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Since the biggest news in B2B tech this week was the shocking allegations of corporate espionage between all-in-one HR platforms Rippling and Deel, we brought in reinforcements. 

Yep, today’s newsletter is a crossover event between The Segment x Founders Behaving Badly!!

Let’s spill.

🍵🍵🍵 

Deel’s unlucky day

St. Patrick’s Day wasn’t so lucky for Deel, a unicorn-status global HR platform. Why?

Oh, nothing major – just a new lawsuit alleging the company engaged an employee of a competitor, Rippling, to spy on its employer and conduct some light corporate espionage.

Totally normal stuff.

The official lawsuit document is a whopping 49 juicy pages of accusations against Deel, alleging “a calculated and unlawful corporate espionage scheme, orchestrated by Deel, a global, multi-billion-dollar technology company.”

(And that’s just part of the introduction!)

Welcome to the cutthroat world of HR tech

Who knew the competition between HR SaaS companies was so fierce? Not us.

But apparently the space is crowded and full of legacy companies like SAP, ADP, and Workday. 

(Chances are you’ve used one or more of these to fill out applications for jobs you never heard from again 🫠)

During the global pandemic, when companies had to shift their people operations to handle remote employment, HR tech saw a bit of a boom. But now, 5 years later, the market has slowed down for these platforms and created much fiercer competition. 

Deel and Rippling are, for all intents and purposes, neck-and-neck in the all-in-one HR platform race. 

• Deel was last valued at $12 billion, while Rippling was last valued at $13.5 billion

• They’re both listed as having 1k-5k employees according to LinkedIn

• And they are interested in winning the same customers

These two were destined to be enemies, just like the Capulets and Montagues 💔

Two households HR platforms, both alike in dignity

Even though Rippling and Deel have a history of directly competing with each other, things have gotten a little more heated in the past few months.

Near the end of last year, Rippling caused waves (or… ripples?) on LinkedIn after creating a game of Snake to call out Deel’s so-called “misleading claims” in their marketing. The subtext (but not really subtext) was that Deel is selling snake oil.

The game wasn’t the main issue. That was just a bit of clever – if totally petty – marketing. The bigger problem?

The day after releasing the game, Rippling’s CRO, Matt Plank, accused Deel’s Head of Sales, Chris Lee, of submitting a contact request form for Rippling and saying something rude.

In the call-out post, Matt posted a screenshot of the submission – effectively sharing what should be private information. 

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The spy who Slacked me

And here we are, 4-ish months later and the rivalry has escalated to new heights!

Rippling’s case against Deel alleges the following:

• Deel collaborated with a Rippling employee to spy on their employer.

• During this employee’s time at Rippling, Deel’s spy used Rippling’s systems to spy on Deel customers evaluating its competitor.

• The corruption goes all the way to the top, involving Deel leadership (including Philippe Bouaziz – Deel’s Board Chair, Chief Financial Officer, and the father of the CEO).

Did we mention that this alleged spy wasn’t even in sales or marketing? Oh no, they were in…wait for it…payroll operations.

So how did Rippling ultimately catch the bad actor?

It all came down to monitoring Slack and using a clever little honeypot trap.

The folks at Rippling noticed that their payroll operations employee was unusually interested in learning about marketing and sales activity in Slack – especially information regarding their competitor, Deel.

So they devised a scheme to create a fake Slack channel and then invited Deel executives in private communication to view the channel, as it may have embarrassing details about their company in it. 

And can you guess who searched for this channel – even though they shouldn’t have known about it?

Yup, the alleged spy.

At this point, Rippling brought in an independent solicitor to seize the spy’s phone via court order, but according to reports the spy ran into the bathroom and refused to come out. Eventually, this person fled the scene.

Via Rippling’s press release:

A room of comedy writers couldn’t come up with this!!

Deel maintains its innocence

Don’t think Deel is sitting idly by and letting Rippling get away with these accusations. 

In a statement to The Register, a spokesperson for Deel dismissed the lawsuit, saying:

Personally? We’re really looking forward to that, too 👀 

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See you next week! 👋