Morning Report

What you need to know one minute before daylight

WeWork’s Losses, Venmo’s Gamble, and the Podcast Revolution

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Gig companies are going state by state to try to shape labor rules: “It was a potentially sweeping proposal from a Texas regulator: Companies that use a ‘digital network’ to dispatch workers the way Uber does could label them contractors rather than employees. …

“Hanging in the balance could be billions of dollars in costs, and even fundamental business models, as more gig companies move toward public stock offerings. When such companies are able to classify workers as contractors, they don’t have to contribute to unemployment insurance or workers’ compensation, or heed minimum-wage and overtime laws. Industry officials estimate that a workforce of employees costs companies 20 to 30 percent more than a workforce of contractors—a sum worth many hundreds of millions of dollars per year to Uber.”

Meanwhile, Uber and Lyft drivers in Los Angeles went on strike: “The work stoppage was spurred by Uber’s recent announcement of a 25 percent cut in drivers’ pay per mile in Los Angeles and parts of Orange County.

“Hundreds of drivers for both Lyft and Uber protested during the day outside Uber’s offices in Redondo Beach, CA, according to Rideshare Drivers United, an advocacy group. Sinakhone Keodara, 44, a Lyft driver, was among them. ‘I’m currently homeless,’ Keodara told NBC News. ‘I don’t make enough to get out of my situation, but I can’t walk away from Lyft. I’m trapped in an endless cycle.’”


Venmo is going after its users to curb losses, and risking its brand in the process: “Venmo is threatening to sic debt collectors on some users who carry negative balances in their accounts, according to customer-service emails reviewed by The Wall Street Journal. Venmo also recently amended its user agreement to give itself the power to recover money its customers owe by seizing it from their other accounts at PayPal.

“Some users Venmo has gone after said they previously reported that the negative balances in question came after fraudsters took over their accounts or the users got duped into sending payments to swindlers.” After one user contacted executives at PayPal and Wells Fargo and a reporter at The Wall Street Journal about Venmo’s attempts to collect money from him after he was scammed, “Venmo dropped its demands. If he and his wife want to use Venmo again, the company said, they would have to reread and confirm its terms of service. They decided to delete the app instead.”


Electric vehicle startup EVelozcity has rebranded as “Canoo” and will sell its new vehicles on a subscription model: “Canoo plans to build [four] cars all on the same ‘skateboard’ platform of battery pack and electric drivetrain. It showed off the outline of one that more closely resembles the shape of a traditional car, which it calls the ‘personal commuter vehicle.’

“Canoo also plans to make a dedicated ride-hailing vehicle and one suited for delivery by constructing different ‘cabins’ that can be dropped onto the universal skateboard. Canoo isn’t sharing specific pricing plans for its vehicles just yet, but CEO Stefan Krause tells The Verge the subscriptions will be really flexible. ‘There will be no set date. You could take it for one month or take it for 10 years,’ he says.”

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In the future, some of the hottest restaurant chains might be delivery-only brands operated out of shared kitchens. One company with such a goal, Keatz, just raised $13 million to disrupt the European restaurant sector:

“[Keatz’s] network of satellite kitchens is designed to negate the high front-of-house costs found in conventional restaurants, while also selling takeout food that is better suited to delivery. ‘We believe the last unsolved part in food delivery is the preparation of food itself,’ Keatz co-founder Paul Gebhardt tells TechCrunch. ‘Delivery food today is often compromised and sold by companies focusing on hospitality and not delivery food. Classic brick and mortar restaurants simply have a different business model, namely hospitality, which is all about the experience and location and the food is meant to be eaten immediately. Nobody at Nandos or Byron Burger designed the food keeping in mind that the food might travel on a Deliveroo bike for another 15 minutes, mostly upside down in a delivery bag.’”


WeWork reported nearly $2 billion in losses last year along with some other warning signs: “WeWork executives said the losses are reflective of investments required to build out new offices, and that once locations are open and well-leased, they make far more money than the cost to operate. The company has plowed into its business billions of dollars in capital raised by SoftBank Group Corp. and its tech-focused Vision Fund. …

“WeWork said its occupancy rate at the end of last year fell to about 80 percent from 84 percent in the third quarter, while another metric watched closely by WeWork—the average revenue each member creates per year—continued a gradual fall to $6,360. It is now down 13.5 percent from the start of 2016. WeWork said occupancy is down because it increased its pace of expansion at the end of the year, and new offices traditionally take up to 18 months to fill. It has previously said its revenue per user has been falling, in part because it is expanding to lower-cost markets.”


Harvest, which just bought Verano for $850 million, is one of several cannabis companies ready to enter the market when federal prohibition ends: “‘There is absolutely a race to beat the end of prohibition,’ said Tom Zuber, managing partner of the law firm Zuber Lawler, which serves the global cannabis community. Zuber said Harvest is taking advantage of the federal prohibition of marijuana, which has prevented major corporations from entering the US cannabis industry. ‘When prohibition ends, a lot of deep pockets are going to enter the marketpharmaceutical companies, alcohol companies and so forth,’ he added. ‘In that context, it will be much harder for smaller companies, and cannabis companies today are smaller companies.’”


Robinhood, a commission-free stock-trading app has acquired MarketSnacks, a podcast and newsletter company that targets Millennials: “After the acquisition, the daily podcast and newsletter company will be named Robinhood Snacks. The daily podcast will be named ‘Snacks Daily’ and made available to Robinhood’s more than 6 million users. … In a statement to Fortune, [co-founder] Martell said Robinhood approached his company and explained how its user base was ‘craving easily digestible and accessible business news.’”


Not long ago, there was little money to be made in podcasts, so people made podcasts with no intention of making money: “In hindsight, the elements that made the podcast revolution inevitable (they’re cheap to make and easy to distribute) are the exact ones that made them seem the opposite of revolutionary when they first appeared. …

“Their development since has been a case study in sheer, unfettered experimentation — the gleeful result of the kind of widespread, wiki-sourced evolution that can happen only when no one is paying attention or, at least, no one with enormous bags of money is paying attention. Podcasts have one very obvious progenitor—radio, to a surprising degree the public-radio program This American Life—while being the brainchildren of thousands of disparate inventors. There are no editors to convince, no producers to pitch, no green lights to be green-lit. To make a podcast, all you have to do is buy a mic, install a recording program on your laptop, and start talking.”


Italy just signed on to China’s “Belt and Road” initiative, further intertwining the countries’ trade relations. The agreement “aims to weave a network of ports, bridges and power plants linking China with Africa, Europe and beyond.

“With the move, Italy becomes the first member of the Group of Seven major economies, which includes the United States, to join the Belt and Road program, following Portugal’s embrace of the initiative in December. … The signed accords are wide-ranging and include cooperation between banks, between a Chinese construction company and Italian ports, and the export of Italian fruit to China. The deals also foresee cooperation in the spheres of science and technology and between media outlets, as well as the return by Italy of hundreds of Chinese cultural treasures.”


Trello, the web-based task organizing app, just launched a new feature called Butler that uses automation to optimize time: “Arguably Butler’s most powerful possibility is its ability to create rules—tiny ‘if this, then that’-style bits of automation for your personal or shared Trello boards. You can think of rules like an advanced version of Gmail’s filter system: You give Butler a specific trigger to watch for—like a checklist being completed or a new card being created in a particular list—and then you tell it what action to perform whenever that trigger occurs.

“In my Trello setup, for example, I have a board I use to manage and organize my weekly newsletter—both in terms of short-term content ideas and longer-term plans and projects. With Butler, I created a rule that made it so anytime I add my ‘High Priority’ label onto a card, the card automatically gets moved to the top of its list, gets a star sticker added onto it, and has its due date set for two work days into the future.”


Kodak is hoping to appeal to hipsters and aspiring filmmakers by partnering with Dogfish Head by making a beer that can actually develop film: “Dogfish is teaming with Kodak for SuperEIGHT gose, a sour German-style wheat beer that features eight main ingredients and can also be used to process Kodak’s Super 8 motion picture film. No joke. ‘We’re comin’ at ya with so much juicy flavor with the latest release of our new gose, SuperEIGHT,’ Dogfish Head founder and CEO Sam Calagione said in a release.” Here is the short film they released to preview the beer.


Get Out writer/director Jordan Peele doesn’t appear to know what a sophomore slump is given the box office success of his second film Us which made $70 million in its American debut. The film delivered the “second largest opening ever for a live-action, original picture, topping the weekend box office… As a result, the 2019 box office continues to improve over the month of March after struggling to begin the year. Overall, this weekend was the third straight to outperform the same weekend last year.”


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