Uber, Lyft and Sharing Economy Regulations

[Thanas]

A statute that was formed as a result of the state's fight against exploitation. That is no small authority.

And at the time it was a perfectly valid cure to a real pain point felt by society at that point in time. Now today, the cure has become the pain. Pain in hindering the innovation economy.

If the innovation economy (whatever this buzzword means) cannot survive without not paying their employees a decent wage, they do not deserve to survive in the first place, because they are exploiting people and are robbing other business that does manage to pay their employees.

Now the government stepped out of the way and let the free market do it's thing, and later if new pains arise that the market can not or will not solve, then an appropriate regulation cure can be applied.

You are very optimistic about that, what is wrong with applying the existing laws?

[Lord MJ]

I didn´t call all startup founders cunts. I called people who abuse people by not paying them cunts. I know a fair share of founders, some of them were successful and some were not. I´ve worked for such startups myself and they managed to pay me real money. Sometimes the pay wasn´t exorbitant but it was at least decent so that you´d not feel ripped off.

Startups that I would imagine had the good fortune of having available capital to pay interns. Either because they got funding already or because the founders had money.

In many cases the founder doesn't have any more personal savings than is necessary to keep a roof over their head. The company is pre-revenue, they may even move in with their parents. That is if they are working on the business full time. But even if they have a full time job on top of their business, they might not be paid megabucks, so they don't have funds available to pay anyone else.

It's hard enough to find an intern that is not only willing to work in such conditions but is competent enough to help launch the company. So if a founder gets lucky finds someone that is both smart and intelligent enough to be of help AND is willing to do it to build up his/her portfolio, the startup founder is a cunt?

You know, I agree that it is silly that you have to pay a co-founder.
But then, they are not unpaid. They are paid in a different way, that is, a percentage of the company.

Government doesn't recognize percentage of the company as pay for a cofounder if you are a corporation. And if you decide to pay an intern equity you are still in violation of minimum wage laws. And technically the intern will need to pay taxes on the equity, the only reason he/she doesn't is because at that stage the equity is not worth anything.

If you don´t pay people, however, and use the current employment climate that may require the intern to have work experience in order to get a real job or something similar, you´re a cunt.
Not paying interns means that somebody else has to pay them because they have to eat and pay rent and stuff.

And not allowing such arrangements means neither the intern or the founder benefits. The intern gets no experience, and the founder can't even get their company to the point where they can get capital or sell to customers. Also any possible economic value that could be generated by said startup in the future is lost.

It may be possible to get pre-sales and then be able to use that money to pay to build your company, but companies have a much better chance of getting revenue or investment if they have something to show.

So, if companies rely on such immoral business practices they can go fuck themselves and need to be dealt with by the law.

If a company has money I agree with you. If not then "Being dealt with by the law" = "Government deciding to inject itself between two consenting individuals and wave it's guns around".

[Alferd Packer]

Yeah, don't expect regulations to kill Uber. Well, at least, don't expect them to kill the idea of Uber. Pandora's box has been opened, and we've all had a look inside at what could be. Even if they could kill Uber tomorrow, the overwhelming demand for ride-sharing/taxi service that didn't suck enormous horse dick would still be there. The days of the previous taxi paradigm are numbered, because we now know that it doesn't have to be that way. So whatever form it takes--taxi companies Uberizing, Uber becoming a nationwide and fully legit service, fleets of self-driving vehicles available for hire--the fundamental shift has happened. The convenience of the Uber model is just too great an appeal to leave it unfulfilled...especially now that so many millions of people have had a taste.

[salm]

Startups that I would imagine had the good fortune of having available capital to pay interns. Either because they got funding already or because the founders had money.

In many cases the founder doesn't have any more personal savings than is necessary to keep a roof over their head. The company is pre-revenue, they may even move in with their parents. That is if they are working on the business full time. But even if they have a full time job on top of their business, they might not be paid megabucks, so they don't have funds available to pay anyone else.

It's hard enough to find an intern that is not only willing to work in such conditions but is competent enough to help launch the company. So if a founder gets lucky finds someone that is both smart and intelligent enough to be of help AND is willing to do it to build up his/her portfolio, the startup founder is a cunt?

Then the business is a failure in my book.

Government doesn't recognize percentage of the company as pay for a cofounder if you are a corporation. And if you decide to pay an intern equity you are still in violation of minimum wage laws. And technically the intern will need to pay taxes on the equity, the only reason he/she doesn't is because at that stage the equity is not worth anything.

That´s why I said that it appears silly. But co-founders are a very special case of "intern" anyway.

And not allowing such arrangements means neither the intern or the founder benefits. The intern gets no experience, and the founder can't even get their company to the point where they can get capital or sell to customers. Also any possible economic value that could be generated by said startup in the future is lost.

It may be possible to get pre-sales and then be able to use that money to pay to build your company, but companies have a much better chance of getting revenue or investment if they have something to show.

Allowing such arrangements leads to companies abusing it like they are doing at the moment. Not paying interns is abusive. Somebody has to pay them because they have to eat and pay rent and so on, so in a lot of cases it´s the parents or the interns themselves paying for the interns "wage".

If a company has money I agree with you. If not then "Being dealt with by the law" = "Government deciding to inject itself between two consenting individuals and wave it's guns around".

No it´s not waving the gun around. It´s the government watching out that there are no systematic unethical working relationships.

[His Divine Shadow]

Yeah, don't expect regulations to kill Uber. Well, at least, don't expect them to kill the idea of Uber. Pandora's box has been opened, and we've all had a look inside at what could be. Even if they could kill Uber tomorrow, the overwhelming demand for ride-sharing/taxi service that didn't suck enormous horse dick would still be there. The days of the previous taxi paradigm are numbered, because we now know that it doesn't have to be that way. So whatever form it takes--taxi companies Uberizing, Uber becoming a nationwide and fully legit service, fleets of self-driving vehicles available for hire--the fundamental shift has happened. The convenience of the Uber model is just too great an appeal to leave it unfulfilled...especially now that so many millions of people have had a taste.

The same thing could be said for slavery and child labor. Though to be fair, we're already using that, just sequestered in the 3rd world where we can ignore it. But maybe it'll make a comeback too, with public support, once they get a taste for it.

[salm]

Yeah, don't expect regulations to kill Uber. Well, at least, don't expect them to kill the idea of Uber. Pandora's box has been opened, and we've all had a look inside at what could be. Even if they could kill Uber tomorrow, the overwhelming demand for ride-sharing/taxi service that didn't suck enormous horse dick would still be there. The days of the previous taxi paradigm are numbered, because we now know that it doesn't have to be that way. So whatever form it takes--taxi companies Uberizing, Uber becoming a nationwide and fully legit service, fleets of self-driving vehicles available for hire--the fundamental shift has happened. The convenience of the Uber model is just too great an appeal to leave it unfulfilled...especially now that so many millions of people have had a taste.

I have no problem with such a "sharing" way of doing things as long as people get paid fairily and aren´t pushed into the low wage labour market and as long as the standards (insurance and stuff like that) are kept.

Even though I find "sharing" not the right term for services like Uber. There are plenty of other ride sharing platforms that are real sharing such as mitfahrgelegenheit.de or (i think) blablacar where the company doesn´t take 20% of the drivers money. Uber sells you a service to connect to people who will drive you somewhere for profit. There´s not much sharing involved. The two companies above connect you to people who are driving somewhere anyway and are offering you a ride for gas money. That´s sharing.
Uber is more like Ebay who also connect two people and then take a cut of the transaction for their service.

[Lord MJ]

Then the business is a failure in my book.

How is it a failure when it is just getting started? If anything it is either a failure of the legal statutes for prohibiting arrangements where a startup and intern can agree to something that is unpaid. Or a failure of the ecosystem for not providing the working capital for a startup founder to pay for interns.

You're definition of failure means that only businesses that have access to money in the beginning can be successful. Congratulations you're supporting a system that means poor and underserved communities can start businesses to start lifting themselves out of poverty.

Allowing such arrangements leads to companies abusing it like they are doing at the moment. Not paying interns is abusive. Somebody has to pay them because they have to eat and pay rent and so on, so in a lot of cases it´s the parents or the interns themselves paying for the interns "wage".

What part of no money are you not understanding here? Don't you think the founder has to eat and pay rent also? The goal is to be able to create capital. You think the intern will be better off not connecting and working with the founder? What if there aren't paying internships available? Wouldn't the parents or the intern themselves have to support themselves anyway? What if the intern does have access to paying opportunities, but feels that working with a startup founder in the early stages would provide more fulfilling opportunities? Who is the government to step in and say "no"?

Once again, what you support harms the poor for more than it helps, because it prevents the creation of wealth generating enterprises.

No it´s not waving the gun around. It´s the government watching out that there are no systematic unethical working relationships.

See above.

[salm]

No money, no employees. It´s really that easy.

[Lord MJ]

No money, no employees. It´s really that easy.

Anymore pronouncements you like to make?

Do you want to be the one to tell poor and minority startup founders to take their ball and go home? Do you want to be the one to tell poor communities, well since you don't have any money right now, we won't allow your early stage founders hire members of your communities and build something that can help lift the entire community out of poverty.

We'll leave building the multi-million dollar companies to the wealthy and privileged. Why? Because we're the government and we're protecting you.

[salm]

No money, no employees. It´s really that easy.

Anymore pronouncements you like to make?

Do you want to be the one to tell poor and minority startup founders to take their ball and go home? Do you want to be the one to tell poor communities, well since you don't have any money right now, we won't allow your early stage founders hire members of your communities and build something that can help lift the entire community out of poverty.

We'll leave building the multi-million dollar companies to the wealthy and privileged. Why? Because we're the government and we're protecting you.

If you´re a founder and absolutely need an employee for whatever reason you can offer somebody a percentage of your company and make him a cofounder. If not paying a cofounder is not possible in California that seems to be a weird law.
Simply not paying people, even if they absolutely love to work for you for free, opens the door and leads to abuse that is way worse than a couple of companies not founded.

If you can´t found your company on your own, don´t find VC, a loan, govenmental grant, Kickstarter or some other way of getting money then you just have to give a share of your future company to somebody else.
Just because you´re poor shouldn´t give you the right to keep other people poor by exploiting them.

[Alferd Packer]

Yeah, don't expect regulations to kill Uber. Well, at least, don't expect them to kill the idea of Uber. Pandora's box has been opened, and we've all had a look inside at what could be. Even if they could kill Uber tomorrow, the overwhelming demand for ride-sharing/taxi service that didn't suck enormous horse dick would still be there. The days of the previous taxi paradigm are numbered, because we now know that it doesn't have to be that way. So whatever form it takes--taxi companies Uberizing, Uber becoming a nationwide and fully legit service, fleets of self-driving vehicles available for hire--the fundamental shift has happened. The convenience of the Uber model is just too great an appeal to leave it unfulfilled...especially now that so many millions of people have had a taste.

I have no problem with such a "sharing" way of doing things as long as people get paid fairily and aren´t pushed into the low wage labour market and as long as the standards (insurance and stuff like that) are kept.

Even though I find "sharing" not the right term for services like Uber. There are plenty of other ride sharing platforms that are real sharing such as mitfahrgelegenheit.de or (i think) blablacar where the company doesn´t take 20% of the drivers money. Uber sells you a service to connect to people who will drive you somewhere for profit. There´s not much sharing involved. The two companies above connect you to people who are driving somewhere anyway and are offering you a ride for gas money. That´s sharing.
Uber is more like Ebay who also connect two people and then take a cut of the transaction for their service.

Uber, et al. exposed the two critical failings of the taxi industry: their inconvenience and (comparatively) high prices. Impose regulations on Uber such that they have to raise their fees, they still have a leg up on the taxi industry with their convenience. People will pay extra for that convenience, but at least they'll have the choice to go with the now-cheaper standard taxi model if they have time to burn and want to save some money. As it is right now, the choice really isn't one--but we're never going back to the way it was. Either Uber will become a very convenient proper taxi service and have to raise rates to accommodate that, or taxi services will start offering Uber-like convenience.

[salm]

Uber, et al. exposed the two critical failings of the taxi industry: their inconvenience and (comparatively) high prices. Impose regulations on Uber such that they have to raise their fees, they still have a leg up on the taxi industry with their convenience. People will pay extra for that convenience, but at least they'll have the choice to go with the now-cheaper standard taxi model if they have time to burn and want to save some money. As it is right now, the choice really isn't one--but we're never going back to the way it was. Either Uber will become a very convenient proper taxi service and have to raise rates to accommodate that, or taxi services will start offering Uber-like convenience.

That´s fine with me.

[Broomstick]

Case in point, it is common practice among many startups in the very early stages when the founder is still starving, to hire interns that to help build their product, or market, or whatever, and these internships be completely unpaid. This violates minimum wage laws. Is it because the founders are greedy? Well in some cases they are because they don't want to give up any equity. But even when the founder does give up equity, they would still be in violation of minimum wage laws. The founder doesn't have capital, or has very little, so he/she can't pay the intern a traditional wage.

I see you do not understand the nuances here.

There ARE exceptions to minimum wage laws. During training periods, employees in positions that usually get tips, straight-commission (usually sales), certain family businesses (usually restaurants or farms), co-owners of a business, sheltered workshops for the severely disabled, and yes, there are times when an unpaid internship is, in fact, perfectly legal (typically in conjunction with educational programs, like getting a degree). Determining whether or not such a situation is legal keeps a lot of labor law lawyers in nice homes and cars.

Technically if the founder finds a co-founder to join him/her, both people have to be paid minimum wage, even if they own the company!

I think if you consult a labor law lawyer you might find a different answer.

I am not a lawyer, but I might remind you that I did successfully sue in court in regards to a labor law violation and my lawyer IS a labor lawyer. I found speaking with him eye-opening.

How can Uber drivers have been cheated, when both parties agreed to the arrangement and it was faithfully executed by both parties.

You can not legally agree to an illegal action.

As an example - I can not agree to work past 40 hours in a week without getting overtime pay. Even if I sign a piece of paper to that effect the agreement can not be enforced because it is against the law.

It doesn't matter what Uber and a driver agrees to if that agreement violates labor law - if it violates the law it's not a legal agreement.

[Broomstick]

Once again it's only exploitative because a statute says that it is.

The statutes were passed for a reason. Have you thought of that?

Would you say the other startup founders in the intern example I mentioned above deserve no protection either?

There's this quaint notion that when one does work, one should be compensated. That compensation is, in large part, money but the government does recognize that there are other forms of compensation, which is why if my company, as part of my employment, offers me a sufficiently large life insurance policy I have to pay taxes on it.

A waiter in a restaurant can be paid less than minimum wage because it is presumed they will more than compensate for the difference in tips.

An intern earning a degree can be paid less (or nothing) because they are being compensated with education and training (or so goes the theory).

An owner does not have to pay himself minimum wage because he is compensated by owning the company.

So yes, there are exceptions to minimum wage laws but they are defined by law and the person is getting compensated via non-monetary means (at least in theory). Where the compensation does not exist or unjustly low yes, the law/society/government does step in. Part of the role of government would seem to be protecting people from exploitation.

So is the problem that the business model is against current law, or that current laws (and politicians) are contrary to how the innovation economy and ecosystem operates today? I would argue the latter.

I would argue you don't understand the law.

You are correct that new conditions may require modification of current laws, or new laws, but you have to make a compelling case that current laws are inadequate. So far, all I see you do is complain that consenting adults can't consent to be exploited.

[Broomstick]

I don´t care who´s doing it. If you don´t pay your people you´re a cunt.

Pretty judgmental and presumptuous statement.

Nope, I have to agree, people who don't pay (or otherwise justly compensate) their employees are cunts. Having actually experienced such a cunt, I feel this even more strongly than before.

[Lord MJ]

If you´re a founder and absolutely need an employee for whatever reason you can offer somebody a percentage of your company and make him a cofounder. If not paying a cofounder is not possible in California that seems to be a weird law.

That only works if the intent of the intern is to be with the company for a while. If this is a short term assignment, giving someone a percentage of the company is a non-starter.

First a cofounder relationship is a marriage. The time prior to be cofounder is dating, and presumably at that point the intern is not getting paid, and the founder has no money to pay. But they are both feeling each other out to see if they want to get married.

Secondly, investors HATE companies where people that are not active in the company anymore own equity. Dead equity is something that turns investors off and can prevent the company from being funded. Which means instead of the interns resume saying "I helped build the app for this startup that took off," it says "I built an app for a startup that went nowhere."

Simply not paying people, even if they absolutely love to work for you for free, opens the door and leads to abuse that is way worse than a couple of companies not founded.

Sounds like a slippery slope argument. So there may be no abuse here, but it "opens the door" to abuse in some place else is a slippery slope. Particularly where we are talking about pre-revenue companies with a starving startup founder, vs exploitation by a multi-million dollar mega-corp.

Just because you´re poor shouldn´t give you the right to keep other people poor by exploiting them.

I fail to see how it is exploitation in the early stage startup's case unless the founder is like "HA HA HA, stupid intern, he works for free, and I make millions, HA HA HA." When in most cases it's "Whew, I found a smart and capable guy that is willing to work for free to help launch this company, because, I have no money. Thank the heavens, if not for this little angel, I would be screwed."

In that case the founder is under enormous pressure to 1. Build a healthy relationship with the intern and 2. get some money in. Because if the intern is talented enough, people that do have some cash will come calling for the intern's services. So the founder isn't thinking about exploiting the intern, he's thinking about how to get traction fast enough to get the intern paid, or at least keep him interested in the project.

[His Divine Shadow]

No money, no employees. It´s really that easy.

Anymore pronouncements you like to make?

Do you want to be the one to tell poor and minority startup founders to take their ball and go home? Do you want to be the one to tell poor communities, well since you don't have any money right now, we won't allow your early stage founders hire members of your communities and build something that can help lift the entire community out of poverty.

We'll leave building the multi-million dollar companies to the wealthy and privileged. Why? Because we're the government and we're protecting you.

This just sounds like some wishy washy republican advertisment without little or any connection to actual reality. In socialist hell holes we tend to offer grants, loans and supports for people starting small companies to make it go around at startup times, and last time I looked at the stats the EU had more small companies per capita while the US is more about bigass companies. Looks like all that free marketeering and deregulamation only really helps the people who push for it, i.e. big rich corporations, and the peons they lied to to make them think they where on their side.

[Lord MJ]

No money, no employees. It´s really that easy.

Anymore pronouncements you like to make?

Do you want to be the one to tell poor and minority startup founders to take their ball and go home? Do you want to be the one to tell poor communities, well since you don't have any money right now, we won't allow your early stage founders hire members of your communities and build something that can help lift the entire community out of poverty.

We'll leave building the multi-million dollar companies to the wealthy and privileged. Why? Because we're the government and we're protecting you.

This just sounds like some wishy washy republican advertisment without little or any connection to actual reality. In socialist hell holes we tend to offer grants, loans and supports for people starting small companies to make it go around at startup times, and last time I looked at the stats the EU had more small companies per capita while the US is more about bigass companies. Looks like all that free marketeering and deregulamation only really helps the people who push for it, i.e. big rich corporations, and the peons they lied to to make them think they where on their side.

Actually it's very descriptive of reality.

Even in areas where government's offer grants and supports, it is very competitive. It is not a, "You have an idea? Here's some money." And some amount of work has to be done in building the product, marketing, customer development, etc in order to get the grants. Unless of course you are good with schmoozing the decision makers.

So in many cases, the starving startup founder if they are lucky enough to find an intern, will work together, get some traction or validation, then apply for grants and programs.

And also, mega-corps support deregulation when it makes them get more profit. In other cases when it makes it harder for startups to arise and threaten them, mega-corps LOVE regulations.

And about the EU, I wonder what the breakdown of those businesses are, are they high growth startups (typically product companies), or more of the lifestyle/small cap types of businesses.

[His Divine Shadow]

Yeah I don't buy it.

[Lord MJ]

I see it every day in my life.

And in poorer communities modern day tools and techniques can help a startup founder launch a successful startup. Sure in the early stages people aren't getting paid, but if these companies can get to the point they can get funded, and then grow, they could be a huge economic uplift to those communities. Which in turn can help spur more companies, whether they be innovative startups or more traditional mom and pops to be created in the communities. Which can conceivably provide services to or hire people from those communities.

There are FAR more serious problems that society has to deal with and solve than a startup founder that starts with nothing, having people work for him/her for free. In fact it might not even be a problem at all. But if the government is so convinced that there is some kind of problem going on, then they can always start cutting the checks to pay the wages of the interns (and the founders for that matter.) Interns not getting paid is at best a symptom of the actual problem, the lack of resources for founders and for poorer communities. If the state and politicians are there to offer help and help facilitate those resources I welcome it. If they are there to wag their fingers and say "Obey our regs!!" they are nothing but an hindrance.

Fortunately some governments are focused on helping entrepreneurs and communities as opposed to regulating. And in the case of the sharing economies they are hearing from both the entrepreneurs, the consumers, and the practitioners to get a feel for what life is like so they can provide appropriate support, and put in place appropriate regs. Unfortunately other governments are not so forward thinking and are intent on throwing their weight around.

[Sgt_Artyom]

I remember doing a business class back in my post secondary (Feels like it's been forever D:) and having the teacher explain that any new company will NOT make any money in the first year. You'll pull in income, yeah but you're pretty much expected to be in the red for the first year or two before moving up and into the black. You find me any employee whose willing to work for free for a few years and I'll ask to have the man/woman canonized.

There's always money coming in though and people are always getting paid, it just takes years to actually be making more than you spend (Paying your employees wages is probably a big part of that). In this day and age when it's hard enough for most people to get by working full time on usually meagre wages, who in the hell would work for free? HOW could a person whose not already well off work for free?

[Lord MJ]

I remember doing a business class back in my post secondary (Feels like it's been forever D:) and having the teacher explain that any new company will NOT make any money in the first year. You'll pull in income, yeah but you're pretty much expected to be in the red for the first year or two before moving up and into the black. You find me any employee whose willing to work for free for a few years and I'll ask to have the man/woman canonized.

There's always money coming in though and people are always getting paid, it just takes years to actually be making more than you spend (Paying your employees wages is probably a big part of that). In this day and age when it's hard enough for most people to get by working full time on usually meagre wages, who in the hell would work for free? HOW could a person whose not already well off work for free?

Very few. Mostly interns that are late teens early twenty something, high school to college kids, working for founders who are mid twenty-somethings to mid thirty somethings.

It has been done though. This is during the phase before the company even pulls in income or investment and more in the phase of building a minimum viable product and validating with prospective customers.

Very few are willing to work for free. And those that do often do sub-par work. Even co-founders don't take equity compensation seriously so the fact that they will have a share of the profit in the future does not outweigh the fact they are not getting a check in the mail today.

But for those that are willing, the reason they are willing to do it, is because they like the project or the idea. In fact many young interns that are actually talented care more about whether the project is interesting and exciting to them than the money (or lack thereof).

[salm]

I remember doing a business class back in my post secondary (Feels like it's been forever D:) and having the teacher explain that any new company will NOT make any money in the first year. You'll pull in income, yeah but you're pretty much expected to be in the red for the first year or two before moving up and into the black. You find me any employee whose willing to work for free for a few years and I'll ask to have the man/woman canonized.

There's always money coming in though and people are always getting paid, it just takes years to actually be making more than you spend (Paying your employees wages is probably a big part of that). In this day and age when it's hard enough for most people to get by working full time on usually meagre wages, who in the hell would work for free? HOW could a person whose not already well off work for free?

You find plenty of them if the market is there. In Germany, for example, we have a ridiculous output of architects (for whatever reason). Every architecture student has to do a mandatory 6 month internship during his studies. This internship is often not payed or compensated beyond lousy.
After finishing university the graduates enter a saturated labour market, so a lot of compainies, start up or not, will give you an internship, if anything at all. They´ll claim that after a period of 6 months there is the chance that they´ll hire you but actually they won´t. They´ll just get the next intern or employ you, but just for another 6 months of a lousily paid intern.
This problem has been eased a bit as companies as of 2015 have to pay interns at least minimum wage (at least under some circumstances).
Since these people have to live somehow but cant pay food and rent they have to be supported by their parents. So what you see quite frequently is people moving from internship to internship being supported by their parents into their late 20s.

The parents pay their children so they can work for some asshole. This is absurd. If you´re an established company and do that you´re an asshole. If you´re a start up you´re, too. The market is saturated, we don´t need you. You can only survive because parents are willing to pay their kids wages.

[salm]

That only works if the intent of the intern is to be with the company for a while. If this is a short term assignment, giving someone a percentage of the company is a non-starter.

First a cofounder relationship is a marriage. The time prior to be cofounder is dating, and presumably at that point the intern is not getting paid, and the founder has no money to pay. But they are both feeling each other out to see if they want to get married.

Secondly, investors HATE companies where people that are not active in the company anymore own equity. Dead equity is something that turns investors off and can prevent the company from being funded. Which means instead of the interns resume saying "I helped build the app for this startup that took off," it says "I built an app for a startup that went nowhere."

Then the founder is just out of luck.

Sounds like a slippery slope argument. So there may be no abuse here, but it "opens the door" to abuse in some place else is a slippery slope. Particularly where we are talking about pre-revenue companies with a starving startup founder, vs exploitation by a multi-million dollar mega-corp.

Yes, see architecture example posted in my post above. In conditions where it is difficult to find a job it is extremly easy for companies to exploit desperate people. We had that problem here for the past decade. It got the catchy name "Generation Praktikum" translating to "generation internship".

I fail to see how it is exploitation in the early stage startup's case unless the founder is like "HA HA HA, stupid intern, he works for free, and I make millions, HA HA HA." When in most cases it's "Whew, I found a smart and capable guy that is willing to work for free to help launch this company, because, I have no money. Thank the heavens, if not for this little angel, I would be screwed."

In that case the founder is under enormous pressure to 1. Build a healthy relationship with the intern and 2. get some money in. Because if the intern is talented enough, people that do have some cash will come calling for the intern's services. So the founder isn't thinking about exploiting the intern, he's thinking about how to get traction fast enough to get the intern paid, or at least keep him interested in the project.

No, no it´t not "Thank the heavens, if not for this little angel, I would be screwed.". It is "Thank heavens, if not for this guys parents willing to pay his wages, I´d be screwed.".
If the founder laughs at the interns stupidity or is thankful for his naivety is irrelevant.

If my toilette is broken and I phone in the repair man to fix it and tell him that I won´t pay him but refer him to my friends who might also have a broken toilette and who might pay him he´ll say: Fuck you, pay me! The same should be done by interns: Fuck you, pay me!

[Lord MJ]

Then the founder is just out of luck.

No, the founder is engaging in a perfectly reasonable arrangement with someone. In most cases the founder will just go ahead and work with an intern anyway. (Or is probably even aware that their arrangement with the interns is technically illegal.)

If the intern is interested in the project (and once again they in often cases place that above money). I have absolutely no problems at all with a founder and an intern going forward with such a relationship. Anything otherwise pretty much leaves the world of founding startup new companies to people that have access to capital already. Which in the US at least would pretty much hit minority and poor founders the hardest.

Now once the company gets to the point that it has raised few hundred grand in capital, and is brining in revenue, and espescially if they have hired full time paid employees, and they are still relying on unpaid internships, I would be perfectly fine with saying "Dude, stop being a bum and pay your interns.)