Beyond legal compliance

NDIA HAS 119 unicorns. At least eight have faced organised worker campaigns in the last 18 months. Their legal teams likely saw none of them coming. The recent Newslaundry investigation into Urban Company's treatment of beauty partners has exposed a fundamental challenge facing platform businesses: the gap between legal compliance and social legitimacy.

- PRACHI SHRIVASTAVA

While Urban Company's model may pass legal scrutiny—training kit financing, subscription plans, and commission structures are all contractually sound—the investigation reveals how legally defensible practices can become reputational liabilities in a stakeholder-conscious economy.

This isn't unique to Urban Company. DoorDash recorded $10.72 billion in revenue while workers struggled financially with the broader gig economy challenges. We are witnessing a systematic disconnect between what companies can legally enforce and what society increasingly expects them to ethically deliver.

The financial stakes are higher than most founders realise. Urban Company, last valued at $2.1 billion in 2021 and recently logging $2.2-2.5 billion in secondary transactions, faces organised campaigns like #DryJune customer boycotts and Worker Ka IPO demands for worker participation in company decision-making. These aren't just PR problems, they are valuation events.

Gig platforms derive value from network effects and trust. When beauticians report "days of unpaid work, earnings squeezed by fees, and a sense of permanent indebtedness", you are not just facing worker dissatisfaction, but also undermining the operational foundation that drives customer acquisition, retention, and ultimately, exit multiples.

Unlike Urban Company, which had years to build market position before scrutiny intensified, today's start-ups launch into an environment where worker aspirations and gig economy work structures are already in tension. The margin for error has collapsed.