Could sexism allegations and political boycotts spell the end for Uber?

Travis Kalanick’s taxi app is a $70bn global disrupter — but with sexism allegations swirling and political boycotts, Richard Godwin asks if controversy could drive it over the edge
AFP/Getty Images
Richard Godwin3 March 2017

"It's hard to be a disrupter and not be an asshole,” was how one early investor described the singular charm of Uber CEO Travis Kalanick. Ever since he launched the paradigm-shifting taxi app in 2009, the pugnacious Californian, 40, has not shied away from confrontations with unions, authorities, safety campaigners, even his own customers as he has “disrupted” his way to 600 cities, 40 million monthly active users and a $70 billion valuation. However, this month Kalanick may have realised that being an asshole only gets you so far.

Uber was already facing the #Delete Uber campaign that lost his app 200,000 users last month, as well as a Google-funded intellectual property lawsuit over its driverless car subsidiary and mounting claims of sexual harassment at the company’s San Francisco HQ. Rivals such as Lyft have been steadily gaining users and investment, while Kalanick was forced to stand down from Donald Trump’s business advisory council to placate his largely liberal, urban customer base. Then Bloomberg published a video taken by Kalanick’s very own Uber driver and we had a perfect storm of bad publicity.

It’s shortly after a Super Bowl party on February 5. Kalanick makes awkward chat in the back of an Uber Black, the executive class of Uber, with a couple of women who don’t seem to know him very well. (“You’re a Leo?”) One of them has heard that Uber has had a hard year. “I make sure every year is a hard year,” Kalanick says. “That’s kind of how I roll… If it’s easy I’m not pushing hard enough.”

Then he gets into a conversation with the driver, Farwi Kamel, who has been driving Uber Blacks since 2010. Kamel complains that Uber’s habit of dropping its prices is making life chaotic and unpredictable for people like him. They don’t call the precarious conditions of the modern labour market the “Uber economy” for nothing after all. “People are not trusting you any more. I lost $97,000 because of you. I’m bankrupt because of you. You keep changing every day.” Kalanick disputes his claims. Kamel argues back. Kalanick loses it. “Some people don’t like to take responsibility for their own s**t,” he shouts. “They blame everything on somebody else.” Don’t you just hate people who do that?

Kalanick was forced to issue a grovelling apology on Uber’s website this week, declaring it was time to “fundamentally change as a leader”. “This is the first time I’ve been willing to admit that I need leadership help and I intend to get it.” But what this means is open to interpretation. Will he seek a new deputy, move sideways — or just do a bit of yoga and mindfulness? And having brought Uber so far, is he still the right person to oversee the promised transition to driverless cars and finally come good on the billions invested in him?

Brad Stone is a Bloomberg Technology editor whose recent book, The Upstarts, charts the rise of Uber and other sharing economy companies. He disputes the idea that investors will be panicking at the content of the video — but they will be alarmed at the reaction to it. “The video really confirms what we all know. The reason Uber has succeeded is because Travis is combative and charges forward and likes getting into these arguments. He wasn’t wrong, either, that the reason Uber has the lowest prices is to compete in a competitive market. But he’s the CEO of a $70 billion company. He needs to be more astute.”

The confrontation underscores the difference between companies such as Uber, which make things happen in the physical world, and companies like Google and Facebook, which operate online. “It was never a concern that Larry Page or Mark Zuckerberg would get into a battle with a member of the public because this wasn’t the world they were operating in,” says Stone. “They didn’t have a whole bunch of drivers whose livelihood depended on them. That means Kalanick has to be diplomatic and disciplined in a way that these other CEOs do not. If you look at Brian Chesky [co-founder of Airbnb], he’s very tactful when he’s out there talking to hosts. But Travis is just not capable of that level of decorum.”

Row: Uber CEO Travis Kalanick argues with one of his drivers
Bloomberg / YouTube

Indeed, for many long-time Uber-watchers, the surprise is that anyone’s surprised. “It’s a little like people who are only now upset that Trump is actually going to build a wall — it’s what he’s been saying all along!” says Douglas Rushkoff, author of Throwing Rocks at the Google Bus, a fiery critique of the scorched-earth growth strategies adopted by companies such as Uber.

“The fact that people are slowly becoming aware of the damage caused by Travis’s singular vision is a natural course of events,” he continues. “If you put oil companies in charge of energy policy, you end up with climate change. If you let bankers decide how money circulates, you end up with money accumulating up at the top. Here you have a guy who has vowed to use technology to drain marketplaces and generate stock value, and that’s exactly what he’s doing.”

Still, Uber has weathered adverse publicity in the past — from reports of its staff “prank” ordering 5,560 taxis from arch-rival Lyft, to claims that its American drivers are paid less than minimum wage. It has also invested considerable resources into lobbying for sympathetic treatment. The company’s head of policy is Rachel Whetstone, former darling of the Conservative Right and wife of David Cameron’s former adviser, Steve Hilton. (Kalanick reportedly refers to her as “the most powerful woman in Silicon Valley”). Kalanick, whose net worth is $6.3 billion, has also cultivated an elitist image that many see as outright “douchey”. He boasted to GQ about his success with women (“Yeah, we call that the Boober”) and has been accused of mishandling claims of sexual harassment by drivers.

Uber taxi protests

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He has relied in the past on Uber’s undeniably brilliant technology to retain customers. However, the recent #DeleteUber episode is a sign that he may not be able to count on it. The hashtag gathered momentum as reports circulated that Uber was taking advantage of the anti-Trump protest around JFK airport in the wake of the Muslim ban. Kalanick had already issued statements of solidarity with Uber’s Muslim drivers, but the perception of Uber as the sort of company that would do that sort of thing was enough to see 200,000 deletions. Meanwhile, Uber’s closest America rival, Lyft, donated to the American Civil Liberties Union and quietly rose up the download charts. It is looking to expand to London soon.

More alarming is the detailed account that a former Uber engineer, Susan J. Fowler, recently posted on her website under the title “Reflecting on one very, very strange year at Uber”. She describes being propositioned by a male boss, and a depressing cycle process of denial and retribution from the human resources department when she complained. Another female Uber employee has anonymously posted similar claims — while Kalanick recently fired a senior engineer, Amit Singhal, as he hadn’t disclosed that he had previously left Google following sexual harassment allegations. Ellen Pao, venture partner at Kapor Capital and former Reddit CEO, was among the senior Silicon Valley figures to condemn the discrimination that is rife in the tech industry. “The fact that tech is this broken doesn’t give any company a free pass,” she wrote in Time magazine. “We see you, Uber.” The reputational damage is no small thing in the hyper-competitive tech jobs market, where skilled engineers are in high enough demand to vote with their feet. And Uber is a company whose business model rests on persuading women to get into strangers’ cars late at night.

Uber Creator: Travis Kalanick

Meanwhile, it’s not as if Uber’s investors are actually seeing a return (unlike Snapchat’s, who made billions from the Los Angeles firm’s initial public offering this week). Kalanick is following the route laid out by his idol, Jeff Bezos of Amazon, who always put expansion before profitability — though some feel he may have to settle for being a company worth tens of billions as opposed to hundreds of billions. “The Uber investors that I know really just want the company to get to IPO as quickly as possible before it implodes,” says Rushkoff. “I’ve appeared on TV shows and podcasts that are produced by companies with large stakes in Uber. Before I go on, they’ll often say to me: ‘Could we not refer to Uber on the show, please?’ It’s as if they want to stave off the inevitable until they get their payday.”

There are compelling reasons for delaying that payday, however. If Uber manages to achieve what’s known in tech as “total platform domination” — all rivals extinguished, black cabs a thing of the past — it can start setting the price where it wants, since drivers and riders alike will have nowhere else to go. Then come driverless cars — no risk of awkward, uppity exchanges there. But this is why Uber’s biggest problem could be the lawsuit filed last week by driverless truck start-up Waymo.

Image: Mark Warner/Flickr

It alleges that a former Google engineer, Anthony Levandowski, secretly downloaded 14,000 files before leaving to found his own self-driving truck start-up Otto, which Uber acquired last summer. Uber is yet to file a counter-claim, and such suits are common in Silicon Valley (as you’ll know if you’ve been watching the sitcom Silicon Valley). However, Google — itself an early investor in Uber — doesn’t usually throw its weight around in this manner.

“This is not an industry where they can slow down,” says Stone. “If Uber become less aggressive, it will be Google or Tesla who invent driverless cars — then Uber will be worth nothing. But if they don’t install the right guardrails, then there’ll be more stories of the kind that you’ve been reading about over the next couple of weeks.”

For Rushkoff, Uber will face an even bigger problem if it succeeds. “Uber economy” has become a general term to describe the casualised jobs market of the 21st century, much as “Fordism” described the prevailing contract between capital and labour of the 20th century. Henry Ford was a brutal crusher of unionised labour who finally accepted that if he didn’t pay his workers, then soon no one would be able to afford to buy his Model-Ts. Rushkoff sees a cautionary tale.

“The biggest danger for Uber is that it will destroy the marketplace on which its business model depends — and thus run out of revenue opportunity,” he says. “If you bankrupt all of your employees, you’re going to run out of ways to make money. Henry Ford knew that and he was a fascist. But if we’re quoting Henry Ford as the new mouthpiece of progressive values, well, that’s where we’ve gotten to.”

Follow Richard Godwin @richardjgodwin

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