Ola and Scam Incentivization

My Ola cab of 2016 was decidedly gloomier compared to an average Ola cab last year, made all the more stark because I wasn't in an Ola for the whole year. A driver and I had calculated last year that Ola had spent four hundred crore rupees in 4 months in driver incentives. This time, the drivers spoke of failed logistics startups they'd worked for, the threat of Reliance entering the cab market, their loans- not only more pessimistic than last year, but than Uber drivers too. I don't like projecting this pessimism online (I was a fan of Ola before it was cool), but it was too interesting to pass up.

Ola and Uber both have incentives to prevent drivers from using both apps at the same time. Uber has a revenue target, while Ola's incentive is released when the driver completes fifteen rides, regardless of the revenue. This leads to the following behavior:

  1. Uber drivers like long distances, but have little reason to cancel the ride
  2. Ola drivers dislike long rides, especially to remote and traffic infested areas. Fifteen short rides unlock the same incentive as fifteen long rides

This incentivizes Ola drivers to cancel if the ride is too long. Why would Ola want to do this? I could think of the following reasons:

  1. They want to reduce the incentive money they give out, or drastically increase the time a driver works. They want to avoid a direct comparison with Uber's revenue target, because the Ola target is (effectively) much higher.
  2. It's hard to incorporate a revenue target in their system. This would imply bad tech- random software issues preventing a logical system.
  3. They think this makes sense. This would imply bad management, or that I'm wrong about incentives.

Ola has also started sending out PIN numbers to users when they book a ride. The driver cannot start the ride unless the customer tells him the PIN, to be entered on the driver's app. Before this, drivers would start (and sometimes finish) rides without the customer having entered the car. My driver told me that he himself had done it many times. Once, because he was drunk. Mostly, because the customer was way too far, it was too late to reach fifteen rides (to make the incentive) and the ride was too short for him to make a profit. By itself, the PIN mechanism doesn't seem bad, but in light of the problems it looks more and more like a bad idea:

  1. The root cause for drivers behaving this way has gone unfixed.
  2. Ola's reputation system is broken and drivers know it. If phantom rides were such a big problem that Ola had to create a new feature to manage it, there may be more incentives for drivers to try and scam Ola.

To jump to conclusions, it seems that Ola spent too much money on customer/ driver acquisition and too little on technology. As seen by a customer, the core logistics problems remain- the GPS is rarely right, wait times are long and drivers want to cancel. Even worse, it seems Ola cannot handle its current scale because drivers told me Ola 'laid off' thousands of drivers for various reasons (like the car model being too old). Government regulation on surge pricing has made things worse for everyone, but I don't want to rehash those arguments.

This scam mentality seems to be the flavor of India's time right now:

  1. A system is put in place to stop bad behavior, but which really incentivizes bad behavior.
  2. This system is backed by morality.
  3. When the system inevitably fails to stop bad behavior, everyone cries foul and blames everyone else.
  4. The real problem remains unfixed.
  1. System: Let's ban surge pricing!
    Morality: Capitalism is bad because I was stranded for x hours and y cab company has 100x surge every evening!
    Failure: Drivers are poorer, work longer hours. Customer wait time are uniformly long. Surge pricing is back in another form (tiers)
    Real problem: Transport infrastructure (pretentious for roads) is completely broken.
  2. System: Let's ban cow slaughter!
    Morality: Cows give milk. They're so innocent. Mythology/ religion tells us not to kill cows.
    Failure: Beef is still the best nutrition some people can afford. Cows are transported illegally and cruelly to be slaughtered under the radar. Cows are abandoned. The people who eat them are mistreated for it.
    Real problem: No regulation for clean and humane slaughter houses.
  3. System: Let's cap movie ticket prices! (Yes, this is really under discussion.)
    Morality: Poor people cannot afford to watch movies in multiplexes right now!
    Failure: This remains to be seen.
    Real problem: Movies of my state are so bad, nobody wants to watch them.

Morality-backed scam incentivization is everywhere in India. The government is the primary perpetrator, but as I've argued here companies do it too. Families do it (eg. caste-restricted marriage). It seems to happen on an individual level.