Carrying two iPhones that beep out assignments throughout the day, Lyons works for four different app-enabled bike-courier services: WunWun, UberRush, Zipments and Petal by Pedal. He does about 25 to 30 deliveries per day, which adds up to about 50 miles, including the commute.
When he first got started last year, Lyons tried working for traditional bike-courier services where he would make $3 per delivery. “It was outrageous,” he says. “They treat you like an animal.”
Some of the newer services Lyons works for are subsidized. When it first started, Uber was giving away free courier service for its UberRush local delivery trial. Lyons says that demand has dropped a bit since the initial promos wore out.
WunWun — which has the insane premise of deliveries from any store or restaurant in Manhattan within an hour, for free — keeps Lyons the busiest.
Lyons claims WunWun’s system of working for tips, which are suggested within the app at 30 percent, somehow actually works. “You never really get snubbed out on a tip,” he says.
By literally working his butt off, Lyons thinks he will make between $45,000 and $60,000 this year.
“If people wanted it so badly, why did it not exist?” he says. “It was too darned expensive, and it was not sustainable. Even in 2010, a business like ours would be incredibly difficult to start because not enough sections of the population had smartphones.”
Still, Xu will admit that Palo Alto might not be the most representative test market in the world. As we drive to pick up the delivery, we pass three Teslas parked in a row in the shopping-center parking lot. “Only in Palo Alto,” he says.
But it’s bigger than Palo Alto. It’s bigger than San Francisco or New York. Take all these stories together and the larger point is: The business of bringing people what they want, when they want it, is booming.
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.
Not to neglect the important historical contributions of pizza joints and Chinese restaurants, but the groundwork for what you might call the instant gratification economy was laid by Amazon, which spent years building up its inventory, fulfillment infrastructure and, most importantly, customer expectations for getting whatever they want delivered to their doors two days later.
Then Uber came along and established the precedent of a large-scale marketplace powered by independent workers and smartphones. After that started to work, every pitch deck in Silicon Valley seemed to morph overnight into an “Uber for X” startup.
On the one hand, this is a positive development. As startups merge online expectations with offline reality, the Internet is becoming more than a glowing screen drawing us away from the real world. On the other hand, instant gratification tempts us to be profoundly lazy and perhaps unreasonably impatient.
As for whether there’s demand, forces are converging to fulfill the notion of what some pundits label “IWWIWWIWI.” That is, “I want what I want when I want it.” It’s not the easiest acronym to get your tongue around — but it’s pretty to look at, and it’s right on the money.
Yarrow thinks we’ve become conditioned for impatience by technology like Internet search and smartphones. “Today, we have almost no tolerance for boredom,” she told me. “Our brains are malleable, and I think they have shifted to accommodate much more stimulation. We’re fascinated by newness, and we desire to get the new thing right away. We want what we want when we want it.”
Someone had told me the day before that one way to think about all this instant gratification stuff is that it basically brings rich-people benefits to the average person.
In his view, the magic of Uber and services modeled on Uber is that they help you value your time the way a rich person would, without spending your money the way a rich person would.
For decades, books and TV shows planted seeds of desire for instant gratification in impressionable minds. But across many of these stories about suburban genies and witches, magic wands and technology of the future, there’s a shadow side to getting what you want when you want it. The princesses always seem to run out of wishes before they get what they really need. Their greed is their doom.
“Don’t care how, I want it nooow,” sings greedy little Veruca Salt, right up until she falls into Willy Wonka’s garbage chute, never to be seen again.
In Pixar’s wistful animated sci-fi story “Wall-E,” the people of the future zoom around in hovering chairs in a climate-controlled dome, with robots refilling their sodas. Their bodies are so flabby they can’t even stand. It’s the ultimate incarnation of the couch potato.
The most important reason that this is happening now is that workers have smartphones. After a briefer-than-brief application process, companies like Uber hand out phones to workers — or just give them an app to download onto their personal devices — and suddenly, for better or worse, they’ve got a branded on-demand service.
Over and over again, startups in the instant gratification space tell me that the most crucial part of their arsenal is an app to help remote workers receive assignments, schedule jobs and map where they are going.
In large part because they are powered by a mobile workforce, instant gratification startups avoid much of the hassle and expense of building physical infrastructure.
“Remote controls for real life” is how venture capitalist Matt Cohler described mobile apps like Uber and the food-delivery service GrubHub two years ago — because their simple interfaces summon things to happen in the physical world.
Today, that real-life remote control feels even more like a magic wand. At a lunch meeting, investor Shervin Pishevar pulls out his phone, opens the Uber app and sets his location to Japan. “If I push this button right now,” he marvels, “I’m going to move metal in Tokyo.”
He describes this as a boomerang back to a village economy. After years of trends toward suburbs, big-box stores and car ownership, smartphones could be helping us get back to where we came from. The combined forces of urbanization, online commerce and trust mean that people can efficiently share goods and services on a local level, more than ever before.
Caviar, which was founded on the premise that “no good restaurants in San Francisco deliver,” became profitable within three months of launching. It has a much snazzier list of restaurants than GrubHub, including Momofuku in New York and Delfina in San Francisco.
Caviar CEO Jason Wang says his startup plans to soon drop delivery fees to $4.99 from $9.99. It pays drivers $15 per delivery and takes a cut of up to 25 percent of each order, depending on the restaurant. Even after the price cut, “We’ll still make money, because our margins are very good,” Wang says.
Uber is a company that owns nothing. It connects available drivers and their cars to people who want to be their passengers. By juicing supply with surge pricing and demand with discounts, Uber is able to create — out of thin air — a reliable service that exists in 140 cities around the world.
Without fail, instant gratification startups say they will win because they are smart at logistics.
Describing his business, Instacart founder and CEO Apoorva Mehta says, “It really is a data-science problem masked into a consumer product.”
DoorDash’s Xu describes his purpose as a machine-learning problem: Discovering “the variance of the variance” so his algorithm can reliably estimate prep and delivery time based on factors like how long a type of food stays warm, what a restaurant’s error rate is (the norm is 25 percent) and how fast a particular driver has been in the past.
Uber aims to match up a driver and passenger as quickly as possible. Food delivery is more complicated, according to Xu.
“It’s almost never the driver that’s closest to the restaurant when the order is placed,” Xu says.
a mobile medical-marijuana delivery startup called Eaze launched in San Francisco. Not only was Eaze open for business, it was open for business 24 hours a day.
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.
The smartphone is at the center of the sharing economy. Every company mentioned in this series on the instant gratification economy runs on worker smartphones. GPS, texting and mobile-app notifications are the ways to make flexible work actually work.
It’s very common for people to pick up gigs from multiple services — in the morning, grab some grocery orders on Instacart; then when you get tired of lifting large bags, run a shift during Sprig’s prime lunch hours; then when you get lonely from ferrying around inanimate objects, sign into Lyft to interact with an actual person.
NYU business school professor Arun Sundararajan’s summer research project is counting the number of jobs created by the sharing economy. He doesn’t have an estimate yet, but he points out that the U.S. workforce is already 20 percent to 25 percent freelance.
Sundararajan says he sees a lot of good in the sharing economy. “It will lead people to entrepreneurship without the extreme risks.” He thinks of platforms like Uber as gateways. “It’s even easier than finding a full-time job, which is easier than freelance.”
Redefining delivery for a new era of customers who want everything right away requires rethinking operations. By focusing attention on creating a powerful logistical system, and tying into the “sharing economy,” many of the new crop of startups in the on-demand space are trying to offer faster service at a much lower operational cost.
And so the young players in the instant gratification economy are ferrying cargo across town via crowdsourced workers.
Usually, these are independent contractors, who decide when they want to work, drive their own vehicles, receive directions about where they need to be via smartphone — and cover the cost of their own parking tickets. The new buzzword for this is “fractional employment.”
Deliv is trying to do deliveries of almost anything and everything later that day, for as little as $5.
Crowdsourced drivers pick up batches of orders, and then take them out to people’s homes.
“I don’t own trucks, I don’t pay for drivers I don’t use, I don’t pay for hubs,” Carmeli says. “The malls are my hubs.”
Amazon said last year that more than 20 million members signed up for its two-day delivery service, Prime, which now costs $99 per year. While that’s a small number in the grand scheme of things, the high-spending habits of the group — estimated to be more than twice as much as regular Amazon customers — are having a magnetic effect on the rest of the industry.
A skunkworks team at Google developed what became Google Shopping Express last year, by putting the Amazon Prime model under a microscope. According to a source familiar with the project, the biggest lesson was that it’s worth investing ahead of where the market might be today.
Which is to say, many people still don’t know they want same-day delivery, because today they think same-day delivery means fuss, friction and expense. But if you make something fast and easy, consumers will come to appreciate it — and maybe even pay for it. So the upfront investment is worth it.
“It’s better to build volume first, than to launch with a ‘gotcha,’” the source says.
That’s the hypothesis, anyway.
And Google isn’t testing the last part of that hypothesis — charging people money — yet.
It is currently subsidizing six-month trials of unlimited free delivery. In fact, the company is throwing something like $500 million at Google Shopping Express.
Competing with that kind of budget is a scary prospect for startups.
The scrum now includes two Ubers for home cleaning, a few Ubers for handypeople, at least three Ubers for massages, five Ubers for valet parking, a couple of Ubers for laundries, an emerging group of Ubers for hair and makeup, and so very many Ubers for food.
Could you actually make a business out of offering same-day delivery — for free? Permanently, not as a promotion.
WunWun, promises to buy anything from any store or any food from any restaurant in Manhattan, parts of Brooklyn and the Hamptons, and deliver it to any place in that same zone. It’s free.
Hnetinka was inspired by an April 2013 investment memo from Jefferies called “Same-Day: The Next Killer App,” which made two big points: 1) Free shipping has become a “must-have” in e-commerce. Half of consumers abandon online shopping carts without it; and 2) there’s the opportunity to improve on that service by making it same-day.
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.
Tomorrow, WunWun will try to create the offline equivalent of search advertising, Hnetinka says.
Stores will be able to bid to be the supplier for WunWun orders, whether tennis balls, ChapStick or Yankees hats.
“That’s when WunWun really starts to make a lot of money,” Hnetinka says. “We have created the largest demand funnel. We’ve brought together convenience of ordering online with immediacy of offline. So we’re not talking about profitability margins, we’re talking about marketing budgets.”
at that moment in time, it seemed like all you had to do was pick a noun, add “.com,” and you were in business.
As a sign of the times, one company called Computer.com spent half its $5.8 million in venture capital airing Super Bowl ads on the day it launched a site purporting to teach people about using computers.
And there were parties, legendary parties, where the likes of Elvis Costello and Beck and the B-52s played, sponsor banners bedecked the walls, and many of the revelers collected their mountains of swag while having no idea which company was even throwing that night’s bash.
Even if Kozmo and its cohort had a chance at a business model that worked, they were all spending more money than they could possibly earn on advertising and parties and weird promotional tie-ups to return movies at Starbucks.
As we all know, that boom went bust in 2000. The period’s most famous flameouts — Pets.com, Urbanfetch, Kozmo, Webvan, even Computer.com, somehow — were all gone by 2001. What’s left — a cautionary tale and some mascot dolls for sale on eBay.
Same-day service is the single-biggest wave in e-commerce, Wainwright says. The single best experience she had shopping online was when she forgot to pack a certain special black cashmere sweater before flying to New York for a business trip.
Wainwright says she realized the sweater was missing at 11 pm, when she unpacked her bag at the hotel. But it was still posted on the online retailer Net-A-Porter, where she originally bought it, so she placed another order and it was delivered to her office at 10:30 the next morning by a deliveryman in a bellboy suit bearing an iPad for her signature.
“It was absolutely the most amazing thing,” Wainwright says. “It was like $25, it was nothing. Now, the sweater wasn’t cheap — but it was the exact same sweater I had left on my bed.”
Jennings has set up a virtual Google Voice number attached to his doorbell so he can let people into his entryway from his phone when he’s not home.
“Say you run out of toothpaste in the morning, you can order it, and then it’s ready for when you brush your teeth at night,” he says.
“The majority of the time, there’s no interaction,” Jennings says, meaning he doesn’t have to say hello to a delivery person or sign for a package.
And in the future, people may be taken out of the delivery equation altogether.
That future is coming sooner than you think. Two years ago, the geek world went wild for an idea called Tacocopter. “Flying robots deliver tacos to your location,” said its website. “Easy ordering on your smartphone.”
“It wouldn’t surprise me to see that the regulations that now limit such uses of drone technology will almost certainly remain in effect much longer than the technological limitations remain a hurdle,” wrote Mike Masnick.
Eight months ago, Amazon upped the Tacocopter stakes with a promo video for Amazon Prime Air, showing a hovering robotic aircraft depositing a package on a suburban patio. It was a marketing stunt designed to jumpstart the holiday shopping season.
Or was it?
In July, Amazon wrote to the FAA asking for permission to test flying commercial drones outside at speeds of up to 50 miles per hour. The company said it hopes to deliver packages weighing five pounds within 30 minutes of orders being placed.
“A lot of things fundamentally change,” he says. “Does the architecture of homes change because there’s more space when you don’t need garages and kitchens? Do you really need a grocery store? You shouldn’t use all that real estate in a city for giant parking lots, you should push a button and be able to get what you want delivered, like Instacart.”
He continues. “And then you argue, is there a world where you have Munchery [another San Francisco food creation and distribution service] delivered to a restaurant that’s not really a restaurant, but it’s a … it’s a front-end. It’s a beautiful spot with a beautiful view, and it doesn’t need a kitchen, just have a few tables for a sit-down dinner.”
This train of thought has taken him to a new place. “You know, I hadn’t thought about that,” Pishevar says. “It’s just a … a distributed table. And then someone would come serve you.”
A popular justification for all this food-startup fundraising is frequency: Most people eat three times a day, at least.
No, really, that’s what every venture capitalist will remind you. This market is an opportunity because it ties into existing daily habits. People eat more often than they need to Uber across town. And so, the biggest opportunity in “instant” is food.
Sure, making food is not novel. The innovation here is making food that ties into smart logistics systems that match supply and demand, and coordinating crowdsourced workers so that meals arrive so fast it seems like magic.
“We’re mass-producing the same meal for all these people. We get economies of scale that no restaurant will ever have because of the physical location. Whereas, we can serve the whole Bay Area with the same supply.”
This is not just a restaurant, says Tsui. Combining the core mobile functions of location and real-time makes for a fundamental shift beyond what other mobile apps — besides Uber — are doing.
Especially for those who live in the cities well served by these services, it’s probably time to start thinking about what deserves to be slowed down, and what things we’d prefer to wait for and savor. Either that, or the inexorable march toward convenience will bring us ever closer to fulfilling the prophecy of those shapeless “Wall-E” couch potatoes, who have trouble standing up after sitting on the couch for so long.
But beyond instant — what comes next?
It’s probably making those brilliant on-demand logistics systems even more brilliant, anticipating our wants and needs before we even have them, and starting to send things our way before we push the button.
And maybe then Veruca Salt would just calm down.