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Instacart CEO apologizes for tipping debacle
- wnevets 8y agoToo late, I've already decided to never use their service because of this.
- got2surf 8y agoJust curious, did you use Instacart or any of their competitors before this?
- wnevets 8y agoDoes amazon's grocery service count? Separately was I about to sign up for instacart through www.bjs.com before this story dropped.
- guest2457533 8y agoAmazon's grocery and restaurant service also has a variable base rate that depends on tips as well. FYI.
- gdulli 8y agoAnd they've treated employees worse than this.
- got2surf 8y agoThanks for taking the time to reply - this story is a good reminder to treat employees/all people as well as you can, not conditionally. Do you think there's anything the CEO could have said/done today that would make you reconsider Instacart? I do like the retroactive payments he mentioned, but wonder if the there's anything more they could do to regain a customer like you.
- abawany 8y agoIn Austin, the local grocery chain (HEB) has started its own delivery service in addition to being available over Instacart. Prices for their service (hebtoyou.com) are lower though delivery+shopper fees are comparable. The experience is still a bit raw (substitute specification) but pretty comparable.
- qgsrw3fd 8y agoI hope nobody ever forgives you even if you apologise to them.
- jVinc 8y agoIf you kick someone in the groin because someone said they'd pay you 20 dollars to do it. Then apologizing is the right thing to do. But don't expect the victim to forgive you just because you apologize, not even if you give the 20 dollars back to whoever paid you in the first place.
- jjulius 8y agoInstacart waited over a week since news of this first broke to issue this kind of an apology and change their course - they only did so after Buzzfeed and the NYTimes started to give the story more visibility. So not only was their decision to pay employees this way a conscious one, but so was choosing to respond not when they realized that their "contractors" felt screwed, but when too many of their customers would be aware of the issue and it became a PR concern. They can apologize all they want, that's fine. But apologies don't always necessitate forgiveness. An apology is a start, and their actions going forward are what will truly determine whether or not people should forgive them.
- nkrisc 8y agoInstacart isn't a person.
- dv_dt 8y agoI wonder if it was really a set of collective decisions like this that drove the change and apology?
- xeromal 8y agoI 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
- lexicality 8y agoThe drama kicked off weeks ago though?
- minimaxir 8y agoThe 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.
- bluetidepro 8y agoThis has been growing for a bit in the news. I've seen it on reddit a bunch the past few weeks from various news sources. I'm sure the NY Times article was the last straw, not the first he heard about it. So probably no conspiracy in that sense.
- ProAm 8y agoSilicon Valley Back Pedal Machine
- minimaxir 8y agoOfficial Instacart blog post: https://medium.com/shopper-news/state-of-pay-doing-right-by-our-shoppers-81de4b66580 https://medium.com/shopper-news/state-of-pay-doing-right-by-...
- lenticular 8y ago"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.
- module0000 8y agoNot 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.
- soared 8y agoDoing the right thing after significant public outcry still seems wrong.
- ProAm 8y agoThey were caught stealing from their employees/contractors. Did the right thing? They are pleading forgiveness for abhorrent behavior, let's not sugar coat this.
- Rainymood 8y agoHow is it stealing if you agreed to their terms? The contractors still got paid.
- bonestamp2 8y agoAlso 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.
- ori_b 8y agoThat would be more than enough if this was an accident -- but it wasn't. Dropping compensation when a customer tips is a deliberate choice that required engineering time and manager signoff to implement and ship. Building and shipping this feature was a calculated, deliberate decision. Who made this choice, and how has the company changed things to ensure that they won't make this choice again?
- soared 8y agoClassic 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 8y agoYep. 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.
- deleted 8y ago[deleted]
- waffleguy 8y agoSilicon Valley? The restaurant business started the model of screwing employees and paying them less. I don’t give why ever is okay with it
- e1ven 8y agoI think his point is that SV has had a lot of companies lately which ignore regulations that are inconvenient. This helps them grow when they are are small, and then when they get bigger they can either fight it in court, lobby, etc. For example, Airbnb, Uber, Lime, etc.
- dkasper 8y agoI think the point there was Silicon Valley is not unique in this. Many other industries have used similar tactics for years.
- brlewis 8y agoThis 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.
- rkho 8y agoI 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 8y agoPretty basic for good leaders: When the organization is doing good it's We When the organization is doing bad it's Me
- rkho 8y agoI wholeheartedly agree and should have better articulated my comment to mention that deflecting to "we" is acceptable when the company does something well!
- WrtCdEvrydy 8y agoFor tech companies, you might say it's the Reverse - CW's The Flash.
- rkho 8y agoEobard Thawne?
- HillaryBriss 8y agoIDK, maybe the "we" goes beyond Instacart to me, as a customer, the vendor-partners (e.g. Costco, BevMo, Ralphs, Whole Foods, CVS, Petco, etc) also seem a bit dirty. i mean, one can ask the question whether they were totally ignorant of Instacart's payment and tip related practices.
- supernova87a 8y agoWhat 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.
- minikites 8y ago>Or maybe that is the role of regulation and government to keep the amoral corporate compass calibrated. That's one of the reasons for government regulation and why you should carefully examine calls for "less government regulation" to see who benefits and who is worse off.
- matz1 8y agoIt should be assumed that company will try to do these kind of thing unless they are forced to do otherwise. Yes it's your role or goverment role to do so
- Consultant32452 8y agoThere's an entire industry dedicated to telling these people how to say these things. I'm confident a consultant provided the exact wording in order to find the best (least bad) long term outcome.
- 8y ago
- JAlexoid 8y agoScrew 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 8y agoThese 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 8y agoThis 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 8y agoI 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.
- docker_up 8y agoI 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.
- gordon_freeman 8y ago@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 8y agoWe 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 8y agoTo 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 8y ago+1
- waffleguy 8y agoSo it’s wrong for instacart to do that, but restaurants have carte blanche to screw over their employees.
- stonogo 8y agoDid you create an account expressly to misrepresent labor law? Why?
- waffleguy 8y agoWell it seems you commented without doing research. I’ll start you out: https://m.youtube.com/watch?reload=9&v=q_vivC7c_1k https://m.youtube.com/watch?reload=9&v=q_vivC7c_1k. Why are you complacent with restaurants taking advantage over employees, but not tech companies?
- stonogo 8y agoSorry for the delay; you've been some kind of banned and I didn't see your reply. I'm not going to watch a College Humor video at all, much less pretend it's research. What I will say is that federal law establishes up-front salary limits for tipped waitstaff such that no waitstaff will ever be paid less than $2.15 an hour (a number I feel should be much higher and pinned to a percentage of minimum wage) and in the event waitstaff does not receive sufficient tips to equal minimum wage for time worked, the restaurant is obligated to supplement the difference. This is known, up front, by both parties. These drivers were promised a rate of pay and not told in advance that Instacart would be intercepting tips. That's a bad-faith operation. In addition, the real instance of wage theft here is classification of these employees as minimum-wage-exempt 1099 workers instead of payrolled W2 employees -- and the cynic in me suspects they're classified this way expressly because Instacart knows they're exempted thereby from minimum wage. So, I agree that reform is needed, but none of the things you posted (modulo some Youtube I'm never going to watch) have been accurate or even relevant. Which brings me back to my initial questions: did you create an account to misrepresent federal law? Why?
- mohsen1 8y agoif you were not following this is a response to this open letter: https://medium.com/@workingwa/instacart-heres-our-22-cents-no-more-tip-theft-low-pay-and-black-box-pay-algorithms-8ff1d7c6b66 https://medium.com/@workingwa/instacart-heres-our-22-cents-n... Instacart reduced payments to workers because they got tips. Basically stealing their tips.
- kylec 8y agoIn large part because of these revelations, I'm no longer going to tip delivery drivers or feel bad about not doing so.
- samstave 8y agowhy not tip cash instead?
- marssaxman 8y agoWhy 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.
- dbelford 8y agoWhy 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?
- mnm1 8y agoOriginally Uber didn't allow tipping. I think it was at the request of the drivers, ironically, though I could be wrong.
- cosmotron 8y agoI 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?
- hrez 8y agoI'm guessing it's precisely to reduce wages and keep them low. The whole tipping is dumb and adds friction to the service. Just charge all-inclusive price. I am the same avoiding services that require tipping.
- albedoa 8y agoInstacart 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-fee-tips-controversy https://www.recode.net/2017/2/20/14503128/instacart-service-...
- gumby 8y agoToo 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.
- whoisjuan 8y ago“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 8y agoNot 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 8y agoi 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...
- randycupertino 8y ago"We're sorry that we got caught."
- habosa 8y agoSo 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.
- HillaryBriss 8y agoThis 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.
- mjrials 8y agoPardon 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-wage https://www.minimum-wage.org/federal/tipped-employee-minimum..., 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 8y agoIn 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.
- blaisio 8y agoNotice 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.
- hunter23 8y agoThe 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 8y ago> 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?