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Agarwal, Ritesh Budget Travel Hotels and Travel Lodgings India Layoffs and Job Reductions Oyo (Oravel Stays Pvt Ltd) SOFTBANK Corporation Start-ups Uncategorized

Oyo Scales Back as SoftBank-Funded Companies Retreat

MUMBAI, India — Oyo, once one of India’s fastest-growing tech start-ups, is now rapidly scaling back.

In recent weeks, Oyo, a budget hospitality company, has pulled out of dozens of cities, cut thousands of hotel rooms, started laying off employees and slashed other costs as it faced pressure from its biggest investor, the Japanese conglomerate SoftBank, to curb vast operating losses.

The retreat has been swift and sweeping. In India alone, Oyo has lost more than 65,000 rooms — or about a quarter of what it had offered to travelers — since October, according to internal data from current and former employees that was reviewed by The New York Times. This month, Oyo also stopped selling rooms in more than 200 small Indian cities, according to company documents and one current employee and one former employee.

The moves come on top of more than 2,000 layoffs around the world, which Oyo began rolling out last week, according to six current and former employees. Before the cutbacks, Oyo had about 20,000 employees in 80 countries.

Oyo said some of the data obtained by The Times was inaccurate but declined to be specific. In an email to employees on Monday, Ritesh Agarwal, the company’s chief executive, said Oyo was focused on sustainable growth and profitability — which meant layoffs.

“Unfortunately, some roles at Oyo will become redundant as we further drive tech-enabled synergy, enhanced efficiency, and remove duplication of effort across businesses or geographies,” he wrote in the email.

The Economic Times, an Indian publication, first reported in December that job cuts at Oyo were coming.

Oyo’s actions are part of a broader pullback by start-ups funded by SoftBank. Armed with a $100 billion fund known as the Vision Fund, SoftBank has shoveled money into start-ups across the globe in recent years. That has given many young companies fuel to expand, often with little thought for profit.

Last year, some SoftBank-funded start-ups began running into trouble — most notably WeWork, the office space company, which failed to go public when investors began questioning its losses. WeWork ultimately ousted its chief executive and slashed its valuation to less than $8 billion from $47 billion.

WeWork’s fall led to questions about other start-ups that SoftBank had financed and whether those young firms could make money. Last month, the dog-walking service Wag underwent several rounds of layoffs before SoftBank sold its shares at a loss. The construction start-up Katerra, another SoftBank-funded company, also cut its staff.

This month, layoffs have gathered momentum at start-ups that SoftBank had invested in. The South American delivery service Rappi and the San Francisco car-sharing start-up Getaround said they were laying off employees. Zume, a company that used robots to make pizzas and had been valued at $2 billion, cut more than half of its work force. It also stopped making pizzas.

Some investors and start-ups said they were now approaching SoftBank’s Vision Fund cautiously — or, in some cases, avoiding it altogether.

“We have advised almost all of our companies to steer clear,” said Josh Wolfe, an investor at the venture capital firm Lux Capital who has been critical of SoftBank’s strategy. “Everyone else was fearful to say the emperor had no clothes.”

SoftBank declined to comment on Oyo and other start-ups in which it has invested.

Mr. Agarwal founded Oyo in 2013 to organize India’s small independent hotels into a chain. The company markets rooms online and takes a cut of each stay. Mr. Agarwal, who has become a business star in India, has said he aspired to make Oyo the world’s largest hotel chain by 2023, displacing Marriott.

But as Oyo tried to expand globally, in part pushed by SoftBank, it spent heavily on incentives to attract hotel owners and customers to its site. That resulted in losses in India, where Oyo has said it will lose money through at least 2021.

Masayoshi Son, SoftBank’s chief executive, began investing in Oyo in 2015. SoftBank and its Vision Fund now own half its stock. While Mr. Son has called Oyo a jewel of his fund and urged it to grow quickly, he has since changed his stance.

As Oyo’s losses have mounted, senior leaders at the company have told employees that SoftBank had demanded that it become profitable on a basis known as EBITDA — earnings before interest, taxes, depreciation and amortization — by mid-2020, according to current and former employees.

In another sign of SoftBank’s shifting position, Yahoo Japan, which is half-owned by SoftBank, pulled the plug in November on a Japanese apartment-rental venture with Oyo. Most of the Oyo employees involved in the Japan venture have been laid off or relocated, current and former employees said.

Oyo faces other troubles in India. On Friday, the Indian income-tax authorities visited the company’s headquarters just outside New Delhi, requesting reams of documents. The tax department and Oyo said the government was examining whether the company was properly withholding and remitting income taxes on payments to vendors.

The Times reported this month that Oyo had offered thousands of unlicensed hotel rooms and sometimes offered free rooms to government officials to deter enforcement. The Times also described how some Oyo employees worked together to commit fraud against the company.

In his email on Monday, Mr. Agarwal said the behavior described by The Times would violate the company’s code of conduct. “We take all the allegations very seriously and are looking into each and every one,” he wrote.

To stem losses, Oyo has also cut back on staff and supplies such as mineral water and cleaning fluids in the hotels it runs itself, according to the current and former employees. Oyo staff members managing some of the hotels have been instructed to save more money on electricity bills by switching off lights, elevators and even boilers for hot water, they said.

Morale has plummeted among thousands of Oyo workers globally, current and former employees have said.

Prabhjeet Singh, an Oyo business development manager who left the company in September, said employees who criticized the company ran a greater risk of losing their jobs.

“It’s a culture of silence,” he said.

Oyo’s reputation has deteriorated so much in India that other employers are reluctant to hire its former workers, said Mr. Singh, who has been unable to land another job.

“They look at me as if I’ve done a crime working at Oyo,” he said.

Vindu Goel reported from Mumbai, Karan Deep Singh from New Delhi and Erin Griffith from San Francisco.

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California Freelancing, Self-Employment and Independent Contracting Labor and Jobs Law and Legislation Layoffs and Job Reductions Lyft Inc National Press Photographers Assn Uber Technologies Inc Uncategorized Vox Media Inc

California Wanted to Protect Uber Drivers. Now It May Hurt Freelancers.

SAN FRANCISCO — Gloria Rivera likes the freedom of freelance.

She moved to San Diego from Peru in 2005 and has a bustling career as an interpreter and translator for doctors, courts and conferences.

Now, as a new California law governing freelancers is set to take effect on Wednesday, her clients are wary. They are asking for more paperwork. Some services are hitting pause on hiring Californians at all.

“Everyone’s scared in California,” Ms. Rivera, 42, said. “Who’s going to hire me as an employee for three assignments a month?”

The new law, Assembly Bill 5, will radically reshape freelance work in California. Prompted in part by frustration with the treatment of workers by companies like the ride-hailing behemoths Uber and Lyft, the bill was created to extend workplace legal protections to roughly one million people in the state.

On Monday, Uber and Postmates filed a lawsuit in federal court in California seeking to block the law from being enforced against them. But the suit is unlikely to stop the law from going into effect in other professions.

Those other industries include a wide variety of freelance workers, such as writers, translators, strippers and clergy. Many said they were now discovering that the law could make earning a living much more difficult.

The idea behind the law, signed in September, is that many workers are misclassified as contractors so companies can save money. Unlike contractors, employees are protected by minimum-wage and overtime rules and are entitled to workers’ compensation and unemployment insurance. Their employers pay half their payroll taxes for Social Security and Medicare.

A.B. 5 codified and extended the reach of a 2018 State Supreme Court ruling that said workers must be classified as employees if the work they did was a regular part of the company’s business. Under the ruling, a plumber who fixes a leak at a store may be a legitimate contractor. But workers who sew dresses at home using cloth and patterns provided by the manufacturer are likely to be employees.

The new law also means a company must treat workers as employees if it controls how they do their work, or if the workers don’t run independent businesses in the same line of work that they do for the company. A plumber who worked only at the store would most likely be deemed an employee.

The law has a host of so-called carve-outs. It exempts certain white-collar workers like doctors and accountants, but it extends legal protections to tens of thousands of low-paid workers in fields like construction, janitorial services and hairstyling.

But complexities cropped up quickly. For example, marketers and grant writers were exempted, but journalists were not.

So a weekly columnist for a newspaper must now be considered an employee, since under the new law a freelance writer can publish only 35 so-called submissions a year with a publication. (A video and a text article on the same event would count as one.) The intention was to require newspapers to put these workers on staff. The result in some cases has been layoffs.

Vox Media cut more than 200 California freelancers, citing the new law. The transcription service Rev told its freelancers that it would be leaving California.

Emma Gallegos, 34, has been freelancing while saving money to start a local news website, Hwy 99, covering her hometown, Bakersfield, located in California’s agricultural heartland. She recently took a copy-editing test to get a significant contract that would help pay her bills. Afterward, the potential client emailed her, apologizing and explaining that it would not be able to hire her because she lived in California.

“There aren’t many full-time writing jobs in Bakersfield, so these kinds of remote editing contracts are important for me,” said Ms. Gallegos. “I just feel really frustrated and like I’m getting set back from my goals.”

Proponents of the new law argue that many companies are playing on worker anxieties and that many of the arrangements that employers are abandoning were illegal even before A.B. 5.

“A lot of these employers are sending out these fear-mongering emails,” said Assemblywoman Lorena Gonzalez of San Diego, the bill’s author. “I guess in this day and age of Twitter, that’s an easy thing to do — create a kind of mass hysteria.”

Ms. Gonzalez, a progressive Democrat, has in recent weeks become a fierce Twitter presence pushing back at critics, sometimes with profanity.

When asked about some of Ms. Gonzalez’s tweets, a spokeswoman said by email: “The assemblywoman is incredibly angry at an economic system that has caused a permanent underclass in her community of working men and women who are constantly being squeezed by corporate greed.”

Ms. Gonzalez has said the problems facing companies that rely on freelancers preceded the new law.

SB Nation, the sports website owned by Vox Media, which cited A.B. 5 as the reason it recently let go about 200 freelancers, was already sued by freelancers before the law changed. In one lawsuit, freelancers claimed that they worked as many as 40 hours a week but earned less than $150 a month.

A spokeswoman for Vox Media declined to comment but cited a post from SB Nation’s executive director in which he said the change was also “part of a business and staffing strategy that we have been exploring over the past two years.”

Even in situations where the new law might hurt workers, Ms. Gonzalez said, the reality is more nuanced than opponents let on. She pointed out that some media outlets, including SB Nation and The Los Angeles Times, were hiring more employees because of the new law.

While acknowledging concerns among journalists, Ms. Gonzalez attributed the media angst over the law partly to journalistic ethics: Those who lose their jobs feel free to complain loudly. But those who may benefit from the law by becoming employees, she said, “think it’s not appropriate to be engaged in something that affects them, that they have a conflict.”

Some freelancers said the new law would force them to change the way they worked. And some said they preferred or needed their flexible schedules. Many companies limit their employees’ flexibility for practical reasons, though there is nothing that requires them to impose a rigid schedule.

Nancy Depper, a copy editor and proofreader in Oakland, has multiple sclerosis. So “setting my own hours makes life infinitely better for all the reasons,” she said. She said she had lost a set of contracts for 2020 worth $120,000.

“I’ve barely had time to process the information,” Ms. Depper, 53, said. “I don’t know what my options are going forward.”

The National Press Photographers Association, which represents photographers who could lose freelance work because of the law, has filed a lawsuit challenging A.B. 5.

“Photographers and writers are stuck between the rock of dwindling to nonexistent employment opportunities and the hard place of A.B. 5,” said Mickey H. Osterreicher, general counsel for the association.

The politics of the bill were messy. There was significant support on the left for regulating Uber and Lyft, which use incentives to encourage drivers to work when and where the companies need them while avoiding any of the protections offered by employment. Ms. Gonzalez focused partly on those companies.

But many of those who could end up losing freelance work consider themselves progressives, so it has been confusing to find themselves disagreeing with a progressive lawmaker over a union-backed law.

Vanessa McGrady, a writer in Los Angeles who runs a feminist clothing brand, planned to volunteer for Senator Elizabeth Warren’s presidential campaign next year. But then Ms. Warren endorsed A.B. 5. Now Ms. McGrady, who is anxious about how the law will affect her career, is conflicted.

“I feel so strongly that workers need protection,” Ms. McGrady said. “But this bill is killing cockroaches with a cannon.”

Strip-club owners up in arms about the law’s effect on their industry may have little recourse because courts have found that many clubs misclassified dancers even under older rules in a number of states. But freelance strippers in California who earn money from streaming services that pipe their performances onto customers’ computers and mobile devices may now find that these online platforms refuse to work with them for fear of being held in violation of the law.

Steve Smith, a spokesman for the California Labor Federation, which advised lawmakers on A.B. 5, conceded that the law was somewhat ambiguous in this area and that the State Legislature should clarify issues like this in the coming years.

“There are going to be unintended consequences with a law like this,” he said. “We want to do everything we can to make sure we’re addressing the right problems and not having any adverse effects on workers.”

Nellie Bowles reported from San Francisco and Noam Scheiber from Evanston, Ill. Marc Tracy contributed reporting from New York.