April 29, 2016

When Kevin Gibbon was in college, he used to sell all sorts of stuff on eBay. But there was one aspect of his operation that slowed things down: shipping.

In 2013, he created an app to tackle this problem. Shyp picks up, packages, and ships items for you. But what sets Shyp apart isn’t just its elevator pitch.

Gibbon decided to turn his army of couriers, who were independent contractors, into real employees. And with that switch came benefits like unemployment insurance, which contractors for companies like Uber don’t get.

“What we found is that as [independent contractors], that relationship, you can't actually train people... we weren't able to provide the level of customer service at the door that our service really required.”

About 98 percent of Shyp contractors who were offered full or part-time employment said they wanted it.

Gibbon says he was inspired by policies adopted by companies like Starbucks, which has the majority of their workforce on W-2s and provides stock options for all employees, among other things.

“I think that what they've done by just treating people really well, providing an education even, I think that I've really looked up to companies like that.”

The change didn’t come without costs. But although the switch was expensive, Gibbon pointed out that the payoff was a noticeable increase in productivity: “We gained so much efficiency on all these other tasks that you just can’t do with traditional 1099 contractor relationships.”

Recently, Shyp had to cut 8% of its staff, though Gibbon notes that the cuts came as part of a reorganization of the company’s priorities, unrelated to converting the couriers into W-2 employees.

“You have to just take a very long-term view on a lot of these things, like, thinking about when we are in every city in the US and then scaling globally... Trying to save a little bit of money, that's not how you build a really big and successful company.”

Kevin Gibbon, new business models, Shyp, startups

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