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In 2009, when the ride-hailing app Uber first started, it was called UberCab. The company was a basic black car service, limited to people in San Francisco who were willing to pay a premium to get driven around the city, according to New York Times technology reporter Mike Isaac.
Since then, Uber has upended transportation throughout the world.
The company has expanded beyond its single-city hub and onto multiple continents. And although it’s struggling now, at Uber’s highest valuation, when the company went private, Isaac says it was worth upward of $60 billion.
“The popular phrase out in the Valley is that Uber was the fastest growing startup in Silicon Valley history,” says Isaac (@MikeIsaac). “And I don't think you can really challenge that.”
Uber had what some called the perfect “product-market fit,” according to Isaac, meaning there were cities with poor public transportation systems that were ripe for the company to come in to fill the void.
“I remember living in San Francisco in 2008,” he says. “You'd have to call a cab and just pray that it would come, whether it did or not.”
However, Uber’s remarkable rise to the top of its industry wasn’t always a clean ride.
In his new book, "Super Pumped: The Battle for Uber," Isaac details the company’s willingness to break rules — and even laws. He also describes the misdeeds that forced the resignation of Uber’s founder and CEO, Travis Kalanick.
“Kalanick, he's a startup guy from the beginning, a serial entrepreneur [who] really cherished this small company spirit and wanted to empower every new general manager in cities across the world to sort of take control of how they ran their local office,” says Isaac. “The drawbacks of that is if you sort of empower this army of bros to kind of take over each city and do what they want, sometimes you can have some really negative consequences.”
Isaac also details the harmful work environment created, in part, by Kalanick's tunnel-vision focus on profits and company growth. He says that in Uber's DNA from the company's start was the desire "to win at all costs." But concerns over harassment — as well as how to build corporate culture and human resources systems — fell by the wayside.
"It was really always about not feeling like a bloated sort of corporate giant that Travis didn't want the company to be," says Isaac. "And while it kept Uber scrappy and lean and able to grow quickly, I think it also came with a lot of side effects that caught up to them in a big way in 2017, as one scandal after another kept breaking."
On Uber’s legally questionable methods for setting up shop in cities, and the pushback from local governments
“Now, Uber is so ubiquitous it's hard to remember for some back when it was actually not legal to operate in many of these cities. So, part of Uber's playbook from the very beginning was to take this service it had called Uber X — which is essentially a way to sign up anyone to, with a car and a background check, to drive for Uber — and push into new cities over and over and in states across the United States and in new countries around the world.
“Sometimes, they would face pushback from the local government. And in this case in Portland, what they had a problem with was a mandate from transportation officials saying, 'If you come into this city, we will shut you down. We will impound your cars. We don't want Uber here yet.' So, Uber being Uber wasn't going to take that lying down, and they had devised this piece of code. ... 'Greyball' was the codename internally. What it essentially did was tagged the apps of official transportation officers, even police officers, and used this code to kind of like hide Uber from these officers … And if you were a transportation official, it would look like the service was too busy or whatever. But in reality, Uber had sort of spotted them and tried to shut the app down before they could ever capture them.
“There were a lot of questions about its legality years later when we uncovered it. But they did that in a number of cities, and it kept the cops and transportation officials off their back, and it seemed to really work.”
On how Uber employees would sometimes bribe local officials
“In some of the markets in Southeast Asia, they started setting up these what are called greenlight hubs, little places where drivers can stop and sort of maintain their vehicles, get checked in suburban areas. And this was not welcome or really legal in the area, so company employees started paying off local police officers in order to help them move traffic through the areas, and that is another sort of detail that was obviously illegal, but then came out later on in a deep investigation of the company. Now, it's a question of whether they broke the Foreign Corrupt Practices Act basically.”
On the violence against drivers abroad
“The story of Uber is really about parachuting into these areas, some of which may have difficult economic or regional cultural issues going on, and then just sort of introducing this new transportation method and new business very quickly. And so, in Brazil, they were in the depth of recession and sort of real deep unemployment issues, and Uber came into the country and got up and running very fast, but also a bunch of drivers were murdered, because it was largely cash-based and drivers kept carrying cash on them as they picked up people. And so, they were basically like rolling ATMs that robbers would go after and sort of pick them off.
“Or in India, for instance, there was just like real unrest around how they treated drivers, and it was hard for drivers to feel really like it was a reliable source of income and service.”
"Now, you have to just wonder whether some of the other unintended side effects — whether it's crumbling infrastructure of public transportation or changing how some cities operate and increasing traffic — if those are worth the innovation that the company's brought with it."Mike Isaac, New York Times technology reporter
On Kalanick’s failed attempts to break into the Chinese ride-hailing industry
“China is this sort of jewel that every Western CEO has always wanted to conquer, especially tech companies [and] software CEOs. Google has had its many different sorts of attempts to break into China — still trying to right now. And so, Travis Kalanick thought he had cracked it. You know, he was going to court the officials. He was going to really spend as much money as he can subsidizing free rides. Now, the problem was that an entire crime syndicate sort of sprung up and started creating many sort of fake ride attempts to scam Uber out of what turned out to be tens of millions of dollars, and ultimately, half of all rides in some cities at one point were completely fake. And that money was just going into the pockets of scammers. But the thinking by Travis and others at the time was, 'We just keep spending, keep spending, keep subsidizing this, and eventually, we'll get into the country.' And ultimately, that didn't work out.”
"I think that's the real sort of irony of Uber is that they really pioneered the category of ride-hailing and ride-sharing, but they might not be the ultimate winner."Mike Isaac, New York Times technology reporter
On the pros and cons of Uber’s development
“I do think that they really did change the world in how they provided transportation where it wasn't before. Now, you have to just wonder whether some of the other unintended side effects — whether it's crumbling infrastructure of public transportation or changing how some cities operate and increasing traffic — if those are worth the innovation that the company's brought with it.”
On Uber’s recent financial woes
“I think that's the real sort of irony of Uber is that they really pioneered the category of ride-hailing and ride-sharing, but they might not be the ultimate winner of ride-hailing and ride-sharing. You have to give them credit that they popularized the service. It's now ubiquitous in most countries around the world. But it might not have a business model that works out for them. They might be losing too much money. They lost more than $5 billion a few weeks ago in their quarterly earnings report. So, even though we can credit them with the rise of ride-sharing, it'll be interesting to see if they are the ultimate winners in the category.
“Things have really changed over the past few years, from say 2009 when Uber was up and running. In the beginning, they were really one of the dominant players in town, both in the U.S. and abroad, and Kalanick's obsession was just with raising money. Like, I would say every few months, they would raise a new round of venture capital, starting around 2014, and they ultimately raised more than $10 billion in private funding to sort of keep this growth engine going.
“What happened was the funding environment changed, and now competitors — in India, in Southeast Asia, in South America, in China — they were all able to raise equally large amounts of money. And now, instead of Uber just sort of spending to grow in the United States, it's burning cash on multiple continents, across dozens of countries, fighting competitors everywhere. And that just is hard to grow a business if you're just constantly burning money to break about even in market share.”
On Kalanick's ability to attract investors
"There's this obsession in the Valley with Steve Jobs and this sort of showman-like pitch, but anyone who's ever met Travis Kalanick knows he really is a true polished showman. He knew how to come in and dazzle potential investors with the rocket-ship growth that Uber had early on. And so, he and his business partner, Emil Michael, eventually set up what they called the "homeshow."
"With IPOs, there's a roadshow where companies will pitch themselves to investors. Instead, they flipped that on its head and had investors come to Uber to beg to be let into the funding rounds. And it worked. ... From mutual funds to giants of private equity to VCs, everyone was just fighting to get into this company, which kept raising money after round after round until it hit a $68.5 billion private valuation, which is one of the highest in private tech companies ever."
On Huffington Post founder Arianna Huffington's role in the company
"Arianna is a fascinating character in this book, and I think in public life too, and she has always managed to kind of find the next trend that is coming up. ... She's always seemed to find what is around the next corner, and she did that with Uber really well and attached to Travis and became this sort of very trusted figure in his inner circle and ultimately gained a board seat. Later on in Uber's history, and as I talk about in the book, there's a pretty brutal board fight where they've trying to remove Travis from the top of the company as CEO, and he felt very close to Arianna as one of the people on his side. And I think she really saw in him like the good qualities that Travis has and his willingness to fight, his willingness to be a powerful entrepreneur and lead his people. And sometimes, [she] probably thought the good qualities outweighed the bad ones."
On Uber's dispute with Apple, and how difficult it was for Apple to discipline Uber
"This goes back to some of the problems that Uber has had in China. There was a big fraud activity problem. Uber needed to find a way to spot fraudsters. So, what they would do is use this specific number called the IMEI, essentially an identification number on each iPhone, and they used this service to fingerprint each iPhone. So, even if a fraudster wiped the iPhone and re-signed up to do another scam, Uber was able to use that fingerprint and identify it and then block them from the service. That seems totally fair game, and it was even a novel way of figuring out how to solve this fraud problem. But the other problem was that eventually fingerprinting became something that was against Apple's rules. Apple's big on privacy, as you probably hear the CEO talk about a lot. And so, fingerprinting devices and attaching identity to a device after it's been wiped is not cool with Apple. So, eventually Uber was caught doing that even after the rules had changed and had to come in for a very tense meeting between Eddy Cue, who heads up iTunes and a lot of cloud services, and then Tim Cook, Apple's CEO himself. ...
"The leverage that I would say that Uber has is that a lot of people use the service, and it's a key component for a long time of why people wanted iPhones, especially when it was an iPhone-only app. That's the sort of delicate dance that Apple has to deal with sometimes: when apps are so powerful that it's hard for them to even discipline them when they're breaking the rules."
"Something changed in the past two years, where folks are starting to recognize the negative effects that tech might have on the world. ... And I think Uber was at the nexus of this flashpoint of anger for a lot of people."Mike Isaac, New York Times technology reporter
On what Isaac believes led to the downfall of Kalanick, and how attitudes toward the tech industry have generally changed
"It was years of turning his head on a lot of practices that were simmering under the surface in the company — whether it was cultural issues or harassment or whether it was questionable business practices that may have broken some laws, depending on your argument. I think also ... 2016, 2017 is this real year of reckoning for tech companies, where say the past 15, 20 years of coverage has largely been in awe of founders who build these giant machines of capital creation. And I think something changed in the past two years, where folks are starting to recognize the negative effects that tech might have on the world. ... And I think Uber was at the nexus of this flashpoint of anger for a lot of people, and especially with all the baggage that it had, it just came to bear it at the exact wrong time for Travis Kalanick. ...
"This is the thing that I think catches the tech industry at large off-guard is that they've been collecting information on how we live and operate and move through the world for years, and no one has really bristled at it until now. And so now, companies — all companies, but especially Uber — they have to scramble to figure out, 'How can we do this in an ethical way while still maintaining our business model?' It's a fine line, and I think every company right now is sort of struggling to figure that out."
Book Excerpt: "Super Pumped"
by Mike Isaac
No one wanted to walk home that night.
It was winter in Portland, 2014, cold enough to need a heavy jacket. Downtown traffic was thick with students, commuters, and holiday shoppers buying gifts. It had snowed earlier in the week; the streets were still slick with rain and melted flurries. White, flickering Christmas lights lined the trees along Broadway downtown, a festive backdrop for the holiday season. But it wasn’t a good night to be waiting around for a bus. The local transportation officers stood outside in the cold— damp, bored, and annoyed— trying catch a ride.
The officers weren’t looking for a cab home. They worked for the Portland Bureau of Transportation and had a mandate: Find and stop anyone driving for Uber, the fast- growing ride- hailing startup. After months of trying to work with city officials to make the service legal in the city, Uber had thrown negotiations out the window. The service was launching that evening, without the bureau’s approval.
For Uber, it was business as usual. Since 2009, the company had faced off against legislators, police officers, taxi operators and owners, transportation unions. In the eyes of Travis Kalanick, Uber’s co- founder and chief executive, the entire system was rigged against startups like his. Like many in Silicon Valley, he believed in the transformative power of technology. His service harnessed the incredible powers of code— smartphones, data analysis, real- time GPS readings— to improve people’s lives, to make services more efficient, to connect people who wanted to buy things with people who wanted to sell them, to make society a better place. He grew frustrated by people with cautious minds, who wanted to uphold old systems, old structures, old ways of thinking. The corrupt institutions that controlled and upheld the taxi industry had been built in the nineteenth and twentieth centuries, he thought. Uber was here to disrupt their outmoded ideas and usher in the twenty- first. Nevertheless, transportation officials were beholden to legislators, and legislators were beholden to donors and supporters. And those donors often included drivers’ unions and Big Taxi, the groups who wanted Uber to fail.
Uber had already tried the nice-guy approach in Portland. Twenty-four hours before, Kalanick had dispatched David Plouffe, an expert political strategist, to smooth things over with city transportation officials. Plouffe was a silver-tongued creature of politics. Many believed his mastery had helped Barack Obama clinch the presidency in 2008. Plouffe knew exactly the right notes to hit with local politicians. He called Charlie Hales, Portland’s affable mayor, to brief him on Uber’s next steps. Hales took the call in an office in City Hall, joined by Steve Novick, his transportation commissioner.
If Hales was a nice guy, Novick was his enforcer. Standing four feet, nine inches tall, with thick glasses and a voice that pitched steadily higher as he got angry, Novick was a bulldog. The son of a waitress and a New Jersey union organizer, Novick was born without a left hand and missing fibula bones in both of his legs, disabilities that enhanced his
pugilistic spirit. After graduating from the University of Oregon with his bachelor’s degree at eighteen years old, he went on to earn a Harvard law degree by the age of twenty- one. He had a sense of humor, too: in past campaign advertisements, Novick branded himself “The Fighter with the Hard Left Hook”— a reference to the metal hook- shaped prosthesis that capped his left arm.
Plouffe opened talks with a friendly overture, letting the two local politicians know that Uber had waited long enough, and with a folksy, familiar tone in his voice— a classic Plouffe touch— said Uber was planning a launch downtown the next day.
“Well, guys, we’re already in a number of suburbs outside of Portland, and there’s just so much pent up demand for our service in your great city,” Plouffe said. Uber’s pitch since Plouffe came aboard was a smart one, populist in tone. The service was a way for individuals to earn money using their own cars, on their own terms, setting their own schedule. It would reduce the number of drunk drivers on the road, improving city safety, and passengers would have another convenient option in places where public transportation wasn’t fully mature. “We’re really trying to provide a service to your citizens here,” he went on.
Novick wasn’t having it. “Mr. Plouffe, announcing that you’re going to break the law is not civil,” he said, his hook digging into the mayor’s desk in frustration. “This is not about whether we should have a thoughtful conversation about changing taxi regulations. This is about one company thinking it is above the law.”
Novick and Hales had tried to tell Uber for months that the company couldn’t just roll into town and set up shop just because it was ready to do so. The taxi union would have a conniption. Furthermore, there were existing regulations that prevented some of Uber’s services from operating. And since ride- hailing was such a new phenomenon, much of Portland’s existing rules didn’t address the practice— laws for Uber just hadn’t been written yet. Uber would have to wait.
It wasn’t as if Novick and Hales were being inflexible. Hales had promised to overhaul transportation regulations upon entering office. Just a few weeks prior, Portland was one of the first cities in the country to draft rules that allowed Airbnb, the home- sharing start up, to operate legally within the city’s confines. And for more than a year, the hope was that such a forward- thinking city could do the same with ride- sharing.
But Portland’s good intentions weren’t delivering on Kalanick’s time frame. Now, the two sides found themselves at an impasse. “Get your fucking company out of our city!” Novick yelled into the speaker phone. Plouffe, the charmer, was silent.
Uber’s nice- guy approach hadn’t worked. But it wasn’t designed to. Over the previous five years, the company had grown from a startup employing a couple of techies in a San Francisco apartment to a burgeoning global behemoth operating in hundreds of cities across the world. It had done so by systematically moving from city to city, sending a strike team of employees to
recruit hundreds of drivers, blitz smartphone users with coupons for free rides, and create a marketplace where drivers were picking up passengers faster than the blindsided local authorities could possibly track or control. This was the plan for Portland as well, no matter what the mayor and his enforcer had to say. And Travis Kalanick was tired of waiting.
Six hundred miles south of Portland, at 1455 Market Street in San Francisco, Travis Kalanick was power- walking around Uber headquarters.
The thirty- eight- year- old chief executive was a pacer. Pacing was something he had done for as long as any friends of his could remember; his father once remarked that a young Travis had worn a hole in the floor of his bedroom from all the pacing. The habit didn’t dissipate with age. As he grew older, Kalanick leaned into it. Pacing became his thing. Occasionally, when taking a business meeting with an unfamiliar face, he’d apologize and stand up— he had to pace.
“You’ll have to excuse me, I just gotta get up and move around,” Kalanick would say, already out of his chair. Then he would continue the conversation, full of kinetic energy. Everyone inside Uber headquarters was used to Kalanick doing laps around the office. They just made sure to stay out of his way.
Uber headquarters was specifically designed with Kalanick’s pacing in mind. The 220,000 square feet of office space in the heart of San Francisco included a quarter mile of indoor, circular track built into the cement floor, which weaved through rows of standing desks and shared conference room tables. The track, he would say, was for “walk and talks.” Kalanick liked to boast that during the course of any given week his walk and talks would take him 160 laps around the quarter- mile track, the equivalent of forty miles.
This was not just any walk and talk. Portland officials had been stalling on new transportation regulations for more than a year. Now Uber was going to launch in the city, without the mayor’s consent. They didn’t have time for city officials to get their act together and write new laws. “Often regulations fail to keep pace with innovation,” an Uber spokeswoman would later tell reporters of the Portland incident. “When Uber launched, no regulations existed for ride- sharing.”
The problem wasn’t Uber’s black car service, which functioned well in a number of cities because it adhered to standard livery and limousine service regulations. The problem was UberX, an ambitious, low- cost model that turned nearly anyone on the road who had a well- conditioned car and could pass a rudimentary background check into a driver for the company. Allowing random citizens to drive other people around for money opened up a slew of problems, most notably that no one had any idea whether or not it was legal. At Uber, no one really cared.
Kalanick didn’t think much of the nice- guy approach to dealing with cities. He believed that politicians, when it came down to it, would always act the same way: they would protect the established order. It didn’t matter that Uber was transformational, a way for people to catch a ride from a stranger with just a few taps on their iPhone. The new model pissed off the taxi and transit unions, and those people would flood the mayor’s office with angry phone calls and emails. Uber, meanwhile, would happily rake in the cash, and do so with a groundswell of public support from locals who loved the ease and simplicity of the service.
Kalanick was done waiting. It was time to go. He gave the word and Uber general managers on the ground in the Pacific Northwest got the message: Protect the drivers, trick the cops, and unleash Uber in Portland.
The next evening, Erich England was waiting in front of a historic venue, the Arlene Schnitzer Concert Hall, along Portland’s storied Broadway strip. He was glaring down at his phone, refreshing his Uber app.
England was not a concertgoer: he was there to bust Uber. Posing as a fan of the symphony looking to catch a car home, the Portland Transportation code enforcement officer had opened the app hoping to find a driver seeking new rides.
After the phone call ended with Plouffe, Novick had sent out marching orders to his staff: Go catch the drivers. After an officer like England successfully hailed an Uber, he would write the driver thousands of dollars in civil and criminal penalties— lack of proper insurance, public safety violations, required permits— and threaten to impound the vehicle. Novick knew he might not be able to stop the company, but at least the City of Portland could slow them down a bit by scaring off their drivers. Local press showed up to document the action.
Uber was ready. Whenever it entered a new city, the company used the same, reliable approach. Someone from Uber headquarters would travel to a new city and hire a local “general manager”— usually a fired- up twentysomething, or perhaps someone with a scrappy, startup mentality. That manager would spend weeks flooding Craigslist with want ads for drivers, enticing them with sign- up bonuses and thousands of dollars in cash for hitting milestones. “Let drivers know they get $500 cash when they take their first ride on UberX,” the advertisements said. For the most part, the GMs placing these ads had little professional experience, but that wasn’t a problem for the company’s recruiters. Uber only expected that new field operations staff have ambition, the capacity to work twelve- to fourteen- hour days, and a willingness to evade the rules— even laws— when necessary.
Excerpted from "Super Pumped: The Battle For Uber" by Mike Isaac. Copyright © 2019 by Mike Isaac. Republished with permission of W. W. Norton & Company, Inc.
This segment aired on September 3, 2019.
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