Uber pioneered the ride-hailing industry and changed transportation services forever. But its meteoric rise also gave way to the fall of its famously mercurial CEO and co-founder, Travis Kalanick. Mike Isaac, a technology reporter for The New York Times, covered Uber for five years and he poured his insights into a new book, Super Pumped: The Battle for Uber. He joined the Knowledge@Wharton show on SiriusXM to discuss Uber’s ascent and travails. (Listen to the podcast at the top of this page.)
An edited transcript of the conversation follows.
Knowledge@Wharton: Finish this line for me: Travis Kalanick’s leadership was — what?
Mike Isaac: I would say, unstoppably pugnacious and, unfortunately, too aggressive for his own good. That is probably what would be the coda on his era of leading Uber.
Knowledge@Wharton: What made this operation successful from the start?
Isaac: Part of the story of Uber is really about what it takes to be a startup in Silicon Valley in general. From the very beginning, you have to grow your company or your company dies. That’s the story of every startup. I think Uber had to be especially pugnacious just because every market, every single city they were pushing into for their UberX service didn’t really allow it. It wasn’t legal at the time. If you can remember back to 2014, this wasn’t a legal model.
They just sort of parachute in, set up shop and spin up demand from riders until they become indispensable, and cities just have to cave in: ‘Uber is here. Uber is inevitable.’ Repeat that hundreds of times in cities around the world, and then they get to a position where they’re ubiquitous.
Knowledge@Wharton: We saw that here in Philadelphia, which you mention in the book as one of the places where they did this.
Isaac: That’s right. There was the long fight and intense battle with the Philadelphia Parking Authority. The advantages that Uber has, as opposed to the public sector or government, is just the hundreds of thousands of dollars in engineering talent [at their disposal and ability to build] different tools like Greyball that was used to hoodwink authorities and eventually make its way in and embed itself into the fabric of the city.
Knowledge@Wharton: But it’s also a story about the people of the company. You talk about some of the hiring. A lot of people who worked in federal agencies such as the CIA, FBI and NSA ended up coming to work for Uber.
Isaac: Part of working at a tech company, especially one like Uber, is just figuring out how to get around the barriers of the government. Some, like Amazon, Facebook and Apple, can hire legions of lobbyists to descend on Washington, D.C. Uber had to hire lobbyists, but they also had to hire surveillance operatives to figure out how to move into a new city. In some cases, they spied on transportation officials and lawmakers in order to prevent them from using the app to call cars. And they’d impound cars when they were fighting these battles, like in Philadelphia. Or in some cases in China or with Lyft in the United States, they’d spy on competitors. It became this crazy, well-funded espionage operation that was against corporate adversaries.
Knowledge@Wharton: How did the executives at Uber view this kind of activity? Did they see it as trying to break up a monopoly that the cab companies had with the local governments?
Isaac: Yes, absolutely. Now, Uber is so big and everywhere, and it becomes the dominant force. But in the beginning, imagine you’re going up against what Travis Kalanick called ‘the taxi cartels.’ They owned transportation. They’re in bed with local government and have deals already set up. So, in Uber’s mind, in Travis’s mind, this is already a flawed, even corrupt system, and the ends justify the means. Some might say that he got there, and Uber is everywhere now. I don’t know. It’s an ethically questionable pathway, but that’s how they thought about it.
Knowledge@Wharton: Did they believe that they were improving on the cab industry?
Isaac: Yes. It’s hard not to look at Uber in terms of how the product works and just compare it to what it was like before — the experience of hailing a cab. That’s the grand irony of Uber to me. Uber ended up becoming the bad guy, even though people generally don’t love the experience of getting in a taxi all the time. They cannot always be super-nice. They might not always show up. In San Francisco, where I live, it’s a crapshoot whether a cab driver shows up on time or not. So, it’s definitely a big improvement in terms of the technology and experience. It’s just that with that has come a host of other side effects that you can argue are for better or worse. You can talk about labor conditions, how they treat the drivers and a lot of different things with the labor model that has come along with it.
Knowledge@Wharton: Can you talk about how the labor issues and allegations of sexual harassment that led to Kalanick’s ouster?
Isaac: One of the most dramatic parts of this book is the nightmare in 2017 that they had. The book is about Uber, but it really is what Uber stood for in terms of how society viewed technology companies in 2017. I think there was a real reckoning, and I’ve even had to look back on my own coverage. For a long time, it was, ‘Wow, founders in hoodies changing the world, eating ramen and making billions of dollars.’
Now it’s like, ‘Well, maybe Facebook is starting genocides in Myanmar from their Menlo Park headquarters.’ It’s very market-changing in how tech is viewed and how the culture inside of these companies informs it, including this very sexist, toxic masculinity and dominant bro culture that is just now starting to change. Uber was the turning point for that, I think.
Knowledge@Wharton: Kalanick was very much an admirer or Jeff Bezos, correct?
Isaac: That’s right. Bezos, from the near beginning of Amazon, had started these 14 values to shape how the company worked. Travis had his version of 14 values, only they looked like they were run through a bro-speak translation engine. That’s where the title of the book comes from. ‘Super pumped’ was one of Uber’s 14 cultural values, and they evaluated their employees on the level of ‘super pumped-ness’ they brought to their jobs. It was hard to take them seriously right off the bat, and I don’t think they were fully self-aware all the time, but that’s how it informed the worldview of the company.
Knowledge@Wharton: I found the story about Las Vegas very interesting. The company hit a milestone, and Kalanick brought everybody to Las Vegas to celebrate with a Beyoncé concert. After that, he unveiled those 14 ideas that he thought were going to make the company successful. To go from Beyoncé to that is a significant emotional shift for the employees.
Isaac: It shows the lack of self-awareness, I would say. They ended up spending $25 million on that week-long bacchanal. They flew out every employee from all around the world to this retreat in Vegas. It was a milestone to celebrate how many trips they had completed in 2015. And they were like, “All right, we’re going to get Beyoncé.”
It just crystallized this moment of perfect tech hubris and excess. It’s one of the things I tried to open the book with. Then they go from that to “these are our values,” which again is kind of absurd. There were employees I spoke with who were just looking at each other in the audience, going, ‘Is this guy for real? Is this a real thing?’
Knowledge@Wharton: What was his style or relationship with some of the people that he worked closely with? You talk about co-founder Garrett Camp, whom Kalanick credits with the base work on Uber. What about his relationships with venture capitalists?
Isaac: Travis had done two startups before Uber, and he was burned twice before. The first company he did was an early sort of file-sharing Napster company called Scour. He ended up getting knifed by one of his backing VCs. We go into that in the book, but that really informs how he starts to distrust the people around him, especially venture capitalists. It really informs his worldview on how he can approach business.
By the time he gets to Uber, he has this co-founder Garrett Camp, who was mostly hands-off. He created the ideas and gave the company over to Kalanick. The VCs involved in Uber definitely were instrumental early on in helping get Uber off the ground. But by the time that Travis builds this empire, he starts cementing his power and placing safeguards into the corporate charter so that it makes him almost inextricable from the company and very difficult to remove. It shows his lack of trust of people around him and, ultimately, the lengths the VCs have to go through to remove him from the company.
Knowledge@Wharton: When they had the IPO earlier this year, I remember watching the video of Kalanick and thinking that it’s amazing that this guy has had so many issues with this company, yet you forget that he’s still a major stockholder.
Isaac: Yes, 100%. It’s really funny. Everyone I talk to now who has been around him or who was involved in building this company has really mixed feelings around him. On the one hand, many believe that they couldn’t have built Uber without him, and he was very supportive in some ways of people. But on the other hand, he took a wrecking ball to this company in 2017, when he was trying to stay at the top. He ended up doing a lot of damage to the company’s brand as he was holding onto power.
He’s always going to be attached. He still has significant stock holdings. He’s a billionaire many times over, but he’s still on the board of this company. I think Uber is always going to be Travis, and Travis is always going to be a part of Uber.
Knowledge@Wharton: Can you talk about former Google engineer Anthony Levandowski and Kalanick’s effort to bring him over to his company?
Isaac: Anthony Levandowski is this other fascinating character. He was an early self-driving car engineer in the Valley. Google picked him up, and he was just a really brilliant guy, but also a shady maneuverer in the Valley. He had a lot of different things going on where he would have side projects on his robotics and self-driving interests. Ultimately, Google had to buy them from him, even though he worked for Google.
He left Google and started his own self-driving company, but the problem with his leaving is he decided to take a whole lot of files with him out the door that Google claimed were trade secrets, and that he was actually stealing trade secrets. That would ultimately result in an insanely intense battle between Uber and Waymo. Waymo ended up suing Uber, claiming that Anthony Levandowski took them and was going to help Uber defeat Waymo by stealing their property. That case was settled, but Anthony Levandowski was recently indicted by the Department of Justice on 33 counts of theft or attempted theft of trade secrets. The case is still ongoing, and he’s still a crazy character in this whole tale.
Knowledge@Wharton: Now that Dara Khosrowshahi is running the company, do you think Travis Kalanick would have accepted bringing on an outside CEO while he was still overseeing a lot of this?
Isaac: A lot of ex-employees and current employees that I talked to wonder what an alternate version of the future would have been if Travis was still there. Would he have stepped down were it not for the blow after blow of scandals dropping in 2017, some of which were personal and really damning of him and his behavior?
As I get into the book, he has a real personal tragedy with the death of his mother in the middle of all this. I think that was probably the most difficult part for him. He’d been always a fighter and willing to fight through all sorts of intensity and the world really being against him. But he lost one person who was really dear to him, and all of his folks were trying to push him out at the same time. I think that ended up being the thing that made him sort of stand down in the end.
Knowledge@Wharton: There is a lot of discussion about Uber’s business model and whether it will become profitable. Was the profitability of the company a consideration for Kalanick?
Isaac: This is the hilarious, or the grand irony, of Uber: It unlocked an entirely new mode of transportation, of work, of how the world moves about, but it still might not be an actual business or a profitable business ever. There are still very serious questions around his business model.
Back in 2009 under Kalanick, the model was, ‘Stay private as long as possible, and raise as much money as we can.’ They ended up raising over $10 billion in private capital. And that worked for a long time, when they didn’t have super-intense competition. But now they’re fighting battles with competitors that offer a commoditized identical product on multiple continents, across hundreds of cities.
And those competitors are also well-funded. So, when do the subsidies stop? When do you get to a point where you can have people pay the real cost of the ride without slashing driver prices? Dara Khosrowshahi has said that for the foreseeable future, profitability is not extremely close. It’s going to take more time.
Knowledge@Wharton: Can you talk about that piece, about the pay that the drivers are not getting?
Isaac: The levers that Uber has are either raise prices for riders — and that’s already problematic for them, because then the rider could just go to another service or decide to take the bus — or lower wages for drivers. That’s a really hard situation to be in. You have to constantly balance who’s getting paid what, and what that does to your demand.
In California, where I live, Uber is fighting battles on worker classification and if they have to treat them as employees, which could also really disrupt their business model. It’s very difficult for them. They may have unlocked this category of gig economy and gig worker, but the way we look at what labor is and how we treat an employee is still evolving. And that’s going to be a very important thing for them as it plays out.
Knowledge@Wharton: How is the company running now under Dara Khosrowshahi compared with Travis Kalanick? Is it night and day?
Isaac: Yes. I think when Dara came in 2017, Uber employees were crying out for a leader that didn’t have them constantly ridden with scandal. I think Dara kind of came in and was the adult in the room. He was a calming force.
The funny thing I’m hearing now from sources and current and former employees is that maybe Dara is almost too calm, maybe a bit too boring for them, which is kind of ironic. But they miss the thing that they will credit Travis with — this fire and drive to create a world-changing company and push ahead, which is not as readily apparent in Dara’s version of it. So, two years later, things are calm. The building isn’t on fire anymore, but maybe some of them are longing for that hard-charging CEO that started the whole thing.
Knowledge@Wharton: What will be Kalanick’s legacy?
Isaac: I covered Uber for five years and wrote all about it for the Times, when all the scandals were happening. It was hard to see him as more than a one-dimensional character back then, just because of all the stuff that was going on. But I really did want to explore what it means to be a founder, what it was like for him to be a founder, why he created this company in the way that he did, and the positive and the negative parts of that.
Ultimately, I think he wasn’t able to mature in time to grow with the company, and that, I think, is a real lesson for any CEO. But he created something of lasting value that did change the world, and I do think you have to credit him with that, whether you like him at the end of the day or not.
Energy December 31, 2019