22 February 2017

The New Economy in a Nutshell

In September, the grocery delivery company Instacart announced a big change that pissed off many of its workers: The startup was replacing tips with a “service fee” that would be collected by the company instead of the people delivering orders.

The startup’s explanation was that Instacart workers were too reliant on tips — around 80 percent of orders had one — and that the service fee would allow the startup to pay everyone a more reliable wage.

Many workers looked at it another way: Instacart, in their eyes, saw all of the tips they were making and wanted to capture that revenue for itself. And when Instacart’s best workers realized the tip-to-service-fee transition would mean lower pay for them, they, in turn, freaked out.

Instacart quickly relented and added the tipping feature back. But with a catch: The company made tipping much harder to find in the app.

Instead of the tipping option appearing on the checkout page as it originally had, a default 10 percent “service fee” sat in its place.

To get to the tip option, customers would have to click on a small arrow to the right of the service fee that doesn’t give any indication where it leads.


As a result, many Instacart delivery people have resorted to handing out flyers to customers to make it clear that the service fee is not a tip, and to explain that the “additional” tip is, in fact, the only tip. Many of these flyers also explain how to set the service fee to zero.


After all, it does take some skill — or, at a minimum, the willingness to be trained — to pick out good produce quickly and get it to someone’s door in a timely manner. And the supply of people willing to do it, while feeling like they are getting robbed, is not endless.
It appears that this was motivated clever accounting:  Tips could not be booked as revenue, while a service fee could.

The fact that it involved cutting the pay of the people who actual work was immaterial to pumping up the numbers, even if it does mean that the employees who are directly responsible for the quality of the service are going to bail on you.

This is what it means when Silicon Valley types talk about disruption.

It's all about the getting venture capitalists to give you lots of money, and then you, and the aforementioned VCs, go public, and get your vig from the stupid money that rushes in.

In a just world, we would see prosecutions for this, but I'm not holding my breath.


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