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."
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Filed Under: aggressive tacitcs, competition, innovation, recruiting, ride sharing
Companies: lyft, uber

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  1. icon
    Eldakka (profile), 27 Aug 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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