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Uber and Airbnb Lobby for Gig Worker Bailout

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(Bloomberg) — Isolated with his family at home in San Francisco, Uber Chief Executive Officer Dara Khosrowshahi has been making pleading phone calls to members of Congress. Khosrowshahi is asking for a bailout—not for his company, which has told investors it should have at least $4 billion in cash by the end of the year—but for its idle drivers.Uber Technologies Inc. and Airbnb Inc., the leaders of the so-called sharing economy, are suffering during the Covid-19 shutdown, but not in the same way as traditional travel companies like airlines or hotel chains. They’ve built their business models on offloading as many costs and as much risk as possible to their suppliers. Uber doesn’t have to pay salaries for drivers with little or nothing to do. Now it’s those Uber drivers, as well as Airbnb’s hosts, who have to worry about paying for cars and houses that are not generating income as they depreciate in value. The companies are hardly immune to the fallout from the pandemic. Uber has lost about 20% of its market value since the end of trading on on Feb. 26, and Airbnb’s board considered revising its plan to go public at a recent meeting. But executives from both companies have focused on drivers and hosts when working the phones to secure some government relief. Uber also sent a letter to the White House and congressional leadership. Airbnb penned a letter of its own advocating for hosts. After an early morning agreement, the massive bailout bill Congress is working seems set to extend unemployment benefits to independent contractors and sole proprietorships, bringing relief even to workers for platforms that haven’t been paying for unemployment insurance. In a letter to colleagues Minority Leader Chuck Schumer wrote that the bill "ensures that all workers are protected whether they work for businesses small, medium or large, along with self-employed and workers in the gig economy."Khosrowshahi has spoken to at least 10 members of Congress in the past week, according to two people familiar with the matter who asked not to be named discussing private matters. Perhaps his most fruitful call came with Schumer, where the senator seemed to indicate support for protecting independent contractors, the two people said. A spokesman for the minority leader did not return a request for comment.As he makes the rounds, Khosrowshahi has been reminded that being the chief executive of a $45.5 billion company doesn’t automatically make someone a power player in Washington. When he attempted to bend the ear of Senate Majority Leader Mitch McConnell, for instance, Khosrowshahi was shunted off onto a staffer. “He's not even demanding to talk to the principals,” said Justin Kintz, Uber’s head of policy. “He's willing to speak to anyone on the Hill who is willing to listen.”Similarly, Airbnb’s three co-founders have spoken with more than a dozen members of Congress, making sure that U.S. hosts— who often file their taxes as sole proprietors—benefit from the bailout package, according to two people familiar with the matter who asked not to be named discussing private matters. They’ve also enlisted thousands of hosts to urge lawmakers to include people who earn income by renting property on Airbnb in their unemployment protections. Airbnb also wants to make sure hosts are eligible for Small Business Administration emergency loans. While both companies are familiar with controversy, they believe they have a winning political issue. “To put it in a really fine perspective, 14% of our hosts are from households that include teachers,” said Chris Lehane, a long-time Democratic operative who runs Airbnb’s policy shop.Uber is the leader of a larger group of companies who have pushed the boundaries of traditional employment that also includes Lyft Inc., Postmates Inc., and DoorDash Inc. All of them consider their workers to be independent contractors, and don’t provide benefits like health insurance. Airbnb hosts aren’t independent contractors, but are taking on financial risk in much the same way that ride-hail or delivery drivers do. Critics of sharing economy companies have long argued their business models were creating circumstances that would make workers vulnerable during a downturn. By offloading risk onto workers, they’re also putting pressure on the governments to whom it will inevitably fall to support them. For its part, Uber has been arguing that states or the federal government create a new status of worker that is neither totally an employee or an independent contractor. “The company has been pushing for a third way for seven years,” said Lane Kasselman, a former Uber executive who advises startups. The vulnerability of workers now, he said, is “proof of what they’ve been saying all along.” Patricia Smith, who was solicitor of labor under President Barack Obama, said Uber was “taking advantage of a crisis” by pushing for a new legal status of work, predicting such a move would inspire other companies to push employees into situations with fewer benefits.  “All you’re going to do is open the door to even more misclassification,” she said.  While Uber is eager to advocate for its workers, it has not moved to use the $10 billion it had in cash as of the end of February to provide relief itself. Doing so could increase the likelihood the company would be compelled to continue paying out those benefits going forward, the company says. Uber has however said it will compensate drivers who suffer from coronavirus.Uber’s turn towards driver advocacy hasn’t gone unnoticed. “A little ironic, right? Uber has spent so much time and money fighting reclassification,” ” said Bradley Tusk, a startup advisor who previously worked with Uber but sold his shares. “Now there's all of a sudden an upside of people being treated as employees and they want it.”(Updates starting in the third paragraph to reflect updated market cap, new details to reflect status and content of stimulus bill, and Uber’s compensation of drivers with coronavirus.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.



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U.S. Futures Fluctuate, Stocks Slip; Dollar Jumps: Markets Wrap

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(Bloomberg) — U.S. equity futures fluctuated and stocks slipped on Monday as investors weighed a weekend full of negative coronavirus news against the stimulus measures that triggered a bounce in risk assets last week. The dollar rebounded, Treasuries edged higher and oil sank.Contracts on the S&P 500 Index swung between losses and gains after President Donald Trump abruptly abandoned his ambition to return American life to normal by Easter. Abbott Laboratories surged in the pre-market after unveiling a five-minute coronavirus test. Shares in Europe followed earlier declines across much of Asia, though they came off their lows. The dollar was on course to snap a four-session losing streak.Core European bonds rose after the outbreak killed more than 3,000 in Spain and Italy over the weekend. Pessimism returned to credit markets, where the cost to insure high-yield debt jumped in both Asia and Europe, as Moscow and Tokyo joined other cities urging residents to remain at home. Brent crude extended recent losses and was set for its worst month in history, down about 54%.Investors are beginning the week digesting word that the biggest economy will stay crippled for longer after Trump heeded advice from the government’s top doctors that re-opening the U.S. in two weeks risks greater loss of life as the coronavirus outbreak accelerates. The president said in a news conference “social distancing” guidelines would remain until at least April 30, while his top infectious-disease expert said 100,000-200,000 may die.“Markets are still in uncharted territory,” said Medha Samant, director of investment at Fidelity International. “When you look at the stages of this pandemic, you’ve gone into escalation,” she said. “The epicenter has shifted to the U.S.”In the latest stimulus moves, China’s central bank lowered short-term funding rates and injected cash into its financial system, Australia announced a job-support program and limited public gatherings to just two people, while Singapore unveiled an unprecedented easing in policy.“The assumption that we can turn a switch in a month or two and everything is going to be okay is a faulty opinion,” David Kotok, chief investment officer at Cumberland Advisors Inc., told Bloomberg TV. “We are waiting to see the closer timetable of treatment, testing, and vaccine — that’s very important to us.”Elsewhere, Australian shares were the notable exception to broad declines, with the equity benchmark surging by a record thanks to the new stimulus measures. Emerging currencies including South Africa’s rand and Mexico’s peso tumbled amid concern about debt downgrades.Quarter-end strains could add to investor nervousness on Monday and Tuesday as financial firms rein in collateral lending to shore up balance sheets, while Japanese banks face their fiscal year-end. The MSCI gauge of global equities is down about 23% since the start of the year, on course for its worst quarter since the end of 2008.These are the main moves in markets:StocksFutures on the S&P 500 Index advanced 0.4% as of 12:27 p.m. London time.The Stoxx Europe 600 Index decreased 0.8%.The MSCI Asia Pacific Index dipped 0.9%.CurrenciesThe Bloomberg Dollar Spot Index jumped 0.7%.The euro declined 0.8% to $1.1048.The British pound decreased 0.5% to $1.2398.The Japanese yen fell 0.1% to 108.06 per dollar.BondsThe yield on 10-year Treasuries decreased two basis points to 0.66%.Germany’s 10-year yield decreased six basis points to -0.53%.Britain’s 10-year yield declined six basis points to 0.305%.CommoditiesGold fell 0.1% to $1,625.72 an ounce.West Texas Intermediate crude decreased 5.2% to $20.39 a barrel.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.



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Finding a middle ground to tackle the coronavirus crisis

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Good morning.

President Trump’s talk of reopening the economy on Easter, which he has now backed off of, has helped launched an important debate. At the moment, we seem stuck between two unrealistic alternatives: 1) a quick return to work, or 2) a widespread lockdown until a vaccine is ready (a year or more in the future). Both alternatives could lead to social and economic breakdown. But no one has articulated a clear vision for what the reasonable middle ground would look like.

What might it look like? The elements of a possible strategy are beginning to emerge. It will probably involve a nationwide lockdown that lasts at least through the end of May. Then, the return to work needs to roll out gradually, and include the following elements: continued protection/isolation for vulnerable populations; continued restrictions on large gatherings; increased production of protective equipment and ventilators; some proven therapies for treating the most vulnerable; priority given to those who can’t work from home over those who can; staggered start times to minimize rush hour crowding; widespread and rapid testing so new infections can be spotted quickly; sharp restrictions on travel so new infections can be isolated and contained; and antibody testing so immune individuals can be identified. The world should be watching China, Hong Kong, Singapore and South Korea as they probe the parameters of such an effort—even though more democratic societies will struggle to mimic many of their less democratic tactics.

Government needs to lead this effort; but business plays a critical role.   Fortune will be holding a virtual gathering of members of its CEO Initiative tomorrow, to begin a conversation on this topic. I’ll have more to report on Wednesday.

In the meantime, former Honeywell CEO Dave Cote—who successfully navigated the Great Recession and added $60 billion to his company’s market value before stepping down in 2017—has some advice for CEOs in the midst of this crisis.  You can read the full interview here, but some excerpts:

Focus on leadership, not consensus. “What matters is getting feedback from all your people, then making a decision.”

Hope for the best, plan for the worst. “Pick a plan and start executing as if you expect the worst to happen.”

Keep workers around for the recovery. In the recession “we did very few layoffs… Instead, we relied on furloughs.”

—In a crisis, don’t take a bonus. “When workers asked me if I intended to take a bonus for 2009, I’d say that was up to the board… That was a big mistake.”

More news below.

Alan Murray
@alansmurray

alan.murray@fortune.com



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Kumu’s KC Montero on creating quality online content

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Earlier this year, KC Montero took on the role of Head of Content at KUMU, the fastest-growing social media app in the country.

Perhaps best known as MTV’s longest-running VJ, KC’s career includes billings as host and producer on a number of shows like Celebrity Car Wars, Survivor Philippines, Discovery Channel’s Worst Vacation Ever, and GOOD TIMES on Magic 89.9. While KC’s star power and marketing talent are undeniable, what helps KC perform in the boardroom is his unique brand of creativity that ensures content on the app stays relevant to a young mobile audience.

As KUMU’s head of content, KC often gets asked, “what is good content?” It’s a question he thinks is fundamentally misguided.

“The term “good content’ can be used in such a broad sense,” he said. “Some would say that if you can watch a piece of content from start to finish, that it should be considered good content. That isn’t totally true because what’s inside that content can captivate you and keep your attention for three minutes but it doesn’t mean, to me, that it’s any good.”

KC believes audiences today want more than just flashy visuals, catchy wordplay, and a coherent aesthetic. What they’re looking for, he says, is something that makes them feel good about themselves.

“I like to use the phrase “quality content” which means that it’s thought-provoking, entertaining, and leaves you with a positive feeling,” KC said. This triumvirate guides every bit of programming KC oversees at KUMU, from the messaging to the technical executions—everything is designed to maximize quality.

The KC recipe for effective content

KC shares these three useful insights to aspiring content creators on how to keep things creative, dynamic, and worth sharing:

  • If it’s a long video, make sure you show a quick look at what happens in the video right away. You have to grab attention as fast as possible.
  • Get close. The closer the subject is, the closer the audience feels, but don’t overdo it. No one wants to see your pores.
  • Know your audience. Know what makes them tick and play into their wheelhouse.

Pushing innovative technology

More than any other device in history, smartphones are the most immediate, on-demand platforms for content consumption. With livestreaming, the bridge between consumption and creation has narrowed nearly to non-existence.

For the team at KUMU, it’s an inmate understanding of the relationships between platform, product, and people that guide their growth into everything from arts to online marketplaces.

This formula proves to be effective as KUMU now engages more than three million Filipinos around the world with its online contests, game shows, celebrity live streams, live e-commerce, and just recently audio streaming features.

“I think that content is really only bound by technology and how it’s delivered,” KC said. “I think at the moment, we’re on the cusp of an e-commerce boom and the faster and closer you can get to humanizing your process the more success you will have.”



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