Recruiting From Competitors Isn't Sabotage: Overstating The Uber/Lyft Fight

from the it's-competition dept

The Verge got a lot of attention yesterday for its story on "Uber's playbook for sabotaging Lyft." If you follow the space at all, you know that there have been stories making the rounds for months claiming that people working for Uber were scheduling competitors' rides and then cancelling them, thereby tying up competitors' systems. Uber has hit back saying that the reverse is actually true, and that Lyft has called up and cancelled Uber rides.

The Verge report actually doesn't focus on the whole "calling up and then cancelling rides," rather suggesting that this is a byproduct of what's really happening: a very aggressive campaign to recruit drivers from competing services:
But since at least mid-summer, some brand ambassadors in New York have been turning their talents against Lyft. Using Uber-provided iPhones and credit cards, the contractors hail rides, strike up conversations with their drivers, and attempt to sign them up before they arrive at their destination. (In other cities recruiters travel with "driver kits" that include iPhones and everything else a driver needs to get started on Uber; ambassadors were told New York State does not allow this.) Compensation varies, but contractors can earn a $750 commission for successfully recruiting a single new driver to Uber, according to a contractor.

As Lyft has gotten better at sniffing out recruiters and banning them from the service, Uber has been forced to alter its tactics. In the run-up to Lyft’s high-profile launch last month in New York City, Uber organized a "street team" to analyze Lyft’s expansion strategy. On July 9th, a marketing manager emailed a subset of the company’s contractors in New York city with a new opportunity. "We have a special ongoing project that we’re going to be rolling out next week and I wanted to get about 8–10 of you to help out," he wrote. "This is going to be completely based on your own personal hustle, as it’s not a typical onsite event. We are going to have you working on your own time helping us sign up Uber drivers, and there is HUGE commission opportunity for everyone you signup."
Here's the thing, though: I keep reading the story, and I don't see anything about "sabotage." It's in the Verge's headline and it's the word that a bunch of others have quoted as well. But basically the whole story is about aggressively recruiting Lyft drivers to drive for Uber. And, given that, I have to agree with Tim Lee that this seems like it's actually a really good thing for drivers. When there's competition for drivers, the drivers are likely to benefit.
The word "poach" often gets thrown around in cases like this, but a minute's thought should make it clear just how misguided this way of thinking is. Drivers are not wildlife on the Lyft reservation being stolen by unscrupulous hunters. They're human beings who have every right to change jobs if a new employer offers them a better deal. And the threat of being "poached" gives drivers more bargaining power with their current employers.
As we've discussed repeatedly, worker mobility is a fairly important aspect of an innovative economy. And, this isn't even a zero sum game as many drivers can (and do) drive for multiple such companies (I was recently in a cab where the guy had 4 phones going for different services).

While Uber won't come out and admit it, it does seem fairly likely that the "cancellations" are because an Uber recruiter requests a Lyft... and when the driver is assigned, realizes it's a driver that's already been pitched (the Verge article details an internal site that Uber set up to avoid re-pitching the same drivers). On Twitter, Uber's Travis Kalanick insists that every ride that an Uber recruiter requests is done with the intent to take the ride. However, when I asked why so many cancelled, he came back with the stat that 10% of all such rides cancel "for various reasons." But, of course, that's not a comparable stat. Those "reasons" could be anything from "changed plans" to "forgot something back home." When it's an Uber recruiter whose job is to take rides, the 10% cancellation number is meaningless. Kalanick wouldn't elaborate any further other than to reiterate the "intention" to take rides, which he insists is "everything." This aspect seems to be pushing the boundaries, though it's certainly not as bad as the claims of Uber doing this just to mess with Lyft. In fact, one could make the argument that this means Lyft drivers are less likely to get repeatedly hassled by Uber recruiters.

All that said, the thing that does concern me about the Verge story is something that almost no one seems to be focusing on: and it's the question about whether or not this is really the best thing for Uber strategically. A general rule I have concerning innovative companies is that if they're spending too much time worrying about their competitor, they're in for a major fall. Truly innovative companies focus on innovating first and generally aren't worried about competitors. Sure, they pay attention to what the competition is doing, but they believe in their own ability to out-innovate the competitor. When they start getting too focused on the competition, it's often a sign that they know they're not able to innovate fast enough any more.

It's not clear that this is what's happening with Uber, but it is a possibility. A perfectly reasonable alternative explanation is that Uber believes that the way it's going to best serve its customers is to have more of the best drivers working for it -- and recruiting from Lyft is the best way to do that. That seems like a perfectly viable explanation, and has little to do with "sabotage" but about putting out a better product. Either way, it's worth watching how this battle evolves, and how much of it is focused on offering the absolute best product vs. how much is about sabotaging a competitor. If it's more the former than the latter, then that seems like a good thing. So far, from the details of the story it seems like that's the case. While some may not fully agree with the tactics that the notoriously upfront and aggressive Uber are using, they don't seem to meet the claims of it being "sabotage."

Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Whatever (profile), Aug 27th, 2014 @ 7:22am

    I think the reactions from both sides here are an indication of a reality neither wants to admit, which is that after disrupting the marketplaces, they are discovering that the business isn't really as big as they wish it was. Moving from rapidly from an innovation model (what innovation they bring) to attempting to sabotage or undermine each other's business says a lot.

    It also made me wonder. If the cancelled calls are a big enough issue for both of them to notice it, you have to wonder how many real clients they are serving in some of these markets. It would be interesting to see what percentage of the rides each gives are to each other's poaching crews.

     

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  2.  
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    Anonymously Brave, Aug 27th, 2014 @ 7:30am

    Definitely the wrong place and time...

    While I wouldn't go as far as to call their tactics sabotage, it definitely qualifies as rude and unprofessional.

    Can you imagine the same methods applied to people in office positions. Say a recruiter makes an appointment with an accountant under the pretense of getting financial advice, only to turn the meeting into a pitch for a position at a rival company. This person is at work! If you want to recruit, fine...but, find a way to reach these people when they are not actively on the job.

    Or better yet, how about looking for people who need the job and currently don't have one. I'm sure there are plenty of them out there.

     

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  3.  
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    Anonymous Coward, Aug 27th, 2014 @ 7:51am

    People are so used to crony capitalism that actual capitalism is a new and terrifying thing for them.

     

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  4.  
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    Anonymous Coward, Aug 27th, 2014 @ 8:19am

    Re:

    I think it's quite the opposite. It shows a demand for drivers which suggests a market demand for the product.

    It's not like Uber and Lyft would be trying to poach off of each other as a business model. I know much of what you say suggests you've never taken an economic, accounting, finance, or algebra course in your life but in order to stay in business and pay bills both companies must be receiving outside income.

     

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  5.  
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    gailpatches (profile), Aug 27th, 2014 @ 9:21am

    I agree

    The Verge article was extremely misleading. I sent the writer some respectful points about missing facts from her article, and got a nasty gif as a reply.

    - There is NO evidence presented that the credit cards were "burner". Why not? This would make the story true. This is an egregious claim.
    - There is no hard evidence that Uber intentionally encouraged canceling rides, while recruiting drivers. Nothing.
    - Verge said there were internal documents confirming encouragement of canceling rides but quoted only the recruiting emails. There's nothing wrong with recruiting.

     

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  6.  
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    Chris Rhodes (profile), Aug 27th, 2014 @ 9:45am

    Companies hiring away competitor's employees = Commercial Sabotage
    Companies agreeing not to hire away competitor's employees = Illegal Colluding

    I guess I'll file that one in the same bucket as:

    Sell for more than a competitor = Gouging
    Sell for less than a competitor = Dumping
    Sell for the same as a competitor = Price Fixing

     

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  7.  
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    Anonymous Coward, Aug 27th, 2014 @ 10:01am

    Re: Definitely the wrong place and time...

    Why would I want to hire someone nobody else wants?


    ~Stupid Manager

     

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  8.  
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    Anonymous Coward, Aug 27th, 2014 @ 10:03am

    Re:

    So tell me, with all of the regulations and legal shit to wade just to start a business and keep it running... why in the world do you think this is a capitalistic market?

    The crony part is right, but we have long ago left capitalism as a market principle.

     

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  9.  
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    Anonymous Coward, Aug 27th, 2014 @ 11:44am

    The reason they call it "poaching"

    A bit of game theory, it appears to be a classic case of Prisoners dilemma to oligarchs, in this case the cooperate and defect are non-competition and competition respectively.

    In case "A" they both don't compete for workers they can benefit from depressing wages. In cases "B" and "C" one competes and the other doesn't the one that competes sucks up all of their talent. Finally in case "D" they both compete they have to deal with *gasp* free market wage competition. Which means that their employees start to get raises above inflation which cuts into their profits. That is why they deride it as poaching, because it is "antisocial" to them.

     

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  10.  
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    Anonymous Coward, Aug 27th, 2014 @ 2:08pm

    It may not be sabotage, but...

    Now that everything happens via apps or websites, with unreadably verbose EULAs/TOS/etc. attached, it may well be a CFAA violation.

     

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  11.  
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    Anonymous Coward, Aug 27th, 2014 @ 3:00pm

    I haven't used these services, so I am speaking from ignorance here. I thought you could choose your driver (to some extent) with these services, so if there is a driver you don't like, you can see their ratings and go with someone else?

     

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  12.  
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    Whatever (profile), Aug 27th, 2014 @ 5:21pm

    Re: Re:

    In a wide and deep market, one company wouldn't really worry about the other, as there would be enough business to go around - and for that matter enough drivers willing to do it.

    When they move almost directly into this sort of aggressive attack on the other side's business, you know there is generally a problem. It suggests that it's faster and more profitable to take away the other's business than it is to expand in the open market.

    what you say suggests you've never taken an economic, accounting, finance, or algebra course

    Far from it. It suggests that as a successful small business owner for most of my life, I can see when people are doing things to expand their business, and I can look to see why. Their actions for growth in the market place say that the most readily available market and the one that promises the most growth (at least in their minds) is the part taken by the other company. It expresses either a shortage of clients or drivers, either of which suggests a problem with their basic model.

     

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  13.  
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    Anonymous Coward, Aug 27th, 2014 @ 6:25pm

    Re: Definitely the wrong place and time...

    Can you imagine the same methods applied to people in office positions. Say a recruiter makes an appointment with an accountant under the pretense of getting financial advice, only to turn the meeting into a pitch for a position at a rival company. This person is at work! If you want to recruit, fine...but, find a way to reach these people when they are not actively on the job.



    The difference is that the Lyft drivers are being paid by the recruiters for the time that is being wasted.

     

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  14.  
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    Anonymous Coward, Aug 27th, 2014 @ 7:01pm

    Re: Re: Re:

    That's interesting because poaching of competitor talent is common in every competitive field of business.

     

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  15.  
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    Eldakka (profile), Aug 27th, 2014 @ 8:41pm

    Re: Re: Re:

    and for that matter enough drivers willing to do it.


    That doesn't necessarily follow.

    There may be a limited number of people who could fit the required profile for being a driver, which off the top of my head could include the following:

    1. Having a suitable car
    2. Having a clean driving record (I would imagine they wouldn't hire drivers who have had disqualified licenses)
    3. Want to be a driver
    4. Don't already have a job that pays better/is less hassle etc.

    I imagine that finding someone who'd meet all 4 above criteria wouldn't be that easy. If you have a suitable car already in a city like New York, then I'd lay pretty good odds that you already have a reasonable job.

    Don't forget, this isn't like being a taxi driver, where you can get a taxi driving license and then work for a taxi company who already owns vehicles. This (I believe) is an owner/driver model, where you already have to have a car to be signed up. Of course, with taxis, it's not uncommon for there to be a partnership model where 2 or 3 drivers go in together to become a joint owner of a taxi license and vehicle and have the vehicle on the road 24/7 with each owner covering a driving shift.

     

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  16.  
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    Michael, Aug 28th, 2014 @ 12:23pm

    Re: Re: Definitely the wrong place and time...

    The complaint was actually that rides were being booked and cancelled - presumably because the drivers had already been pitched, so what they are doing IS actually costing the drivers time/money.

     

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  17.  
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    Ally, Aug 29th, 2014 @ 3:40am

    There's a lot of competition in the car sharing sector. T Dispatch is a software company that assists car sharing and taxi companies in many countries with our cloud based software.

     

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  18.  
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    Bryony Cooper, Sep 3rd, 2014 @ 8:13am

    The War Rages On...

    It doesn't look like this battle is ending any time soon. I take everything I read with a pinch of salt, it's all a case of 'who did what to who', which I think is quite hard to prove in this instance.

    To me, Uber is ruthless - but that is what made them so successful. Lyft is more of a threat to traditional fleets because they are not even professional drivers...

    We only work with licensed drivers at T Dispatch, but trying to encourage them to innovate in the same way that Uber have!!

     

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  19.  
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    Lyft, Jan 5th, 2015 @ 7:17pm

    I really like how lyft has a free promo code that allows you to try out the service free for your first time. I love lyft the drivers are nice, cars are clean, and service is fast!

     

    reply to this | link to this | view in thread ]


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