Deliveroo IPO disaster - A question of ethics

keithmac

Veteran
Didn't they make a massive loss last year?, amazing the "drivers" will work for them tbf.
 

cisamcgu

Legendary Member
Location
Merseyside-ish
Not worst for the company. Perhaps for the people who bought the shares immediatey and lost upto 30%

Not sure asset managers really care about 'ethics' since they all run, for example, China Funds, and don't seem overly worried about that. More likely they saw that Deliveroo was unable to turn a profit even during lockdown, and have competition from Uber Eats and JustEat amongst others.
 
Good evening,

Way back in the 2000s I lost a bit of money when I had shares in a company called Acuma, they specialised in arranging Individual Voluntary Agreements, the legal work-around when you have borrowed more than you can afford to repay.

The business closed because at the end of the day it didn't have a fair business proposition, someone in the chain had to lose, in this case it was the lenders and the "customers", the borrowers didn't want to pay, the industry operated on a contingency basis.

Provident and Amigo loans have both recently got into trouble by lending to people who couldn't afford to repay the loans and eventually the regulators caught up with them. In the case of Provident they had been doing this for over 100 years. Interestingly they guy who founded Amigo, James Benamor has stated that he wanted Amigo to move to the unregulated Klarna type model once Amigo got "told off"

These businesses model also have losers, people with low income who pay very high interest rates of 50% or more.

A lot of the Deliveroo type businesses also have a loser, the worker, they managed to sell the argument that flexibility was worth more than the benefits of being an employee and its associated taxes. But after a while many workers realised that they had done the same as many farmers did many years ago when they supplied their whole production to one customer, a supermarket.

On day 1 it probably was a good deal, once the worker/farmer has become "captive" the exploitation starts.

However Deliveroo is hardly unique in how it treats employees (or not employees), but are also having issues with how many customers /suppliers who don't really want to pay the fees. If you look at a lot of the advertising, Greggs, McD, KFC are being touted as suppliers rather than independent local higher value food providers. I am an occasional McD customer but can't imagine paying to have it delivered.

Does Deliveroo Editions say to many restaurants, "thanks for helping us get started, we will now make your business obsolete?".

Remember WeWork, the office rental company that disguised itself as something else that pulled its float, had been seen through?

It's easy to say we have ethical issues if you believe that the business is never going to be profitable and don't want to buy it.:smile:

Bye

Ian
 
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Beebo

Firm and Fruity
Location
Hexleybeef
They also take 20% of the takings from the restaurants. Many takeaways near me are actively trying to steer people away from the aggregators and back in to their own websites.
 

Adam4868

Guru
Exploit your workers and the local restaraunts....Maybe the recent ruling against Uber has had a impact,hopefully !
 

stowie

Legendary Member
Remember WeWork, the office rental company that disguised itself as something else that pulled its float, had been seen through?
WeWork is an extraordinary story. Apparently a documentary has been made on it, but it is only on Hulu. It is sort of reassuring in a way that even those with mythical investment reputations can get completely suckered in by a smooth talking trendy CEO.

Lots of money floating about looking for the promise of higher returns than available through traditional investments. And an almost equal number of conmen "visionaries" looking to relieve those investors of that cash.
 
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dutchguylivingintheuk

Senior Member
I remember tons of companies with an alternative way of bussiness not making it. Tesla is one of the few who does along with Google and facebook. No one would have tough Sun would ever go down in the nineties..

But Deliveroo would have had an perfect ipo if it weren't for the fact that in a case against Uber eats about two weeks ago is also a bomb under their business model.
 
OP
Arrowfoot

Arrowfoot

Guru
Exploit your workers and the local restaraunts....Maybe the recent ruling against Uber has had a impact,hopefully !
Couple of points.

1. Deliveroo staff are paid just below £9 an hour on average. It has been called a scam in Australia. After the recent UK Supreme court landmark ruling and Uber converting drivers to full-time, this is going to be dicey.
2. Deliveroo went ahead with dual listing in London Stock exchange which is a US feature but is frowned upon here. In Dual listing founders shares carry more rights than other shares. In Deliveroo's case the founders each share carry 20 votes as opposed to 1 vote per share as in normal public listing. This is despite founder shares and ordinary shares priced the same. So UK investors boycotted. After this IPO, the CEO/founder holds 57% of voting rights.
3. There is fear that after Covid, demand will drop hence the rush by similar companies to rush thru IPO and unload their shares to the innocent public.
4. It has yet to make a profit. Other companies have also been listed without making a profit but institutional investors are uncomfortable with this lot.
5. Doordash which is no different to Deliveroo was listed in the US recently and it went higher by 86%. After the successes of Apple, Google, FB etc tremendous rise in values over many years, the US does have a lift / confidence factor that pushes tech shares high. We don't have a similar company or phenomenon. Ocado for years struggled with their model, never made profits until recently and changed from food delivery to logistics automation which is where the money is made.
6. Goldman Sachs is a common thread in all these. Deliveroo's CEO was formerly with Goldman Sachs. So are Ocado's founders. The IPO is lead by Goldman Sachs and other US firms. Everyone involved in Deliveroo's is basically American. The only British identity to endorse it publicly is Rishi Sunak.

Deliveroo is the company to watch on many levels on ethics and business grounds.
 
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OP
Arrowfoot

Arrowfoot

Guru
Good evening,

Way back in the 2000s I lost a bit of money when I had shares in a company called Acuma, they specialised in arranging Individual Voluntary Agreements, the legal work-around when you have borrowed more than you can afford to repay.

The business closed because at the end of the day it didn't have a fair business proposition, someone in the chain had to lose, in this case it was the lenders and the "customers", the borrowers didn't want to pay, the industry operated on a contingency basis.

Provident and Amigo loans have both recently got into trouble by lending to people who couldn't afford to repay the loans and eventually the regulators caught up with them. In the case of Provident they had been doing this for over 100 years. Interestingly they guy who founded Amigo, James Benamor has stated that he wanted Amigo to move to the unregulated Klarna type model once Amigo got "told off"

These businesses model also have losers, people with low income who pay very high interest rates of 50% or more.

A lot of the Deliveroo type businesses also have a loser, the worker, they managed to sell the argument that flexibility was worth more than the benefits of being an employee and its associated taxes. But after a while many workers realised that they had done the same as many farmers did many years ago when they supplied their whole production to one customer, a supermarket.

On day 1 it probably was a good deal, once the worker/farmer has become "captive" the exploitation starts.

However Deliveroo is hardly unique in how it treats employees (or not employees), but are also having issues with how many customers /suppliers who don't really want to pay the fees. If you look at a lot of the advertising, Greggs, McD, KFC are being touted as suppliers rather than independent local higher value food providers. I am an occasional McD customer but can't imagine paying to have it delivered.

Does Deliveroo Editions say to many restaurants, "thanks for helping us get started, we will now make your business obsolete?".

Remember WeWork, the office rental company that disguised itself as something else that pulled its float, had been seen through?

It's easy to say we have ethical issues if you believe that the business is never going to be profitable and don't want to buy it.:smile:

Bye

Ian
When companies are floated and shares are offered to the general public, it is always 2 fold - one is to raise more funds to grow and second is for the initial investors and founders to realise some value from their original investment (their payday). It is never done for an altruistic reason like sharing the bounty.

Deliveroo argument that workers accepted lower pay in exchange for flexibility was novel and daring. Even Uber did not suggest it. Will She the founder is an American and has lived and worked in London for years. He raised Deliveroo in London from scratch but I suspect that he did not understand the British psyche. And for the first time ever, the British corporate world and the British public acted in unison without coming together. Its quite an outcome. And it had nothing to do with parochialism - just fair play.
 
OP
Arrowfoot

Arrowfoot

Guru
WeWork is an extraordinary story. Apparently a documentary has been made on it, but it is only on Hulu. It is sort of reassuring in a way that even those with mythical investment reputations can get completely suckered in by a smooth talking trendy CEO.

Lots of money floating about looking for the promise of higher returns than available through traditional investments. And an almost equal number of conmen "visionaries" looking to relieve those investors of that cash.
There are private tech companies around the world that has a San Francisco address and it is actually a WeWork location with no staff. Just the address that is rented. It became a red flag.
 
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