pishevar’s SherpaVentures counted $1.6 billion invested in 117 on-demand economy companies in 2013.

Last year’s total was already equaled this year by just two companies: Uber and its competitor Lyft, which together raised $1.65 billion.

According to data pulled by CB Insights, “Uber for X” companies get 46 percent larger Series A rounds than other technology startups.

And it’s not just the food that’s getting across town fast. It’s also the money.

Split Bread in San Francisco is a popular choice on Caviar, so popular the company that owns it, Mixt Greens, has invested in the startup.

Vjeran Pavic for Re/code Split Bread in San Francisco is a popular choice on Caviar, so popular the company that owns it, Mixt Greens, has invested in the startup.

Caviar, which was founded on the premise that “no good restaurants in San Francisco deliver,” became profitable within three months of launching. It has a much snazzier list of restaurants than GrubHub, including Momofuku in New York and Delfina in San Francisco.

Caviar CEO Jason Wang says his startup plans to soon drop delivery fees to $4.99 from $9.99. It pays drivers $15 per delivery and takes a cut of up to 25 percent of each order, depending on the restaurant. Even after the price cut, “We’ll still make money, because our margins are very good,” Wang says.

A year and a half after it first launched, Caviar set out to raise funding, and secured in three days a $15 million round led by Tiger Global Management.

“Day one, we had the meeting; day two, we sent them data; day three, we got the term sheet,” says Wang.

That was in April. It’s expected to be announced this week that payments company Square is acquiring Caviar for a reported $90 million in stock.

Vjeran Pavic for Re/code

Uber is a company that owns nothing. It connects available drivers and their cars to people who want to be their passengers. By juicing supply with surge pricing and demand with discounts, Uber is able to create — out of thin air — a reliable service that exists in 140 cities around the world.

Without fail, instant gratification startups say they will win because they are smart at logistics.

Describing his business, Instacart founder and CEO Apoorva Mehta says, “It really is a data-science problem masked into a consumer product.”

Instacart is now perhaps the largest startup in the space, with operations in 12 cities and $55 million in funding.

DoorDash’s Xu describes his purpose as a machine-learning problem: Discovering “the variance of the variance” so his algorithm can reliably estimate prep and delivery time based on factors like how long a type of food stays warm, what a restaurant’s error rate is (the norm is 25 percent) and how fast a particular driver has been in the past.

Uber aims to match up a driver and passenger as quickly as possible. Food delivery is more complicated, according to Xu.

“It’s almost never the driver that’s closest to the restaurant when the order is placed,” Xu says.

Before he started DoorDash, Xu, a former product manager at Square, spent two weeks dropping off pizzas for Dominos in Palo Alto. He showed up, got an outfit and a sign for his car, and was sent on his way. Orders were printed on paper, and he would have to drive back to the restaurant to get a new one. Within two weeks, a third of the drivers he started with had left.

“I was like, we’re Stanford software guys. How do we make this a software problem?” Xu says.

spoonrocketapp-1619

Vjeran Pavic for Re/code

But let’s be real, food delivery is not some crazy new tech invention. Safeway first launched home delivery in 1990. Long before that, there were milkmen and ice-cream trucks delivering to homes and neighborhoods.

“Food is hot now, but we actually went public 10 years and three days after we were founded,” says GrubHub CEO Matt Maloney.

GrubHub and Seamless — which merged in the months before that IPO — offer customers menus for participating restaurants, then fax in orders in exchange for a bounty. They were the antecedents for the current food craze.

“For the longest time, nobody gave a crap,” Maloney says. “Once we hit critical mass, people recognized what a massive industry it actually is.”

The venture capitalists who are piling into food delivery have blinders on, Maloney says.

“Everyone is looking for the next social blowout like Twitter or Instagram, where it’s infinitely scalable. When you’re interacting with the offline world, like us and Uber, it’s a lot harder. Offline to online is not infinitely scalable.”

Maloney says he has some news to deliver to all those involved. “These companies are not going to redefine the way people eat. Even my company — we processed over $1 billion in food sales last year — we are not currently redefining how people eat!”

Eaze delivers medical marijuana on demand in San Francisco.

Vjeran Pavic for Re/code Eaze delivers medical marijuana on demand in San Francisco.

Though I had met an unlaunched “Uber for weed” startup from Washington state called Canary, I thought the dream of drugs appearing at the push of a smartphone button was still a way off in the future. Apple was expected to withhold app approval, and recreational marijuana legalization is such a new phenomenon.

But then, just last Monday, a mobile medical-marijuana delivery startup called Eaze launched in San Francisco. Not only was Eaze open for business, it was open for business 24 hours a day.

Bootstrapped by an early Yammer employee, Eaze’s site promises delivery to our office in seven minutes. I don’t have a medical marijuana card myself, but my friend Joey at our co-working space does, so I get permission from the bosses to subsidize a minimum order of “Berry White,” described as a “mix of legendary White Widow and Blueberry strains.”

We submit Joey’s doctor’s letter at noon, and are verified by 1:20 pm. We place our order via mobile Web on Joey’s iPhone.

A black Lexus pulls up outside the office 42 minutes later. We have been told to have cash on hand, because Eaze’s online payments system isn’t fully in order yet.

Our “caregiver” — a guy named Loreno who says he found the Eaze gig on Craigslist — opens the trunk and sorts through piles of Tupperware to find the baggie of Berry White. Joey gives him our $40, and instant gratification is delivered.


Illustrations by our Joy of Tech friends at Geek Culture, Nitrozac & Snaggy.


Liz Gannes

By

Ethics Bio Articles

0 comments

Log In

{* #userInformationForm *} {* traditionalSignIn_emailAddress *} {* traditionalSignIn_password *}
{* traditionalSignIn_signInButton *}
{* /userInformationForm *}
Follow

Get every new post delivered to your Inbox.

Join 300,900 other followers