Deliveroo is set to become publicly traded in the first quarter of 2021. This “initial public offering” (IPO) will mean incredible wealth for a few; cheated, red-faced shareholders a few weeks down the line; and intensified exploitation for food delivery workers.
Deliveroo is not currently publicly traded on the stock exchange. Rather than raising money by selling shares (and being accountable to shareholders), the company has thus far funded itself by making impressive and boastful pitches to big private investors. Between 2014 and May 2019 it had raised over US$1bn in successive charm offensives (“funding rounds”) aimed at a handful of large firms. About half the money came from Amazon.
The problem is that by May 2020 that Deliveroo was still losing money on every meal it delivered. Deliveroo has never made a profit. In 2019 it made losses of £319 million. It has expanded quickly (the Evening Standard reports that as of December 2020 it has 110,000 couriers on the books); it has demonstrated an ability to squeeze workers and suppress unionisation (so far) in innovative ways; and it has run a slick and aggressive marketing operation. That’s all.
When a firm becomes publicly traded, it faces harsher scrutiny. We can make some predictions about this IPO. Firstly, the initial valuation may be very optimistic, meaning that Deliveroo will be able to make a ton selling off its shares and paying back some of its ultra-rich early investors before all the smaller buyers realise they’ve been had.
Secondly, increased pressure to actually become profitable will mean harsher exploitation. Manic boasting, sucking up to the stronger, cheating the weaker, and bullying workers: it’s a classic British capitalist success story.
The IPO does provide the workers’ movement with an opportunity, though. While Deliveroo and its agents (they’ve hired JP Morgan and Goldman Sachs to help with the IPO) are trying to charm the markets, they will be more sensitive than usual to bad publicity. The next few months will be a good time for the labour movement to seek concessions from the company.
The story of Deliveroo’s funding shows us something else. An online-based food delivery company is a good idea. But it’s very hard to make money from it in a way that suits the stock market. Many good services are worthwhile, but can’t ever be expected to turn a profit.
The “gig economy” food delivery firms should be nationalised, consolidated, and run democratically.
• Hannah Thompson is wild-swimming every day in January to raise money for the South Yorkshire Couriers’ Network Strike Fund. Contribute here