Welcome to the Instant Gratification Econonomy

August 16, 2014 11:12 AM

A series from Re/code exploring the explosion of tech startups that cater to our every need and desire, on demand.

Part one: I Want It, and I Want It Now — It’s Time for Instant Gratification

A decade ago, we got iTunes, and the ability to buy a song bought and delivered with the push of a button. Then Facebook helped us stay in touch with our spread-out friends and family from the comfort of our couch. Then Netflix DVDs started coming over the air instead of to our mailboxes. Now it’s not just Web pages that we can load up instantly, it’s the physical world.

Part two: It Takes a New Kind of Worker to Make “Instant” Happen

But it can be too easy to forget that people make “instant” happen. And, generally, these people are not a traditionally stable workforce. They are instead a flexible and scalable network of workers — “fractional employees” — that tap in and tap out as needed, and as suits them.

Part three: Can “Instant” Become a Viable Business?

The streets of San Francisco are bottlenecked by double-parkers: Sedans with bright Google Shopping Express stickers on the side carrying bags of online purchases inside, hulking UPS and FedEx trucks, and as of last December, AmazonFresh trucks for the company’s online grocery service. UPS paid $1.27 million for 14,552 parking tickets to the city of San Francisco in 2013, according to the city’s municipal transportation agency. That’s up from $673,000 for 11,788 tickets in 2006. It’s just part of the cost of doing business.

Part four: Instant Replay: The Second Coming of On-Demand Delivery

Many people who remember the dot-com bust, or who know how to do math, are skeptical that same-day delivery can be a sustainable business. But you know who thinks reliving the instant-gratification boom again is a good idea? The people who did it the first time — even after they crashed and burned in millennium-ending style.

posted by ellieBOA (10 comments total)

Spoiler alert: cut out enough middle men, and suddenly you're the one in the middle.
posted by Potomac Avenue at 11:40 AM on August 16, 2014 [3 favorites]

I've been using Instacart for a while, and it first I was a little concerned about how the people doing the deliveries were being treated. I made a point of asking them about the job, and they all seem to genuinely like it. One person works at the grocery store and finds it convient to shop for a person and drop it off on the way home as a way to make some extra cash. It also seemed ideal for people who don't want a fixed work schedule because they are in college or what have you. Wether the business model is sustainable or not is another question, but I enjoy not having to shop as long as the people doing it aren't being exploited.
posted by OrangeGloves at 12:09 PM on August 16, 2014 [4 favorites]

As a narcissist this is the best thing that's happened to me since me!
posted by Foci for Analysis at 1:29 PM on August 16, 2014 [5 favorites]

I'm getting a little skeptical about the "Uber for X" companies. It strikes me as unwise to heavily invest in services that are only relevant in NYC and SF, and only there relevant to a small slice of the population.

I've been reviewing a lot of food delivery services (for my job) and I keep coming back to the question "but how are you going to make money - like real money?" I just struggle to see a long-term profitable business to be made from delivering room temperature spaghetti to design firms.

And this quote from the part 3 kind of sums it up for me:

Hnetinka’s answer is that everyone else is thinking too small. For today, WunWun is making money by taking a slice of tips, and by getting discounts from retailers it spends a lot of money with that it doesn’t pass along to customers.

So your business plan is to make money from tips? And further, tips that you are skimming from your employees? That's insanity.
posted by elwoodwiles at 1:49 PM on August 16, 2014 [4 favorites]

elwoodwiles: "services that are only relevant in NYC and SF, and only there relevant to a small slice of the population"

One of the most interesting things about watching the current "startup boom" is the targeting that goes on, beyond the 83 services that exist to bring an ice cold soda from a nearby convenience store straight to your San Francisco door at 3AM for $0.09... Being in Seattle's 98122 ZIP code has been quite instructive. 98122 is shared between very-dense, ultra-hip, modern-trendy, combine-other-words-here Capitol Hill and still-dense, not-as-hip, bad-but-undeserved-reputation Central District* but out-of-area startups either don't notice the distinction or don't figure that anyone in the CD will bother ordering with them after they launch. I happen to be in the not-Capitol-Hill part of 98122 and seeing the wariness some of these startups have is...interesting, primarily from the people who show up in response to an order or request. There's one company** that just won't go to CD addresses in 98122, and another that will serve single-family houses but not apartments in the area, even though both areas are made up of a lot of apartment buildings.

* Yes, Madrona, you're in 98122 as well but I have no experience with this sort of thing in your area.
** Not naming it because I haven't tried it for myself, just anecdotes.
posted by fireoyster at 2:08 PM on August 16, 2014 [1 favorite]

Another issue I have is these companies are not started to address a need in the market - per se, but rather because it's now possible to provide a service (any kind of service will do) without building an infrastructure. Nearly all aspects to these companies depend on other people's assets: their cars, smartphones and formally stable careers and skill sets. Without having to develop any logistics, or purchase any equipment, these companies don't put much into the economies around them - they are built purely to extract value.

This wouldn't be a problem for me from a investment perspective, but I see too many companies building brands instead of assets. At the end of the day there's nothing to invest in but a logo. Washio could vanish tomorrow and nothing would change. This makes me distrust the company principles - they have no skin in the game.
posted by elwoodwiles at 2:54 PM on August 16, 2014 [9 favorites]

If they're not addressing a need, then why are people paying them money? Have they been duped? Are they confused? Most of these companies are based on the idea of creating an easier way for people who want services and people who provide services to find each other and make transactions. That's the skin they have in the game -- building the software, creating relationships with service providers, then going out and promoting their apps to find those service providers more customers.
posted by the jam at 4:58 PM on August 16, 2014 [2 favorites]

If they're not addressing a need, then why are people paying them money?
They're addressing a desire of people who have money, which is a small-and-getting-smaller, geographically-concentrated-and-getting-more-so population. Maybe not today, but in the near future, Billion Dollar Corporations will emerge to provide Super Services to less than the number of American neighborhoods you can count on your hands and toes.
posted by oneswellfoop at 7:13 PM on August 16, 2014

Re: Deliveries to Capitol Hill 98122 but not Central District 98122

Many companies won't deliver to 98118 at all, even though part of 98118 is one of two of Seattle's wealthiest sub-neighborhoods (Seward Park). 98118 is also the most ethnically diverse neighborhood in the US, I have heard. I lived in the affluent part of 98118 for most of a decade and couldn't get delivered pizza, asian food, or often, taxi service. Safeway and Amazon would deliver, though. I now live in a less fancy part of 98118 (but still with 1.5x Seattle average house values), and there's no delivery other USPS, UPS and Fed Ex here, period. I've NEVER seen an Amazon Fresh truck here, or their distinctive reusable delivery crates, nor Safeway. Taxis, however, no problem.
posted by Dreidl at 8:13 PM on August 16, 2014

It strikes me as unwise to heavily invest in services that are only relevant in NYC and SF, and only there relevant to a small slice of the population.

If the future of American living is a return to urbanization, then other cities will follow. Ones with less dysfunctional living costs, God willing.
posted by Apocryphon at 12:27 AM on August 17, 2014