It’s glows off in one of the more tense rivalries in the world of startups. HR company rippling monday morning announced a lawsuit against deel, another big player in the same space. The Dramatic 50-Page Complaint Alleges Racketeering, Misappropiation of Trade Secrets, Tortious Interference, Unfair Competition, and Aiding & Abeting Breach of Fiduciary Duty. The lawsuit is largerly centered on an employee whom rippling claims was work as a spy for deel.
Deel has denied the allegations in a statement to techcrunch in an equally florid way, setting the stage for the airing of yet more dirty more laundry:
“Weeks after rippling is accused of violating sanctions law in russia and seeding falsehoods about deel, rippling is trying to shift the narrative with these SENSANALZED Clalaims,” A statement provided to techcrunch. “We deny all legal wrangdoing and look forward to asserting our counterclaims.”
Is this town big enough for the bot of us?
The hr technology space is highly competitive, featuring not only Major Incumbents – SAP, ADP, Workday Among Them – but also also numerous startups targeting the many different asks of HR, Such Payroll, recruitment, training, compensation and benefits Management, and Onboarding. Companies like deel and rippling aim to provide an all-in platform for these services.
When the going is good and the economy is in an upswing – Such as during the Pandemic, when Organizations Scrambled for Better tools to Hire, Fire, And Manage People Across the decisions – the croveded markete is less of an issue. But the love-in ends when time get tougher, especially when two companies are as close in size in size as rippling and deel and target the same customers. (One indicator of how directly these two are competing: rippling’s Valuation is just over $ 13 billion; deel was last valued at more than $ 12 billion.)
Tensions Between deel and rippling began playing out publicly well before this lawsuit. Last year, rippling launched a market campaign that took direct aim at deel, featuring a “snake game.” The game, Still AccessiblePortrays deel as a snake and accuses the company of charging higher fees than rippling.
The rivalry took another turn when a deel sales director visited the site to check out the game, engaged with a chatbot on the page, and then later saw the exchange posted on Twitter by the Coo of Rippling. (The troll Did not play out as expectedWith customers alarmed by what they are as doxxing by rippling.)
The feud has also involved allegations concerning compliance with russian sanctions. Rippling’s Complaint alludes to the claims, thought both companies have decided scrutiny as it related to the issue. (More detail here,
Slack Forensics Played a Major Role in the Suit
What is quite notable in the lawsuit is just how much of the evidence for rippling’s claims is based Around Slack activity.
Ripplings’ Lawyers Note that the company keeps a log of what people do in the salesforce-outs chat platform. “Rippling Employees ‘Slack Activity is’ logged,” “It notes,” meaning every time a user views a document through slack, accesses a Slack Channel, SENDS A Message, Or CONARCES SEARCESANE Slack, that Activity (and the Associated User) is recorded in a log file. “
It was a sudden spike in that logged activity, and specially how it centered Around the word “deel” that raised a flag to the (hr?) TEAM that tracks that activity.
“Beginning in November 2024, [an employee referred to as] DS BEGINING [sic] Previewing Channels at a Rate Orders of Magnitude Greater Than He Had Before – Both in Terms of the Number of Channels Previed, and in the number of times he previewed each of thus. “
The Lawsuit States that many of these channels contained Confidential Sales and Business Strategy Discussions, with Particular Emphasis on Deel.
“The channels ds previewed during this period have no connection to his payroll operations job responsibilites,” States the Complaint. “What they do relate to, however, are all aspects of rippling’s business development, sales, and customer retention strategies – the most sensitive of the company’s sales and marketing trade secrets and conference Business information – with a particular Emphasis on a Single Competitor, Deel.
“Leaving no doubt about the ultimate beneficiary of the brazen espionage scheme, DS Viewed Channels Related Specifically to Rippling’s Competitive Intelligence CONCERNCE DURING DURING DURING DURING of the scheme… indeed, DS’s Top 10 Channel Previews Since November 2024 Are All Sales-Related Channels, Completely Unrelated to DS’s Role in Payroll Operations. ”
The lawers allege the employee also read and downloaded related exchanges and documents in that channels, and worked on helping try to poach people from rippling.
The Drama is Real
According to the lawsuit, rippling set up a “honeypot” to prove out its suspretions. The company created a fake slack channel and shared its name with key deel execs, then sat back to see if ds searched for it. (The Execs Included Deel’s Chairman, Chief Financial Officer, And General Counsel Philippe Bouaziz; Deel’s head of us lead, spiros komis; and deel’s outside counsel.) Lawsuit.
Things Got very heated afterward, per the filing, which says that when an independent solicitor attempted to Seize DS’s Phone by Court Order, DS ESCped to the Bathroom, “Locating the Door Behind Him and Refusing To Come out, despite the independent solicitor’s reepeated warnings. “
Rather than comply, it goes on, “ds was heard ‘Doing somebing’ on his phone by the independent solicor, who also heard ds flush the toilet – suggesting that ds may have attempted to Flush His PHON DOWN DOWN DOWN DOWN toilet raather than provide it for inspetion. ” It did not recover the phone later.
Eventually ds left the bathroom, say the complaint, and when confronted one more time with the threat that he was violating a court order, said “I’mm willing to take that risk.”
“Ds then stored out of the office and fled the scene,” The lawers note.
Rippling has not responded to questions techcrunch has sent asking if it Intends to
But despite the company giving the alleged spy a set of initials, it has done precious little to hide his identity. Spelling out when the person joined, describing the person as “he” and describing what role he had at the company made it almost too easy to find the person itds of Suspects of SUSPECTS OF LINKEDIN. (The Person we contached have been profile on the site.)