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June 24, 2018

Yes, The Cottage Food Market Might Be Uberized, But That’s Not A Bad Thing

Most fresh food made at home (outside of canned and baked goods) is illegal to sell commercially in many states, including California. Because of this, some in California have been working on creating momentum for a bill called the 2018 Homemade Food Operations Act (AB 626) in hopes that it will pass through the California legislature this year and become law.

The reason this is interesting to me is a) California often leads the country when it comes to forward-leaning legislation and if AB 626 passes it could open the door for nationwide legalization and give a framework for home food entrepreneurs (also known as the ‘cottage food’ industry), and b) I think home cooking is the next big micro-entrepreneur space to open up, much like home sharing and ride sharing did over the past decade.

While you’d think most would be on board, not everyone is. As can be seen from this excerpt from a guest column in the LA Times by Christina Oatfield, policy director of the Sustainable Economies Law Center in Oakland, some see a darker side to AB 626:

If AB 626 becomes law, the homemade food market would likely become dominated by big companies like Airbnb and Uber. The trajectory of these businesses is rapid growth fueled by venture capital and aimed at disrupting and then monopolizing a market. They disregard important public safety laws and worker protections by treating the workers as independent contractors. They could easily overwhelm the homemade food economy just as they have ride hailing, delivery services and vacation rentals.

Oatfield, who once operated an underground kitchen out of her apartment, seems to believe that once big platform players like Airbnb or Uber get involved in the market, they will inevitably treat home food workers as commodities and take outsized commissions from home cooks when listing their goods on their marketplaces.

While I think it’s good to be suspicious of any large platform player, I’d suggest Oatfield’s suspicion is overblown. Not only are the public safety concerns she lists specifically addressed by a compliance framework for home cooks within the proposed legislation, but I also wonder where her suspicions about the shadowy forces behind AB 626 come from. As far as I can tell, the primary advocates for AB 626 and legalization of cottage food businesses have been the C.O.O.K Alliance, a group founded by the same people who started Josephine, a now-defunct startup lauded universally for the way they treated the cooks on their platform.

And even if Uber or Airbnb did eventually swoop into the home meal sharing market with a platform and charge 15% fees, I would say this: so what? As long as legislation requires that food safety is the paramount concern, I do not doubt that an online marketplace like an “Airbnb for home cooks” would likely open up much more market opportunity than many small food entrepreneurs would otherwise have.

I’ll never forget when I met a woman named Majda, a former Josephine home cook, who told me about her dream of opening a home-based food business so she could retire from her day job at a casino. You see, Majda had trouble standing all day at her casino job and with Josephine, she had the beginnings of what seemed to be a flourishing home food business that would give her greater control over her time and allow her to stay at home. Or at least she did until Washington State forced Josephine to shut down.

While Majda probably would have liked to not pay any transaction fees to Josephine, my guess is that she probably had a much better shot at building a home food business with a platform that matched buyers of home food with home cooks like herself. Now she doesn’t have any way to reach her consumers other than through underground sales of her food.

So, does the cottage food industry need to guard against aggressive tactics by platform providers? Yes, of course. But just as with ride sharing, home sharing, and creator marketplaces, opportunities like this need platforms to match the sellers with the buyers. These platforms need to be built by companies with resources and experience building communities and marketplaces. Without them, the opportunities will never arrive and, as a result, the Madjas of the world will never have a chance to chase their dreams.

Bottom line: the home cook market will have the best chance of flourishing with the combination of a strong legal framework that ensures both the consumer and entrepreneur’s interests are protected and a platform that brings together buyers with sellers. We’ve all seen the market building power of platforms – whether it’s those made for digital creators like Patreon, artisanal crafters like Etsy or, yes, gig economy workers like Uber – and the lesson learned is these platforms help to create markets that would otherwise stay dormant without them.

January 23, 2018

Selling Snacks to Add Revenue for Rideshare Drivers and Airbnb Hosts

There was a strong ethos of community when startups like Lyft and Airbnb helped kickstart the “sharing economy.” Lyft had passengers sit in the front seat and fistbump their drivers, and Airbnb CEO Brian Chesky once remarked that his company was “in the business of meaningful experiences.”

But it looks like the kumbayah days of simply renting your spare room or backseat for some extra cashe are giving way to the capitalist world we are all familiar with. One where in addition to paying for your space, guests and passengers pony up for snacks, treats and other sundries.

Yesterday, Cargo, a startup that lets rideshare drivers sell snacks from the front seat of the car, announced that it had raised $5.5 million. Cargo is basically a container that straps to the center console. Inside are things like snack bars and breath mints–stuff you see at the counter of a convenience store. Passengers can use their mobile phone to order and pay for desired items.

According to TechCrunch, the company is in 2,500 cars on the road in NYC, Chicago, Boston and Minneapolis — with 20,000 drivers signing up for the service from all around the U.S.. Drivers get a commission and evidently earn on average an extra $100 or so a month. So wherever you are, you’re bound to encounter upsells in your Uber relatively soon.

Then there is Qvie, a company we looked at earlier this month. Qvie is a small vending machine that you can put in your Airbnb to offer wine or snacks to guests. The Qvie is just a single-item vending machine right now, but as Mike Wolf pointed out, it’s not hard to imagine them coming out with something closer to an unmanned store offering up a variety of items.

To be clear, both of these ideas seem like good ones. There have been a few times when I’ve wished for a breath mint while on a ride to a meeting. And if you’re going to rent your home out, it makes sense to offer up snacks or items people may have forgotten (toothpaste, band-aids, etc.), though I’m not sure of the legality of selling wine in your house.

But both Qvie and Cargo point to a whole selling ecosystem rising up inside the sharing economy to add incremental sales for owners and convenience for customers. Plus, consumer packaged goods companies will also want this sales data to better understand buying patterns of their products. These vending systems will get better and smarter and more prevalent.

I mean, it’s not that ridiculous to think that Domino’s will get into this game and somehow combine its pizza oven car with an Uber for a piping hot pizza pie available to grab as you arrive home after a night out. Which, when you think about it, is totally worth a fistbump.

You can hear about Spoiler Alert in our daily spoon podcast. You can also subscribe in Apple podcasts or through our Amazon Alexa skill.

April 25, 2017

Josephine Looks To Change Cottage Food Laws In Effort To Expand Home Cooking Marketplace

Today’s a big day for Josephine, the startup behind the ‘cottage food’ sharing platform and marketplace that enable home cooks to sell food to their neighbors.

That’s because today is the day a bill is being considered by the Health Committee of the California state legislature called the 2017 CA Homemade Food Operations Act (edit: the bills name was changed to “AB 626—The 2017 Homemade Food Act” in the form it went before the committee). The bill, which Josephine management helped craft and introduce, would expand California’s current cottage food law to allow aspiring home-based food entrepreneurs to sell home cooked meals to neighbors.

(Ed Update: The bill passed out of assembly on April 25th. You can read our story here).

That’s naturally of interest to Josephine, which has built a platform which can more or less be described as an “Uber for cottage food” (although it should be noted the company resists the negative connotations associated with platforms like Uber). The problem for Josephine, which is based in Oakland, is that the sale of home cooked meals to neighbors is not allowed under current California law. As a result, about a year ago home cooks using Josephine received cease and desist letters, which eventually led the company to shutting down operations in the east Bay area.

The company, which has investments of about $2 million from Kapor Capital and angel investors, believes home cooks with the proper licensing should be able to sell food to their neighbors. And why not? Just as how Uber, Airbnb and other sharing economy platforms gave entrepreneurial folks a marketplace to rent their underutilized assets – whether that be a car, apartment or a person’s own time and labor – it’s logical that there’d also be demand to do so with home cooked food. In fact, it would be hard to argue there isn’t a large potential market of people on both sides of the equation – those who can cook and need to make some extra money, and those who like to eat – to make a marketplace like Josephine successful in the long run.

I caught up with Josephine cofounder Matt Jorgensen to ask him about Josephine’s efforts to change California’s cottage food law and also get a little backstory about Josephine.
You can keep up with the status of Josephine’s efforts and the California Homemade Food Operations Act at their blog.

When was Josephine forced to halt operations?

Jorgensen: In April of 2016, several of our cooks were served Cease and Desist warnings from local health regulators, which lead us to halt operations in the East Bay. This ultimately led to our good faith collaborations with State health regulatory coalitions in CA

With the Homemade Food Operations Act (Editor Note: Bill name was changed to “The 2017 Homemade Food Act:), when is a vote expected on this bill?

First the Bill must pass through Health Committee next Tuesday April 25th, and we expect the legislature to vote at some point in the early summer.

How does California compare to other states in terms of legality around cottage food as a business?

Jorgensen: California is essentially on par with the 30+ states that have passed Cottage Food laws.

Like many states, certain California cooks with the access and means can apply for cottage food permits as hobbyists, but the law doesn’t allow for the sale of most financially viable/ culturally relevant products… instead it’s focused on certain shelf-stable foods (jams, granolas etc). So we haven’t seen CA yet push beyond others in terms of the available food types. Several states go further, with Wyoming’s “Food Freedom” law being the most open.

Do you see this bill as the first in a push towards national rolllout? (And will other states follow suit)?

Jorgensen: We’re taking a different advocacy approach in each state– while we’re supporting Garcia’s legislation in CA, we’re actually looking at various administrative paths in other states. In Portland for example, we have strong support letter from the Mayor for a proposed pilot program. In other states like Wyoming the low-risk behaviors we are proposing are already legal.

How does Josephine business work? Is it similar to other sharing economy services that take a % of the overall bill? Charge a flat service fee?

Jorgensen: There’s no cost to set up a cook account or post meals. For each meal cooks serve, they keep 90% of your total sales and 10% of your sales will go toward covering credit card fees and the cost of our services. We also partner with values aligned non-profits for no cost.

How does Josephine find new cooks?

Jorgensen: Mostly through word of mouth and through offline communities. Many cooks are already partaking in the types of activities we support before choosing to partner with Josephine.

How does Josephine ensure people are going to be quality cooks? I assume getting a “cottage cook” license (as permitted by the bill) would be one step. But are there other things you do?

All cooks go through a vetting process from the masters of public health on our team and have access to our knowledge base before posting their first meal. We work with them to ensure a quality first experience, but all meals are also reviewed by customers (built-in accountability).

Is Josephine the only cottage cooking platform app, and if so why hasn’t this market taken off (is it legal restrictions, or something more as well).

Jorgensen: Some other companies have tried to make this business work, but we believe we are still in the early days of building the cook confidence and public trust necessary for this business to succeed.

How big is Josephine and what is your funding?

Jorgensen: We have a few hundred cooks across the country, a staff of 10 in Oakland, CA, and funding from a handful of different impact, angel, and venture capital investors. We’ve raised a little over $2m so far from angel and impact investors including Kapor Capital.

December 3, 2016

Welcome To Uber For The Kitchen

You don’t have to be a technology insider to know the world has been Uberized.

The reason ‘Uber-for-X’ companies are popping up like daisies is the sharing economy concept is both simple and revolutionary. Rare is it that a model works so well for people on both sides of a transaction, but that’s exactly what Uber-models do by creating low-friction marketplaces that earn the owner a little money for an underutilized asset – whether it’s a car, a basement room or their labor – while providing access at an affordable price to the buyer.

Because of the win-win nature of Uber models, it was only a matter of time before they ended up in the home kitchen. Not only are companies aspiring to give grannies and wannabe chefs a way to share their home cooking, but large appliance companies are beginning to explore ways to enable buyers of their products to share them via an Uber-like marketplace.

One of the Uber-for-kitchen concepts is Josephine, a platform for home cooks to feed people in their neighborhood. Sign up for Josephine as a customer, and you’ll find yourself chowing a neighbor’s chili and cornbread. The goal is to match cash-hungry home cooks with people who are hungry. However, while there is no shortage of home cooks and hungry people, the market narrows considerably when looking for folks willing to invite strangers into their home or buy food from a complete stranger. But, just as we saw with Uber, what once seems weird fast becomes the new normal when people begin to do it at scale.

Want to go on a food tour of Miami or Seoul? You can now book with local home cooks through Trips from Airbnb. The home sharing service company recently expanded more fully into dining and travel more with Trips, an evolution of the Airbnb Experiences program which the company launched into beta in 2014. This expansion allows for food to be offered as what is essentially a tourist package, where aspiring cooks can offer home cooked meals to travelers or local foodies can create food tours of local cities.

Electrolux is exploring the Uber concept for home appliances. While the company CEO initially mentioned they were toying with the idea of Uber for washing machines, their out-of-the-box thinking could also include dishwashers and even stoves.

Appliance sharing is still in its early days, but as I wrote a few weeks ago, manufacturers are evaluating how connectivity and smarts to can enable new business models. They’ve watched as smart devices reinvented a whole slew of industries from travel to home security to transportation, and are exploring how they can transform themselves from makers of metal boxes into trusted service providers using the same foundational technologies. By creating a sharing platform, these companies could make themselves more indispensable by not only enabling a new way to purchase fractional access to appliances but by also creating business opportunities for their consumers.

And while I’ve yet to see an Uber-for-kitchen company for renting out an entire kitchen, it’s only a matter of time. After all, if you can rent a single room in a home to sleep in, why not rent a kitchen to cook a meal? At least that way, you might be able to skip going home to that weird uncle of your’s for the holiday meal.

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