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See Who Made The 2015 Unicorn Naughty List

In Fast Company’s inaugural Unicorn Naughty List, we take a look at who in Silicon Valley is getting a lump of coal.

See Who Made The 2015 Unicorn Naughty List
[Source Photos: Sari O'Neal via Shutterstock (Unicorn); All pattern via Shutterstock (Flames)]

Santa isn’t the only one making a list and checking it twice. Fast Company perused the list of 144 unicorns—startups valued at $1 billion or more—to see which Silicon Valley dynamos should resolve to do better in some areas, based on news from this year. From miserable working conditions to shady subscription scams, these are the unicorns that stumbled in 2015 (and don’t forget to check out the companies who made the Nice List!):

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Photo: courtesy of Uber

Uber

As Uber’s valuation skyrockets, its reputation continues to vacillate. The company—whose CEO was praised in Fast Company’s October cover story as “smart and driven and hungry and also very generous”—was also called “the most ethically challenged company in Silicon Valley” by Peter Thiel, the Silicon Valley investor.

Uber started the year on the wrong foot with a series of outrageous New Year’s Eve surge price horror stories. One man was charged $509 to travel just 20 miles. Others were charged for trips they didn’t make and had to endure the company’s subpar customer service. In New York and Washington, D.C., the company is taking heat for its cars’ “inadequate” wheelchair accessibility. In August, prosecutors revealed it had failed to spot drivers with previous criminal records. Then it leaked personal data— including Social Security numbers—for hundreds of drivers. And to top it all off, the company faces a class-action lawsuit by drivers asserting they are employees, not independent contractors, and should be entitled to benefits like health insurance, expense reimbursements, and tips. In a thinly veiled attempt to stymie the suit, Uber is now requiring drivers to sign a new contract that limits their rights to sue and publishing dubious studies insisting its drivers are perfectly happy in their part-time roles.

All of this leaves customers with conflicting feelings about the Unicorn, which is now worth more than $60 billion and facilitates two million rides every single day.

Airbnb

One of Airbnb’s biggest transgressions of 2015 was its misguided response to Proposition F, a piece of legislation aimed at imposing stricter regulations against short-term rental services in San Francisco. The ballot measure failed in November, but not before Airbnb unveiled a series of passive aggressive billboards reminding people that Airbnb paid $12 million in hotel taxes, a gutsy move for a company that avoided paying said taxes for years. The ads rubbed people the wrong way, and Airbnb—which Fast Company has lauded for building a “fanatical global community”—later apologized and had them removed. Other problems persist, like a lack of clarity on how the company keeps guests and hosts safe. And a recent paper found Airbnb hosts regularly discriminate against black renters, to which Airbnb responded by saying it was “in touch with the authors of this study and we look forward to a continuing dialogue with them.”

Photo: App Image courtesy of Theranos, Blood Cells: Flickr user Ed Uthman

Theranos

The blood testing startup, which Fast Company named one of its 10 most innovative companies in health this year and is valued at $9 billion, has spent the last few months defending itself after a Wall Street Journal report called into question the accuracy of its blood tests. In the report, anonymous employees dished on the company’s Edison device, and medical experts said its results were sometimes inconsistent with those produced by other machines. Theranos CEO Elizabeth Holmes says the report is inaccurate, and has vowed to prove it by releasing data on its tests to the public, but has yet to do so, leaving unanswered the question of how good or bad the company’s tests actually are. Theranos is also butting up against the FDA. Shortly after the WSJ report, an inspection by the agency found Theranos had ignored complaints from customers, questioned the company’s quality control process, and called the vial it uses to collect blood samples an “uncleared medical device.” In early December, emails obtained by the Washington Post suggested military officials sounded the alarm on Theranos’s tests back in 2012, but the company may have used its cozy relationship with a high-ranking ally in the military to whitewash the complaints.

WeWork OfficePhoto: courtesy of WeWork

WeWork

Over the summer, WeWork, the office coworking space valued at $10 billion, kicked off a labor dispute when it laid off 90% of the janitors who cleaned its New York offices. The layoffs came shortly after the cleaners, many of whom are Spanish-speaking immigrants and were paid as low as $10 an hour, began organizing to join a union for higher pay and benefits. WeWork—which in March was awarded #15 on Fast Company’s list of Most Innovative Companies— then hired its own cleaning staff and required them all to be proficient in English, sending a message that the company was not only anti-union, but anti-immigrant, as well. After months of protest, the company caved to using unionized contractors and said it would hire from the pool of workers it laid off “whenever possible.” Those who aren’t re-hired will get severance payment.

Photo: Flickr user Library of Congress

FanDuel and DraftKings

The world of fantasy sports found itself in the spotlight after a DraftKings employee won $350,000 on rival site FanDuel. The instance sparked allegations of insider trading amongst the two companies. A statement from DraftKings assured “both companies have strong policies in place to ensure that employees do not misuse any information at their disposal,” but the damage was done. The Justice Department and FBI investigated whether fantasy sports violates federal law by allowing online gambling, and both sites stopped operating in Nevada after authorities ruled they would need licensing. The battle continues in New York state, where the attorney general sent cease-and-desist letters to the two companies, calling them “the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country.” Ouch.

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Honest Co.

Jessica Alba’s $1.7 billion company prides itself on offering environmentally friendly and non-toxic alternatives to mainstream products—everything from diapers to detergent. In August, Honest Co. faced a wave of complaints from people claiming its sunscreen left them sunburned. The company responded by tweaking the lotion’s formula to offer better water resistance, but otherwise washed its hands of the matter, saying the lotion was tested “by an independent third party” against the FDA’s protocols and the complaints received represented less than half of one percent of all the sunscreen the company had sold. But the problem wouldn’t go away. One month later, Honest Co. was facing a $5 million class-action lawsuit over unnatural and ineffective ingredients in everything from its hand soap to multi-purpose cleaner. The company—whose cofounder Alba was named to Fast Company’s Most Creative People in Business list in 2012—insists the allegations are baseless.

Photo: courtesy of Jawbone

Jawbone

In the increasingly crowded wearables market, one of its key players is struggling. Two of Jawbone’s partners sued the company for failing to pay its debts. The company was forced to delay the release of its UP3 device for six months due to unexpected complications in trying to make the device waterproof. The delay elicited an apology from the company’s VP of product management. In June, Jawbone cut 20 jobs. Then in November, it laid off 15% of its staff and shuttered its New York City office as part of its “strategy to create a more streamlined and successful company.”

Photo: Flickr user TechCrunch

Zenefits

For a company so focused on disrupting how offices approach human resources, Zenefits has yet to perfect its own HR practices. Zenefits, which acts as a sort of middleman between health insurance providers and companies, has faced a number of problems this year, including low morale and a high turnover rate stemming from missed revenue targets and the accusation that some of its salespeople were selling insurance without proper licensing. It stopped paying employees for unused vacation time, a policy that took effect in March, but some former employees claim they weren’t paid for accrued vacation time even before the policy change. Zenefits chalks it all up to an “error” in its employee handbook and offered payouts to former employees with one caveat: that they sign a release waiving any other claims against the company.

Jet.com

Jet.com launched to the public in July offering “club price savings on pretty much anything you buy” for a $50 annual membership. Two weeks after launch, it was in trouble with some of its more-established peers. More than 70 companies—including Walmart, Macy’s, and Walgreens—claimed the Amazon competitor was linking to their websites without permission and offering customers cash back for using those links to buy things. As Fast Company’s Pavithra Mohan explained, “for competing brands like Amazon, allowing Jet to feature their links only drives further traffic to Jet (because customers return to Jet to spend the loyalty points they earned by shopping elsewhere), which explains why so many brands have asked to be removed from Jet’s index.” More than 100 brand links
were wiped from the site as a result. Jet.com is valued at $1.5 billion, with backing from big investors like Google Ventures and Alibaba.

JustFab

This startup, worth $1 billion, lets members get discounted clothes through subscriptions. But according to a number of unhappy customers, the site doesn’t make it clear that “VIP Membership” is a euphemism for “recurring monthly subscriptions” and credit card charges that are hard to cancel. According to a Buzzfeed investigation, JustFab amassed more than 1,400 complaints with the Better Business Bureau between August of 2012 and September of this year for its shady automatic billing. In November, the company announced it was hiring a third-party auditor to look into its business practices. The site’s founders, Adam Goldenberg and Don Ressler, also have connections to one of the largest weight loss scams ever targeted by the FTC.

Blue Apron

Meal-kit company Blue Apron is one of the biggest players in a growing field of services offering to deliver meals in a box directly to your door. The problem, though, is those boxes aren’t just full of food, they’re also stuffed with packaging. Despite Blue Apron’s claims that its bags and containers are biodegradable or recyclable, much of it inevitably ends up in the trash. But this problem isn’t limited to Blue Apron; the entire meal-kit industry is grappling with it. Food writer Mark Bittman, who recently joined plant-based meal-kit startup Purple Carrot, wrote in a column for Fast Company that packaging and responsible food sourcing are his company’s biggest challenges, but that he’s working to address them. “We are taking it seriously, and that will be the hardest stuff to crack,” he writes. “I really hope we can say to the bigger players in this industry, like Blue Apron and Plated and HelloFresh, ‘This is a common problem we have, what can we do? People are making packaging out of mushrooms, can we ship with that kind of stuff?'”

Wanna see who made the Nice List? You can check it out here.

About the author

Jessica Hullinger is a London-based journalist who covers science, health, and innovation. She currently serves as a Senior Editor at TheWeek.com.

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