Uber is offering free UberPool rides to its New York customers to attend a pro-Uber protest at noon on Tuesday at New York's City Hall.

On Monday, Uber sent an email to its New York City customers, asking them to "Save Uber as you know it in NYC."

Its email to customers reads, in part:

"We need your help. Mayor de Blasio is supporting a bill that would stop thousands of new drivers from joining the Uber platform. This bill would destroy 10,000 job opportunities for New Yorkers in just one year, and result in longer wait times, higher prices and less reliable service for riders."

The bill in question is backed by New York's Taxi & Limousine Commission, and if it were to become law, it stands to severely kneecap Uber's growth in New York, one of the company's largest and more mature markets. Under the proposed bill, for-hire vehicle companies that have bases with 500 cars or more — which includes Uber — would only be able to increase their number of vehicles by 1% annually.

Proponents of the bill say it's an effort to cut down on congestion and traffic in New York, according to the New York Post. In the past four years since Uber started operating in New York, 25,000 black cars have been introduced to New York's streets. Today, New York is one of Uber's biggest markets, generating hundreds of millions of dollars in revenue annually. There are more Uber vehicles than taxis on New York City's streets.

In its email to customers, Uber says its UberPool service, which pairs you with other riders going the same direction as you, actually helps solve the problem of congestion. Uber is offering free UberPool rides to and from New York's City Hall today until 2:30 pm to get riders and drivers to attend its rally. We've reached out to Uber for comment and for more information about the protest, and will update this post when we hear back.

Uber has previously butt heads with New York's Taxi & Limousine Commission. Earlier this year, the TLC briefly suspended 5 of Uber's 6 NYC bases, a largely toothless punishment served when Uber refused to hand over ride records.

Between April 29 and June 15, NYC authorities seized 496 cars from Uber drivers taking illegal street hails, mostly at the three airports in the region. And in May, the TLC published a series of newly proposed rules for how for-hire vehicles like Uber can operate. Among the TLC's proposals for companies like Uber is something that would prevent drivers from using Uber's turn-by-turn directions while they're driving a car.

SEE ALSO: How a tweet turned Uber's first hire into a billionaire

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The smile on Austen Heinz's face was unguarded and brief. It was the involuntary, small upturn of the corners the mouth that escapes when something genuinely makes you happy.

For Heinz, it was seeing the surfers at Del Mar. He raised his phone to snap a photo for a friend.

Mike Alfred saw the grin on his face, so he took his own photo of his friend's happiness.

Heinz’s long, curly brown hair is whipping back in the wind secured only by a green San Francisco hat. A black North Face vest, one he’s wearing in most photographs, covers his dress shirt.

“He smiled for a brief moment, and it was so beautiful,” Alfred said. "That's the last picture I have of him smiling."

Heinz’s love of surfing with his sister, Jean, would be noted in his obituary, published a month later.

The founder and CEO of Cambrian Genomics took his own life May 24, two weeks after the trip to Del Mar. He was 31.

When news slowly spread on Twitter that Heinz had died by suicide, many were crushed and surprised.

"That was a reminder to me that you can’t predict which founders are struggling," said Y Combinator president Sam Altman.

There are other founders who have followed this path before. There was Aaron Swartz, the Reddit cofounder who faced hacking charges that many thought were unfounded and could have landed him in jail for decades. He ended his life shortly after. There was Jody Sherman, one of three Las Vegas entrepreneurs associated with the Downtown tech project, who shot himself in early 2013. There was Ilya Zhitomirskiy, who founded would-be Facebook competitor Diaspora; both he and his website are now gone.

These founder suicides are just the extreme outliers of the tech industry's quiet battle with depression, exacerbated by the stress of starting a company and trying to change the world. It's a problem that almost nobody wants to talk about. But the conversations are starting to happen.

Tech's dark secret

A recent study by Dr. Michael Freeman, a clinical professor at UCSF and an entrepreneur as well, was one of the first of its kind to link higher rates of mental health issues to entrepreneurship.

Of the 242 entrepreneurs surveyed, 49% reported having a mental-health condition. Depression was the No. 1 reported condition among them and was present in 30% of all entrepreneurs, followed by ADHD (29%) and anxiety problems (27%). That's a much higher percentage than the US population at large, where only about 7% identify as depressed.

More surprising was the incidence of mental health in the families of entrepreneurs: 72% said they either had mental-health problems themselves or in their immediate family.

A founder who has no history of mental illness from a family with no history either "is the exception, not the rule," Freeman said.

Sean Percival has seen the problem firsthand.

After the failure of his ecommerce startup, Wittlebee, a "baby Birchbox", Percival was depressed. But he didn't open up about it until Jody Sherman's suicide. Percival was lucky, he said, to have had a wife and friends to talk to openly when his startup took him to the edge and back several times.

Percival now works at 500 Startups, where he estimates founders at 10% to 20% of companies are suffering from similar issues: failure to lift off, doubts, depression or substance abuse problems.

When Percival mentioned in an interview with Inc that depressed founders could get in touch with him, he was flooded with more than 500 emails. A few were from Silicon Valley, but many were small business owners from around the globe who had borrowed money from their families to launch a company and were suddenly in a really tight spot.

Terrified he would miss an email of a founder in a dire situation reaching out for help, Percival eventually had to ask Inc to update the story to include a link to the National Suicide Prevention Hotline.

Ben Huh, the CEO of Cheezburger and cofounder of recently shut-down Circa, has also seen startup founders approach him since he wrote a post called "When Death Feels Like a Good Option" and publicly acknowledged a period of suicidal thoughts in 2001.

The real problem is that entrepreneurs who do have advantages are choosing not to use them, he said.

"What we do have though is access to more resources, though, and it's a shame we don’t access them because of shame," Huh said.

"There's lots of people who go through depression without access to support. We are not those people. What creates that barrier to support is that notion that a CEO is a strong, tough male figure who acts masculine and doesn’t ask for help or assistance."

You're (not) crushing it

The startup community has built up the great entrepreneur mythos. It's not rags to riches, but idea to fortune, building something from a simple thought that suddenly advances society forward. There's room on the list after Bill Gates, Elon Musk, and Mark Zuckerberg.

But most will not make it to that level of success — there's a common Silicon Valley adage that nine out of 10 startups fail. 

"I think the crazy dynamic range puts a lot of pressure on founders. People’s expectations of themselves get so high because the top is so high," said Y Combinator's Sam Altman. "The culture of 'I’m crushing it, bro' is not that helpful.”

Working around the clock, waking up incredibly early, or never sleeping has become a status symbol. Funding headlines pop up every day as companies rake in more money. Today, five startups are valued at more than $20 billion.

Depression — wrongly — doesn't seem like a natural fit for the cheery glorification of a startup life.

"Against the backdrop of this rah-rah everybody’s killing it, everyone’s doing great language, it makes it even harder to be open about it," said Brad Feld, an entrepreneur and investor with Denver-based Foundry group.

Feld has been blogging openly about his depression for more than a decade to try to change the industry's approach to mental health.

"We’re programmed and told over and over again that as leaders we have to be strong, we have to show no weakness," Feld said. "That tone and that dynamic is incredibly hard to deal with, especially against the backdrop of huge amounts of stress and anxiety that gets generated by startups and the startup world."

The conversations around depression are then relegated to the shadows and behind closed doors.

In 2013, Moz founder and former CEO Rand Fishkin attended a founders' summit put on by Feld's Foundry Group. In a meeting with around 22 CEOs, Feld asked how many had suffered from anxiety or depression at some point.

Every hand except two went up, Fishkin said in an email.

"It's a strange thing, because everyone knows that, under the shroud of positive posturing, every startup and every founder is struggling or has struggled, but we're only supposed to talk about what's going right," Fishkin said.

"Given that dissidence, it's no wonder many of us find ourselves struggling quietly and privately."

Heinz and his life without a windshield

Austen Heinz's startling death is the most recent example of extreme depression in Silicon Valley. But he had a history of mental illness long before he entered the crucible of the startup world.

At 23, Heinz left a mental hospital, fixed up a motorcycle, and spent a year riding across the country wearing his trademark flip-flops.

He wrote about his trip in a book called “Life without a Windshield,” which he published under a pseudonym, Austen James. Its subtitle: “A humorous tale of motorcycles, mental illness, and youth."

A few years later, the Duke graduate left his doctoral studies in Seoul and came barging into the startup world with a big idea and a passion to match it. He had developed a way to print strands of DNA, which is made of four molecules represented by the letters A, C, T, and G, and he founded Cambrian Genomics.

"We print life. Life is very simple, it's just code. Four letters — we print that,"Heinz once told TechRepublic.com. In simple terms, he described it like a 3D-printer, but instead of printing plastic dinosaurs, you could print little walking ones some day. His ideas of printing life pushed social, ethical, and scientific boundaries, and he lived focusing towards the future, balancing on that edge.

His friend, Mike Alfred, who spoke to Business Insider on behalf of Heinz's family, described him as someone who behaved differently than the average person — like Steve Jobs, he could sometimes be critical and not be understanding. Alfred said people overlooked it because they realized what he was working on and where his mind was.

While his unusual charisma and bold vision landed Heinz $10 million in venture funding for Cambrian Genomics, his tendency to say what was on his mind also landed the company in hot water.

At a presentation in the November 2014, Heinz and another presenter took the stage and started talking about Sweet Peach, a company that was working on probiotics for vaginas, and in which Heinz owned a 10% share. The media presented Sweet Peach and Heinz as sexist and juvenile: "Male startup founders want to enable women to change the way their vaginas smell."

That reputation, which Heinz made even worse with a poor damage-control effort, affected his ability to raise more money for Cambrian Genomics.

"Some of my investors pulled out, which sucks," Heinz told Inc at the time. "The implication is that Cambrian is a sexist organization that thinks women's vaginas smell bad. I just got off the phone with my lawyer and he said, 'Austen, I would not invest in your company right now.' Basically he said you look like Bill Cosby right now. But that's why you raise $10 million, because shit happens."

"He took it pretty hard," Alfred said. "No matter how tough you thought Austen was, getting beat up in the press is hard on anyone. In particular, someone who is prone to depression, you start to get sucked into that. He started to believe that meant the company wasn't going to work."

Like many startup founders, his business had reached the “trough period” or the period after the initial hype where companies are working on their problems. Cambrian Genomics was not immune to this. The headlines bolstered the controversial nature. Investors had turned away.

"The way he described it was that he had built this unbelievable piece of art that did a lot of things that no one had done before, but didn't do all of the things he had said it would do. So he had built something pretty amazing but it just wasn't enough," Alfred said.

He also started believing he wasn't in good physical health. He needed more time, more money.

"That worry and dealing with his own health, his own bodily integrity, was causing him a lot of pain," Alfred said.

Your startup's money can feel like your own self-worth

Money was a big source of struggle for Heinz, as it is for many entrepreneurs. And once feelings of low self-worth set in, founders may be too afraid to speak up or seek help, because if they show signs of weakness as a leader, investors may stop cutting their companies checks.

"You’re trying to send good signals that you’re doing good things; that you’re the right person; that you’re backable. There is a bit of a facade put up and that’s all anyone sees," 500 Startups' Percival said. "It's very risky for someone to go out and say 'I am depressed. I'm having trouble.'"

But some investors expect health issues or other personality quirks as part of the "genius" package.

"I think folks realize that sometimes the most talented people in the world sometimes have complications, and that it's those qualities that also make them great," said startup investor Jason Calacanis in an email.

"As an angel investor I make all founders do two things when I invest: First they agree that when things are really dark I will be their first call, and second if they fail they will come to me with their next idea before anyone else," Calacanis said.

Attaching dollar figures to companies can also be dangerous. If a founder can't separate themselves from the company, they can see the money as their personal value, too.

"No matter how much you have in your bank account, how much someone has given you, depression turns that into fuel for self-worth," Huh said. "When I wouldn’t leave my room in 2001, I would make something up like 'Oh, I’ve got a migraine.' The money, and the pressure of money, is that red herring."

Bringing depression to the surface

Momentum has been building to bring more authenticity into the conversation: less talk of business metrics, more talk of feelings. Sadly, it's inspired in part by the string of suicides from Swartz to Sherman to Heinz.

A new Y Combinator-backed startup, 7 Cups of Tea, is trying to tackle one common problem: the affordability of help. When founders are running out of money for their company, that's rarely when they can shell out for a visit to a psychologist or other mental-health professionals.

"I don’t think there’s an outlet for much of society," said its founder, clinical psychologist Glen Moriarty. "I don’t think we’re doing a particularly awesome job caring for people in other professions either. It just happens that we care about startups."

Moriarty's 7 Cups of Tea is a free, on-demand, internet-based anonymous listening network, which has a special section dedicated to listening to startup founders' problems. Since launching the startup section, Moriarty estimated there have been more than 10,000 anonymous conversations.

There's also been a movement to speak publicly about mental-health issues. Some investors like Feld, Percival, and Mark Suster have blogged about their experiences for years. Huh, Fishkin, and Andy Sparks are just three examples from the longer list of startup founders who have chronicled their experiences with depression.

Even sites like Product Hunt, a website used by tech enthusiasts to vote on interesting new products, is trying to have a role in talking about mental health. It's doing small things like hosting meditation sessions in the middle of a bustling office so employees remember to take a break, but also larger events like community talks.

These can be especially important to younger founders, like 18-year-old Ryan Orbuch, who said his friends may not have same kind of support networks like someone with a spouse or that's on their third startup.

"My friends are open about it if they are feeling s----y," he said. "I think the investors play an important role in acceptability of talking about it. Investors see so many founders that they can do a lot to bring it to light."

Still, the consistent dialogue about depression is missing from the startup world.

"In public, no one wants to go out there. People still look at it as a scarlet letter and they’re just not comfortable talking about it. I don’t think that’s changed," Percival said. "They may be more comfortable talking about it privately with other founders or investors, but I don’t think you’ll see someone going around tweeting ‘I’m depressed. I don’t know what to do.’ I don’t think we’re close to that yet."

Until that changes, there will be silent strugglers like Austen Heinz.

On Saturday, May 30, in San Francisco's Trinity-St. Peter's Episcopal Church, an outpouring of Heinz's friends, colleagues and family gathered to remember the entrepreneur.

"Austen was an intrepid, candid, accomplished yet unassuming, brilliant and creative scientist, with a bold warrior spirit and a giving and artistic soul. I can't f---ing believe I have to refer to him in the past tense," friend and fellow founder Philip Low wrote on Heinz's remembrance Facebook page.

"We have lost a Great Human Being. We have lost a Pioneer. I so wish I had seen his pain."

If you're struggling and need help, reach out to the National Suicide Prevention Lifeline by calling 1-800-273-8255 anytime.

SEE ALSO: The Fascinating Reason Many Billionaires Get Depressed (And How They Snap Out Of It)

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Uber passengers in China are taking a million trips every day.

Four of Uber's 10 biggest cities are in China, CEO Travis Kalanick told investors in an email obtained by the Financial Times last month.

Uber operates in 11 Chinese cities, with plans to launch in 50 more cities with a population of 5 million people or more this year.

But Uber faces stiff competition in China in the form of a company called Didi Kuaidi. It was created in February when competing apps Kuaidi Dache and Didi Dache merged to cut the costs of competing with each other — and more importantly, Uber.  

In a leaked memo to investors last week, Didi Kuaidi CEO Cheng Wei said that his company is processing 3 million trips in China every day. That's three times the number of rides Uber is giving throughout the country.

Cheng, whose company is raising $1.5 billion at a $15 billion valuation, also said in the leaked memo that the 3 million figure is triple the number of rides Didi Kuaidi was doing in May.

Uber is increasingly ubiquitous internationally — it operates in more than 300 cities globally. It would appear that for now, at least, Uber is still being dwarfed in China as Didi Kuaidi dominates the Chinese market. Though it runs two separate apps (Didi and Kuaidi), both share the same core technology and data. Didi Kuaidi accounts for 78% of ride bookings in China, according to industry researcher Analysys International, while Uber accounts for only 11%.  

South Korea has charged Uber CEO Travis Kalanick with operating an "illegal" taxi service, and has vowed to shut down Uber's operations in the country. As TechCrunch notes, "Korean law doesn’t allow technology companies to store payment data as part of their purchase workflow, but instead requires consumers to retype their information with every purchase, ostensibly for security reasons."

And previously, Uber's China offices were raided by police in what was described as a crackdown on ride-hailing apps. China's taxi market is largely state-owned, and the International Business Times reports some Chinese citizens have been angered by taxi drivers opting to switch over to apps like Uber, because it makes it more difficult to simply hail a cab on the street.

To give Uber credit, though, it's still growing like crazy in the country. Uber’s service is taking off in China much faster than it did in the United States. Nine months after launching in Chengdu, Uber has 479 times the trips it had in New York after the same amount of time.

And Uber is putting a lot of money into its Chinese growth. Uber has previously raised more than $5 billion in several funding rounds, including a $600 million investment from Chinese search engine company Baidu.

Uber certainly already has a leg up on its US rivals: Lyft, perhaps its closest competitor, hasn't even expanded outside the States yet. But if Uber wants to achieve global expansion, it needs to work within the legal regulations in the Asia-Pacific area as well as work to make its Indian customers happy.

SEE ALSO: Uber is offering free rides to its own protest today

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Shyp, the startup that sends a courier to your house to pick up your packages and ship them for you, is reclassifying its laborers as employees.

As you may recall, the California Labor Commission ruled last month that an Uber driver, who filed a suit against the company for misclassifying her as an independent contractor, was actually an employee.

So it's interesting now to see another on-demand company proactively decide to make its workforce employees.

A memo from Shyp CEO Kevin Gibbon says the move is meant to invest "in a longer-term relationship with our couriers," and is an operational decision that will let the company have better quality control over the Shyp experience. He says the decision to reclassify his company's couriers is not in response to recent lawsuits. 

Not unlike other startups including Uber, Lyft, and Postmates, Shyp relies on human labor to carry out its services for customers. Like these other companies, Shyp hired its couriers as 1099 employees, or independent contractors.

The difference between contractors and W-2 employees is, according to the IRS, for common-law employees, employers "must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid" to full-time employees.

The same is not necessarily true for an independent contractor. Benefits are another aspect often extended to employees but not independent contractors. Employers also retain the right to control how their employees behave — how to dress, for example, or specific customer-interaction protocol — but that same level of control doesn't apply to independant contractors.

Shyp is not the first company to voluntarily reclassify its laborers as employees, but it is among the first of Silicon Valley's on-demand companies to have a workforce made up entirely of employees. In June, just after the California Labor Commission ruled on the Uber driver case, grocery delivery startup Instacart announced plans to reclassify some of its workforce as employees.

Shyp raised $50 million in a Series B round of funding earlier this year, with investors including SherpaVentures and Kleiner Perkins Caufield & Byers. In the past year, the company has increased its number of shipments by nearly 500% and continues to grow. The company sends a courier — which used to be an independent contractor — to pick up your packages and ships them for a $5 flat fee plus shipping.

SEE ALSO: The California Labor Commission just ruled that an Uber driver is an employee — here's why it could dramatically change Uber's business model

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The e-commerce powerhouse Amazon has spawned a wide range of startups, with its former employees working on everything from cute robots to recruiting software.

If you want proof that Amazon recruits some seriously talented people, just look at what they're doing now. 

Flipkart actually competes head-to-head with Amazon in India.

Flipkart founders Sachin Bansal and Binny Bansal both worked at Amazon before ditching in 2007 to start their own new company with a very similar business model.

The startup took off and Flipkart is now India's largest online marketplace in terms of sales.

Amazon, meanwhile, didn't enter India until 2012 with the price-comparison site Junglee (which it had acquired way back in the late 90s). It opened its official India website in June 2013. A year later, Flipkart raised a mammoth $1 billion funding round. Exactly one day later, Amazon said it was planning to pour $2 billion into its Indian operations. Flipkart currently employees 33,000 people and attracts more than 10 million daily visits.

Hointer founder Nadia Shouraboura brings the principles she learned at Amazon to brick-and-mortar retail.

Nadia Shouraboura worked at Amazon for 8 years, during which she scaled all the way up the corporate ladder into CEO Jeff Bezos’ elite “S-Team” of direct reports.

She eventually left in 2012 to launch Hointer, a futuristic retail store that wants to make the shopping experience as convenient as possible by integrating in-store apps and automating the process as much as possible. In its Seattle store, Hointer whisks clothing in and out of dressing rooms with robots. 

Matt Williams founded Pro.com to make every home improvement project a breeze.

Former Digg CEO, Andreessen Horowitz entrepreneur in residence, and long-time Amazon employee Matt Williams put together an ex-Amazon dream-team to take the pain out of home projects.

Pro.com gives people looking to tackle a home improvement project a price estimate for both materials and labor and then recommends professionals to get the job done.  

During his 12 years at Amazon, Williams did a stint as Jeff Bezos' shadow, an incredibly elite position. Williams has raised upwards of $17 million for Pro and a bunch of his coworkers are ex-Amazoners as well. 

After working at Amazon but before starting Pro, Williams served as Digg's CEO and an Andreessen Horowitz entrepreneur in residence. 

The lawyer who sued Uber and Lyft for not classifying contract workers as employees is now representing workers against four more on-demand companies: delivery services Postmates and Instacart, laundry service Washio, shipping company Shyp.

"I hope companies realize this isn’t something to fool around with," said their lead attorney, Shannon Liss-Riordan. "They’re violating labor laws."

Workers from Postmates, Shyp, and Washio sued their employers this week, arguing that they should be classified as employees and not independent contractors. Liss-Riordan filed all three cases on June 29.

In addition, while there's already a case against Instacart in California, Liss-Riordan has filed a different class-action case against Instacart on June 30, but limited to Massachusetts. 

Liss-Riordan is already fighting to reclassify Uber and Lyft drivers in two cases that will go to a jury trial in August. She's also filed lawsuits against cleaning service Homejoy, food delivery startup Caviar, and a different case against Postmates on behalf of its couriers.

The Shyp, Instacart, and Postmates customer service cases were filed as "class action arbitration demands" in arbitration courts because of their contracts, Liss-Riordan said.

Postmates did not return a request for comment. Washio and Instacart had no comment, and Shyp was still reviewing the claim. (We'll update this post as we hear back.)

The lawsuits strike at the core of the so-called "1099 economy"

The difference between the 1099 workers and W-2 employees, according to the IRS, is that for common-law employees, employers "must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid." The same is not necessarily true for an independent contractor.

In addition, benefits are often extended to employees but not independent contractors, and employers have the right to control how a worker behaves — how to dress, for example, or specific customer interaction protocol — when they're an employee and not an independent contractor.

Each of these new filings alleges different ways each company is controlling their workers, which may indicate that they are employees under law.

• Washio hires drivers, or "ninjas," to deliver laundry as part of its on-demand laundry and dry cleaning service. According to the court filing, the company makes Washio drivers agree to an exclusivity arrangement, where they agree not to provide service for similar businesses. They're also paid a fee for each pick-up and delivery, the complaint alleges. 
• Shyp's couriers operate in a similar way to Washio's, although its "Heroes" get paid hourly to pick-up packages. They're instructed to "always bubblewrap fragile items" and claim to receive warnings for rejecting too many pick-ups, the arbitration demand alleges.
• In the newest claim against Postmates, pay for its customer service reps is the issue. According to the arbitration demand, the representatives make 35 cents for each delivery they facilitate. If a store doesn't pick up the phone, the representative has to call back four times in two minutes before doing a search to see if the business is closed, the claim alleges. One plaintiff estimated in the arbitration demand that she worked 30 hours in April 2015, but only made $45.85 for 131 calls. 

"I’ve been amazed to see how far companies are stretching it. So many companies just seem to watched what Uber did and think it’s ok," Liss-Riordan said. "It’s like they just sort of assumed they don’t have to worry about it. I just find it unbelievable." 

The issue is starting to gain steam after the California Labor Commission ruled last month that an Uber driver, who filed a suit against the company for misclassifying her as an independent contractor, was actually an employee.

Shyp, the package shipping service, announced Wednesday that it would be reclassifying all of its couriers as employees. The change is effective immediately as it rolls out to new cities like Chicago. For existing workers, employee status will begin January 1, 2016, according to Fast Company. A company spokesperson said the decision has had nothing to do with the arbitration demand.

Instacart announced in June that it would also transition some of its shoppers to W2-employees in select markets.

Liss-Riordan called the moves to reclassify contractors as employees "a step in the right direction." Should her cases win in court, Liss-Riordan said the companies would only be responsible for back pay up until the date they are switched over to employee status. Companies that do switch can "limit their exposure moving forward," she said.

"FedEx battled me for 10 years," Liss-Riordan said. "I’m ready to hang in there and fight for for however long they want to fight." 

SEE ALSO: This lawyer fought for FedEx drivers and strippers. Now she's standing up for Uber drivers

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faux·men·tum
fōˈmen(t)əm, fəˈmen(t)əm/
noun

when a technology startup, its investors or the market believe in robust growth rates writ large.
“the ecommerce company gained fauxmentum by raising artificially high amounts of venture capital and spent lavishly on customer acquisition despite long payback periods and questionable LTV”

We live in heady times. Startup companies continue to grow at unprecedented rates, raise enormous amounts of venture capital and achieve valuations that imply that they will continue to grow rapidly for the foreseeable future.

We can see in the market the telltale signs of a rapidly expanding market: wage inflation, high staff turn-over, rapidly increasing rents with scarcity of space and booming real estate market with prices and rents for homes unaffordable for many. I don’t meet many rational invests (VCs or LPs) who believe this will last but nobody knows whether we have 6 weeks, 6 months, or 2 years.

A certain amount of the growth in today’s market is genuinely caused by the economic leaps that globally connected markets, widely available smart phones, and frictionless commerce caused by the linking of our credit cards, bank accounts, or crypto currencies to our phones for 1-click purchasing. On the other hand a certain amount of growth is fauxmentum caused by the over-funding of the startup markets and ebullient buyers of technology products (both businesses and consumers).

When the music does stop playing it will create a more jarring counter force than you feel when markets grow more sensibly. But can sensible management team even do anything about it? Rational investors can’t sit out of the market entirely so what can they do?

Let me give you some examples I see of fauxmentum:

In the SaaS world I see many business plans where companies have achieved 100-300% year-over-year growth and this is truly impressive. My cautionary tale here is that we’re in the phase of the market where every corporate buyer of software is being paid to innovate. Their bosses are literally encouraging them to work with the latest startups, install new collaboration tools, build apps, integrate with APIs and so forth.

We’ve been here before and it feels familiar. Many startups, though, don’t have the muscle memory to know the signs of when this changes gears and may believe good times are here to stay.

But when economic conditions turn nobody is paid to innovate: They are paid to cut costs, cancel projects, reduce staff, do more with less, stop attending conferences, and improve the bottom line.

So those bullish pipelines your teams have developed that may be completely real in this market environment but at some point will stop materializing. 3-month purchasing cycles will turn into 9-month cycles and the pace of growth will naturally slow – even for great companies that have amazing products.

What to do now

I’m not saying don’t hire sales staff or market your products aggressively. I’m not saying you shouldn’t grow engineering or do PR. I’m saying something simpler:

• Protect your balance sheet and make sure you have enough cash to weather a slowdown and don’t let your reserves dip too low before raising more capital unless you have no choice.
• Get out and raise money now because when markets change they change on a dime and capital completely dries up.
• Limit your fixed costs. In a rapid correction we can all cut excess jobs, slow marketing spend, travel more sensibly, and attend fewer events but high fixed costs kill many companies in recessions
• At least be thoughtful about what is the right growth rate for your business and always ask yourself the hard questions. Push yourself harder to be sure that your product is truly solving a deep problem for your customers because in a recession fauxmentum is the fastest thing to grind to a halt

In the e-commerce arena I see some great companies spending heavily on customer acquisition. When customers are buying your products like hotcakes it can be intoxicating. Sometimes this is legitimate because your product is simply awesome. But even awesome products can slow when consumers feel the negative effects of a reduction in their personal “wealth effect.” Sensible companies are careful about inventory levels, material commitments and so forth.

I also see many ecommerce companies that look less sustainable to me where they are spending on growth in excess of healthy levels and sometimes they have really low gross margins that will make it hard for them to recover their customer acquisition costs (CAC).

There are both entrepreneurs and some investors who focus too much on top-line revenue at the expense of gross margins, payback periods and CAC and because funding has been freely available to those that show growth many are encouraged to continue with growth for growth’s sake.

I see another breed of startups who are dependent on startups for the majority of their revenue. I am most skeptical about this class of startup because they are simply way too vulnerable to a correction in our market.

I always encourage startups to seek a healthy balance of corporate revenue to balance their startup-company revenue. When you’re a startup it’s often easier to sell to other startups because they are like-minded, tech-savvy, less sophisticated in procurement rules, and loaded with cheap capital.

But as with any sales advice, revenue diversity matters. Concentrate your revenue on only startups at your peril. I’d rather grow more slowly than to have all of my eggs in one concentrated basket of any customer type.

Be prepared for the turn

There are many types of fauxmentum and some of it will naturally come to even healthy and well-run businesses that are the recipients of the spoils of a growth market.

Make sure you have long-term planning sessions where you have all sorts of “what if” conversations. Keep your fixed costs as low as possible and know what you’ll do if the tides turn. Be prepared with your contingency plans if the market conditions change because when they do so, they do it quickly.

Raise capital when you can and raise slightly more than you need. Try to keep a reserve that you don’t spend. I’m not talking about raising 10x what you need (that leads to a lack of discipline) but perhaps an addition 6 months more than you need. Or a year.

Growth at all costs sometimes pays off if you time the market perfectly because investors step in to fuel your losses. On the other hand sometimes companies are caught between market shifts. Make sure that you at least understand the risks you’re taking on if you want to grow at all costs.

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To reward their employees for their work, companies used to give out grandfather clocks and gold watches as gifts.

But Achievers, an enterprise-software company from Toronto, has a different approach to rewarding employees.

"Rewarding people for time doesn't make the most sense — what if you could reward them for performance, for hitting their sales goals or for providing great customer service?" Achievers founder Razor Suleman told Business Insider.

Companies like Microsoft, 3M, and Samsung use Achievers' social network-like platform to align their employees with company values, help them achieve their goals, and recognize them for their contributions. Achievers' social-recognition feature lets employees share their accomplishments on social media and lets them rack up points that they can then cash in for tangible rewards like vacations and electronic gadgets.

On Tuesday, Suleman sold his 13-year-old company to Blackhawk Networks for $110 million in cash.

After founding Achievers in 2002 (the company used to be called I Love Rewards), Suleman bootstrapped his company for the first five years of its existence. In 2007, Achievers raised its Series A, followed by a Series B round in 2009. In 2011, Sequoia Capital's Alfred Lin led a $25 million investment in Achievers — the storied Silicon Valley VC firm's largest investment in HR tech at the time.

"Lin was the COO of Zappos, so he got culture and values, so when he saw that Achievers had built software similar to how Zappos ran their culture there and was making it available, it was a good investment to them," Suleman says.

Achievers is used by companies in 110 countries. It has 240 employees at its offices in the Bay Area and Toronto, and though Suleman says it's not profitable, Achievers has a $100 million gross billings run-rate.

It had been four years since Achievers raised its Series C from Sequoia, and the company had gotten inbound interest from growth-stage and strategic investors who wanted to participate in the company's Series D round. And Suleman says his company was "definitely on an IPO path." Achievers had brought in former PeopleSoft CEO Craig Conway, who sits on Salesforce's board of directors, to help it explore going public. "It took me like a year to recruit him, really to set us up to go public," Suleman says.

So why sell the company?

Suleman says that, ultimately, Blackhawk just made an offer too good for him to refuse. "They really made it compelling by keeping Achievers independent, keeping the team on board, keeping the brand. They were already a public company," Suleman says. "It was a really good fit, ultimately, with Blackhawk. They do a lot of payments tech. They do tech for gift cards and mobile wallets. It was a vertical they were really passionate about. We'd had a relationship with them for years. Maybe we could grow faster, make our customers happier, grow at a global scale faster if we were doing this as part of Blackhawk."

Achievers started talking to Blackhawk about a possible acquisition back in January. In April, they signed the term sheet. And on Tuesday night, the deal finally closed. And Suleman couldn't be happier about it.

"It's a little surreal to sell your baby. It's exciting," he says. "Achievers started off as a little vision, a little opportunity. It's been a crazy ride for the past seven or eight years. I just feel really grateful."

SEE ALSO: How a 10-month-old startup's founders convinced investors to give them millions of dollars to buy a 93-year-old German razor factory

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Isaac Oates manages a team of 42 people at Justworks, an HR and payroll management startup that he founded in 2012.

Justworks wants to take the pain out of starting a business by making it easy to get employees enrolled in a benefits plan. 

Oates is pretty familiar with operations: He spent 12 years in the Army Reserve, enlisting with the help of a parent's note at the ripe young age of 17.

"The army has a certain style of leadership that people find attractive," Oates said. "Anyone who knows me well knows that I like doing things in a very clear, specific way. Also, treating people like family is important to me." 

He did ROTC during college and became an officer upon graduation.

He soon got a full-time software engineering job at Amazon, but he continued to take weekend shifts with the National Guard and Army Reserve. He also worked on counterterrorism analysis and commanded his own team.

"It kind of became a hobby while I was working full-time," Oates told Business Insider. "Those are really useful skills for any job." 

He ended up having two separate stints at Amazon between 2002 and 2009: nearly three years as a software engineer, then, after a short break for business school, a year and a half as a product manager. He worked with the National Guard for that entire stretch of time, though he did have to take a six month-leave from Amazon during officer training.

Amazon had a similar focus and rigor to the army. Oates described the Amazon experience in a blog post that was shared widely earlier this year: 

When you go to a meeting with Jeff Bezos at Amazon, you spend time preparing a document. It could be called a narrative, a 1-pager, or something else — the name doesn’t really matter. The document is an articulation of what you are trying to accomplish and your understanding of what it will take to get there. The document is long, thorough, and written in prose.

When you present to Jeff for an hour, you spend the first 20 minutes while he reads your narrative, making notes in the margins. Everyone else waits. It sounds like a waste of time, except that the following 40 minutes is pure gold. For 40 minutes, you have a strategic discussion where everyone in the room is on the same page, has the same context and access to detail.

I believe that those meetings, along with Jeff’s intellect, are Amazon’s true competitive advantage. They think better than their competition. Great decision-making and execution follow.

Into the startup world

Oates left Amazon in 2008 and started his own company, an ad platform called Adtuitive. The five-person startup was acquired by Etsy in 2009. 

The difficult experience of getting Adtuitive off the ground would serve as inspiration for Oates' current project: Justworks. 

"When we were trying to set up health care for our employees, we found that it was really complicated, and all of the forms and laws for benefits were different in other states," Oates said. "We just kept thinking, 'How do we make this better?'" 

To set up benefits through Justworks, a business owner only needs to set up an account and invite employees to the system. Employees then choose from various benefits packages. Everything from medical insurance and payroll to commuter benefits and 401(k) accounts can be managed through Justworks. Casper, Trello, and Ringly are among the startups who have signed on to use the service.

"The product definitely appeals to companies that are run by younger people," Oates said. "We also work with lots of agencies and creative people, as well as some doctors and dentists." 

Oates' experiences definitely influence how he runs Justworks today. As he wrote about his time at Amazon:

To this day, I avoid laptops in meetings and encourage presenters to participate as best they can. It’s tough. There’s a lot of pressure to be online and available all the time, much more so even than in 2009. I’m hopeful that by creating a place where distractions like email, social media, and Google can be avoided, I can get my team’s best thinking.

Justworks has raised $20 million in venture funding to date. Their most recent round was a $13 million Series B led by Bain Capital Ventures. Earlier investors Thrive Capital and Index Ventures also contributed to the round. 

SEE ALSO: Go inside the beautiful new office and test kitchen of the wildly popular food site Food52

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Five years ago, Travis Kalanick launched a startup called UberCab in San Francisco.

Fast forward a few years and Kalanick's company, now just called Uber, is now one of the most lucrative in Silicon Valley.

Uber operates in 311 cities in 58 countries, and it could be worth as much as $50 billion.

Thanks to that sky-high valuation, Kalanick made Forbes' list of the world's billionaires, where the 38-year-old serial entrepreneur is said to have a net worth of about $5.3 billion.

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Uber CEO Travis Kalanick grew up in Northridge, California, a suburb outside Los Angeles. When he was a kid, he wanted to be a spy.

Source.

But Kalanick would eventually follow in the entrepreneurial footsteps of his mom, a retail advertiser. He went door-to-door, selling knives for Cutco as a youngster. He started his first business at age 18, an SAT-prep course called New Way Academy.

Source.

Kalanick's parents, Don and Bonnie, would be "rider zero" when Uber launched in Los Angeles.

Source.

There's been a lot of talk about tech "unicorns" recently.

Like the fictional animal, unicorn companies — tech startups with billion-dollar valuations — are supposed to be rare and magical. 

Lately, though, tech's unicorns have become rather common. 

And now, Fortune's Dan Primack reports, there's even a venture capital firm dedicated to funding unicorn companies.

Unicorn Capital Partners has already raised $12 million to fund tech companies in Asia, Primack says.

According to its LinkedIn page, Unicorn Capital Partners "focuses on investing and partnering with the leading and emerging venture capital fund managers at the start of the Age of the Unicorns."

The term "unicorn" was first coined by Cowboy Ventures founder Aileen Lee in a November 2013 TechCrunch post. At the time, Lee identified 39 of these unicorns, which were all  US-based software companies founded in 2003 or later, with valuations from public or private market investors of $1 billion or more.

Now, about a year and a half later, there are 100 unicorns, according to the Wall Street Journal's "Billion-Dollar Club" list.

Some Silicon Valley investors have seen the increase in number of tech unicorns, the astronomical rise in startups' valuations, and the amount of funding being raised by Silicon Valley startups as a sign of a looming tech bubble, possibly mirroring the dot-com bubble of the late 90s and early 2000s. 

Back then, the tech bubble of the late '90s produced a number of flash-in-the-pan internet companies that raised millions — often in public offerings — only to flame out a year or two later.

Recently, a handful of investors — including Benchmark's Bill Gurley and Y Combinator's Sam Altman — have voiced their concerns about the current state of venture capital funding. In a tweetstorm in February, Altman warned startups that they need to keep their burn rates low. High startup burn rates are one measure investors have used to determine whether or not tech-bubble talk is real. 

At a SXSW keynote this year, Gurley warned that "a complete absence of fear" in Silicon Valley had led venture-capital firms to take big risks on tech companies. Those companies could face a turn in the market in the near future. "I do think you'll see some dead unicorns this year," he said.

SEE ALSO: Which billion-dollar 'unicorn' startups are at most risk of dying? Here's what some data suggests ...

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Angel investing in Silicon Valley is huge right now.

In 2014, there were 2,960 angels who participated in a funding round (and by comparison, there were 822 in 2010).

It's so popular, in fact, that there's a four-hour class in Mountain View, California, that will teach you how to be an angel investor, the New York Times' Mike Isaac reports.

In March, Y Combinator president Sam Altman held a four-hour, invite-only crash course at the seed fund's headquarters to teach new angel investors how to "evaluate founders and their ideas and how angels can be helpful to companies they invest in," Isaac reports. "The event also stressed that angel investing was difficult to do well, and that newcomers should expect to lose money." 

Of course, the idea that you can learn all there is to know about angel investing in startups in a mere four hours is literally unbelievable.

In the past several years, big tech companies like Facebook and Twitter have gone public, creating lots of millionaires with money to invest back into small startups. “The total angel scene back when I started in 2006 was 30 or 50 angels, maybe with three to five very active ones,” Aydin Senkut, founder and managing director of VC firm Felicis Ventures, told the Times. “Now everybody and their family and their pets who have some money want to get into angel investing.”

The influx of angel investor interest in startups can be a blessing and a curse for founders: having a bunch of notable angel investors provides much-needed credibility for young startups. But when a lot of angels invest in a company that's in trouble and there's no lead investor, there's less responsibility on any one investor to help out.

Some founders also say angel investors today are so eager to put their money into startups that they don't do their due diligence by thoroughly reading over deal terms. 

This fits into Mark Cuban's theory about what he considers to be a tech bubble forming today about private investments. In a blog post earlier this year, Cuban asserted that today's tech bubble is worse than the dot-com bubble 15 years ago because today's investments in private tech startups lack the liquidity of public market investments.

Here's Cuban:

"I have absolutely no doubt in my mind that most of these individual Angels and crowdfunders are underwater in their investments. Absolutely none. I say most. The percentage could be higher.

Why?

Because there is ZERO liquidity for any of those investments. None. Zero. Zip.

All those Angel investments in all those apps and startups. All that crowdfunded equity. All in search of their unicorn because the only real salvation right now is an exit or cash payout from operations. The SEC made sure that there is no market for any of these companies to go public and create liquidity for their Angels. The market for sub 25mm dollar raises is effectively dead. DOA. Gone. Thanks SEC. And with the new Equity CrowdFunding rules yet to be finalized, there is no reason to believe that the SEC will be smart enough to create some form of liquidity for all those widows and orphans who will put their $5k into the dream only to realize they can't get any cash back when they need money to fix their car."

You can read the New York Times' full report about angel investing here.

SEE ALSO: There's a new VC firm that only wants to fund billion-dollar 'unicorn' startups

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There's no shortage of innovative and impressive startups in Silicon Valley.

But which are the coolest?

Pulled from our recently published Silicon Valley 100 list, meet the coolest startups in Silicon Valley.

All the companies on this list are private tech companies that have raised venture-capital funding.

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Gagan Biyani, Morgan Springer, Neeraj Berry, Matt Kent

Cofounders, Sprig

CEO Gagan Biyani's mission is for Sprig to become "the easiest way to eat healthy in the world." Former Google head chef Nate Keller leads the in-house kitchen staff that prepares each meal delivered by Sprig, the on-demand fresh-food delivery service that launched in November 2013. It offers three meal options daily and aims to deliver the food in 15 minutes.

In April, the company raised $45 million in funding, which spurred its expansion to Chicago from the San Francisco Bay Area.

Conrad Chu, Tri Tran

Cofounders, Munchery

Tri Tran and Conrad Chu wanted to provide the convenience of a professional chef without the high cost, and in 2011 Munchery was born. The company is similar to Seamless, except your food is made by Munchery's chefs instead of being outsourced to restaurants. Each time you order a meal on Munchery, the company makes an equivalent donation to a charity in your town.

Munchery made headlines in April when it raised a $28 million Series B round. More recently, Sherpa Ventures, a prominent venture-capital firm, announced it was making its "biggest bet since Uber" by endorsing Munchery. At the end of May, the company announced its Series C round of $85 million co-led by Menlo Ventures and Sherpa. Munchery has raised $117.2 million, including contributions from celebrities such as Jared Leto and Edward Norton.

Todd McKinnon and Frederic Kerrest

Cofounders, Okta

McKinnon is a Valley A-lister, a former star Salesforce engineer who launched his own company in 2009 without CEO and friend Benioff's blessing. His company has seen massive growth: By September 2014 it had raised $155 million from top VCs. Okta is now valued at about $600 million and is expected to go public by 2016.

McKinnon said there's tremendous value in working for a rapidly growing, successful company before pursuing other endeavors. He called his time at Salesforce a "gift" that taught him what it means to win.

The CEOs and founders of Europe's tech startups don't spend all their time in the office — they also get to travel to award conferences in exotic place and and atten fancy parties.

Luckily for us, Europe's leading names in tech enjoy documenting and sharing their lives on Instagram, giving us a sneak peek into the startup world. 

We ranked some of Europe's best tech Instagrammers according to how good their photos are, how regularly they post, and what they post snaps of.

25. Tunepics CEO Justin Cooke. WHY? Cooke's app is actually an alternative to Instagram, but he still shares photos of his daily life around London.

Crazy #sunsets in winter along the river with the skateboarders in the dark...

A photo posted by Justin Cooke (@jc7777) on Jan 2, 2015 at 2:57pm PST

24. Rentify CEO George Spencer. WHY? Spencer's Instagram shows daily life in the Rentify office, as well as interesting photos of properties in London.

A photo posted by George Spencer (@officiallygeorge) on Jul 4, 2015 at 7:11am PDT

23. Prezi CEO Peter Arvai. WHY? Arvai loves to Instagram photos of tasty meals.

My Chinese me is soo happy!

A photo posted by Peter Arvai (@peterarvai) on Apr 22, 2012 at 1:49pm PDT

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Barbara Ann Berwick delivered a potentially huge blow to Uber when she was declared an employee, not an independent contractor, by the California Labor Commission in June.

She was awarded more than $4,000 for her employee expenses from the ride-hailing company.

Now she wants to teach other drivers how to do the same.

Berwick's Rideshare School launched Tuesday and promises to teach "drivers from ridesharing services how to enforce their rights as employees and reclaim funds for driving expenses, overtime, and more." 

Berwick will charge $50 for the three-hour class, and will hold it twice a week at her home in San Francisco. 

Winning your case, Berwick said, is much harder than showing up. And since her case was a win at the labor-commission level, the result only applies to Berwick.

"You can’t say I drove 'I’m an employee, pay me'. The fact that I won my case at the EDD does not set a precedent," Berwick said.

For one thing, if drivers are working for multiple companies at the same time, "your litigation will definitely fail," Berwick said. The drivers may be able to claim for mileage or other specific items, but won't be able to claim expenses or overtime because there's no way to easily split the items.

That's just one pitfall some drivers may face going against ride-hailing companies.

Berwick offered another example: Suppose the commissioner asks if your job is time-based or project-based. A driver could respond that it's project-based because they are picking up each passenger to complete a task, or they could say it's time-based because they are responsible for getting the person there in the shortest amount of time — a stop for lunch along the way would mean a low rating and potentially getting fired, Berwick explained.

The correct answer for purposes of getting classified as an employee is time-based: That's one characteristic of employment. Projects signal more of a contractor status, Berwick said.

There are also complexities surrounding the paperwork you need to provide and try to get submitted as evidence.

"You have to know what to argue," Berwick said. "If you get careless, you can make a point that strikes the other side's argument."

Berwick won, she said, because she's a "seasoned litigator." A search for her name returns 26 cases in San Francisco courts alone, and she can recite the address of the labor commission off the top of her head.

Uber is now appealing the labor commission's decision, and Berwick will be facing a court date in October. Until then, she hopes she'll be teaching other drivers how to come out ahead in face of the teams of lawyers for the ride-sharing companies.

"They will win," Berwick said of Uber and Lyft. "An unprepared litigant will lose."

SEE ALSO: Ex-Uber driver says she used her experience running a phone sex company to beat Uber in court

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London may be the "capital of European tech," but it still lags a long way behind the US.

Case in point: When it comes to salaries, British tech workers earn significantly less than their American counterparts, with some US developers earning more than 50% more than Brits in equivalent positions.

Data provided to Business Insider by Hired, a tech-industry job site, shows that software engineers in the UK on average earn 30% less than they would in identical roles in the US.

For example, a British software engineer with up to three years of experience will make an average of $77,508 (£50,540) working in London. In Chicago the engineer would make $85,631 (£55,854), and in Washington, D.C., that jumps up to $94,916 (£61,891). New York is more lucrative again, with an average salary of $103,324 (£67,373). But the most highly paid area, predictably, is the San Francisco Bay Area: Salaries average around $113,479 (£73,995) — 46% higher than in the UK.

This difference lessens slightly as software engineers become more senior, but it is still pronounced: With between six and 10 years experience, a London worker should expect to make $99,674 (£65,014), while in San Francisco the average comes out to $131,779 (£85,928) — 32% more.

Similar differences are found in other tech professions, too. London senior data scientists make $89,231 (£58,176), while US ones make $128,333 (£83,670), 44% more. And with mid-level UX/UI designer salaries, the difference is $81,572 (£53,184) to $108,287 (£70,632), with US workers making 32.7% more. Hired drew its data from job listings placed on its site in various US cities, as well as London, where it launched earlier in March.

So what's going on? It's not the case that US tech workers are just better at their jobs. Instead, as Hired UK market manager Sophie Adelman points out, "It is driven by the supply/demand dynamic." The UK just doesn't have the same kind of mature tech scene the US does, and accordingly, demand isn't so high for tech workers.

There's also a relatively low level of venture-capital investment in Europe compared with the US, which will contribute to lower salaries: In 2014, European VC firms raised $4 billion — one-tenth of what US firms managed, according to The New York Times.

(Of course, in places like San Francisco, there can be a higher cost of living too, forcing all companies to pay more. But this is the case because tech workers are more in demand, letting them command higher salaries, and thus driving up the cost of living in the area.)

Yes, London is widely regarded as Europe's tech hub, with three times as many startups making their home in the English capital as in any other European city, according to research from EY. Yes, London is improving fast, with $1.47 billion in VC funding raised in the first half of 2015— a milestone it took nine months to reach a year prior. And yes, UK tech companies are forecasting 11% growth this year, four times as fast as the UK's gross-domestic-product forecast. But for all its successes, London fails to boast of a single true tech giant, like Apple, Facebook, or Google.

Here's another example of how far the UK/European tech scene is behind the States': startup exits. Research from Tech.eu published in April found that of the 332 European tech companies acquired in 2014, 122 of them were acquired by US companies alone.

UK companies, in contrast, were responsible for just 33 startup exits during the same year. Even the most prolific European country, Germany, acquired just 40 companies — less than one-third of America's.

So long as this disparity exists, we shouldn't expect to see equal wages on both sides of the Atlantic anytime soon.

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Uber is out of the running for buying Here, Nokia's mapping business, Reuters reports.

Back in May, Uber was reportedly bidding on Here for as much as $3 billion.

Here is a hot commodity. Nokia's Berlin-based mapping business accounts for $1.1 billion in yearly revenue, or just less than 8% of Nokia's 2014 total sales. When it comes to built-in navigation systems, Here has 80 percent global market share.

It's a significant business, and the main rival to Google Maps when it comes to mapping units. Analysts say it could be worth between $2.2 and $4.4 billion.

Sources previously said Uber, Chinese search engine Baidu, and private equity firm Apax had banded together to bid on Here. Theoretically, Uber could do several things with new mapping technology.

Nokia's mapping product would let Uber replace its current mapping technology — a mix of maps from Apple, Baidu, and Google — with its own mapping software and data, which would help Uber's central driving business.

Uber could also use Here to develop the self-driving cars it's reportedly been working on in Pittsburgh. Nokia's mapping technology could also further Uber's attempts at expanding the company into a delivery and logistics business, starting with UberFresh, its food delivery service, and UberPool, its carpooling service. 

But according to a new story from Reuters, Uber is no longer bidding on Here. (Uber declined to comment on Reuters' report.)

So who could buy Here now that Uber's not bidding on it?

German automakers! In May, BMW, Daimler’s Mercedes-Benz and Audi banded together to launch a formal bid to buy Here. Now that Uber — with its massive war chest of $5.9 billion in funding — is out of the running, there's less pressure to bid high on Here.

Car makers want to get their hands on Here's technology so they can develop their own self-driving cars. BMW, Mercedes-Benz, and Audi already use Here, but buying the business would give them an edge over tech companies working to develop their own autonomous cars.

Though Uber rarely buys companies, two of its most recent acquisitions have been maps-related. Uber acquired part of Microsoft Bing's mapping technology at the end of June, including 100 of its engineers. In addition to losing roughly 100 data-collection engineers, Microsoft has also sold other assets to Uber, which includes a data site near Boulder, Colorado, plus intellectual property, cameras, and software. And in March, Uber acquired mapping startup deCarta for an undisclosed sum.

SEE ALSO: A look inside the insanely successful life of billionaire Uber CEO Travis Kalanick

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Uber is fighting back against a federal class-action lawsuit that seeks to reclassify all of its drivers in California from independent contractors to employees.

In court documents filed with the Northern California District Court on Thursday, Uber argued that the class-action part of the suit should be dropped because the 160,000 drivers "have little or nothing in common, other than their use of the Uber App in California at some point over the past six years."

Here's the most interesting parts from Uber's argument:

• Uber is calling itself a "lead generation" app that connects buyers and sellers — in this case, people who want rides and drivers who sell them. So Uber and other ride-hailing services are actually similar to eBay and Etsy. "Lead generation platforms such as Uber similarly coordinate transactions between drivers and passengers," wrote Professor Justin McRary, an expert hired by Uber, in his testimony. 
• Uber has used 17 different agreements to sign up drivers, so it argues drivers can't be classified as a group. These driver agreements change in many "legally significant ways" including whether they can drive for competitors, can be terminated without cause, and whether they must resolve disputes through arbitration.
• Uber claims a plaintiff has admitted to defrauding Uber out of $25,000 and so he doesn't reflect the "class" of drivers. In a deposition, one of the plaintiffs admitted to referring drivers to the app temporarily, paid drivers to complete "sham rides", and collected more than $25,000 in referral payments during his time as an Uber driver, the motion said.

The case is scheduled to begin trial in August.

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Home-sharing juggernaut Airbnb reached a jaw-dropping valuation of $25 billion in its most recent funding round.

That figure left some observers scratching their heads as the company is projected to bring in just $900 million in revenue this year and is still operating at a loss. 

Is Airbnb worth this colossal sum? Before breaking down the numbers behind the valuation, let's take a closer look at how the company got here.

What is Airbnb?

One of the champions of the sharing economy alongside Uber, Airbnb is a website that allows home dwellers to rent out spare rooms or their entire homes for any period of time. Spaces can range from a simple backyard for camping to a luxurious beach house for thousands of dollars a night. The concept itself is not new, with competitors like HomeAway and VRBO, a subsidiary of HomeAway, and for years, Craigslist has provided a more rudimentary substitute for such a service.

What has separated Airbnb from sites like HomeAway and VRBO is that Airbnb has always handled payments for its hosts, as opposed to the other two, which began as online classifieds and have since added direct payment options. HomeAway and VRBO also tend to specialize in vacation rentals, while Airbnb has become the dominant force in urban apartment rentals.  

How big is this market?

Home-sharing competes within the larger hotel and lodging industry. Founded in 2008, Airbnb already has 1.4 million listings on its site, while HomeAway has 1.1 million on its network. 

Determining the number of rentable rooms in the world is difficult, as there are several different categories of lodging, big and small, but according to hospitality research company MKG Group, there are about 20 million hotel rooms globally.  

That means Airbnb and the home-sharing industry in general are still a small piece of the overall lodging industry. It is important to note as well that many Airbnb listings are only available for a limited portion of the year. 

What Airbnb has that the others don't

Hilton Worldwide Holdings, the most valuable hotel chain in the world, is expected to see 9% revenue growth this year. HomeAway, Airbnb's closest rival, is expecting a sales increase of 10% to 12%, or about 20% in constant currency.

At Airbnb, meanwhile, that number is going through the roof, as its projected $900 million in revenue is more than triple its 2013 total of $250 million. The company has taken a good idea and executed it to near perfection.

It provides free photography to new hosts to show apartments in the best light; it handles all payments, eliminating a potential trust issue; and it resolves any disputes between hosts and guests. At the same time, Airbnb provides a much wider variety of housing, both in type and location, and at lower prices than hotel chains.

It is easy to see why its popularity is exploding. The site is a simple way for the average American to leverage an underused asset -- a spare room or an apartment vacated when the host goes out of town -- to make extra cash. 

Do the numbers add up?

With this recent round of fundraising, the company carries a valuation on a price-to-sales basis of nearly 30 times. In the realm of publicly traded companies, that puts Airbnb above even social media titans like Facebook and Twitter, which trade at 17 and 14 times sales, respectively. Facebook, however, is raking in boatloads of profits, and its high price-to-sales is as much a reflection of its huge profit margins as it is its massive valuation. 

Airbnb, which expects an operating loss of $150 million this year, is not in the same league as Facebook, but it could be one day.

The home-sharing site benefits from many of the advantages that has made Facebook so successful, including network effects, word-of-mouth advertising and popularity, and user-generated content. Facebook has developed such a profitable business model, with operating margins of 35%, because it simply provides a platform for its users and then sells advertising within the content.

Similarly, Airbnb, with the dominant brand in the industry, only needs to provide the online platform for users to make transactions, allowing the company to collect a commission fee of 6% to 12% on bookings.

Though it is losing money today because of expansion efforts, over the long run, it should be highly profitable. With the global hotel market coming in at more than $500 billion, this presents an enormous opportunity. 

Airbnb expects to hit $10 billion in revenue by 2020, representing a compound annual growth rate of over 60%. It is clear that Airbnb does not expect its dramatic growth to slow down anytime soon. 

Is the company overvalued at $25 billion? Perhaps, but if it can follow through on that projection and revolutionize the hotel and lodging industry, it will be worth much more than that one day.

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