How Uber Backers Orchestrated Kalanick’s Ouster as CEO
wsj.com
wsj.com
"How did you go bankrupt?"
"Two ways. Gradually, then suddenly."
Without diminishing the impact of Susan Fowler's blog post, Uber has already been "going bankrupt" slowly for years before this point.
I has been surreal watching this unfold, but I'd hesitate to compare it to the butterfly effect - unless we're talking about many, many butterflies over a long period of time ;)
I do hope that these events have inspired companies to pay more attention to their workplace and culture - festering problems like these are easy to ignore, but reveal their consequences suddenly and severely.
The point of the butterfly effect is that every small input magnifies so much in a chaotic system over time that you won't be able to predict it correctly if you miss any detail, even one so insignificant as a single flap of a single butterfly's wings.
The moral being that a chaotic system is fundamentally unpredictable in detail, and can only be predictable in averages and aggregates. (So we can predict climate, but not weather.)
I am, in a way, pleased to see this happen from a personal standpoint. As an admin at a previous organization I had reported harassment, abuse, and bullying directly to HR multiple times from several of the top sales executives. Calls and emails were logged, documented and sent.
Not long after, I was terminated.
Oh, please. Some argue that those drivers are employees, some argue that they are contractors providing a low-level service, but calling them "entrepreneurs" really is a bit of a stretch.
Except McDonalds can't make you pay for your own fry station. Or lease it from McDonalds at high rates:
For examples, Experian estimates the average weekly payment for a new car
lease is $96, while a 2013 vehicle through Xchange costs $130 a week.
[...]
After reviewing the terms of one lease, experts estimate that a driver would
pay $25,210 plus $5,000 for the residual value for a 2015 Honda Civic, far
more than the Kelley Blue Book fair purchase prive of $18,142.
https://news.ycombinator.com/item?id=14577840- McDonald's forcing people to buy a special salt shaker
"In early September, McDonald’s announced it would start offering all-day breakfast across the U.S. Customers will soon be able to order a limited selection of breakfast items past the usual 10:30 a.m. cutoff. That will require changes in the restaurants, such as finding room on the grills for eggs and in the fryer baskets for hash browns when most customers are ordering burgers and fries. Those changes cost money—including a potential $500 to $5,000 for equipment—that will fall mostly on franchisees."
https://www.bloomberg.com/features/2015-mcdonalds-franchises...
Whether their calculations will pan out is another story. Whether such tactics should be allowed - yet another.
The Uber model is anti-econonmy-of-scale. It is a non scalable human wave approach.
For investors, the promise of profitability is continually just over the horizon, as long as you keep investing money. Everyone can see the company is potentially very profitable, but nobody can see a route there.
Though for the drivers, it looks a lot like a multi-level marketing scheme. Be your own boss, choose your own hours, work hard and you will be rich.
I always believe their intention was to become big enough and ubiquitous enough that they could become a monopoly supplier and therefore set profitable prices without the risk of being undercut, having consumed or removed their competition through subsidised rides.
I don't know, if this is true then they could have expected that some of his innovations may backfire.
- reduced drunk driving rates by 1/3
Not going to argue with that one, it is good.
- enabled nearly 200K drivers to become entrepreneurs
I used to work in direct sales, aka multi level marketing. They too called the people there "entrepreneurs". Those very people your describing as "entrepreneurs" have been suing Uber for missing money. When confronted by one of these drivers about money Kalanick embarrassed himself. It is a gig, barely a job and not "entrepreneurial"
- provided a valuable service to millions of customers
So do tobacco companies, but we wouldn't qualify that as something good. Doing buisness and having customers requires that you do this.
- Accelerated the shift to self driving cars. That deserves serious credit.
Newco/waymo lawsuit? Is that what your suggesting? The only one who is getting close to this in a meaning way is tesla. They are the only ones with the data and the drive to do it.
Lets talk about other things uber has done
- sexual harassment issues (theres a lot here unpack it at your leisure)
- India rape case and the file floating around corporate offices
- Its creepy data surveillance programs
- Its programs to avoid law and code enforcement (greyball)
- Its program to track lyft drivers (hell) also totally counter to the "entrepreneurs" idea of them
- Its continued flouting of regulation and the law (just file the paperwork like everyone else)
These are the less than stellar things that uber has done to burn through investors money in an attempt to secure their market share. Was it needed? I don't know? Does it paint a pretty grim picture that Uber is a company that is willing to do anything to get ahead? It sure looks like it. Kalanick is the ONE constant in all of this, for him to be unaware of all or most of this would make him derelict in his duties as CEO, for him to be aware of all of it doesn't make him look like a good human being.
The icing on the cake is the lactation room incident (see: http://www.mercurynews.com/2017/06/08/uber-ceo-does-a-riff-o... ). At this point we go from sketchy possible evil CEO to something that looks like it is right out of HBO's Silicon Valley, only in the show the scene would end with him throwing out a woman who was using the room for its intended purpose to put a fine point on its insanity.
Kalanick might have done a lot of good, on a lot of fronts, he also might have been aware of all of the above and either done nothing or actually encouraged it. Uber might succeed, but at this point it is living under a microscope and the odds are that it will be one of the biggest private implosions in the valleys history.
Is it purely a price sensitivity thing? Is it a simplicity/convenience thing? Is it just because summoning an Uber became hip among a certain demographic whereas taxis weren't? It would be useful data because there are possibly useful public policy responses that could address why people drive drunk in some cases.
[1] https://www.nytimes.com/2017/04/07/business/uber-drunk-drivi...
- Accelerated the shift to self driving cars. That deserves serious credit.
If you consider corporate espionage and theft of IP "accelerating the shift" but how much of what Uber was marketing were they actually responsible for?
Yup. Telling grunts that they're "entrepreneurs" as an excuse to not pay them is a very old scam.
Back in 2010-2011, I was unemployed, and I was constantly getting messages (mostly via CareerBuilder) from life insurance companies saying they had sales positions for me. They sounded sketchy, largely because they were all hitting me up when I had no sales background whatsoever, so I looked some of them up.
The reports were... not pleasant. Ripoff Report was full of complaints about these companies [0]. Some examples:
- You had to pay to receive training.
- You are expected to drive around to lots of places as part of your job, at your expense.
- You are legally classified as a franchise, so they don't have to pay you like an employee.
- Compensation is 100% commission, plus the money you make by recruiting other people (pyramid scheme much?).
- People complained that their job largely consisted of repeatedly harassing unionized companies who went with the life insurance provider associated with their union. They were ordered to attempt union busting as part of their job.
- Sales goals were set up to be impossible to meet, you are given no support whatsoever to help you reach your goals, and the people above you in the pyramid would frequently berate you, call you an idiot, and tell you that you're a hopelessly terrible salesman.
Oh, and here's the real kicker: once they got wind of people using Ripoff Report to complain, they would astroturf fake reviews. The reviews are often striped: every negative review is immediately followed by a positive review accusing the previous reviewer of having a personal vendetta against the company because they sucked at being an entrepreneur and didn't know how to grow their own business and said that they were just jealous of all the successful entrepreneurs the company has grown.
[0] Here's one of them: http://www.ripoffreport.com/reports/liberty-national-life-in...
Hardly true: http://fortune.com/2016/07/28/uber-drunk-driving-study/
> enabled nearly 200K drivers to become entrepreneurs
Going self-employed doesn't make you an entrepreneur.
> provided a valuable service to millions of customers
Looks like true: http://fortune.com/2016/10/20/uber-app-riders/
> accelerated the shift to self driving car
Not true. Uber's entered the game very late and since then lagged behind most of the competitors in this space: http://uk.businessinsider.com/the-companies-most-likely-to-g...
I think that apart the "less drunk drivers", "entrepreneurs", and all that fandom talk, Uber went ahead to bump heads with one of the most "exclusive" professions (taxi drivers are the favorite voters for any government), and managed to carve out a portion of their business, out-of-nowhere.
It's like, me starting a soft-drink company and, take on Coca & Pepsi and carve out 10% of their sales globally within 5 years.
They, of course, achieved this "by hook or by crook" but hey you need a ruthless team to succeed this.
Business-wise, a job well done.
Sexism, rape, stealing, avoiding taxes, etc... a big fat NO - thou shall not pass.
Closest aggregator of data I found seems to have a very anti-ride-sharing view ("We are an initiative of the Taxicab, Limousine & Paratransit Association"), but here it is nonetheless: http://www.whosdrivingyou.org/rideshare-incidents
This case had an even worse history than I thought though:
Uber had investigated the complaint, obtained her medical records and speculated that she made up the claims to hurt the firm's business.
So Uber also steal peoples medical records, and only fired the guy who instigated that after it became a news story: http://www.bbc.co.uk/news/technology-40196055
https://www.bostonglobe.com/metro/2017/04/25/boston-uber-dri...
http://nypost.com/2017/05/10/uber-driver-accused-of-kidnappi...
This has a list of sexual assaults (both Uber & Lyft): http://www.whosdrivingyou.org/rideshare-incidents#sexualassa...
No. They damaged the move forward with self driving cards by putting them on roads before they were ready and without permission and breaking the law. Not to mention the part about how it's all using stolen tech.
It is productive to discuss how founders like Zuckerberg and Kalanick retained majority voting rights, because that's meaningful even if you use a pithy definition of control that makes it virtually impossible to achieve. Similarly we can talk about the class of shares Snap issued which do not allow shareholders to control the company.
When you abstract legitimate insights like "executives at pre-profitable/public companies can't rely on voting rights for security" to "no one has control as long as customers are a thing", you preempt a lot of very useful discussion. You've defined away the controversy.
My company over the years has transitioned from no employees, to employees, to no employees again, and back to employees. The only time I have been in control (despite having 100% ownership) is when I have had no employees.
When you are thinking about starting a business the decision to employ or not is even bigger than deciding to take in investors.
"The culture at Uber is Toxic."
I keep hearing this. Yes, there are clearly some sexual harassment issues, I'm not sure it's systemic. I lived a couple of blocks from Uber's HQ's on 10th/Market and I went to lots of meetups there. People I met were happy and proud of the company.
As for the rest of the events, such as Greyball, etc. I don't consider that toxic, I consider that disruptive. Had Uber not have done that, the lobbyists for the Taxi industry would have kept the status quo.
It was Uber, pushing hard, that changed the world, for the better. That's how the world changes, people pushing hard and breaking the rules when they know the rules are wrong.
I also personally worked with Travis and I know his personality. He pushes hard, he works hard, he wants to win. That may be because he's had some really tough losses too (Scout, RedSwoosh [1]). I have a lot of respect for him, being an entrepreneur is tough, especially when it's raining.
[1] Although he had an exit, it was a slog ~7-year slog where he lost funding and was, at one point, alone.
Uber makes an app that lets you hail a cab, or lets you drive people around without buying a medallion.
If you used Taxi's for primary transport and now use Uber, it changed your world for the better.
"How about gun violence, domestic violence, cancer, diabetes, rape, systemic racism, drug overdose?"
Those were not part of Uber's goal, it doesn't mean they didn't make the world just a bit better. I could say the same thing about Google or Apple. They have also changed the world but haven't addressed those issues. The difference is there wasn't regulation preventing a Google or an Apple from growing. Uber was challenging a broken system of laws protecting an industry.
https://techcrunch.com/2017/04/24/uber-hell-lawsuit/
http://money.cnn.com/2014/08/11/technology/uber-fake-ride-re...
[1] http://mentalfloss.com/article/30140/acdc-tesla%E2%80%93edis...
Regardless of whether anyone else did it, do you think these are examples of Uber making the world a better place and breaking rules that shouldn't exist?
You're not really asking a question, you know that anti-competitive behavior is not making the world a better place, it's fighting for market share and dominance.
Anti-competitive behavior is often rewarded in our society with higher profits, valuations, and market dominance. For example, Microsoft forcing PC makers to use Windows 95, or Microsoft using Windows to push IE crush Netscape. Look at Google pushing Chrome via all its products to take 70% market share, much of it from Mozilla, or Google downranking Yelp to push its own products.
Dangerous position to take. This is pretty much saying that the ends justify the means, given enough time. That because winners write history, that in the moment, doing whatever it takes to win is more important than operating ethically.
> intentionally sabotaging competitors?
This only underscores that Uber is a fairly large company. The only difference with every other large company is that not only did Uber get caught, they also sported a festering PR problem which worked as an amplifier.
I agree that unusually bad PR has amplified the consequences, but again that's irrelevant to examining the culture of the company.
What I tried to point out is that actively sabotaging competitors has nothing to do with company culture, toxic or not. It's simply an aspect of a company being reasonably large (iow. they have resources to effectively use underhanded tactics).
I have no doubt that Uber's culture is toxic. (And I do admit to some glee observing them get raked over coals.) But engaging in sabotage is, for me, a null signal in that regard. The capacity for that is simply a result of being large enough.
Uber has lobbyist now, working to change laws to benefit what they want to do, i.e. no fingerprint background checks for drivers in Austin see: https://www.curbed.com/2017/5/18/15657684/uber-lyft-austin-t...
From the above article "nonprofit Texans for Public Justice says the companies has spent more than $2.3 million on an army of 40 lobbyists."
Is it right for Uber to use lobbyists to push for laws that limit background checks?
>>It was Uber, pushing hard, that changed the world, for the better. That's how the world changes, people pushing hard and breaking the rules when they know the rules are wrong.
No, Uber does not care whether rules are right or wrong, does not care about making the world better, it only cares about how things will affect the bottom line, case in point: Uber's behavior in NYC.
We should know by now, that Uber had to make payments for short-changing drivers on pay, companies truly interested in making the world better, don't mistreat their partners see: https://theoutline.com/post/1780/uber-hasnt-changed
In regards to rules, Uber did not pull out of NYC, yet NYC has tougher regulation than Austin. It rarely get’s reported but the only NYC regulation that was changed that helped Uber was allowing drivers to use smartphone apps for ride hailing. The other more expensive regulations remained. Not only do drivers have a relatively expensive background check process, but they also have to pay to register as a driver. All potential drivers are required to take several classes and pass several tests to become professional Taxi drivers. There is literally no legal ride sharing in NYC, all Uber drivers must be professionals. An important part of Uber strategy is winning NYC, NYC does not need Uber. In the end Uber is like most businesses, it is not about making the world better, it is about making lots of money.
I'm not really sure this is a good measure of the toxicity of a company's culture, since it's not even close to a fair sampling of the people there.
Perhaps you and your friends live inside that space. The people who regard the purported toxic environment as toxic are either not allowed in that space, or are conditioned to hide their beliefs.
You can bury your head in the sand (and think back on all the fun you had at those boozy meetups), but the brunt of evidence now made public so far - and ultimately, the recent actions of Uber's board itself - clearly indicates otherwise, this issue.
You don't just publicly fire 20 people - and ultimately, the CEO himself - for nothing, after all.
That's how the world changes, people pushing hard and breaking the rules when they know the rules are wrong.
Keep drinking that Kool-Aid, man, and drink it deep.
There's plenty more where it came from.
"Getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life."
/s/John Sculley/Steve Jobs/
He did not change how transportation works. He got where he is through a combination of luck, good timing, and criminality masked as 'disruption'.
Have you ever spoken to an African American what it's like to hail a cab? Read the estimates on the number of drunk drivers taken off the road?
WHat's more, is that any founder or CEO who doesn't embrace this reality should not be made CEO.
Enlighten us, which competitor made such a claim?
Uber does have a strong competitor in India, a local company called Ola Cabs.
Plus, it's not the orchestrator of the rape who is in question anyway. It's Kalanick's response, involving the alleged acquisition of the woman's medical records without her consent. And if true, that speaks to some despicable moral compass within Uber. Which isn't news anyway.
" Uber executives discussed the possibility that the rape could be tied to one of its competitors in India — such as a taxi company or Ola, the largest Indian ride-hailing company — as part of a plan to sabotage Uber’s momentum in the region. One day after the rape was made public, Uber was banned by officials in New Delhi. "
https://mobile.nytimes.com/2017/06/15/technology/uber-india-...
Uber may have been paranoid, perhaps because they know how easily they'd do such things? Or due to their general attitude?
> By Monday of last week, Benchmark had found four additional investors to sign the letter, including First Round Capital; Lowercase Capital; Menlo Ventures and Fidelity Investments, according to people familiar with the matter. Benchmark’s Mr. Gurley attempted to get other board members to sign, but at least one refused out of reluctance over being represented by Mr. Gurley, according to one person with knowledge of the matter.
PS the rest of the Uber story is IPO in 5..4..3..
Or is there some way to IPO without outing exactly how much the burn to date has been subsidizing rides?
Aha. Now I think this makes more sense.
Their software might scale and business model replicable across many cities, but they still need people on the ground running.
It's easy to think everything is handled online via digital advertising, but ops-heavy businesses like this require bodies on the ground.
I'm guessing they decided that any valuation damage will only be short term. I suspect they are right.
Could also probably modify some header or something to achieve the same thing.
www.ReadAcrossTheAisle.com
See my response to a sister comment for more details!
To be honest, I've been surprised at the interest this project had received from major media companies. We actually were almost acquired by a large media company that wanted to build a new brand and put Read Across The Aisle as a central part of it.
The reason that permissions are needed is that the extension monitors how long you read on each website. But that data never leaves your computer — it's just used to compute the stats we show you in your dashboard.
Read Across The Aisle is related to my main startup, BeeLine Reader, and it was just something we did for fun, and to help with polarization of news consumption.
window.location.href='http(s)://m.facebook.com/l.php?u='+encodeURIComponent(window.location.href);"Man I can't believe you got our money in there, we're gonna be rich!"
to
"$&?@! our money is in Uber? We're going to lose our shirts. Do something! Now!"
The VCs on the board had no other choice but to kick Kalanick out of the CEO job.
But once they get Sandberg in there, combined with Huffington on the board, and Boz St John on the exec team, the press is going to love it. It's a new day at Uber, Uber goes from harass-y to classy, all that stuff.
In fact, this is a brilliant pattern: start by winning with shitty, extortionate tactics. When everyone eventually, inevitably hates you, fix the image problem by replacing leadership with a more optically-appropriate team. Continue as before.
And why not? Do investors care who is ostensibly in charge, as long as the wheel keeps turning? They do not. Employees love that action has been taken, voices have been heard, wrongs have been righted. Plus, now they don't work for just another bunch of white dudes like everywhere else in tech. Press is all about it, of course.
It's smart!