Travis K's Secret to Gig Marketplace Economics? Tipping
Uber's Black Friday retail sales climb 300%, insurance costs climb
Travis Kalanick knows a thing or two about scaling up gig-powered marketplaces. Between Uber and CloudKitchens, he knows the ins and outs of making mobility and delivery businesses work as profitable endeavors. And now he’s just… tweeting out one of the most important factors in making the numbers work: tips!
In a marketplace, tips aren’t primarily about encouraging good behavior through a feedback loop; they’re a psychological hack that greases the wheels for both supply and demand. You can quibble with the 20% benchmark he’s used, but a courier or driver values $1 in tips more than they value a $1 in base pay. Something about the *ping* of the notification that you’ve received more than you had to makes the job feel more rewarding, and keeps workers on the platform longer.
The same is true for consumers. As much as users might grumble about tip-flation, they’ll continue to sprinkle in a few extra bucks here and there. And a shopper is much more likely to pick the option that’s listed as 80 cents in the initial screen, and then instinctively add on another 20 cents in tip later, than they are to pick an option that was initially priced “all-in” at a dollar.
A Legalized Advantage — But Can Platforms Tip?
All that has been true for years, but recent changes actually make it even more relevant. As part of the One Big Beautiful Bill Act, tips now go untaxed for most workers, subject to some income limits. And while not every type of tip is permissible, the guidance specifically says up to $25,000 in tips related to food delivery or ridehailing will go untaxed at the federal level, with a phase-out for higher earners starting at $150k. As dumb as that policy may be, it means that a dollar in tips is worth up to 24% more than a dollar in regular income.
Interestingly, we’ve seen some city-level policies work in the countervailing direction. When cities like NYC or Seattle mandate higher base pay for app work, they’re generally upping the non-tip portion. The platforms then in turn downplay tipping, to lessen the impact on consumers. I think in the coming years we’ll see the platforms experiment with offering tips themselves, as a way to offer compensation to workers that stretches a bit further. Have a high rating and work consistent hours? Maybe one of the 3PDs will throw in a nice $100 “tip” at the end of the year! It’s certainly not what the law imagined, but we’re not exactly in an era of heightened legal compliance…
HOT INDUSTRY NEWS & GOSSIP
A very smooth Cyber Monday: Consumers celebrated Black Friday / Cyber Monday with their usual exuberance, with spending up 7.1% YoY. But what does that mean from a logistics and delivery congestion POV? Well, the actual number of items purchased fell about 1%, with prices rising due to the impact of tariffs. Retailers have done what they can to cut costs; I caught up with Flexport’s Darby Meegan who noted that in the past few years, national carriers like UPS have gone from handling 90% of deliveries to handling less than half, with specialists and regional carriers like Veho on the rise. That’s good enough to save shippers a buck per box, while also improving speeds by 20%+.
For local retailers as well: It used to be that on Black Friday you muscled your way into a store, and then on Cyber Monday you sat at your computer and clicked at things on Amazon.com, which would then arrive a few days later. But with the 3PDs now all-in on retail, shopping patterns have blended into an interesting hybrid. Uber tells me that retail orders grew 300% on Black Friday, with consumers clamoring for AirPods, iPads, headphones and PlayStations. Interestingly, folks taking Ubers to stores seemed to have less interest in electronics, with top destinations including Walmart, Target, Ross, Macy’s, Best Buy, Burlington, Marshall’s, Dollar General, TJ Maxx and Kohl’s. And finally, a stat that will get stuck in your head: the top pet supplies item was live crickets, with over 5,000 units sold. I guess lizard owners really felt their “pets” needed a great Thanksgiving meal as well…
Wing and Walmart Head to Hotlanta (Suburbs): Drone deliverer Zipline just went live with Walmart at six Supercenters in the ‘burbs of Atlanta, as part of a partnership that will eventually cover parts of Arkansas, Texas, Florida and North Carolina as well. Why are they all in the South? Your first instinct may be regulatory or “pro-business” reasons, but it really comes down to the built environment. These are towns where it’s fundamentally impossible to walk to the store. Check out this map — literally the first location I chose on a lark — of a home near a Conyers, GA Walmart. A distance of 1400 feet as the crow flies becomes a 3.9 mile walk; in which case, you’ll opt for the drone! (See my previous writing about Wing in North Carolina.)
Insurance ruins everything around me… Zipcar is pulling out of London, and the U.K. entirely, citing rising costs and dwindling consumer spending. While London should be the perfect city for car-light living, the final nail in the coffin may have been insurance costs, which Barak Sas notes climbed 33% last year alone. Stateside, creeping insurance costs are having a huge impact as well: open-street event organizers at CicLAvia say their costs are up 5X, forcing them to rely more on brand activations to keep the lights on and the roads free of cars. Some of this just comes down to inflation, but legislators could help by capping max liability payouts. (As CA just did for TNCs.)
Secure bike parking conquers the eastern seaboard: NYC is rolling out bike lockers across the city, with 500 locations meant to enable biking to subway stations and popular destinations. The city just awarded the contract to our friends at Tranzito, but there were a number of great options (like Oonee) in the mix as well. D.C. is also getting new bike lockers, with 450 showing up at WMATA stations around the region.
Texas two-step? Avride and Uber are rolling out their robotaxis to Dallas, with the safety-driver equipped Hyundais hitting Downtown, Uptown, Turtle Creek and Deep Ellum. Texas may certainly end up being a prime market for AVs, if DFW suburbs make good on their awful plans to end public transit funding.
AV rules: California’s DMV just began a 15-day comment period for new rules on autonomous vans and heavy-duty trucks. Maybe regulators will finally make it so cars, and not just human drivers, can receive traffic violation tickets? Meanwhile, the City of Santa Monica has ordered a Waymo charging depot to shut down overnight, as nearby residents tire of all the reverse beeping and car noises. Perhaps this could be solved by… not putting the cars in an open-air lot? Pulling conduit into a parking structure is a bit harder, but there are plenty of Level 3 chargers built into buildings, some quite close to this lot. Further south, San Diego’s taxi committee is fighting the proposed expansion of AVs into their humble town. You might think “San Diego has taxis?” and you’d be right — these are mostly Uber and Lyft drivers. I bet the taxi committee was fighting them not too long ago!
New train Serb-ice? Belgrade, the largest European capital city without a metro, may finally get the rapid transit subway it deserves. City officials signed contracts worth €1 billion with French and Chinese construction consortiums, towards building a €4.4 billion ($5.13 billion) subway line. (Pretty pricy for a ~13 mile line in a middle income country.) Plans to build a subway have gone on and off for years. For a sense of Serbian transit excellence, please do take a look at these wild photos of their suburban trains or read the epic saga about the redevelopment of Belgrade Centre Railway Station. (And for you true nerds, make sure you watch the six part BBC documentary The Death of Yugoslavia — here it is on YouTube.)
Super fast, take two: Amazon is breathing new life into rapid deliveries, with 30-minute or less produce and electronics now available in Seattle and Philadelphia. The latter city is of course home to Gopuff, so you can see whose turf they’re coming for with this launch. Priced at $3.99 for Prime members of $13.99 without, you’ve got to really want those eggs to arrive quickly.
The housing crisis is pretty much nationwide at this point… New Brookings data shows that more and more middle-class families across the country can’t afford basic necessities. While rising food and child care prices aren’t helping, the biggest driver is of course high home prices. Towards that, it’s no surprise to see the biggest issues in coastal cities, while the Midwest (and surprisingly, Los Angeles) do well. Speaking of the Midwest, someone at Brookings really fucked up that map of Lake Michigan…
Cafe to go: The Trump administration is looking to roll back automotive fuel economy standards, reducing the 2031 average from 50.4 to 34.5 MPG. While boosters claim this will reduce the price of cars, consumers will quickly end up paying that all back and more in higher fuel expenses. In the announcement, President Trump also made a passing remark about wanting to legalize smaller trucks in the U.S. While lovers of cute kei-trucks are enthusiastic, I’ll believe this is happening when I actually see it…
A few good links: A new underground down under: Melbourne opens Metro Tunnel. India’s 3ev raises $13.5M for electrified tuktuks. Cash-strapped Rad Power Bikes hit by battery recall (pretty sure I have one of these cells - eep!) Tesla cuts Austin robotaxi fleet goals from 500 to 60. Japan’s Luup raises $44M to expand micromobility network. Area 2 Farms wants to turn under-utilized parking lots into urban agriculture amenities (we’ve seen this movie before…) Detroit releases 2026–2027 Dockless E-Scooter Permit Application. South Florida skyscrapers sinking at an alarming rate. How to build a community market in under-served neighborhoods (note to the Times: this is not a food dessert, there are full-service markets + healthy restaurants within a five minute walk…) Behind the scenes with DoorDash’s Tony Xu. Apartment rents dip nationwide as some (but not enough) new supply comes online. Dollar stores conveniently forget to update sticker prices, leaving cash-strapped shoppers to pay more at the register. Toronto plans to build new bike lanes, despite provincial pressure not to, by reducing car lane widths instead of eliminating them entirely. State Department offers Zipline $150M for African expansion. Autolane raises $7.4M to help AVs navigate retail zones. S.F. mayor pushes through upzoning. Waymo begins DoorDash DashMart deliveries near Phoenix. The decades-long plan to replace NYC’s BQE. Agentic shopping on the rise. Waymo should talk up its tele-ops capabilities. Non-Chinese carmakers hope to turn their flailing China operations into export hubs.
Don’t forget to score your Curbivore tickets!
- Jonah Bliss & The Curbivore Crew