Piece of Cake and Dumbo Moving and Storage in Tech Fight


Share post:


Photo-Illustration: Curbed/Getty Images

It was late May, the height of New York’s peak moving season, when double-parked trucks clutter the streets of Brooklyn, their logos providing a crude ranking of their competitive strength. On a soccer field in McCarren Park, two rival moving companies were getting ready to face off in a more visceral fashion. Players from Dumbo Moving and Storage warmed up on one side of the field as the Piece of Cake team, in the company’s signature colors — hot pink and purple — did drills on the other. “Do you know who this company is?” one Dumbo mover whispered to another. “It’s them.” Dumbo had recently sued Piece of Cake, which was founded by a former Dumbo mover in 2017, for misappropriation of trade secrets, and Dumbo players said the previous soccer match between the companies had taken on an unsportsmanlike edge — Dumbo’s best player had been tackled from behind, disabling him for the rest of the game. “Hopefully, they’re more sportive tonight,” said Lior Rachmany, Dumbo’s founder and CEO. “The last time, they came just to hurt us. I fell on the floor so many times.” That, he added, was an unusual occurrence. He didn’t want to gloat, but last season, Dumbo had been league champion.

Until recently, Dumbo had been winning in lots of ways. In August 2021, it had hit a new record of 400 moves per day, grown to a fleet of 150 trucks in the city and 30 long-haul tractor-trailers, and expanded to more than a million square feet of storage space — “owned, not leased,” Rachmany noted. Rachmany was, in the words of one former employee, “the king of the moving companies.” But since last summer, things have taken a turn. “Expansion these days has been a lot more challenging. Cash flow is not great,” Rachmany said. “This last year, I’m not taking a salary.” He attributed the rough period to three things. First, there is less work to go around, because people aren’t moving as much — they’re hunkering down in their apartments to wait out the terrible rental market. Second, “the market is saturated because of last year’s boom — in the last year, over 30 moving companies incorporated. They saw the success and wanted to get in on it.” And No. 3? “No. 3 is our good friends from Piece of Cake.”

This spring, Dumbo filed a lawsuit against Piece of Cake, alleging intellectual-property theft. The suit claims that Piece of Cake’s founder, Vojin Popovic, and two other former Dumbo managers stole proprietary software that Dumbo paid more than $100,000 to develop. The competitor not only used that product to run its own company, the suit alleges, but to undercut Dumbo, tweaking its price-setting algorithm so it could woo Dumbo’s customers with cheaper quotes. This was not hard to do, as Rachmany claims Popovic’s team had gained unauthorized access to Dumbo’s customer database.

That would have been galling under any circumstances, but it was made all the more so by the fact that, in the past few years, Piece of Cake’s pink trucks have become as ubiquitous on the streets of Brooklyn as Dumbo’s green ones. Questions of stolen software aside, Piece of Cake was following the game plan that Dumbo had laid out a decade earlier: Charge less than your competitors, and make your money on volume. Even assuming there’s enough business to go around between the two of them — a big if given that kind of business model — only one can be truly dominant. This has led some in the industry to wonder whether Piece of Cake is guilty of stealing Dumbo’s software or simply all its other ideas. “Piece of Cake is the winner right now, and Lior knows it,” said one moving-company founder.


When I met with Rachmany in a coffee shop by the Brooklyn Navy Yard — Dumbo moved its operations to Flushing Avenue and North Oxford Street after rents in its namesake neighborhood exploded — he was wearing a Sarajevo 1984 Olympics T-shirt with a picture of a ski jumper on the front, his long dreadlocks pulled back into a ponytail, drinking his fourth black coffee of the day. A progressive-jazz musician, he’d come to New York from Tel Aviv in the summer of 1998 and, within a few days of arriving, found a day job as a mover in Gowanus. “I came here because of music and ended up working as a schlepper,” he said. “Up to 15 years ago, all the licensed and insured companies were Israelis’ — Moishe’s, FlatRate, Shleppers,” he said. “But that time is over. Now there are a lot more opportunities in Israel. For the last 20 years, they’ve been eating and breathing tech. They want to be Adam Neumann.” Rachmany opened Dumbo in 2006. “They entered the market with dirt-cheap pricing and tried to grow as the no-frills low-price provider,” said an executive at one of the city’s largest moving companies.

“Lior’s obsession was with growth and volume,” said Zak Solomon Miller, founder of Solidarity Movers, who started working at Dumbo in 2012 before leaving four years later to open his own company. “The primary motive was volume — book every job.” Miller said that, coming from Rabbit Movers, which had been started by an artist and employed other artists (mostly American-born), the culture at Dumbo was fascinating. “It was very different working in a company that was primarily immigrant-run, people here on visas. The work ethic between them and Americans was like night and day. They worked twice as hard and complained half as much. But the other thing that made an impression on me was that everyone was pitted against everyone else. There was very little trust; it was all about the bottom line. A lot of the time, we were undercutting other companies by 15, 30 percent. They brought a lot of innovations to cut costs — from logistics to the kind of tape they used.”

Miller said that he saw the culture evolve over time into something more collaborative. But the focus on the bottom line necessarily had to remain at the forefront, and keeping costs low is difficult, Miller told me, not least because of the huge discrepancy in demand — most leases turn over at the end of the month and between May and August, so moving companies need four or five times as many crews during the crunches. It’s hard to keep a highly flexible workforce that’s reliable and competent. Bringing in seasonal labor, essentially — workers on visas from places like Serbia, Russia, and Georgia — is common at Dumbo and many other moving companies. “There are all these little corners that have to get cut or innovated around to reach a price point people feel good about,” said Miller.

Piece of Cake declined to answer any questions for this story, citing the ongoing litigation. Popovic’s LinkedIn profile shows that he worked as a McDonald’s cashier for three months before starting as a mover at Dumbo. (It also says that, as of last year, the company had more than 80 trucks.) “He’s Slavic — from Montenegro. I sponsored his visa, which is all good, all good in the hood,” said Rachmany. “He started as a mover. He’s a very fit guy, an eye-catcher. When he worked with us, we got a lot of comments from clients.”

Popovic may have been eye candy, but he was also really focused. In a couple years, he was promoted to a sales manager at Dumbo. A year after that, in December 2017, when he was 24, he left to start Piece of Cake. Popovic and Rachmany parted on good terms — Rachmany showed me friendly email exchanges from October 2018. “We were sitting right here when he asked me for tips: how to set up payrolls, licenses with the DOT, a lot of valuable information,” Rachmany said. “I told him, ‘I’m giving you millions of dollars of information no one gave me. I learned the hard way, but I want to keep a good relationship. There will come a day when you’re going to want to step on my toes.’ He says, ‘Don’t worry, boss. That will never happen.’ ”


In 2016, a year before Popovic left, Dumbo had decided to build its own software, a centralized automated-management system that could generate leads, schedule jobs, generate quotes, and track performance. Rachmany says that he approached his storage manager, a Ukrainian immigrant named Volodymr Plokhykh, to see if he could arrange for Ukrainian coders to build it. Plokhykh, according to the lawsuit, introduced Rachmany to a company called IT Dev Group — without disclosing that he had a financial interest in the firm. Plokhykh, when reached by phone for this story, declined to comment.

The software that IT Dev Group ultimately built for Dumbo had “numerous novel features that have never been used by the moving industry,” the suit claims, “including paperless tracking, communication, sales, data, marketing, and analytical capabilities, all of which were designed at Dumbo’s request and consistent with specifications provided by Dumbo.” According to the lawsuit, it had an algorithm that generated a “guaranteed price” quote — the amount that Dumbo, taking into account many factors, says it will charge for a move, then is supposed to stick with — a key feature that Dumbo says was developed with its years of expertise and helped the company more than double its revenue. In 2017, the year before Dumbo introduced the new software, called Moveit Moveit, the company generated $17.6 million in revenue, the suit claims. By 2020, revenue had jumped to $36 million.

That summer, Dumbo says, it discovered that both Piece of Cake and Simply Moving, a company started by Stefan Marcali, yet another former Dumbo sales manager, were using Dumbo’s software. (Simply Moving has since been acquired by Piece of Cake, and Marcali didn’t want to discuss the suit when reached by phone.) “Dumbo received emails from potential customers informing Dumbo that they had received instant quotes from POC and Simply that looked strikingly similar to the form of quote used by Dumbo, but the quoted price was at a substantial discount to the Guaranteed Price,” the suit alleges.

The software’s source code was stored on a separate secured server maintained by IT Dev Group, which was accessed by Plokhykh using his IT Dev Group username and password, a breach revealed by an internal investigation done by Dumbo and IT Dev, according to the suit. Plokhykh had access to the server to provide support and software-development services to IT’s clients, but, the suit alleges, in June 2018, he used it to copy Dumbo’s software and source code without either Dumbo or IT Dev Group’s knowledge or consent, then tried — unsuccessfully — to cover it up.

Dumbo alleges that Plokhykh then sold the software to his former Dumbo colleagues, who knew it was proprietary. (It wasn’t only his old co-workers he was helping out — the suit claims that Plokhykh launched a new business and website, QQ Moving, which looks like a moving-company or moving-company-referral site but is actually a demonstrator site to sell software — Dumbo’s software.) Rachmany believes that Dumbo’s customer database was breached, allowing Piece of Cake to steal not only its trade secrets but its clientele.

Rachmany said he offered to settle matters amicably out of court — giving Piece of Cake time to find new software, keeping Plokhykh on as an employee, and increasing payments for his IT-maintenance services — “This isn’t Gowanus in the ’70s or ’80s. What good does it do to be mad? I had to find some kind of a solution.” But when that failed, he turned to legal remedies. In moving (as in so many other industries), tech and the razor-thin advantage that it promises to confer have replaced more traditional weapons and techniques.

Mark Ehrhardt, a competitor who founded Movers, Not Shakers!, told me that he had no idea if the suit’s claims were valid but that, if true, stealing another company’s proprietary software is a huge deal. Moving software is a valuable, surprisingly complex thing: “It’s intricate: It has to factor in distance, labor costs, stairs, the delicacy of the stuff, when the move is happening,” he said. And for companies like Piece of Cake and Dumbo, which are trying to dominate the market based on pricing, it would be an even bigger deal. “They literally spend every waking hour figuring out how they can win the moving game in New York,” said Ehrhardt.

But Eli Abdrakhimov, yet another former Dumbo employee who started his own firm (Diamond Hands Moving & Storage) last year, said that Diamond Hands and many other movers — including Piece of Cake, as far as he knew — used a different software program. (Rachmany claims that the other program is, in fact, based on Dumbo’s stolen software.) “Lior is a great guy. He really helped me a lot. I appreciate the guy,” said Abdrakhimov. “But I don’t think the case is valid. The case against Piece of Cake has nothing to do with an application. It’s because they’re getting bigger and bigger.”

Irrespective of the merits of the case, everyone I spoke with agreed on two things: Piece of Cake is growing very fast, and it charges very little. “Now the lowest price is 60 cents per cubic foot. Before Piece of Cake, it was $1. We charge $1.20 and try to explain why we’re charging it,” said one moving-company founder. “Gas got more expensive, supplies got more expensive, labor got more expensive. The only thing that got cheaper was moving.” Although Dumbo had distinguished itself with low prices — one mover told me that he’d seen a recent Dumbo quote of $1,200 for a job involving a 24-foot truck going to Connecticut, a job he’d charge $3,000 for — Piece of Cake was undercutting even that. Rachmany suspects that it’s being subsidized by a funder, something other moving companies also told me they assumed, although Piece of Cake has claimed otherwise. In 2021, Popovic told Fortune that Piece of Cake was “completely private and 100% funded by our own profits … We have not once discussed outside investment.” He said that in 2020 — the company’s third year in business — it had experienced 360 percent year-over-year growth. Rachmany and others told me that they’ve heard Piece of Cake is paying movers competitive nonunion industry rates (around $20 an hour or so) and, he added, it must be spending large amounts on ads and lead generation. Unless, another moving-company leader speculated, it really was doing that much more volume than anyone else?

Was it possible that Popovic had simply taken Rachmany’s playbook and executed it better? Over the last 20 years, small innovations that sped up jobs and thus added volume were quickly and widely imitated. Movers used to secure moving blankets with giant rubber bands, then Moishe’s started using tape; now everyone uses tape. “People in the moving business are not too creative,” said Daniel Norber, founder of Imperial Moving. “Everybody branches off.”

Still, Rachmany said, even by the standards of the industry, Piece of Cake was pushing it. And that wasn’t even taking into account the alleged intellectual-property theft. “Everything I do, they imitate,” he griped. “From joining the soccer league to how I set up my parking lot, my plastic bins, the way I send my emails.” Piece of Cake even poached his mechanic, Rachmany claimed.

He admits that Piece of Cake has more sophisticated marketing than Dumbo — with its snapping-fingers logo and compelling purple-and-pink branding scheme. Another mover told me he also found the branding clever — in his experience, women usually choose the moving company, and Piece of Cake seemed to recognize that. “The Piece of Cake guys are like models,” he said. “Their arms are really buff.” Dumbo’s marketing was once at the leading edge — but that was more than a decade ago. Rachmany told me he’d picked the name Dumbo because it was associated with art and creativity. He’d witnessed the great migration of upper-middle-class people from Manhattan to Brooklyn, and in an era of sexy advertising (it was American Apparel’s heyday), he put up provocative ads — one with a photo of a couple hooking up amid moving boxes with the tagline “Always have protection” was even banned from the L train. But these days, its branding feels a bit dated, its blocky-D logo forgettable, opined the head of another moving company. “I’m not really sure why Dumbo doesn’t hire designers to make their logo better,” the competitor said.

Yelp ratings, which play a decisive role among customers choosing a mover, are another area where Piece of Cake has a distinct edge and Dumbo feels like it has been wronged. Piece of Cake, which has 4.5 stars on Yelp, has collaborated with Yelp on YouTube videos and has special features like a “Book now” button on the site, whereas Dumbo, which has 3 stars, has been indefinitely banned after a dispute with a customer who posted a negative review; Dumbo told her the claim couldn’t move forward because of the negative review, a violation of Yelp’s terms of service. Rachmany said he accepted an initial one-year ban but not its indefinite extension. “I am, for some reason, banned, and they’re flourishing on Yelp.”

At McCarren Park, as the sun faded and the lamps clicked on, illuminating the artificial turf, the soccer match began. Shouts in Ukrainian and Georgian filled the air, an occasional “Wow” breaking in as a headbutt sent a ball flying clear across the field. The players, most of whom had spent the morning lifting wardrobes and dressers, cycled in and out. Soccer balls rolled onto the running track. At one point, a Dumbo player fell in front of Piece of Cake’s goal. “The goalie got Max!” exclaimed one of the players on the sidelines, craning his neck to try to see if he’d been badly hurt. There was some angry shouting — accusations that the goalie had intentionally stepped on the Dumbo player after he’d gone down — but then Max got up, limping across the field, and play continued without him. Dumbo won, 3-0.


Source link


Please enter your comment!
Please enter your name here


Related articles

New Soundboard Review: Pricing is Not Always the Only Criteria

I actually first read this as alkalizing meaning effecting pH level, and I was like, OK I guess...

Technology Will Help Keep Your Smartphone from Becoming Obsolete

I actually first read this as alkalizing meaning effecting pH level, and I was like, OK I guess...

Hottest Wearable Tech and Smart Gadgets of 2022 Will Blow Your Mind

I actually first read this as alkalizing meaning effecting pH level, and I was like, OK I guess...

Things to Look For in a Financial Trading Platform Environment

I actually first read this as alkalizing meaning effecting pH level, and I was like, OK I guess...