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  Both Dan and Saman saw themselves as people who would make a positive social impact, and Managed by Q’s current business strategy didn’t necessarily fulfill that vision.

  The answer to both the company’s business problems and to its founders’ cognitive dissonance was clearly to hire frontline workers. Not just hire them (there are plenty of terrible employers, too), but train them well, and pay them better.

  The potential problem with this approach was funding. In August 2014, four months after launch, Managed by Q announced a $775,000 round of funding, which was enough to get by for some months before it would need to raise another round. At least one of its early investors had found the potential similarities between Managed by Q and Uber to be appealing. Scott Belsky had been an early investor in Uber, and he liked the idea that Managed by Q (by now just “Q” for short) would be a technology platform that brokered other people’s labor and goods: a startup that could scale infinitely without much upfront investment. “I love businesses that replace the pipes and upgrade the user experience for some aspect of everyday living—I call these ‘interface layer’ businesses,” Belsky told Business Insider at the time. “Uber did this for transportation. Shyp [another investment] is doing it for shipping. And Q is doing it for office/space management.” He suggested that “the interface of Q” had the potential to “revolutionize many industries that operate underneath.”4

  Many investors were, like Belsky at the time, still enamored with the “Uber for X” strategy, and to keep them interested, Managed by Q would need to justify its decision to invest in jobs instead. It planned to compare this strategy to a company that was arguably just as successful as Uber. Starbucks had transformed the job of being a barista from a specialized version of the cashier into a hipster profession that involved benefits and a career path. Managed by Q’s idea was to do the same for its “operators.”

  Dan knew somebody who knew an executive at Starbucks. Her name was Dervala Hanley, VP of global strategy at the time, and she was in the process of starting Starbucks’s partnership with Arizona State University, which today covers tuition for all employees who want to pursue a bachelor’s degree. The campaign, she would later write on her LinkedIn profile, earned two billion media impressions at launch and was mentioned by President Obama. Seeing the opportunity to meet someone who had done pathbreaking work in creating good jobs in the service sector, Dan asked for an introduction.

  Dervala told Dan about a book called The Good Jobs Strategy by Zeynep Ton, a professor at MIT’s business school. The book argues that offering good jobs can benefit a company’s bottom line. Profiling companies like QuickTrip, UPS, Costco, and Trader Joe’s, which profit by offering their employees good jobs, Ton wrote with power and passion about a different approach to business that matched what Managed by Q hoped to do.

  You can certainly succeed at the expense of your employees by offering bad jobs—jobs that pay low wages, provide scant benefits and erratic work schedules, and are designed in a way that makes it hard for employees to perform well or find meaning and dignity in their work … Many people in the business world assume that bad jobs are necessary to keep costs down and prices low.

  But there is another, and still profitable, choice, the book argues, one that involves providing decent pay, benefits, and stable work schedules.

  These companies—despite spending much more on labor than their competitors do in order to have a well-paid, well-trained, well-motivated workforce—enjoy great success. Some are even spending all that extra money on labor while competing to offer the lowest prices—and they pull it off with excellent profits and growth.5

  The key to making investment in labor work, Ton concluded, was operational efficiency. It wasn’t enough to treat workers better. Companies also needed to empower those workers to deliver great customer service and help avoid expensive chaos. They needed to allow employees to break from standardized policies in order to adapt to customers’ needs, expect employees to do different types of work during slow times instead of scheduling them sporadically, and staff their stores with more, not fewer, employees than they predicted they would need to do the job. Do these things, she argued, and the strategy could work even for stores with low prices, like the convenience store QuikTrip.

  With Ton’s model, because employees are trained well and stick around, they have enough knowledge to help customers. Because stores are not understaffed, they also have the time to do so. “They work harder and they work better,” Ton wrote. “You get lower employee turnover, so you have people with more experience making fewer mistakes.”6 This was research-backed logic, not a hypothetical labor revolution like the gig economy. Dan would eventually meet Ton about a year into Managed by Q. “She is not a bleeding heart,” he would determine, approvingly. He used her theory to build his case for employing workers.

  Though Dan and Saman started with cleaning services, their plan was to build a dashboard that would allow an office manager to request anything from a light bulb change to a caterer by pushing a button. If a client was impressed with Managed by Q’s cleaners and handymen, that relationship could become a gateway to sales for anything an office needed. But if Managed by Q sent out office operators who hated their jobs and did them halfheartedly, the company would be less likely to make those extra sales from its dashboard. Acquiring new customers could be expensive, and sending an employee who hadn’t been vetted, trained, and incentivized by Managed by Q would be a good way to lose business.

  Beyond that, providing good jobs could save Managed by Q money recruiting cleaners. Gig economy companies often struggled to retain their workers. According to one report by Alison Griswold, a journalist at Slate at the time, former employees at Handy estimated that the company brought on 400 to 500 new cleaners every week, at a cost of hundreds of dollars each (Handy told the reporter its onboarding costs were less than $100). The same report estimated that after 60 to 90 days, between 20% and 40% of those new cleaners stopped taking jobs from Handy.7 Which meant the hundreds of dollars spent to onboard them had been wasted.

  By contrast, very few people ever quit at companies that used Ton’s “Good Jobs Strategy.” QuikTrip, one of her model companies, had 13% of its staff leave each year, which was wildly lower than the industry’s 59% rate. Trader Joe’s turnover rate among full-time employees was less than 10%, and Costco employees who had worked at the company for more than a year turned over at a 5.5% rate.8

  Outside of Silicon Valley, the Good Jobs Strategy was a less-than-shocking revelation. “This is M.B.A. 101 stuff,” said Diane Burton, a professor of human resource studies at Cornell University, when the New York Times explained Managed by Q’s strategy. “When people are your source of competitive advantage, it’s clear that a long-term employment relationship and what we would call a ‘good job’ is good for the workers and good for the companies.”9 This is why some US employers offer paid maternity leave, vacation leave, and sick days despite having no legal obligation to do so—because they’re competing to attract and retain employees.

  But in the startup world, few companies had attempted this approach outside of their professional offices (where they took it to the extreme with free meals and on-site dry cleaning). As Dan explained this strategy to potential investors, some of them pushed back, pressuring him to switch to an Uber model. But others saw it as a wise decision.

  The startup announced its seed round of funding, $1.65 million, in November 2014. It raised another $15 million in June 2015. “Our employees are our greatest strength, not a cost to be minimized,” read an early tweet from the Managed by Q account, which linked to its new job application. “Come clean.”

  Managed by Q operators started at $12.50 per hour, compared to New York State’s $9.00 minimum wage.10 This wasn’t as much as the estimate for Uber’s average hourly wage, but according to New York State, it was much more than the pay for a typical janitor. Entry-level janitors in the state earned on average $21,000 per year or about $10 per hour, if th
ey worked for 40 hours per week.11 Nationwide, the average was $15,000 or around $7.00 per hour.12

  Managed by Q’s operators received a $0.25 per hour raise every six months. If they worked more than 30 hours per week, they received free health insurance, 40 hours of vacation, and a retirement savings plan.13 Managed by Q also prioritized creating jobs that provided reliable work. The startup, which made most of its revenue from weekly office cleanings, didn’t have unpredictable busy hours, like a store or Uber or Handy did, so workers could count on coming into work at the same times every week.

  In addition to paying a higher wage than its competitors, Managed by Q also constructed a career path for operators. Some workers, like Anthony Knox, a 39-year-old father of three who was born in Harlem, took advantage of this opportunity to steadily rise through the company ranks.

  Anthony had heard about Managed by Q while he was working at the Human Resources Administration, where he advised about 30 people every week about where they could get shelter, clothing, and a haircut before a job interview. A growing company, he hoped, would mean more opportunity. “It’s how hard you work in life,” he said. “That’s part of who I am.”

  He submitted his resume, which detailed his experience working 11 years as a medical assistant and his nursing degree, and was immediately called in to attend an info session. There, he took a verbal quiz, answering questions such as “To clean this surface, would you spray it directly with product or use a rag?” (the right answer is to spray the rag first—you don’t want to risk stray spray getting on someone’s clothes or in their eyes), and then did two (paid) deep cleans as a test. Having performed well on both, he was given an office to clean. He still remembers the exact date he started, November 21, 2014. He earned $12.50 an hour and kept his job at the HRA, which meant that in a typical day he might travel from his home in the Bronx to his day job in Queens to a cleaning site in Brooklyn or Manhattan.

  Back then, there were only a couple dozen field operators, and about ten office operators, so “everybody kind of knew everybody.”

  The office he cleaned first, which belonged to a professional services firm, was 17,000 square feet, and he cleaned it Monday through Thursday, and then again on Saturday. The first thing he did every day when he arrived was collect all of the dishes from the desks and put them in the dishwasher. While it ran for 45 minutes, he cleaned the kitchen. Then he put the dishes away and moved on to 103 desks, which each required dusting and a wet cloth. The men’s bathroom had two stalls and three sinks. The women’s bathroom had four stalls and three sinks, plus tiny wastebaskets for “women’s stuff.” He cleaned the walls, the toilets, the trash cans, and the Dyson air blowers. He did it all in 4.5 hours, after the offices had closed for the day, and his clients rated every cleaning with five stars.

  After a few months, Managed by Q promoted Anthony to “mentor,” which meant that while he cleaned, he showed new employees how to do the job. He taught them, for instance, to use pink rags in the bathroom, blue on glass and mirrors, and yellow in the kitchen; that you have to wet a Magic Eraser before it will work; and how to line a trash can properly. He got a raise to $14.00 an hour.

  A couple of months after that, he was promoted to supervisor and made responsible for quality control on between 40 and 65 accounts. He started at $15.50 per hour. Every day, he went to Q to pick up keys and a schedule for checking the sites. He got them from the company supply closet, which was stacked from floor to ceiling with clear plastic tubs full of swag that the company handed out to its workers: Q-branded hats, T-shirts, jackets, sunglasses, lens cases. Anthony opened the key safe—mounted on a wall across from the swag—using his thumbprint. Inside were a colorful array of keychains, and red lights would blink next to the ones that he was scheduled to collect.

  When I met him in August 2015, Anthony was one of about eight supervisors in New York whose fingers opened this safe. Later he delivered the keys to cleaners whom he “spot checked” for quality. If he found an error, he taught him or her what had gone wrong. If the client had feedback or there had been a change in service, he communicated it to the cleaners. Next, he wanted to run trainings. “You get to choose your own path,” he said. “I like training people because when you show people the right way to do something, they usually do it right.”

  Or, he said, he would go the IT route. He would observe the company’s engineers during his free time until he learned the job. “You don’t need the degree,” he told me. “As long as you have the skills, they will promote you. You don’t really get a lot of employers where you can start as a cleaning operator and end up at the top of the company. You could go to McDonald’s and start as a cashier, but it would take you a lot longer to work your way up to franchise owner.”

  By July 2015, Managed by Q had 228 accounts in New York, 25 in Chicago, and 28 in San Francisco, and a customer retention rate over 90%. Customers spent almost 30% of their total monthly bill with Managed by Q on services other than their routine office cleaning, by adding on items like maintenance and cleaning supplies.14 And the company had begun to get attention for its Good Jobs Strategy, which CNN called “the anti-Uber model.”15

  At the same time, the difficulties of applying the Uber model to businesses beyond transportation grew increasingly clear.

  Homejoy, another gig economy cleaning company, announced it was going out of business in July 2015. Others followed: The companies that had pitched using the gig economy as a way to park cars in San Francisco either abruptly shifted their business or closed. On-demand laundry startup Washio, which had charged just $2.19 a pound for washing and folding clothing, plus delivery, announced it was calling it quits.16 The number of venture capital investments in the gig economy fell from its peak of 179 deals in 2015 to around 114 deals in 2016, according to CB Insights.17

  For all of the reasons that Dan and Saman had argued—training, motivation, and consistency of service—and also for the sake of avoiding lawsuits, switching from an “Uber for X” model to one that relied on employees had become a new trend in the gig economy.

  Instacart, a startup that delivers groceries and once relied entirely on independent workers, also made the decision to hire workers rather than rely solely on independent contractors. “This is something that people need to be trained on and coached on, on a regular basis,” said Apoorva Mehta, the CEO.18 Ultimately, Instacart offered training to employees that taught them skills like how to pick out a ripe avocado and the difference between basil and parsley. Shyp, a shipping service that initially relied on independent couriers to pick up packages from customers’ homes and deliver them to its warehouse, made a similar change. In a blog post, Kevin Gibbon, the CEO, explained that moving to employees was “an investment in a longer-term relationship with our couriers, which we believe will ultimately create the best experience for our customers.”19 Delivery restaurants Munchery and Sprig also switched their couriers from independent contractors to employees shortly after launching. The gig economy remained prevalent, both in Silicon Valley and beyond, and some of the startups that switched away from using independent contractors failed even after hiring employees. But Managed by Q had to some extent proved the Good Jobs Strategy could work.

  Running Managed by Q was still stressful, but a high rate of customers and cleaners quitting wasn’t the reason. A growing source of tension came from a rift between the two cofounders.

  Dan and Saman had once been co-CEOs, but now Dan was CEO and Saman was leading the product team. In the new office, they sat apart: Saman with the engineers, and Dan with the business team in a different area. Saman had moved out of New York City to Westchester after Q had launched, and if someone called at 3 a.m. because there weren’t enough mops, it was usually Dan who dealt with the late-night emergency—a circumstance that sometimes grated on Dan when he was crawling out of bed in the wee hours of the morning to go shopping at Home Depot. The cofounders spoke less frequently and increasingly had different ideas about how the company should be run. �
�We started having disagreements [in the office] just like parents have disagreements in front of their kids,” Saman said.

  In January 2016, Saman left the company (he remains a major shareholder). “It’s very much like being separated from your child,” Saman told me more than a year later, describing the experience as “surreal.” Though Dan felt the new arrangement was better for the company, he later described it as the hardest thing he’d ever done as CEO.

  Managed by Q was still far from profitable, and the journey was not getting any easier.

  PART IV

  BACKLASH

  CHAPTER 10

  THE MEDIUM IS THE MOVEMENT

  “Uber for X” startups quickly became synonymous with the on-demand economy. Thanks to Uber’s business model, city dwellers who were merely wealthy, and not disgustingly rich, could for the first time have every need filled at the push of a button. Startups would summon independent workers to deliver meals, shop for groceries, do laundry, or even park cars for just a small fee. “In the new world of on-demand everything,” wrote one critic of this system, “you’re either pampered, isolated royalty—or you’re a 21st century servant.”1

  The price of this affordable royalty treatment was still falling. Under pressure to grow as quickly as possible, startups often discounted their services to attract customers and undercut competitors. Uber and Lyft engaged in a “price war” that would eventually in some cities make their services cheaper than public transportation. These price reductions were partially subsidized by venture capitalists who had invested billions in the companies, but they were also funded by cuts to drivers’ pay. As Uber and Lyft became prevalent, the startups continued to cut fares and increase commissions, claiming a higher percentage of each fare as a fee. Customers, if they were aware of any impact that this had on drivers, didn’t seem to care. Anonymized data from millions of credit card accounts showed that Uber’s growth in weekly users started to accelerate in 2015.2 By 2017, Uber had around 2 million drivers and 65 million customers worldwide, according to its cofounder Garrett Camp.3