
Instacart CEO apologizes for tipping debacle - Reedx
https://techcrunch.com/2019/02/06/instacart-ceo-apologizes-for-tipping-debacle/
======
supernova87a
What I hate about company behavior is the lack of leadership compass in
knowing what is right and wrong, and instead treating every resource (person)
as an experiment to see what they'll accept or not. And if they don't hear
enough complaints, must've been ok to do.

You can read it in their apologies and the positive spin: "We heard loud and
clear the frustration when your compensation didn’t match the effort you put
forth."

Heard you loud and clear? What is this, like the American Idol voting contest?
Daytime Emmy awards, or public opinion poll, where we have to be asked what we
like to be paid?

A proper apology would be: "We know what we were doing was wrong, and we were
wrong to do it, and we will not do things like that in the future." Not, "it
seems you didn't like what we did, so we'll do something different."

Makes you think they won't apologize for doing fundamentally wrong things
until they get called out by public opinion. What types of issues should a
company know are not ok / illegal, and what issues are subject to public
approval or measuring reception? Shouldn't a CEO know these and apologize
accordingly?

Or maybe that is the role of regulation and government to keep the amoral
corporate compass calibrated.

~~~
munk-a
And rest assured! The responsible parties (i.e. the ones complaining loudly)
will be sacked... just as soon as we get out of this spotlight.

~~~
pssflops
The people responsible for sacking those people have themselves just been
sacked.

~~~
munk-a
We apologize for the lack of professionalism, the above commentor has been
sacked - and apparently I have too, it's all a lie-

The voice to text program used to generate the above has been sacked.

------
whoisjuan
“After launching our new earnings structure this past October, we noticed that
there were small batches where shoppers weren’t earning enough for their time”
... Dude really?

So you create an earnings structure that deliberately fucks your workforce,
but it's just something overseen, just recently "noticed", and it only affects
"small batches" of shoppers?

This is just plain dishonesty.

~~~
bonestamp2
Not to mention, he didn't even address the customer's who were defrauded when
instacart told us that our "tips" were "100%" going to the shopper.

I'm glad he's making things right for the shoppers, they were hurt the most.
But he didn't even apologize to us customers who thought we were tipping our
shoppers well, and instead we were paying their base salary (instacart would
just make up the difference if we didn't "tip" enough). WTF? That's not a tip!

After seeing his response, I'm glad I closed my account when this news broke
and I won't be returning. They had one opportunity to nail this PR disaster
and they forgot about their customers!

~~~
HillaryBriss
i stopped using Instacart too for this same reason. i might start to use them
again if they refunded all customers all of their tips and paid all of the
shoppers a significant extra bonus, as a good faith measure. otherwise, there
are better ways to get a few groceries...

------
soared
Classic example of begging for forgiveness rather than asking for permission
(alt: move fast and break things). They've got enough capital to apologize
with money. It was worth the risk fiscally but we'll see how their brand fares
after this settles (probably just fine).

> For the shoppers who were subject that approach, Instacart says it will
> retroactively pay people whose tips were included in payment minimums.

~~~
lykr0n
Yep. The Silicon Valley Model.

Break the law and be as unscrupulous until we can either change the law, have
enough money/market to "fix it" and save face, or fight indefinitely in court.

~~~
waffleguy
Silicon Valley? The restaurant business started the model of screwing
employees and paying them less. I don’t give why ever is okay with it

~~~
brlewis
This is not up-front lower pay with the expectation of tips. This is low pay
where tips effectively go to the company, not the worker.

I would not be OK with it if I tipped at a restaurant and the restaurant
reduced the staff's pay by the amount I tipped.

~~~
LyndsySimon
If the restaurant is paying less than minimum wage - which many (perhaps most,
in some areas) do - then that's exactly what's happening.

~~~
brlewis
You don't really mean "exactly what's happening". You mean "approximately
what's happening, averaged across everyone's tips." Which is still not true,
because people know the restaurant situation up front, while this situation
goes against expectations.

~~~
loeg
No, GP was right the first time. "Server wage" is exactly this — the employer
pays _less_ than the nominal minimum wage, and tips from customers are
appropriated to make up the difference.

~~~
brlewis
Server wage: Workers and customers know up front that base pay is lower.
Customers expect that their tips will go to the worker in addition to base
pay.

This: Base pay starts low, and is reduced by the tip amount, contrary to the
expectations of customers and workers.

Now is it clear how they are two different things?

~~~
loeg
I think you're misrepresenting server wage.

To style it like your comment, server wage: Base pay starts low (minimum
wage), and is reduced by the tip amount. Customers may or may not be aware
that servers are paid below minimum wage and that their tips will be
appropriated by the business. Businesses don't exactly advertise this.

~~~
brlewis
I couldn't find where any law enshrined businesses appropriating tips. I
googled server wage and just found
[https://en.wikipedia.org/wiki/Tipped_wage](https://en.wikipedia.org/wiki/Tipped_wage)

If there's something enshrined in law beyond a lower minimum wage for tipped
workers I'm interested to know.

~~~
tfehring
Say I'm a tipped worker making $3/hour in an area with a minimum wage of
$10/hour.

I work for an hour and don't receive any tips. My employer has to pay me $10
to comply with minimum wage laws.

I work for another hour and receive $5 in tips. My employer now has to pay me
$5 so that my total pay for the hour is $10. I make the same amount in wages +
tips that I did in the first hour, but my employer saves $5.

~~~
jdeibele
Yes, but if that goes on you get fired. The restaurant probably isn't
expecting to pay you anything more than the $3/hour.

There's lots of jobs, like commissioned sales, where the employer has to pay
minimum wage. They get rid of salespeople who may do a great job of relating
to the customer and explaining the benefits but can't close the sale. Out the
door for somebody who is pushy, etc.

------
JAlexoid
Screw tipping culture. This expectation of a tip by default is a
retarded(archaic, slow, ancient) cultural element.

If I HAVE to tip for an adequate service, then it should be included. If
adequate service isn't delivered - then that should be reported to the
management. If service that is above and beyond is delivered - then I will
gladly pay for the extra service.(And I mean above and beyond, not just
literally doing the job as stated)

~~~
lenticular
These drivers aren't even entitled to minimum wage protections, let alone car
maintenance and gas. While I agree that tipping is a bad form of compensation
because it is so volatile, this is the only way folks like this are keeping
their head above water.

~~~
verelo
This is the only solid rebuttal I've ever really seen someone come up with
when seeing complaints about tipping, but my general response still applies:
The reason I "buy" from a company/service is so I don't need to worry about
"how" my request gets completed. If I need to pay your employee/contractors, i
might as well look at hiring them directly and skip the middle-man taking a
cut. I'm not your HR department, pay them properly and don't expect me to tip
them based on my judgement of their performance.

~~~
lenticular
I fully agree. It's going to be a while before tipping goes away, but it's
being recognized more and more as a problem. Restaurants that get rid of it
are usually seen positively. There's a successful brewery in Seattle that has
a no-tipping policy. The beers are about a $1 more than elsewhere, so you pay
the same. The employees are also paid more in regular wages to make up for
this. Everybody wins: The employees make about the same except with more
stability, and there is no awkwardness.

Tipping in restaurants is really problematic especially due to issues with
tipping out the back.

~~~
verelo
> The employees make about the same except with more stability, and there is
> no awkwardness.

This is my biggest gripe with tipping. It's just a crappy experience as a
consumer, and a weird power dynamic for the employee. Promotes class
divisions, and makes me feel kind of crappy. I just want everyone to get a
fair deal and thats it...

------
habosa
So you stole, got caught, and all you did was give the money back and say
you'll stop stealing?

If one of their drivers had come to the Instacart office and stolen something,
they'd have to do all of the above plus go to jail.

This was a widespread coordinated criminal action and someone should be facing
our criminal justice system as a result.

------
rkho
I find the use of "we" as a CEO to be disingenuous. Being the head of the
company means taking ownership for your company's actions and I feel at that
level you don't get to deflect to "we".

~~~
AndrewKemendo
Pretty basic for good leaders:

When the organization is doing good it's We

When the organization is doing bad it's Me

~~~
WrtCdEvrydy
For tech companies, you might say it's the Reverse - CW's The Flash.

~~~
rkho
Eobard Thawne?

------
albedoa
Instacart have been playing these games for years now [1]. They're not going
to stop. They will squeeze their contractors until they meet resistance, then
issue an apology and repeat. There are no long-term consequences, or at least
any that they fear.

1\. [https://www.recode.net/2017/2/20/14503128/instacart-
service-...](https://www.recode.net/2017/2/20/14503128/instacart-service-fee-
tips-controversy)

------
module0000
Not what I expected, it seems to me the CEO did the right thing. I'm not a
customer of Instacart, my only knowledge of it comes from following the
various HN stories about this whole ordeal.

The "right thing" he did:

1) Apologize, explaining that he made a mistake. Self-deprecation is good
here.

2) Make it right, not just going forward - they are retroactively paying the
delta to the impacted employees.

~~~
ProAm
They were caught stealing from their employees/contractors. Did the right
thing? They are pleading forgiveness for abhorrent behavior, let's not sugar
coat this.

~~~
bonestamp2
Also stealing from their customers. They told us our tips were "100%" going to
the shopper. Really, only the percentage that exceeded the base pay was going
to the shopper because instacart was reducing their base pay by the amount of
the tip. If that's not fraud, I don't know what is.

------
dbelford
Why did the gig economy pick up tipping culture? Why did Instacart need to?

I've read about why tipping exists in the restaurant industry and what happens
to businesses that try to avoid it. But for these new businesses without
established mores, I have to do moral calculus to decide whether to use them
and how to tip. I wish they had avoided this. I tend to avoid them instead.

Did customers ask for this? The people providing the services?

Was it for the price discrimination? price discovery? Or to deflate the
sticker price?

~~~
cosmotron
I wonder if this starts organically: some customers paid tips in cash to their
"shoppers", word gets around, people see other gig apps accepting tips, and so
Instacart follows suit and adds this feature.

Perhaps it's a legal cover? If enough customers are paying cash tips, is it in
Instacart's best interest to keep track of this (by building a tip feature
into the app) for tax reasons?

------
wnevets
Too late, I've already decided to never use their service because of this.

~~~
got2surf
Just curious, did you use Instacart or any of their competitors before this?

~~~
wnevets
Does amazon's grocery service count?

Separately was I about to sign up for instacart through www.bjs.com before
this story dropped.

~~~
guest2457533
Amazon's grocery and restaurant service also has a variable base rate that
depends on tips as well. FYI.

~~~
gdulli
And they've treated employees worse than this.

------
minimaxir
Official Instacart blog post: [https://medium.com/shopper-news/state-of-pay-
doing-right-by-...](https://medium.com/shopper-news/state-of-pay-doing-right-
by-our-shoppers-81de4b66580)

~~~
lenticular
"We're sorry we got caught." This sort of thing is why socialism now has a
higher positivity rating among under-30's than capitalism does.

------
blaisio
Notice people found out about this last week, but the CEO waited to apologize
and make promises until the New York Times published a scathing article about
it this morning.

------
docker_up
I don't understand how he could have expected to get away with that. It's so
deceitful to his employees as well as his customers. It makes me wonder what
other shortcuts Instacart and Doordash will do in the future, now that they're
caught.

------
gumby
Too late: I now know how the company thinks about its employees and, frankly
how truthful they are with their customers too.

So more Instacart and no more DoorDash. There are plenty of alternatives to
both and I suspect we'll pretty quickly figure out which ones are the creepy
assholes and which differentiate themselves by being decent human beings.

BTW simply uninstalling the app won't cause change. I contacted both Instacart
and DoorDash and asked them to delete my account and all PII and when asked,
explained why.

PS: it's worth looking at which investors have supported this kind of
attitude.

------
mjrials
Pardon any misunderstanding, but how is this different from normal tipping
culture in the US?

According to [https://www.minimum-wage.org/federal/tipped-employee-
minimum...](https://www.minimum-wage.org/federal/tipped-employee-minimum-
wage), if a laborer accepting tips does not minimum wage during a time period
of their work, their employer must compensate them up to minimum wage.

In other words, tips subside an employers obligation to provide a minimum
wage- the same thing Instacart is doing, although instead of a minimum wage,
Instacart uses a $10 minimum payment.

~~~
Rebelgecko
In many states, including the one where Instacart started, the minimum wages
for tipped and untipped employees are the same. You can't pay someone less
than $12/hr and hope that tips make up the difference, even if the the
employer is willing to make up any shortcoming.

------
ProAm
Silicon Valley Back Pedal Machine

------
mohsen1
if you were not following this is a response to this open letter:

[https://medium.com/@workingwa/instacart-heres-
our-22-cents-n...](https://medium.com/@workingwa/instacart-heres-our-22-cents-
no-more-tip-theft-low-pay-and-black-box-pay-algorithms-8ff1d7c6b66)

Instacart reduced payments to workers because they got tips. Basically
stealing their tips.

------
hunter23
The apology misses half of the equation. Instacart was putting a tip section
of the app to fool users into thinking that improved the wage of their workers
when it kept to stable. So not only were they stealing from their workers they
were stealing from their customers. Where's the apology for using the word tip
deceptively?

What a non-apology.

------
xster
> Instacart has since said it was a glitch — caused by the fact that the
> customer tipped $10

I was ready to pull out the pitchforks, but then in an effort to keep
journalism honest, tried to look to the primary sources for where this was
said and can't actually find it. How was this attribution sourced?

------
HillaryBriss
This is a situation where the CEO may eventually need to be replaced. The PR
stream went negative to an extreme and shoppers have become disillusioned.

------
kylec
In large part because of these revelations, I'm no longer going to tip
delivery drivers or feel bad about not doing so.

~~~
samstave
why not tip cash instead?

~~~
marssaxman
Why tip at all? Tipping is an archaic vestige of old-fashioned hierarchical
power relationships. I'm not some aristocrat dispensing largesse to the
servant class, I'm just a person trying to pay for a service. It's not my job
to manage instacart's payroll for them.

------
gordon_freeman
@Dang -- Why we selectively add YC Badge to the stories on HN? Hacker News
needs to be consistent adding YC startup badges in the brackets for both
positive and negative stories. Let's be clear on that.

~~~
sctb
We add it when the community might not have heard of the startup or known they
did YC. Airbnb, Dropbox, Stripe, Reddit, Docker, Twitch, Zenefits, Instacart
etc. don't need it (and indeed, consistently don't get it).

~~~
e1ven
To be fair, I've been following YC for 12 years and I didn't recall that
Instacart was a YC company until I saw the parent's comment.

There are just too many to keep track of, even for the big guys.

That said, I don't know that who they raised money from is particularly
relevant to the story.

~~~
samstave
+1

------
xeromal
I read about this 10 minutes ago and now the CEO already has a response! Feels
really weird. I'm not a conspiracy theorist, but it's almost like the CEO was
prepared for the blowback if this thing ever got out. haha

~~~
minimaxir
The initial complaint that set off the firestorm was a week ago:
[https://news.ycombinator.com/item?id=19029801](https://news.ycombinator.com/item?id=19029801)

The articles two days ago by NBC, yesterday by BuzzFeed News, and today by the
NYT forced Instacart's hand.

