Some gig economy startups are eschewing the route Uber and Lyft have taken and are, instead, classifying their workers as employees, not independent contractors. What I’ve referred to in the past as the “poster child” of this strategy is Managed by Q, which began as an office-cleaning service. The company starts its nearly 700 workers at $12.50 per hour, and it offers its full-time workers—which make up half the force—health benefits and a 401(k) plan.
A recent article in Quartz noticed that, while many competitors taking the independent-contractor route are going bankrupt or dissolving, Managed by Q’s “good jobs” strategy is paying off. The company is going strong, still hiring employees and still raising millions of dollars. While the office-cleaning service, known as Q Services, still makes up most of its business, the company has expanded to serve as a marketplace for other local service providers.
Most importantly, Managed by Q is announcing today that Q Services is profitable.
That profitability calculation includes salaries and benefits for all Q Services employees; recruitment, training, and software costs; uniforms and other equipment; and a standard umbrella insurance policy and workers’ compensation. It leaves out equity grants, rent for Q’s Manhattan headquarters, and salaries and benefits for corporate employees who work outside the services unit, fairly standard in calculating operating profit. Managed by Q as a company is not yet profitable.
“It was a big bet that we made on our approach to employment, on employing people at all, as a technology company,” [founder Dan] Teran told Quartz. “We would not have gotten to this point if we had not made the choice to not only employ people, but to go above and beyond in investing in their training and development, and make them a part of the business.”
While the company as a whole isn’t yet profitable, Teran points to the upfront investments he makes in Managed by Q’s workers as the key to success, increasing worker satisfaction and reducing turnover.