Gig Economy Disaster: ‘Uber For Laundry’ Hung Workers Out to Dry and Now It’s Out of Business

Lambert here: Froth. Then again, the skyhigh valuations for both Uber and AirBnB depend in large part their willingness to break the law — taxi regulations for the one, hotel regulations for the other — and their impunity for doing do. It’s hard to see how a laundry app — I mean a literal laundry app, not a money laundering app — could take advantage of the same opportunity. Sad!

By Michael Arria, associate editor at AlterNet and AlterNet’s labor editor. Originally published at Alternet.

The on-demand laundry app Washio recently announced that it’s shutting down. Alongside this announcement comes news that a San Francisco judge has rejected a settlement between the company and former employees who allege they were underpaid, saying that the deal could hurt the workers more than help them based on the financial situation of the now-defunct business.

There’s a lot of commentary and debate over tremendously successful sharing economy companies like Uber and Airbnb, but much less discussion is reserved for the ventures that fail. Washio’s birth mirrored many other gig economy startups: the Santa Monica company was launched in 2013 and was able to raise nearly $17 million in its first four rounds of funding. It even received financial backing from celebrities like Ashton Kucher and Nas.

At the time of its launch, TechCrunch wrote that Washio founder Jordan Metzner “sees an opportunity to displace the existing dry cleaning infrastructure.” Washio applied the language of disruption to its job description. Washio sent employees to pick up and drop off your clothes, but referred to delivery staff as “ninjas”:

We offer a FLEXIBLE schedule, NORMAL hours, GREAT pay and the chance to be a part of a AWESOME growing company where your back is always welcome. This is a fantastic opportunity to make money on your time in your car. Our ninjas are compensated competitively at $20/hour and your pay is based on time alone (not determined by the number of drop offs or pick ups during each shift). You can sign up for as many or as few shifts that fit with your schedule each week.

Gawker’s Sam Biddle succinctly summarized the major issue hovering over this alluring pitch: “Twenty bucks an hour is double the state minimum—which is great!—but it’s part-time only, without any benefits, and you’re driving your own car around to get from job to job.”

Last year a former Washio employee named Akil Luqman sued the company, claiming it broke California minimum and overtime wage laws, denied workers breaks and failed to fully reimburse work expenses. The complaint also featured a charge that’s leveled against many sharing economy companies: Washio classified full-time hourly workers as independent contractors. The case was taken up by Shannon Liss-Riordan, the Boston lawyer who has launched suits against Lyft and Uber.

A Washio ninja would pick up your dirty laundry and the company would wash it for $2.15 per pound, with a $30 order minimum. The service was regularly criticized by users and holds a mere 2-star rating on the iTunes store. One user wrote:

I really wanted Washio to be great, but it’s dodgy. Set up my first pickup: no confirmation message or email. I can’t see any order history or pending pickups in the app. So I called customer support the day-of to confirm: call won’t go through. No recorded message, nothing. The line is dead. So I SMS for support. No reply. Then no one showed up during the pickup window. Now I’m trying to remove my credit card because I’m sketched out and CAN’T EVEN DELETE MY CREDIT CARD. They seem well able to send me unsolicited marketing emails, but apparently that’s all they’re good for. Beware!

A letter about the company abruptly shutting down was posted on Washio’s website:

“We generated millions in revenue and hundreds of thousands of orders, but the nature of startups is being innovative and venturing into uncharted territory: sometimes you make it, sometimes you don’t. We are proud of what we accomplished along the way: over one million items of clothing dry cleaned, and over 21,000 tons of laundry washed and folded!”

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

27 comments

  1. Ignacio

    The utility of Uber or Lyft is that they overcome municipal economic burdens (high municipal fees for taxi permits, somehow prone to corruption). The utility of Airbnb is that they brougth to the national and international market a whole new class of lodging that was underused and it was advantageous for both landowners and guests. The laundry thing, I just can’t see. It seems to me that too marginal the benefit would be.

    It is true that until you run the business it is difficult to see what kind of genius is on it. Once one or few companies succeed it is typical to see a wave of start ups trying to exploit similar bussiness models. The fact that the majority fails is also the normal outcome, nothing new here. At least here you don’t find the kind of failures shown in Theranus case.

    Anycase, it is very instructive to report this kind of normal outcomes too.

    1. Lambert Strether Post author

      > they overcome municipal economic burdens

      Uber enters a market and gets the regulations that outlaws what it does later. AirBnB lets property owners run small hotels without being regulated as hotels. That’s a major source of their valuation.

      1. Robert Hahl

        As long as we are talking about new business models that ignore regulations, your comments just gave me a great idea for an app which lets you get alcohol delivered to your table at restaurants without a liquor license. airBYOB?

      2. Nelson Lowhim

        I’ll say this: I really enjoyed the aspect of Airbnb where one stays in a foreign city with a local and gets to know them. Really nice and much better than a hotel or hostel.so I was a little surprised when I heard the underside of it was not wanting to do local regs. I mean how much would they cost? Apparently too much. Same with how the rich will figure out its more money and kick out poor long term renters (how much of this has been done?) That being said it shows the difference between consumer preference and the underlying reality

        1. Yves Smith

          It is not just that. AirBNB also takes apartment stock out of the rental market, increasing the rents to locals. This is a big issue in San Francisco, which already has seriously overpriced housing and a shortage of new supply due to NIMBY development policies (city full of little Victorian houses, which is cute but low density, and the owners fight the development of apartment buildings like nuts. But neoliberal ignore the elephant in the room and blame rent regs, which only apply to some existing units, and given the high rent rates and demand, is not a disincentive to new construction).

    2. digi_owl

      “The utility of Uber or Lyft is that they overcome municipal economic burdens (high municipal fees for taxi permits, somehow prone to corruption).”

      Can we get any more dyed in the wood libertarian?!

  2. Ignacio

    I have just thougth on a possible bussiness model based on laundry that could be effective at the level of neighborhoods. Imagine you develope a technology that allows your clients to label their clothes/sheets easily and allows you to easily (using some kind of electronic screening) identify and separate each client’s clothes after laundry, so can you can run massive laundries mixing your client’s clothes (as in large hotels) and benefit from economies of scale. You clean all the white stuff together, the coloured etc. You save energy, you save in total investments (less washing machines), you win in sustainability (less water and soap)…

    It is a win-win!

    1. Ignacio

      Imagine to associate with a local supermarket. Local fellows would go to to buy their groceries while leaving their stuff for Laundry. If you are efficient enough your clients could resolve in an hour most of their weekly domestic tasks. That’s really an utility!

      1. Romancing The Loan

        I once thought of a launderer/gym where the machines are powered by spin class, but my friends pooh-pooh’ed the idea. Philistines.

      2. Ezra schley

        It was tried already with Dress for Success and Smith food Markets, the problem of this industry is the inability to create good quality product and service at cheep prices.

    2. Romancing The Loan

      That is called a regular wash-dry-fold service and what they do is put each person’s clothes (separated by color if needed) into their own large mesh bag, with plenty of extra room for water to circulate through it. The bags are then thrown into the giant industrial size washing machines. It’s a great technology, Retrotopia-style. ;)

    3. Carla

      I was once in an establishment in the New Orleans area (I believe it was in the Garden District, near a university) that seemed to me to have a winning business concept. It was a combination laundromat, cafe, pool hall and bar. Do your own laundry while taking care of some other basic and social needs at the same time. This was around 1993.

    4. oh

      Here’s one based on Uber and AirBnB models:

      Use the nearest river to wash the clothes by pounding on rocks (undocumented workers would be used and would be paid pennies per hour), air drying and folding. Get the same workers to pickup and deliver the laundry. Use or FB to schedule. /snarc

  3. Michael_emmett

    While such failures give me great satisfaction, the article was frustrating because, with the paragraph outlining user complaints, it left an opening that puts blame of the failure “poor execution” rather than on ethically challenged business model. The failure of this company will not deter others from trying some variation in order to eliminate the effects of “bad customer support”. They’ll simply use more technology to squeeze greater efficiency into the offering.

    Products and services can fail for lots of reasons. I hope this one and others like it fail because society rejects the shell game of transferring variable costs to my employees rather than making a business succeed through a real value proposition (new/better products and services) delivered on a level playing field.

  4. der

    Duncan Black (Eschaton) calls this the Grifter Economy, the long con. Come up with the next “Big Idea!”, pocket the assets walk away from the liabilities. TPP will protect the innovators! Seems app(t).

    1. jsn

      Appsploitation pure and simple: the power of technology to extract increasingly small grifts from increasingly small income streams from increasingly poor people. Economic jelly fish flourishing in the waste left by the free market utopia.

      1. bob k

        it’s my understanding that many wealthy people use Uber and taskrabbit. it makes them feel they have an indentured servitude class at their disposal who they can use and abuse, cuz hey, that’s fun if you’re rich.

  5. D. Battabong

    On NC, at least, could we please stop using the term ‘sharing economy’ to describe what has just been described, more accurately, in a previous post, as the Grifter Economy?

  6. Tertium Squid

    tremendously successful sharing economy companies like Uber and Airbnb

    Uber is tremendously unprofitable, billions every year, so success is relative.

    1. Yves Smith

      Amazon was unprofitable for 20 years…but at least it was cash flow positive:

      http://ben-evans.com/benedictevans/2014/9/4/why-amazon-has-no-profits-and-why-it-works

  7. DJG

    Ahh, the servant problem. It has always been an issue in the U S of A, especially after those darn slaves insisted on giving up life-time employment.

    But: A $30 minimum? Who is this service for? What could possibly go wrong?

Comments are closed.