Uber is facing the biggest crisis in its history
economist.com
economist.com
> If Mr Gurley and the rest of the board cannot find an experienced candidate willing to work with Mr Kalanick, calls for him to step down may grow louder. But that is his decision to take. Uber is a prominent example of founders’ power at fast-growing tech firms. On its own, Uber’s board does not have the clout to change the CEO, because of his super-voting shares and those of his co-founder, Garrett Camp: together they control a majority of the voting stock.
Well, that's a pretty bad corporate governance problem. The CEO's behavior, and the culture he created at the company, have badly damaged the company's image and driven away senior executives and probably a lot of engineers too -- and yet the board can't get rid of him.
I would certainly think twice about investing in a company whose board is powerless to do anything about such a terrible self-inflicted wound.
You seem to be stating that there's a moral imperative that founders voluntarily give away voting rights to investors.
In the case of Uber, the CEO could run the company into the ground, and nobody would be able to prevent that.
A trend toward worse corporate governance could harm the entire economy eventually.
But, I don't see any reason why founders should be obligated to give away voting rights.
In other words, I would argue that if founder CEO's want that level of control, they SHOULD get it.
It's sort of weird to even phrase it as "get it". They already have it by default, and I don't see why we should have any right to force them to give it away.
In theory if/when Uber goes public, the market can hammer his share price into submission. His choice then would be to step down and keep his money, or watch his valuation rapidly dwindle as low as the market dictates.
At this point I don't know if even a new CEO could save this company.
Honestly I am more concerned about saving the world from this company, because it still looks like they are going to win. Have you seen any signs that Lyft can compete in the worldwide market?
Consider the size of Uber now and compare that to the size of Microsoft 15 years in the DOJ antitrust trial. They are about the same size, that gives them lots of options.
They have always been betting their future on autonomous cars and the Waymo lawsuit stands a good chance to set them back a decade and they do not have the current capital to withstand that.
MS was already public when they had the antitrust lawsuit and was making money. To try and compare MS and Uber is not close to the same thing.
[1] https://www.bloomberg.com/news/articles/2016-12-20/uber-s-lo...
If anything being public hinders options. Being private they can do a huge number of things public companies cannot, first and foremost is an IPO.
The Steve Jobs Apple fired was not the same man that returned to save the company. The caricature portrayal of him with an aggressive, petty, demanding, obnoxious style were all pretty much true back then. If Kalanick is at an equivalent stage, then Uber may really desperately need to get rid of him. Whether he ever vindicates himself and realises a greater potential remains to be seen, but it may well be that remaining at Uber regardless of his behaviour will just feed the negative side of his nature.
On the other hand, sounds ripe for some other company not struggling with the same culture issues nor saddled with the sizable VC debt to come in for the kill.
(Maybe if they offer enough money, it's worth it even if it's a suicide mission? Though "just cash the checks and wait for your inevitable dismissal" doesn't seem like an attractive offer for anyone who's good enough to have alternatives.)
From your comment, I gather that if it were up to you, you'd sentence Uber to death instead of giving them a shot at redemption. You wouldn't be alone in this perspective, but I think you're overlooking the thousands of GOOD people that would be adversely affected and punished by such a decision. All to punish a couple people you believe to be evil.
Not exactly, just that they shouldn't be able to offer them generous golden parachutes.
Of course, I'm not so sure about the legality of this, but perhaps within corporate law a law could be made that companies aren't allowed to promise enormous sums of money to people when they fail to fix the problem, and the company is now in dire financial straits. When the company is having severe financial difficulty, the first dibs should go to anyone it owes money to, not someone they promised a big golden parachute to in case he couldn't turn it around.
>I gather that if it were up to you, you'd sentence Uber to death instead of giving them a shot at redemption.
Absolutely. The good people should have found new jobs by now; all accounts now show this company to be truly toxic, at many levels (not just "a couple people"). They should not be rewarded with a shot at redemption. Now, if they can find someone willing to take on this challenge of turning the company around, who is willing to assume a great deal of risk in doing so (at least risk not getting paid much for it), then that's fine. I just don't think they should be allowed to offer a golden parachute if that person fails. Then, such people can evaluate such offers based on the true risk of the situation, instead of knowing they'll be safely off with their golden parachute if they can't make it work.
The negative impact of such a decision wouldn't just be on Uber employees, but also the 500,000 drivers actively using their app; on average making $30K per year. A large fraction of these people are probably depending solely on this income to make ends meet.
In an ideal world, there'd be an immediate replacement for Uber for all these drivers to switch over. However, we all know that's wishful thinking. At best, capacity would only be halved, which still means you'd effectively be letting go of 250K people tomorrow.
Imo, even if your goal is to enact maximum punishment on Travis and Co, doing so THROUGH punishing the company is a really destructive way to accomplish said task.
From my experience in growth/marketing, I would bet there would be around 50% drop off, but I could definitely be wrong! These things are hard to guess. (Customers need to switch as well as drivers)
Even a 1% drop off leads to 5000 people let go. Anything substantial would lead me to strongly considering other avenues of redemption.
To be sure, I'd want to better understand the magnitude of effect here before saying that sentencing Uber to death is "absolutely" the right thing to do.
Um, all of them? If Uber went under, what choice would they have? Why would customers give up on Uber/Lyft and go back to cabs, when there's at least one company that does almost the exact same thing and is a direct competitor? Why would they refuse to install the Lyft app, when they've already shown they're willing to install the Uber app? And why would drivers not go to work for the competition, esp. with a giant void left by Uber in the market?
I'm sorry, I think your argument is ridiculous. Right now, I'm eating some spaghetti for dinner that I just made. It's made with Brand X spaghettin and Brand A of sauce. Now if either of these brands suddenly went under and disappeared from the supermarket aisles, do you think I'm going to just stop eating spaghetti altogether? That's insane. And even that would make more sense than this Uber scenario. Uber is just a way to get you from point A to point B, and has succeeded so far because it's both cheaper and more convenient, in most cases, than the incumbent services. People aren't going to suddenly stop needing to get transported places without Uber around, nor are those incumbents improving enough to get them back, at least in many places (if they were, Uber would have a large loss of ridership there already). And Lyft is already there (in many markets at least), offering the exact same service as Uber, frequently with many of the same drivers. Why wouldn't people switch? There's only two reasons: 1) ignorace (easily countered with some advertising, plus word-of-mouth from drivers during Uber's last days), and 2) lack of availability of Lyft or other competitors in certain locations (I believe Toronto does not have Lyft for some odd reason). At least with my spaghetti example someone might say they love sauce brand C so much that they just wouldn't bother making much spaghetti without it and would eat other stuff.
I'd guess the difference in our conclusions is based on your belief that these are "easily countered with some advertising".
Most of my background is in paid advertising, and reactivation on defunct company contacts is never close to 100% -- not even close.
Keeping around rotten management because you don't want to disrupt the people below them is always the wrong thing to do, because then you're not fixing the problem, you're letting it fester.
After thinking more about this, I think I actually agree with your argument that we should sentence Uber to death just because it's the 'right' thing to do even if it indirectly leads to unemployment of a lot of people.
However, we started this thread under a shared premise of utilitarianism. If we treat these 'death sentence' decisions on on a case-by-case (i.e. no future precedent set), it's hard for me to believe punishing the 'corrupt management' (which probably only amounts to a dozen individuals) is worth screwing with peoples' livelihoods. At Uber's scale, it just seems like a given that there will be hundreds of people whose lives will be SERIOUSLY screwed, albeit indirectly.
For everyone else, drivers, customers, etc., I really do think they'll just move on to other things and it won't be a big deal. Lyft seems to be doing fine, though it'd be nice if they eliminated the tipping.
Of course, because of the innumerable real-world confounds to the model (not least of which is the artificial-or-otherwise high barrier to entry that most industries seek to ensconce themselves in), this doesn't happen anywhere else, but at least here with novel companies competing in their early stages, I don't see why anyone would bother "saving" a company that will be dragging against you every step of the way you can just invest in one of its competitors and let that dragging force drag your competition down, to your advantage.
If the "capitalism will save us" model can't succeed here of all places, I don't know why people still bother with it anymore.
The problem is finding someone worth paying that much (and the pretense that whether someone is worth paying that much can be determined ahead of time).
This man said that some Uber drivers are trapped by car loans: They are working-class people who took out loans to buy their Uber cars. All cars lose value the moment they are driven off the lot and these cars are driven hard and for high mileage, so their resale value is low. He said these drivers keep working for Uber because they have to try to pay off the loans. (I know nothing else about that story other than what one random driver told me; I'm hoping others can contribute some better knowledge about it.)
It struck me: Not only does Uber treat their workers like contractors and give them no benefits or other employee protections, but they ask (often) working class people to provide Uber's capital. Arguably, it's like General Motors calling factory workers 'independent contractors' and asking them to bring their own machinery. In contrast, taxi drivers lease the cab for a shift, AFAIK; they have no long-term capital investment or debt trap. It's almost as if Uber's main business proposition is a loophole in labor rules that allows them to shift almost all costs onto their own workers.
That said, I hesitate to pile on, even for a company I don't like personally (which is why I take cabs). Let's not let the hype exceed the reality.
EDIT: A few clarifying edits
Medallions?
The medallion owners make a long-term capital investment. The drivers lease the car per shift or per 24 hours, and have no such investment. (As I understand it.)
Does anyone have statistics on this?
Why would the number of taxis need to be controlled? I don't know much about the taxi industry and perhaps there is some good reason for it that I am simply not aware of?
* It's one of those situations where the free market fails. Because anyone with a car can give someone a ride, it creates a race to the bottom and nobody can make money. You'll note that one criticism of Uber is that they create exactly that situation.
* Safety and fraud prevention for customers
Note that the community has an interest in quality transportation, including for tourists.
I've heard this referred to as modern day share cropping.
Check out point #5 https://consumerist.com/2016/05/31/5-things-you-should-know-...
Better article https://www.google.com/amp/s/www.bloomberg.com/amp/news/arti...
Quote from above article
He leased a 2016 Toyota Corolla from Xchange in November, paying $155 a week. Two months later, Uber slashed fares nationally. Soon Hofstede had trouble keeping up with his payments. He went from making $200 in a weekend to $140 in a weekend, he said. "It got to the point that I would drive just to meet my payment," he said. "If you were short on your payment for a week it would roll onto the payment for next week. It starts adding up."
End qoute
I don't get any incentives or bonuses either, just ~75% of the gross receipts from the customer.
While I agree that the service is here to stay, the individual players are likely to shift.
If you really want to go down the rabbit hole I'd recommend reading this series on nakedcapitalism. They're at nine parts now: http://www.nakedcapitalism.com/?s=can+uber+ever+deliver
It's pretty clear Uber is in heavy investment mode, in market expansion as well as new businesses (uber-eats, self driving cars, etc), no one can know what their real costs per ride are unless they can break out that detail.
But it's also clear in their core business their cost to dispatch a ride should only be pennies.
If your reasoning is entirely anecdata, there's really no point in you engaging in threads about where businesses are going, since you'd only ever have something to contribute after it already happened.
If anything Uber will have better margins as they can distribute their fixed costs across more rides due to their global availability.
Have you not been paying attention to Uber? They've been leaking funds like a sieve. Settlements, advertising, more employees, generally more aggressive and expensive tactics.
If I made my living (or any sizeable chunk of $$) off rides, I'd honestly be looking at positioning Lyft first if it was possible.
Obviously in larger cities the taxi model can and does thrive, but as Uber's price goes up, more frugal users comfortable with installing new apps will likely move to other platforms that offer the same basic service minus massive investor pockets to fill, while others might use it as a niche transport service for longer-distance ridesharing or as one of several taxi services in cities.
Autonomous could save the margins there, but imo it's another front that Uber won't be able to afford fighting. Once the subsidizing ends, there'll be no love lost between Uber and users eager/happy to stick it to Kalanick and save a few bucks in the process, nor drivers who might've felt slighted/affronted by his or Uber's treatment of them, nor employees/users who don't care for the company's culture.
Time's running out for Uber; whether or not it survives as a big fish basically comes down to how soon autonomous goes mainstream.
In the meantime people won't switch because of branding. They will already have Uber on their phone and be comfortable with it. It will take a lot to get people to switch. Branding is a huge competitive advantage. Better colas than Coke have been developed for a hundred years and they still grew market share.
Uber will get market rates, whatever they are and will make tons of money because their business model is super efficient. It should only cost pennies to dispatch each ride, they get dollars in revenue from each ride, and are developing huge economies of scale cab dispatch companies have never had.
As soon as they stop investing so heavily on opening new markets and businesses their income statement is going to look a whole lot different.
There's definitely a niche, but it's nowhere near the size that Uber's operating at now; so if they're reliant on that volume or higher for the margin they need they're in for some bad news. Once the price goes up the market will be ripe for new public transportation efforts and less-VC-saddled competitors to fill the void.
I dunno, maybe they'll have more luck in foreign markets. (Though last I read, that wasn't the case either...)
I'm hoping not so he can continue to pay rent.
The only reason I have Uber on my phone is for trips to Ottawa.
To me, a crisis would be if software stopped working as intended.
I think most people's view would change if they were in a situation where tipping makes the difference between being able to pay your heating bill.
Tipping, as it exists in the US, is pretty much a dark pattern.
I think most people hate tipping because they hate when people ask for tips. But a formal tipping system might reduce the number of Uber drivers who already ask for tips.
I tip 22% for full service, 10% for partial. If I go to the bar, I tip 10%, or a dollar/drink if I'm paying cash. If I'm ordering takeaway somewhere, I tip around 5%. I have no idea which of these are reasonable or not, because there is no "tipping class". I have no idea if places I regularly go like to spit in my food because I tip like shit.
Can you explain the math? Why is this amount higher than 20% rather than lower than 20%?
According to who? Certainly many restaurant workers in the U.S. earn most of their income from tipping.
The only way this works over the long term is to force out competition so that they can massively jack up prices, and/or replace drivers with self-driving cars that have lower costs.
If Uber does this and they realize customers are not riding as much anymore, then it is a problem with their pricing and setting of expectation.
Is their any data to back this up? Outside of Hacker News, I don't think I've ever heard someone complain about tipping. I have no problem with it.
Well fuck you too, Economist. That seems like an unnecessary and ignorant jab.
http://www.paulgraham.com/founders.html
There's definitely a sense in which Kalanick's "boundary pushing" is the sort of thing Silicon Valley encourages.
I suppose I just don't like the insinuation that I (or my part of the Silicon Valley community) support that behavior.
This is completely unrelated to Uber's cultural and ethical problems.
My comment was "Actually, that's not true."
Same thing happened to RIM a few years back. None of this is personal. It's just a domino effect.
In what way would other companies fail?
Uber is a glorified cab dispatch organization, desperately fishing around to try to convert some of the insane valuation they enjoy into something more valuable. For years the media has made Uber their darling -- the oft restated misnomer about a "sharing economy" -- giving it what would likely calculate to billions in free press. Retelling the tales about the grand new world for drivers, with endless riches. The new standards of excellence for passengers.
So now the bad parts are the narrative. To dredge up another trite saying, live by the sword die by the sword.
The potential of Uber is a worldwide brand with super efficient dispatch. Do you really think it costs them more than a few cents to dispatch rides? There isn't any cab dispatcher in the world with remotely their economies of scale.
But in the end you've literally said that Uber isn't a cab dispatcher, but they're a super efficient cab dispatcher. Aside from that not being remotely true (their economics are absolutely abysmal), being a worldwide brand is close to meaningless. The overwhelming majority of rides happen locally.
Uber's primary beachhead has been a complete disregard for regulations. This may be justified in many cases, but it led to the corporate culture that is now eating it from the inside.
How many others, besides Kalanick, can you name off the top of your head?
Thought so.
Given the volume of comments mentioning their role in the committee I've seen on HN, I'd say that HN users are probably at least as likely to know about Elon Musk being on the committee (and unlike Kalanick, staying on it.)
And Musk and Kalanick are the two that have been high profile media figures as part of startup media strategy; most of the rest are big blue-chip finance and manufacturing CEO, who despite leading more powerful firms, normally have lower media profiles.
Not a lot of people seem upset about Musk's presence on the committee, or about anyone else's for that matter.
Funny. I'm sure it's all just a coincidence, or karma, or a spontaneous self-organizing feeding frenzy, or something.
Now, Kalanick actually managed to draw more attention by creating additional news by his dramatic resignation, but as far as criticism of the initial decision, I don't see any evidence he was treated differently than Musk; often, the two were mentioned together in both news articles and criticism.
So. What about the other 18 members? Why isn't anyone on HN or elsewhere attacking them?
There are 17 other members.
> Why isn't anyone on HN or elsewhere attacking them?
HN specifically has a tech-industry-startup focus, plus the other people are exactly the kind of people you'd expect to be supporting an authoritarian corporate plutocrat. Their role is a dog-bites-rabbit story.
Uber did those shitty stuff itself. Media did exactly what it supposed to do, to spread the information to a wider audience here.
This pattern of stories about Uber is very familiar and very predictable. It starts with a single, note-worthy story. Based on the reception of that story, other employees (former or current) are emboldened to leak information of their own to the media/write their own blog post/etc. That story feeds another leak, and so on, and so forth. At this point I don't doubt for a second that numerous people inside Uber want Travis gone, and consider the short term bad press to be worth it in order to achieve that goal.
There's no conspiracy here. Just the media reporting things they are told by people in the know. If there were other ways to get rid of Travis (more diverse stock ownership, or, dare I say the word: unions) people would probably go for that route. But when you shut all that off your employees will use the press as a last-resort pressure release valve.
Who is the conductor?
Extraordinary claims and all that. We've had enough of this hand wave-whispering of dark plots for one year.
If you are not going to name the bad actor you think is pulling the strings, don't make the claim.