Due to the shutdowns caused by the coronavirus pandemic, special importance has been placed upon those working the frontlines of the fight to stop its spread. A group of workers that are often overlooked – delivery drivers, grocery stockers and many others who often work in the gig economy.
The uncertainty in the markets that settles in as the virus spreads globally will likely affect everyone in the gig economy differently in the weeks and months ahead. And locally, startups operating in these spaces are already feeling the economic effects of the coronavirus, as well as adapting to the increasingly ever-changing landscape in varying ways.
“The same attributes that make the gig economy strong have also highlighted a weakness at a time like this. With no central point of control, the gig workforce has a harder time managing through the current landscape and with no common resource of support it makes the unknown more daunting,” Donna Letier, founder of Dallas-based gardening delivery company Gardenuity, told NTX Inno via email. “Those who rely on contract work are in a vulnerable place as many businesses will work to keep employees paid vs independent contractors. Conversely, more talent is available and businesses that can use the independent workforce for small or large projects are stepping up.”
While across the country hourly workers, especially those in the food and hospitality sectors, have been some of the hardest hit by the economic downturn caused by the lockdowns required to slow the spread of the virus, nearly every local company that operates in the gig economy space that NTX Inno spoke to has seen an uptick in business. This is likely due to the increased demand in services, like deliveries, that gig workers typically fill.
Gardenuity recently onboarded a couple new hires, in order to fill any remaining open positions it had. In addition, cannabis industry gig work platform Kanna said it has seen increased demand for work due to an influx of orders in the legal cannabis industry. Although, Kanna has had to freeze hirings and operations temporarily to ensure its workforce has not been infected by the virus.
“Dispensaries are selling product faster and farms are actually turning out more product but at the same time the farms that we’re working with we need to prioritize people over profits at the moment,” Farhaj Mayan, co-founder and CEO of Kanna, told NTX Inno. “It’s like peace-time CEO versus wartime CEO, now a lot of us have to transition from one of the biggest bull markets ever to becoming pure wartime CEO and we’ll do what it takes to survive and help the people on our team, our network succeed.”
"we need to prioritize people over profits at the moment."
However, an increase in demand doesn’t always mean an increase in revenue. Mayan said that despite the spike in demand, Kanna has had to pull back workers due to their age and at-risk status. Though, he expects that with increased testing and a deployment of protective equipment, gig workers can be put back to work after two weeks of self-isolation and proof of testing negative for COVID-19.
In hopes to be able to deploy its workforce quickly after a period of self-isolation, Kanna has begun providing its onboarding training online.
“The thing that really sucks for us to have to pause operations is it really directly impacts the livelihood of the people we employ and now they’re losing 2 to 3 weeks of cashflow,” Mayan said. “We’re fortunate to have enough cash in our bank to float through a good period of time and have a strong social revenue coming in but I’m assuming that's not the same case for a lot of other companies, especially those whose are going to flatline or go down over the next couple of months.”
Other companies have had to find unique ways to adapt. For example, Gardenuity has had to close its retail locations. However, besides increased safety and cleaning precautions, the company has adapted by focusing more heavily on B2C transactions. Meanwhile, its leadership team has opted to either stop taking a paycheck for the moment or to take a salary reduction.
“We need to focus on keeping as many people safe and healthy as possible. But every business needs to evolve and explore new ways to meet customer needs - and leadership teams globally are proactively discussing how to evolve,” Letier said.
Likewise, Dallas-based rideshare app Alto (which partnered with Gardenuity to deliver some of its products) has had to adapt to the new normal of operations. Alto CEO Will Coleman told NTX Inno the company has pivoted from focusing largely on rideshare revenue to on-demand lunch deliveries.
Alto’s drivers are W-2 employees, unlike other companies like Uber and Lyft, which operate in the same space, yet hire drivers as independent contractors. As such, Coleman sees Alto in a better position, due to the fact the company offers its employees paid sick leave. In addition, because Alto owns its fleet of cars, it has been able to easily implement stepped up safety measures like disinfecting and driver fever testing.
“We have certainly exercised adaptability and have pivoted quickly to accommodate the ever-changing climate during this pandemic,” Coleman told NTX Inno in an email. “The business has been rapidly evolving to serve customers’ needs, which are changing daily.”
At the time of publication, none of the startups NTX Inno spoke with had yet been forced to lay off staff. However, nationally that is not the current trend. In Texas, between March 8-14, unemployment insurance claims jumped by nearly 60% from the previous week. Even unicorns, like Austin’s RigUp have had to lay off employees.
While the $2 trillion stimulus package passed last week has provisions to provide $600 per week in unemployment to gig workers and freelancers, additional benefits will be determined and distributed by the states. Due to being placed at the frontlines of handling the pandemic, along with economic uncertainty and little protective gear, workers from companies like Instacart and Amazon are planning strikes.
“Think about taking 2 to 3 weeks of work from them and they’re already living paycheck to paycheck, that’s what I’m terrified of, the trickle down effects that this will have,” Mayan said.
