Massachusetts Attorney General Maura Healey gave a coalition of app-based service providers like Uber and Lyft the go-ahead to start collecting signatures needed to put a proposed ballot measure before voters that would define drivers as independent contractors rather than employees.
Backers of the initiative, which is essentially a MA version of Proposition 22, would need to gather tens of thousands of signatures for the measure to make it to the November 2022 ballot. Despite the fact that last year Healey filed a lawsuit that challenged Uber and Lyft’s classifications of drivers as contractors who are therefore not entitled to benefits like sick leave, overtime or minimum wage, on Wednesday, the AG certified the current measure met constitutional requirements.
The news comes nearly two weeks after a superior court judged ruled California’s Prop 22, which was passed in 2020, unconstitutional. The union-backed Coalition to Protect Workers’ Rights urged Healey to reject the measure under the same grounds, and told Reuters that it is considering suing to challenge the measure.
The Massachusetts Coalition for Independent Work, the coalition of members including Uber, Lyft, DoorDash and Instacart, filed the petition for this ballot initiative last month, a move that Uber CEO Dara Khosrowshahi said he thinks is “the right move.” The proposed initiative would also allow drivers to earn a minimum of $18 per hour in 2023 before tips and provide those who work for at least 15 hours per week with healthcare stipends. Drivers would also be guaranteed at least 26 cents per mile to cover vehicle upkeep and gas.
The coalition has until December 1 to collect and file 80,239 signatures from voters. If they miss that deadline, they can gather an additional 13,374 signatures by July 6, 2022 to get the initiative on the ballot.
Startups are hard work, but the complexities of global supply chains can make running hardware companies especially difficult. Instead of existing within a codebase behind a screen, the key components of your hardware product can be scattered around the world, subject to the volatility of the global economy.
I’ve spent most of my career establishing global supply chains, setting up manufacturing lines for 3D printers, electric bicycles and home fitness equipment on the ground in Mexico, Hungary, Taiwan and China. I’ve learned the hard way that Murphy’s law is a constant companion in the hardware business.
But after more than a decade of work on three different continents, there are a few lessons I’ve learned that will help you avoid unnecessary mistakes.
Shipping physical products is quite different from “shipping” code — you have to pay a considerable amount of money to transport products around the world. Of course, shipping costs become a line item like any other as they get baked into the overall business plan. The issue is that those costs can change monthly — sometimes drastically.
At this time last year, a shipping container from China cost $3,300. Today, it’s almost $18,000 — a more than fivefold increase in 12 months. It’s safe to assume that most 2020 business plans did not account for such a cost increase for a key line item.
Shipping a buggy hardware product can be exponentially costlier than shipping buggy software. Recalls, angry customers, return shipping and other issues can become existential problems.
Similar issues also arise with currency exchange rates. Contract manufacturers often allow you to maintain cost agreements for any fluctuations below 5%, but the dollar has dropped much more than 5% against the yuan compared to a year ago, and hardware companies have been forced to renegotiate their manufacturing contracts.
As exchange rates become less favorable and shipping costs increase, you have two options: Operate with lower margins, or pass along the cost to the end customer. Neither choice is ideal, but both are better than going bankrupt.
The takeaway is that when you set up your business, you need to prepare for these possibilities. That means operating with enough margin to handle increased costs, or with the confidence that your end customer will be able to handle a higher price.
Over the past year, many businesses have lost billions of dollars in market value because they didn’t order enough semiconductors. As the owner of a hardware company, you will encounter similar risks.
The supply for certain components, like computer chips, can be limited, and shortages can arise quickly if demand increases or supply chains get disrupted. It’s your job to analyze potential choke points in your supply chain and create redundancies around them.