Gone Social SF: Growth of On-Demand Services

As many of you know by now, Katie and I have relocated from Atlanta to San Francisco to start a new chapter in our lives, and now that we’ve found an apartment it’s time to narrow the focus to finding work. This can be tough in a lot of ways, especially moving to a new city with limited contacts, where you can easily get by playing tourist all day. What’s the next step for me career-wise? How will I find the perfect fit? What will the market be like?

In asking myself these questions I asked around for advice from those who have made similar moves. One question led to another, and the contacts and connections started piling up. I somehow managed introductions to a few dozen San Franciscans with ties to Atlanta, all of whom I’m in the midst of scheduling coffee meetings over the next few weeks!

One of my new contacts, Jaz, recommended I check out a group called Gone Social SF.

If you know me, you’d know that this was my in I’d been after. This was my opportunity to immediately put myself out there and see what a social media / marketing-focused organization in SF had to offer.

Well, I was lucky to grab a ticket and join the community for an event focused on on-demand services on my first Thursday in town! I was excited and (housing/transplant pains aside) I couldn’t wait to jump in. A wise man once told me:

Your first 3 months [in SF] will be extremely difficult. You’ll feel as though everyone else knows each other and you’re not a part of the club. My best advice to you is this: Get off the couch and meet as many people as you can.

This is precisely what I intend to do, and I think I’ve already found my people.


Enough about me, here’s a little more background on Gone Social, via Simon Walker’s YouTube channel:


Event Recap.

Below you’ll see the one pager with the panelists and some background on each of them (event agenda on the backside, really nicely done).

An impressive group of panelists:
Aaron Smith (Moderator) – Associate Director at Pew Research Center
Kristin Schaefer – VP of Growth and Strategy at Postmates
Jay Ganatra – Director of Operations at Yelp Eat24
Lauren Sherman – Head of Marketing at Shyp
Matthew Schwab – Co-Founder and President of BloomThat
Jon Dreyfus – Product Management Lead at Google Express

Aaron opened with some background on his role at Pew and on-demand services as a whole. It’s worth noting the work and studies Aaron has done around The New Digital Economy, so definitely check that out if you have an interest.

Aaron then introduced the three main pillars we’d be discussing:

1 – The new relationships between consumers and service providers.

Consumers struggling to contextualize how these companies operate and work on the backend.

2 – San Francisco as ground zero for the regulations of highly professionalized services.

Anyone can now be their own Director of Whatever (ex: taxis, hospitality industry, startups)

3 – The workforce angle – how is the on-demand industry shaping the future of workforce in our country.

1099 vs. W2: what it means to have a job, be employed, have benefits, etc.


Following the quick introduction, Aaron brought up each panelist one-by-one for a quick ~10 minute discussion about their respective roles, perspectives, and challenges. I’ve provided a high level overview of takeaways and notes from each.

Kristin Schaefer, Postmates

Uber/Lyft have changed the dynamic of on-demand services to literally mean “press a button and expect it in less than 20 mins.”

The price points have dropped significantly over last 3-4 years. Nearing unit-economics, or ability to make money with the business. Different from Kozmo because delivery was free with them, so there’s no revenue there.

Postmates first started as courier system to move anything from A to B. People tried to hack it for restaurants deliveries, so they followed consumer demand and built it with an impressive technology stack to handle payments in real time.

What about the workforce at Postmates – what do they look like?

  • There’s no typical Postmate. Crazy diverse mix. Students, hospitality professionals, etc.
  • Varies market by market. L.A. is great to grow a fleet quickly because people there inherently hold lots of p/t jobs.
  • Most are doing deliveries to supplement income.

Jay Ganatra, Yelp Eat24

Originally partnered with Eat24, then acquired them. Finding good food and restaurants in the city are the gateway drug to using Eat24.

“Order pick up / delivery” button now pops up in search. Brought to forefront for more seamless user interface.

One of most interesting offerings is integrating Yelp photos in the experience. It’s a real differentiator – know what you’re getting.

The pitch to business owners to get into the Eat24 system is relatively simple:

  • Already over 35k restaurants on platform.
  • “Hey, we wanna send you more orders, you interested?”
  • Over 100M monthly uniques looking for a place to eat right now. In real time.
  • Eat24 makes it easy for existing customers to remember you’re there.

Biggest logistical challenge for end users?

This is a messy business in general. Things always change in food orders, deliveries, expectations, and plans. Working, planning, and estimating around these changes is tough. For this reason, Yelp invested heavily in customer support, to ensure that the app reflects the correct pricing, menu items, add ons, and more.

Conflict of interest between Eat24 service and unbiased reviews of restaurants in Yelp?

No conflict. Yelp has a strong culture around transparency and honesty. One of the Yelp Value’s states to protect the source. No business can pay to remove reviews or be higher in search. Yelp truly values the customer experience, and the same mentality has carried over to Eat24.

Yelp is not just trying to make next $0.10 cents on each order, but wants you to come back for the foreseeable future.


Lauren Sherman, Shyp

Trust issues – a stranger coming to your home to pick up an item. Will it always make it to the end destination? How do you make users feel comfortable?

Shyp changed their task force from 1099 to W2 (full time vs independent contractors). Lauren has a background in brand marketing, so this is a super important topic for her: Uniforms, script at the door, etc. etc. Branding always helps.

Shyp prides themselves on their NPS (net promoter score) – a jump from 70 to 85 after making the 1099 change resulted in a profound impact.

Major road blocks?

Lauren’s a strong believer in the W2 model, but it wasn’t easy for them to do and took about 5 months to make the transition (unforeseen HR related issues).

The notion that people want to work “liquid” and form their own schedules — employees were scared that Shyp was taking that away with enforcing W2, but Lauren and her team are proud of the 99% transition rate (a signal that people were happy with the W2 stability). In this change, Lauren continues to declare her confidence in doing right by the community and customers. Good stuff.

Who are your customers?

Early customers were mostly consumers, gifting and online returns, which remains a big piece of their business.

Recently Shyp has segmented customers and found Shyp for Business holds a huge chunk of profitability: “side hustlers” – trying to sell on Etsy, Shopify, etc., transitioning to a more “pro-sumer” SMB side of things.


Matthew Schwab, BloomThat

Online flower delivery has been around forever. How are you different from 1-800-Flowers?

The idea of thoughtfulness is not new, but how we want to be thoughtful is not aligned with our generation. 1-800-Flowers’ model is not resonating. BloomThat is a new brand for a new generation.

How does BloomThat operate behind the scenes? What’s the magic?

We make the experience as simple as possible. Don’t need 50 different options for a simple bouquet of roses.

BloomThat builds all of their products themselves. It will look exactly like it does online.
In today’s world, recipients (consumers) can immediately post on social if the product doesn’t look like it was supposed to. They will call you out. It was acceptable to have a fault product in previous generations, but now it’s not. BloomThat operates under the fundamental belief that it’s going to be 100% correct each and every time, and this should make people want to use it more.

Large competitors farm orders out to local florists. BloomThat works directly with local gardens and farmers and only offer 6-8 items.

From the media & entertainment industry to flower deliver, how did this happen??

Obsession with consumer experiences. Living in SF and having the overwhelming feeling that this is the future when, for example, riding in a Lyft car for the first time.


Jon Dreyfus, Google Express

Why delivery for Google? How does it fit in with the rest of Google’s portfolio?

Google’s mission is to “organize the world’s information and make it universally accessible and useful.”

This goes hand-in-hand with the delivery of goods and services that may not otherwise be deliverable: Connect consumers to the merchants they know and love. Simplify the experience to give people time back in their lives.

If people want to research, search, and/or buy a product, there are tons of merchants that aren’t accessible through the traditional online world. The goal is to connect the offline and online world, by making every store three things:

  1. visible
  2. transactional
  3. deliverable

Biggest logistical challenge thus far?

Scalability and not getting in the way of the physical customers in a store. There are simply not enough cash registers sometimes!

How are you using all the rich data of customers in different ways to drive loyalty?

In customer loyalty there are two main stakeholder groups:
1 – Merchants. They want the relationship with their customer, and Google intends to maintain that by getting the merchants the information that matters most.
2 – Google. How to make the purchase recommendation experience better. Must be careful about data privacy and security — Never use anything without a user’s consent.


Q&A

IMG_0337

L to R: Aaron, Kristin, Jay, Lauren, Matthew, and Jon.

1 – These services work well in cities, but what about rural areas? Are you building systems to schedule ahead?

Jon: Google thinks a lot about that. It’s important to build this sort of business not just for urban areas. Right now Google Express services most of California, Arizona, Nevada, Texas, Arkansas, Louisiana, and Kansas. To continue to scale, Google is looking at different delivery models and partners.

Matthew: BloomThat is not an on-demand company, just offers that service. They are a brand around thoughtfulness. At first, the deliveries were promised in 90 mins in SF, and now in LA and NYC. Starting to offer next day delivery to give people another option and more flexibility.

2 – In fleet management, are there any opportunities to partner and connect with other companies? Do you mostly manage the fleet internally or look to scale externally?

Matthew: Everyone has had a bad experience with flower delivered on demand, from the actual delivery process, to the product, and placing the order. BloomThat is simultaneously building three businesses at once, all focused on their core function:thoughtfulness. BloomThat don’t care to be best in class in delivery, as long as the product is perfect. Logistically, figure out your core competency, and you can always layer in or acquire later on.

Jay: The orders are actually fulfilled by the restaurants themselves, which makes sense in most markets vs. the typical Thai/Indian/pizza place that already offers delivery services. Now, Eat24 is starting to partner with places that haven’t historically delivered food. They don’t care to cater to all businesses, but do have options for all kinds of food.

3 – Transparency is a big part of building trust. How are you building this to manage expectations and continue building trust? (asked by my new friend Danielle from the LIFT Agency)

Jay: We continue to reflect the exact same price as the restaurant menu. We continuously test our partners through prank calls (sounds so fun) to make sure all is correct. Yes, it costs Yelp a lot of money, but trust is paramount for them.

4 – Are you guys seeing more movement towards W2 or 1099?

Lauren: We don’t think that W2 vs. 1099 should have anything to do with the size of the business, but nature of it. Again, do right by your customers and your community.

  • Key differences: What is nature of job person has to do? Does trust play a big piece?
  • Think about Shyp, with personal items sent from customers > vehicle > warehouse > package > shipment. With Shyp, there’s lots of variability so trust must be high.

Shyp is promising to deliver a trustworthy service, and will not settle on building a bad business on back of 1099 workers.

Matthew: 70% of our deliveries hit the door when no one is home. Simply depends on the nature of your business in what sort of employees you need.

Kristin: A new class of labor is coming. In an ideal world, it’d be great to offer both W2 and 1099. W2 can be more prescriptive about the work, which can help solve problems about the quality of work, but might take away from diversity and freedom of the fleet.

Will be interesting how people decide to classify over the next 5-10 years.

5 – With the growth of on-demand services and items being sent extremely quickly, how do you combat fraud? Stolen credit cards, expensive items being sent, background checks, etc. Is this a big concern?

Kristin: This is huge for us, and we’re constantly addressing the issue with big data science. Once you get through the layers of predicting fraud, you’ll notice orders from places like Best Buy were mostly fraud.

Tap into things that have already been discovered (i.e. PayPal almost going down from fraud), and integrate in your systems and processes. Worst case scenario is to cancel the transactions until you know more about the order or scenario.

Matthew: This is awkward for us. Credit cards have been stolen and flowers have been fraudulently sent. Weird scenario.


Hope this recap helps shed some light on the backend operations and complications that on-demand service companies are facing these days. The next Gone Social event is coming up on August 15 – 6:00 to 8:30 at Thumbtack HQ. The topic: Power Tips for Power Users and the #ArtOfSocial, with social media rockstars Peg Fitzpatrick and Guy Kawasaki! I’ll be sure to provide another recap if I’m able to snag a ticket.

8-15-social

In the meantime, be sure to check out the Gone Social blog and follow them on Facebook, Twitter, LinkedIn, Instagram, and Snapchat (gonesocialsf).

Finally, thanks Yelp for hosting, and the event partners for doing what they do.Cline Cellars with some amazing Sonoma wines and Antoine Patisserie for introducing me to crepe cake. Seriously, you gotta try this stuff.

[Images by Steffan Pedersen, logos and banners credited to Gone Social]

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One thought on “Gone Social SF: Growth of On-Demand Services

  1. Pingback: Gone Social SF: The Art of Social Media | steffan pedersen

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