September 9, 2019 • 35 mins
You don’t name your company "Uber" if you are planning to play by all the rules, make decisions by committee, and be everyone’s friend. But you probably also don’t make it to the top of the tech world by setting everything on fire, just because you can. (You can’t). In this episode, Bethany chats with Mike Isaac, who is in charge of covering Uber for The New York Times. He’s covered the company extensively for the past several years and also just published his book, SUPER PUMPED: The Battle For Uber. As Uber makes the claim: "Cars are to us what books were to Amazon,” Bethany and Mike dig into important questions about Uber's future.
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Speaker 1 (00:00):
Uber. The name itself means superlative, the most of something,
super top extreme. My guess is you don't name your
company Uber if you're planning to play by all the rules,
make decisions by committee, and be everyone's friend. Unlike many
Silicon Valley companies promising to revolutionize the world, Uber has
actually done it. The eighty two billion dollar company has
(00:21):
changed the way we move people through the world. It
certainly changed the way I moved through the world, and
has done it so well and with such market dominance
that Uber is now that most special of brand achievements,
a verb on top of which many believe Uber when
they say they are just getting started and that ridehailing
was merely the first feature of a much broader platform.
Is dar Kazbrashahi Uber's knew as in not. Travis Kalinich,
(00:45):
CEO said cars are to us what books were to Amazon.
Let that sink in for a second. Can you imagine
if Amazon still only sold books for nearly a decade?
What was driving Uber's innovation was a growth at any cost.
Culture and today's podcast guest Mike Isaac calls the superpumped
egos of founders who were worshiped as demigods. This led
(01:06):
to a period of time at Uber that was so
turbulent the company and its goal of an IPO were
nearly derailed entirely. Here's what I wonder, is Uber two
point o for real or has a dark seed been
planted that is going to metastasize at some point in
the future. Could you have had the success without that
dark side? Is this kind of behavior emblematic of the
(01:27):
overinflated valuations and perhaps underinflated core values of a new
generation of Unicorns? Or is it just part of the
coming of age story of a tech startup with Uber
sized dreams. I get to chat today with Mike Isaac,
who covers Uber for The New York Times. He's written
about the company extensively for the past bunch of years
and also wrote the great book super Pumped, The Battle
(01:49):
for Uber. So let's start with the title of your book,
super Pumped. What did that come to mean to Kalenik
In twenty fifteen, Travis had this real obsession with Amazon.
He always sort of looked up to Amazon as the
company he wanted Uber to look like to be. And
Amazon has this list of fourteen values. A lot of
(02:09):
them have to do with customer obsession and like a
lot of this sort of typical platitudes of Silicon Valley,
And so Travis translated that into probably a bro speak
version of his own fourteen values, and super Pumped Nois
was one of those that eventually became something. They evaluated
people on their job performance, and it embodied this idea
(02:30):
that they could do anything, they could take on the world,
and being super pumped meant you were like ready to
fight or be in the trenches or whatever, and that
became a quality that was very important to him and
everyone he hired, and that also tended to be a
lot of twenty something NBA frat boy times he saw
it is unabashedly a good thing. Absolutely. I mean, I think,
(02:53):
you know, in the clearer light of day, after the
federal investigations of past, we might see the downside of that,
But at the time, you know, like that was he
hired people like him and super pumped no This was
part of the criterion even before those investigations come to
a close. You've come to think about Super Pumped in
a slightly darker way. Right, My book is pretty critical
(03:15):
of the company, but I also think that every entrepreneur
in the Valley especially, is starting from a place of zero, right,
you have everything against you. No one wants you to win,
especially if you're taking on an incumbent industry like the
taxi and limousine and transportation in cities. You know, So
there's the class half full. Part of it is you
(03:36):
need to be as as optimistic energetic as possible, and
I sort of get that. But then where that sort
of turns is when you know you don't know when
to rein it back in. You don't know when the
aggression sort of tips over into alienating yourself from the
industry or not being able to make friends. And I
think that's really the story of uber is is going
(03:57):
hard and really diving into to pushing into an industry
that had never been disrupted before, and then sort of
becoming a winner, but not knowing how to go into
any other mode. We talk a lot about a corporate
culture on this show, and Andy gross famous quote is
the former CEO of Intel, Only the paranoid survive that paranoia.
That sense of being the underdog is supposed to be
(04:19):
a good thing, but when does it become the When
does it become a bad thing? When do you need
to have a broader sense of yourself in the world. Yeah, totally.
I mean, you know, you have to sort of read
the room over a period of time. And in twenty fourteen,
I think is when Uber started becoming a verb rather
than like an now and if that makes sense, I'm
going to the ultimate brand achievement. True. Yeah, like Google,
(04:39):
I'm gonna Google this or Facebook me or whatever people say,
you know. I think I think Uber probably tipped around then,
and there was a moment where I think Travis's pr
tried to rainiment right and tried to say, look, you
need to start making friends instead of fighting all these
regulators in Europe because they're going to all come at
you really hard. And I think he tried. But I
see him as a tragic character because I don't think
(05:01):
he's able to operate in any other mode. I don't
think he's able to really grow and mature like some
of probably the best CEOs are able to, you know,
for all their faults. I think Mark Zuckerberg is at
least entering a new phase where he's trying to change.
He moves, he doesn't just stay the same. He moves.
We can quibble about whether he's moving fast enough and
(05:22):
hard enough, but he moves. I totally agree, And I
think even a lot of the valley now is sort
of realizing this tech reckoning is happening, and the maybe
doctor Frankenstein moment of what have we wrought? And how
do we change that or at least adapt to that?
But I think that's what the best CEO is doing.
I don't. I don't know if Travis's has ever been
able to do that. It's actually another really interesting thing
(05:44):
about this story that I find goes against Countrarian wisdom,
or at least what I debatably thought was my wisdom,
but which is that people like Kellen at Cove had
failure in their past are more equipped to grow and
change and to see problems and to listen to other
people and appreciate difference. And yet it didn't work that
way for Kalinnik for some reason. Yeah. I mean, he
did two startups. One of them was a file sharing startup.
(06:07):
It was basically like a proto version of Napster meets Google,
and that crash and burn really hard. That was when
the record industry actually had much more clout than it
did right now. He did another one that was parlayed
into a mild success, but not really He made maybe
like a million dollars, which made him like Silicon Valley
middle class I guess so, which is another depressing story.
(06:28):
But I think the reason that some felt he was
right for Uber after that is that even through all
the hardship he faced with those two first startups, he
still kept pushing through it and fighting these really large
existing companies, you know, to keep going. But I'm not
sure if he took away, like you said, the exact
(06:50):
lessons that he might have needed to from the beginning
things that he went through. I'm thinking as you talk
that maybe the difference here is between insecurity and paranoia.
That paranoia it might be a good thing, but a
fundamental insecurity and a person which might be tell me,
if you agree with this, what Travis Kalinek has might
be a very dangerous thing. I try to get into
his head in this, and he wouldn't talk to me
(07:13):
for this book, and so I had to sort of
do a lot of reporting around him, and so I
think talking to hundreds of people who have dealt with him,
around him, got a good insight into how he sort
of operates and a lot of a lot of this posturing,
this sort of broneness and you know, we're we're the
ship and we're cool or whatever, and you know we're
going to take over the world. I think does fundamentally
(07:34):
stem from this um, this insecurity and his that went
even in his childhood, that went from a sort of
like nerdy guy trying to like seem like he was cool.
You know, sometimes that drives people, but I think it
also has its limits, as we as we see. I
thought this sentence in your book perhaps sums up his
inability to grow, and you wrote, Travis Kalenek couldn't figure
(07:56):
out why everyone hated his guts. So what's your absolute
favorite Travis Kalinic story. You have so many great anecdotes
in the book. What's the one that really stood out
to you that you had that aha moment when you
were reporting. It's not as sort of sexy as some
of them, but I think he really he really didn't
understand drivers super well. One of the things he really
(08:17):
pushed back on for a very long time was this
idea that drivers deserved tips, right, and he just he
was the only stopping block. Literally everyone in the company
was like, we need to tip these people like it's
just part of how labor works, right, Like LYFT is
doing it like this is something that this is a
table stakes minimum and he didn't get this obsession with
(08:38):
customer experience and if we add another like thing in
the app, it's going to make people mad and there's
too much friction, blah blah blah. And you know, it
wasn't until he literally was pushed out of the company
that they were able to add tipping. And it absolutely,
you know, helped drivers a lot. And I think the
way you can look at how he saw the people
who worked for him was he referred to drivers as
supply instead of people, which is which really just gives
(09:02):
you a perspective on how he looks at you. An
entire class of workers that company a little bit of
an engineering brain, although perhaps that's not fair to most engineers. Yeah,
there's a quote from another article that I loved that
the company's new chief HR person I think told you,
and it was every strength in excess is a weakness.
What has driven Uber to immense success. It's aggression. The
(09:22):
hard charging attitude has toppled over. And I thought about
that slightly differently. Could you have had the success without
the way Travis was. That I think is the ultimate
question that even folks who have invested in this company,
even folks who don't have a relationship with Travis anymore
and once really cared about him or believed in him,
(09:44):
but he is now alienated, still are questioning to this day. Right,
Like one of my verses told me, he was the
right guy for a certain period of time in the company,
and then it was clear that he wasn't the right
guy anymore, and he wasn't able to see that he
wasn't you know. They tried giving him executive coaching, they
tried to sort of like put people around him. There's
(10:05):
this sort of i would say, legendary figure in the valley,
Bill Campbell, who you probably know who's been on the
board of Apple, and he's they call him the coach, right,
and they wanted folks like that to really bring him
into a new phase of leadership. And he can't do it.
He really can't do it. I think he's sort of
(10:26):
the way I wrote this book, I just saw him
as like a Greek tragic figure where he was he
flew too close to the sun and then and then
just sort of fell over because he wasn't able to
wasn't able to see it himself. Do you think it
ultimately is a story that says Silicon Valley has to change?
Or do people look at this and because Uber was
such a success, do you think there's more emulating of
(10:47):
him going on. The ending, which people vaguely know, at
least in the public eye, is that everyone got really rich. Right, yeah, exactly.
But even if the company, like the company now is
the funny thing is the IPO didn't go at all
the way they wanted it to. You know, they had
a real bust first price that actually opened lower than
the price they set at the market, which is very
(11:08):
embarrassing for the for the company, it's just not what
you want. People didn't make as much money as they
wanted to. But at the same time, you know, Travis
is a billionaire right now. Ryan Graves, another longtime employee,
is a billionaire. Garrett Camp, the guy who came up
with the idea, is a billionaire, and Bill Gurley a benchmark.
The main venture capitalist that was involved in the company
probably made what was considered one of the greatest venture
(11:30):
capital investments of all time. Everyone quote unquote one in
a way, and in the like lesson, if I'm being
super cynical, is is maybe it did work. You know,
maybe this sort of terrible behavior did works, got rewarded
and right, even if he lost control of his company,
he got the money. That's right the way I feel.
You know, I'm not exactly crying for him in his
(11:51):
billions of dollars, but I you know, ultimately Uber was
his baby, and that was more about the company entire life.
He had a girlfriend, lost her, had a mother, had
a family, and his mother died tragically and completely out
of the blue. He really had no one. Even his
closest friends and colleagues sort of alienated him towards the end.
(12:11):
So the one thing he had and really the reason
he started fighting for it so desperately later on, is
this company. And so you might argue that, you know,
he did get fabulously wealthy, but he lost one of
the most important things in his life too. I can
see why you call it a tragic story in some ways,
and it'll be interesting to see what the lesson becomes,
(12:32):
what the valley does with this. So going back to
the inner workings of Uber, you talk in your book
about this competitive intelligence and about an uber's case, you
could argue they crossed the line, but where where is
the line? Because you also write everyone in Silicon Valley
has some version of this, So where does it go
from being okay to being not okay? It's really funny.
(12:52):
There was a saga the other day on the Internet
about this company that just came out. It was called Superhuman.
It's an email company. It's it's totally a value thing.
But basically they use a tracking pixel, which is fairly
common in email marketing and sort of basically tells you
when you open an email, but it sends tracking pixels
to anyone that you send an email for. And so
(13:14):
the idea is you can tell when you have opened
an email, if you send it to someone, how many
times they've read it, where in the world they are
when they've read it. And the company sort of launched
thinking that this was an okay thing, right because so
many other types of services do this, And when someone
pointed out, like, oh my god, what do you like?
This is crazy? This is like Fucoldian panopticon, right, like
(13:38):
why are you doing this? And there was a minor
freak out. Again it was like a tech thing, but
but I think we're in a moment right now where
the norms of what is acceptable in tech is starting
to at least be questioned, if not changing, you know,
and I think people are reckoning with the power of
how tech can shape and transform society. I get in
(13:58):
my book, like I do think that the moment that
Trump was elected was this sort of moment that folks said,
oh my god. You know, immediately everyone turned to Facebook
and these disinformation campaigns. And there's still question on how
much that shape things at all, but like the idea,
just the idea that people were manipulated by ads and
(14:18):
even fake information on Facebook gave people this idea that,
oh my god, tech tech has more power than we
thought it did. And so I think the norms around
what is acceptable, which is you know, maybe surveillance type
tech that Uber was doing, or you know, monitoring how
much people spend on their credit cards per month, monitoring
what Lift its biggest competitor was doing. Heaven in Hell. Yeah, totally,
(14:41):
Heaven in Hell. These two really nefarious programs that they
thought were cool, but we're actually pretty quickly they were sure.
So Heaven was this internal program at Uber that allowed
basically for a time, anyone inside the company to see
where any car and any user was on Earth ever, right,
and there were no safeguards around it internally, anyone could
(15:02):
look it up. Like there's one scene where Travis at
an event with just sort of a bunch of folks
at a hotel dinner, he displays Heaven on this big
screen in a room and anyone can just sort of
look at where all these users are. It's just really
sort of no care for user privacy and where anyone is.
It's sensitive information where I take a car in the world, right,
(15:25):
Like I don't want people knowing where I am all
the time, right, Yeah. Terrifying and so hell. The counterpoint
to that hell was Uber's way of monitoring its biggest
American competitor, Lift, and sort of through a bunch of
different tracking methods, were able to tell which drivers were
driving for Lift, how much they were getting paid, so
Uber would spend slightly more money to get them to
(15:48):
abandon Lift and come over to Uber. And there's just
questions around how ethical that was and how much spuying
on your competitors you should do, and what's acceptable, which
are big questions. Do you think they felt they were
crossing the line, or do you think when you tell
me that story about Travis putting this up on a screen,
it doesn't seem like it was some big internal secret, right.
And that's the thing I ran up against in my
(16:09):
reporting over and over when I would discover something or
someone else would discover something, employees inside would be like,
why are you freaking out about this? This is like
a common thing, or we've had this for years that
you just very everybody does this, yes, or everyone does it,
and like that's the thinking that I think is really
pervasive even now in the valley and really dangerous. And
I don't think folks in the tech world fully appreciate
(16:31):
that normal people don't know these things, right. They don't
really know what norms are or what they're comfortable with.
And part of that, I think is the failing of
the media too getting into how these things work that
we use every every part of our lives, you know,
are involved in them, and what we're okay with. I
want to go to the role of the venture capitalists
and this talk a little bit about Bell Gurley. I
(16:51):
love this quote you've gotten your book from Gurley about Kalinnik.
If we let him out of the box at any
point during the day. He'll destroy the entire world. But
why couldn't the vcs control Kalinik? I sort of look
at VC from a few different angles, you know. I
think part of how VC works shapes how these companies
have to act the way venture capitalists invest. They don't
(17:12):
want to flip a company for two x. They need
to flip it for ten x or whatever. You know.
They need to make it sell or ipo and make
their investment really a grand slam. Yeah, because a lot
of investing is a lot of failures, right, So it's
pushing harder and Gurley eventually turns on Kalenik. But for
a lot of the time, you supported all the moves
(17:33):
that Kalenik was making and was just as aggressive as him.
And there's a question as to his indemnity in this
whole thing, and how culpable he is for some of
the things. Our adventure capitalist part of the problem in
the valley. If you ask an entrepreneur who has raised
VC again, I don't pity them too much once they
say it's a series A worth thirty million dollars or whatever,
(17:54):
because you just get a lot of these damn, investors
are trying to make me do something. But but but
that puts you on a trajectory and you have to grow.
It's grow or guy, you can't do anything but go
up into the left on your charts when you have
to make your presentations to vcs and to get there,
that means doing anything you can, and a lot of
(18:16):
the times that means shady, subversive practices. You know, whether
it's in like social networking and sharing phone book contact
lists without people's knowledge, or in ride hailing where you're
doing sort of shady tracking mechanisms or even thinking of
ways to track other drivers or even passengers. I think
it perverts the idea that you should in some entrepreneurs,
(18:38):
at least who don't have like a fully formed moral compass.
It just it sort of makes you think you have
to grow at all costs, and sometimes that means going
into the darker side of how how growth works. And
it's making me think that the venture capitalists don't always
have they're not always the adult in the room either.
They don't always have the moral compass. Ideally, you have
someone that's very involved and can guide you. But I
(19:00):
don't think that's the case at the end of the day,
they need to make this company worth a lot of
money and sell it, either take it to IPO or
sell it to Facebook, Google, microsore one of the big
five companies that end up buying a lot of these
companies anyway. And that's that's a motivation, right and that
provides perverse incentives over time, and a lot of the
time vcs vcs are just as aggressive as any entrepreneur.
(19:24):
And do you think that's changed over time? I mean,
do you think was there a mythical period in the past,
speaking of myths, where venture capitalists were all about creation
and all about building a company and the money kind
of came second, or do you think it's always been
all about the money and the big cash out day.
The rise of MBA business culture, I think kind of
changed how people think and work a lot. Once the
(19:46):
finance guys started flooding into tech companies. I think that
that kind of just changed how these companies work. That's
why engineers are still so vaunted and because like the
roots of the valley are about building and cre and tinkering.
Steve Jobs is this still mythical figure because he cared
about users and the user experience, and it's really about computing, right,
(20:08):
And I think earlier on it was about building a
computer in a garage and worshiping that, and now it's
really about the Internet and software, and you see different
types of folks sort of flooding into that. So you know,
we're always instalgic for periods of the past, and it
may or may not have existed, yeah exactly, Like I'm
probably oversimplifying some things, but I think I think it
has changed a lot with the rise of the Internet
(20:30):
and the rise of this sort of NBA culture. And
maybe there's also a point where the money has just
become so big that it's a tipping point, right, And
so many of these stories are about a tipping point.
And that might be true for Uber, and it might
be true for the valley broadly. Writ Right, once the
money just got to a certain point, the corruption sets in.
And I'm using the word corruption loosely. Yeah, yeah, right,
not necessarily in the legal sense. But I think these numbers,
(20:53):
even the small rounds, what a series a round of
venture capital used to be was like maybe five million
or less, and now you know, you're seeing like thirty
to forty million dollars series A's right, these are wow.
The amount of money getting put in earlier on is
increasing exponentially in some cases, and that is having again
(21:14):
adverse effects on how companies operate. So I do think
they're going to hit a wall with some of this,
or maybe I hate to use the B word of bubble,
but it can't keep going like this. But that has
also invited private equity and hedge funds and all this
other money coming in start flooding in, and so it
gets bigger and bigger until it all goes splat. Right,
that's right. Why is it that some companies like Uber
(21:36):
get the special dispensation to continue to lose money and
other companies have immense pressure put on them to be profitable.
Is that decision made in some kind of fair and
calculated way, or is it that certain people just get
a dispensation that others don't. It's so funny, and I
go head to head with some vcs on this all
the time. Their favorite buzzword is economies of scale. Right,
(22:00):
once you hit certain large enough point, the math starts
to work apparently, and you need to be able to
have metal I guess I mean that's TVD on Uber
at least, but you need to be have the metal
to burn enormous amounts of money to get there, and
that means raising enormous amounts of money up front in
order to do that. I don't think that works for
(22:21):
every company, right Like I think at some point because
a lot of folks like to look back at the
first dot com bubble and say, look that these IPOs
were happening and everyone crashed. This going to happen again.
And the distinction they make is that the revenues that
current internet companies have are not insignificant. There are like
in the tens or hundreds and millions of dollars in
revenue which didn't exist during the first dot com era.
(22:44):
But you just wonder whether you can push into profitability,
you know, and what point and how long it's going
to be in what point you have to do that?
And I think it's just different mindsets. You think the
West Coast is vcs are much more comfortable with burn
huge piles of cash over time, and the East Coast
and folks who actually like to see profitable companies make
(23:07):
a profit are more conservative, they would say in that respect.
And I don't know if that's going to ever change.
Can Uber ever make money? Is it structurally unprofitable or
do you think there's just going to be a moment
where they can cut back on the expenses and achieve
those economies of scale. What Uber would say is their
current business is driving other lines of business. They everyone
wants to be a platform Silicon Valley, and that's the
(23:29):
argument that Uber, right, yes, and that's what they're saying now,
we're not a car service, where a transportation platform, right,
which is like I sort of rule my eyes at
because literally everyone wants to be a platform, and they
all say that that. I didn't know that was the
new cliche. That's fast. Oh yeah, someone says a platform.
You know, they're full of it. But I think but
(23:50):
I think the thing that shows some promise even though
it's still the new cash suck for them is their
food delivery stuff and using some of their existing assets
to try to push into a new industry. But you know,
you could also argue they're just kicking the can down
the road, right, Like, at the end of the day,
you either have to increase prices for customers or decrease
(24:11):
profits for drivers, right, And you're balancing a very fine
three sided marketplace essentially between customers drivers in the company itself,
and someone has to at the end of the day
eat those costs. And you and I have seen artificially
depressed prices on the rides that we take for a
very long period of time, and slowly those either have
(24:31):
to go up or the drivers have to get paid less.
If you look at lifts S one and paperwork, they
subtly say that they're essentially going to increase costs for
drivers over time or decrease what they're paying them because
like the only way they can get closer to profitability
at all is by doing one of those two things.
Lift is even more screwed in a way than Uber
because they don't have these other lines of business to
(24:53):
point out. It's interesting, though, is you talk. I'm thinking
that Uber is obviously really different from a Google and
a face Book because there's no network effect with Uber, right,
And I think it might even be fundamentally different than
an Amazon because once you shop on Amazon it's just
so easy, whereas Uber, the consumer switching costs from Uber
to Lift is not that high, and so I don't
(25:14):
I wonder how much flexibility do they have? No, you're
exactly right. And the problem Uber had and has is
that it's been commoditized and done very quickly. Right. So
like even though the verb and brand, Uber is still
sort of there, and that's like a positive thing. A
lot of folks, myself included, will open Uber, look at
the price, and then open Lift and see if there's
(25:35):
like a buck or too cheaper, and then I might
go over to the other one, right, because it's essentially
the same service, all this driver's drive for the same company.
There's this really good book called hard Landing about the
airline industry. It compares because airlines are also like a
sort of commodity industry. Right. They look at Southwest Air
as a case study where brand and the lock in
of customers based on these added things, and a lot
(25:57):
of it was like brand and then over time like loyalty,
point programs and things like that become the differentiator for you, right,
And so I think people are still price sensitive on
it airlines a lot of the time. But you have
to find ways to attract people to your service, and
I think Uber is testing that right now, or at
least dipping his toe into it with rewards programs. How
(26:21):
do you think about Dara so far. Reid Hoffman and
his book Blitz Scaling talks about how in all startups
you have to move from being a pirate to commanding
and Navy. Is Dara the guy to do that. So
he's been at the Helm for a little more than
a year. He was not who you know. We get
into towards the end of the book. There's this big
board fight. The board becomes entirely dysfunctional, and so many
(26:42):
great anecdotes it was so fun to report, actually insane
and maddening. It essentially comes down to a few candidates
and no one really wanted Dara to be the guy
to take over, but they end up with him over
a series of essentially yeah exactly like no one was satisfied,
but he became the guy. He's a very straight laced
professional CEO. He knew how to take a company public
(27:05):
in some ways, and in that most of his job
was not being Travis for the first year of his
entire CEO And he's got a great quote. Over the
next eighteen months, Uber's new chief executive would systematically undermine
nearly everything his predecessor had stood for. That's it. He
went on an apology tour if there's a moment in
London where they are trying to bar Uber from operating
(27:26):
and he had to sort of give maya cop post
to everyone. If you look at all of his statements,
it's basically we are not the old Uber. And so
in the sense that he's not Travis, he was probably
pretty good. But there's also a question of can he
be as inspiring to some of the people there as
the former leader was. It's back to that dark side,
but also the positive side. Can he what was good
(27:48):
about Travis? And can Dara replate ken Dar replate takeaway
what was bad? And is there can you can you
still have what was good? Yeah? Totally. I mean, look again,
for all of Travis's faults or many, I think one
of the things he was really able to do is
is rally these troops around him and like so like
cried Hoffman was saying they were a pirate ship company,
but they didn't know when they turned into a navy right,
(28:11):
And he wasn't able to sort of operate on any
mode but rallying his fellow pirates and taking over everybody.
But you'd say, you'd say it's still tbd whether whether
whether Dara can keep the good while getting rid of
the bad. Dar's a numbers guy. He was a CFO
at m I see for a very long time Barry
Dealer's company. He and Barry Diller are still really close.
(28:31):
And he's a numbers guy, right, So he looks at
the balance sheet, sees how much they're bleeding, and has
to start cutting and changing things in the street. Probably
really likes that. But you know, employees there were used
to some level of whatever comfort or just decisions that
might not be as popular. So it's still only eighteen
months in or whatever he's at now, it's still I'll
(28:54):
give him like a little more time to see what here.
You start to make a judgment. Yeah, On that note,
I also wonder a sort of corollary to that. As
much as he's tried to change the culture, is the
culture of a company set with its founder? In other words,
is that darker side of Uber still? Is it a
seed that's waiting to blow up in some ways, not
just through the ongoing investigations, but just that is going
(29:15):
to exist in the company, regardless of what Darr tries
to do to change it. Right. No, I love that
point because if you look at I mean every smart
VC that's trying to give advice to the founders. Is
talks about like culture set from the very beginning and
tone at the top. I think it's very difficult to
change that, and the authority that a founder has over
that is very powerful. Right. So even if you look
(29:37):
at like Twitter, there was a time when Twitter was
in the news all the time for being one of
the most dysfunctional companies ever, right, And a lot of
that came with the in fighting between the three founders
of the company from the very beginning, and to this
day it's still it still shapes Twitter in some ways,
it still shapes the company. Google is seen as like
a sort of grad school of the valley and very
(29:58):
engineering heavy, and that's from Larry Page and Sergey On
down right. That's how they started the company, and that's
what's most treasured inside of Google. So that DNA really
sets the tone for the company and it's hard to
change that. Over Travis Kalenik is gone, but as a
ghost haunts the hallways. I love despite all the press
around the culture and around the destructiveness of the brolite
(30:22):
culture at Uber, which is a huge part of your
book as well, with Susan Fowler's letter. Is that going
to change? I mean again, this is the question, because
you know, bad behavior ultimately got rewarded, like a lot
of people got rich at the IPO. Right. I live
in San Francisco, and I'm already seeing home prices go up.
I live around many Uber employees, you know. I talk
(30:43):
about this thing called the like the cocktail party test,
where it's whether or not you're embarrassed to where your
T shirt or tell people at a cocktail party where
you work. And there's like a version of the old
Wall Street Journal test. Right, if you're not afraid to
see it a headline in the Wall Street Journal, that's it.
And so there's a period where Uber employees didn't wear
their swag out in public, and now they're back to it,
(31:04):
you know, now they're they're sort of wearying again. And
maybe that's just the proof that you can act, you
can act with impunity and get away with it as
long as everybody gets paid. Yep, that's a fairly devastating quote.
You quote another CEO, female CEO named Karina Lake, which
she wrote in an email it's demoralizing and said that
something like Uber can even exist and even thrive. Do
(31:25):
you agree with that? Look? I think if there are
founders trying to do things the right way, it's really
it is really depressing to see that other companies can
thrive when they're not doing it quote unquote the right way.
And maybe that's naive. Maybe maybe someone like me or
someone like her look at the world in a way
that is moralizing and not cynical enough. Sometimes, you know,
(31:48):
maybe maybe this is how you have to build companies.
But I'd like to think that that you don't have
to be an asshole to build a great company, you know,
and like you can be an entrepreneur and guide things
in a way that you're proud of, or that like
you can have a headline in the Wall Street Journal
and not have to cringe about it, or at least
not have to cover up your behavior. You wrote at
the end of the book, And I think it's it's
(32:08):
interesting that it is an open question. I wondered if
there would be a new generation of Travis Kalenik protege
as soon. The hope I have in this I met
a young kid I was at like a New York
Times event last year when I was reporting the book,
and I met a young, like nineteen year old who's
fresh out of Harvard and he was African American and
(32:30):
identified as gay. And he heard me talk and he
was like, you know, part of why I want to
go into tech is to try to like change what
that culture kind of looks like. And since tech is
not going away, be a part of the force for
representing like all types of people building these things instead
of like young white men who've grown up in largely
(32:51):
in it was at least safe financial bubbles or whatever. Right,
maybe maybe the people building these products should look more
like the rest of the world instead of a monoculture
in the valley. And that I thought was pretty hopeful.
Maybe there's maybe the people behind it are going to
look different in a generation. I love this. We get
to end on a positive note here, it's not all dark.
Thank you so much for coming, Thanks for having me.
(33:21):
It's striking to me how many things about Travis Kalenik
and the Uber story turn accepted wisdom on its head.
Most of all, it's supposed to be good to be paranoid.
It's supposed to be good to have failed in the past.
But in Kalinich's case, the past failure it seems to
have sharpened already sharp edges to a knife point, and
the paranoia took an indisputably dark turn that still might
(33:42):
destroy Uber. It's also interesting to me that there are
all these big questions that we want answered, at least
that I want answered, but real life, a real business,
doesn't always yield clarity, or at least not the clarity.
Would like. We want there to be a moral to
this story, a good moral, but I'm not sure there is.
At least the moral might be to do as Kalenick
did rather than the opposite. Would like for a kindler,
(34:05):
gentler company to have had the same degree of success
that Uber did. It's not clear to me that it
would have. Most of all, would like to believe that
Silicon Valley, which is so critically important to our economy
and our lives, is going to have a day of reckoning.
It's going to leave its ugly childlike aspects in the past.
It's going to grow up. It's not so clear to
me that's going to happen, at least not anytime soon.
(34:30):
Making a Killing is a co production of Pushkin Industries
and Chalk and Blade. It's produced by Ruth Barnes and
Rosie Stoffer. My executive producers are Alison mcclein. No relation
in making Casey. The executive producer at Pushkin is Mia Loebell.
Engineering is by Jason Gambrell. Our music is by Jed Flood.
(34:51):
Special thanks to Jacob Weisberg at Pushkin and everyone on
the show. I'm Bethany mcclein. Thanks so much for listening.
Find me on Twitter Bethany mac twelve and let me
know who you've enjoyed hearing from.
Uber. The name itself means superlative, the most of something,
super top extreme. My guess is you don't name your
company Uber if you're planning to play by all the rules,
make decisions by committee, and be everyone's friend. Unlike many
Silicon Valley companies promising to revolutionize the world, Uber has
actually done it. The eighty two billion dollar company has
(00:21):
changed the way we move people through the world. It
certainly changed the way I moved through the world, and
has done it so well and with such market dominance
that Uber is now that most special of brand achievements,
a verb on top of which many believe Uber when
they say they are just getting started and that ridehailing
was merely the first feature of a much broader platform.
Is dar Kazbrashahi Uber's knew as in not. Travis Kalinich,
(00:45):
CEO said cars are to us what books were to Amazon.
Let that sink in for a second. Can you imagine
if Amazon still only sold books for nearly a decade?
What was driving Uber's innovation was a growth at any cost.
Culture and today's podcast guest Mike Isaac calls the superpumped
egos of founders who were worshiped as demigods. This led
(01:06):
to a period of time at Uber that was so
turbulent the company and its goal of an IPO were
nearly derailed entirely. Here's what I wonder, is Uber two
point o for real or has a dark seed been
planted that is going to metastasize at some point in
the future. Could you have had the success without that
dark side? Is this kind of behavior emblematic of the
(01:27):
overinflated valuations and perhaps underinflated core values of a new
generation of Unicorns? Or is it just part of the
coming of age story of a tech startup with Uber
sized dreams. I get to chat today with Mike Isaac,
who covers Uber for The New York Times. He's written
about the company extensively for the past bunch of years
and also wrote the great book super Pumped, The Battle
(01:49):
for Uber. So let's start with the title of your book,
super Pumped. What did that come to mean to Kalenik
In twenty fifteen, Travis had this real obsession with Amazon.
He always sort of looked up to Amazon as the
company he wanted Uber to look like to be. And
Amazon has this list of fourteen values. A lot of
(02:09):
them have to do with customer obsession and like a
lot of this sort of typical platitudes of Silicon Valley,
And so Travis translated that into probably a bro speak
version of his own fourteen values, and super Pumped Nois
was one of those that eventually became something. They evaluated
people on their job performance, and it embodied this idea
(02:30):
that they could do anything, they could take on the world,
and being super pumped meant you were like ready to
fight or be in the trenches or whatever, and that
became a quality that was very important to him and
everyone he hired, and that also tended to be a
lot of twenty something NBA frat boy times he saw
it is unabashedly a good thing. Absolutely. I mean, I think,
(02:53):
you know, in the clearer light of day, after the
federal investigations of past, we might see the downside of that,
But at the time, you know, like that was he
hired people like him and super pumped no This was
part of the criterion even before those investigations come to
a close. You've come to think about Super Pumped in
a slightly darker way. Right, My book is pretty critical
(03:15):
of the company, but I also think that every entrepreneur
in the Valley especially, is starting from a place of zero, right,
you have everything against you. No one wants you to win,
especially if you're taking on an incumbent industry like the
taxi and limousine and transportation in cities. You know, So
there's the class half full. Part of it is you
(03:36):
need to be as as optimistic energetic as possible, and
I sort of get that. But then where that sort
of turns is when you know you don't know when
to rein it back in. You don't know when the
aggression sort of tips over into alienating yourself from the
industry or not being able to make friends. And I
think that's really the story of uber is is going
(03:57):
hard and really diving into to pushing into an industry
that had never been disrupted before, and then sort of
becoming a winner, but not knowing how to go into
any other mode. We talk a lot about a corporate
culture on this show, and Andy gross famous quote is
the former CEO of Intel, Only the paranoid survive that paranoia.
That sense of being the underdog is supposed to be
(04:19):
a good thing, but when does it become the When
does it become a bad thing? When do you need
to have a broader sense of yourself in the world. Yeah, totally.
I mean, you know, you have to sort of read
the room over a period of time. And in twenty fourteen,
I think is when Uber started becoming a verb rather
than like an now and if that makes sense, I'm
going to the ultimate brand achievement. True. Yeah, like Google,
(04:39):
I'm gonna Google this or Facebook me or whatever people say,
you know. I think I think Uber probably tipped around then,
and there was a moment where I think Travis's pr
tried to rainiment right and tried to say, look, you
need to start making friends instead of fighting all these
regulators in Europe because they're going to all come at
you really hard. And I think he tried. But I
see him as a tragic character because I don't think
(05:01):
he's able to operate in any other mode. I don't
think he's able to really grow and mature like some
of probably the best CEOs are able to, you know,
for all their faults. I think Mark Zuckerberg is at
least entering a new phase where he's trying to change.
He moves, he doesn't just stay the same. He moves.
We can quibble about whether he's moving fast enough and
(05:22):
hard enough, but he moves. I totally agree, And I
think even a lot of the valley now is sort
of realizing this tech reckoning is happening, and the maybe
doctor Frankenstein moment of what have we wrought? And how
do we change that or at least adapt to that?
But I think that's what the best CEO is doing.
I don't. I don't know if Travis's has ever been
able to do that. It's actually another really interesting thing
(05:44):
about this story that I find goes against Countrarian wisdom,
or at least what I debatably thought was my wisdom,
but which is that people like Kellen at Cove had
failure in their past are more equipped to grow and
change and to see problems and to listen to other
people and appreciate difference. And yet it didn't work that
way for Kalinnik for some reason. Yeah. I mean, he
did two startups. One of them was a file sharing startup.
(06:07):
It was basically like a proto version of Napster meets Google,
and that crash and burn really hard. That was when
the record industry actually had much more clout than it
did right now. He did another one that was parlayed
into a mild success, but not really He made maybe
like a million dollars, which made him like Silicon Valley
middle class I guess so, which is another depressing story.
(06:28):
But I think the reason that some felt he was
right for Uber after that is that even through all
the hardship he faced with those two first startups, he
still kept pushing through it and fighting these really large
existing companies, you know, to keep going. But I'm not
sure if he took away, like you said, the exact
(06:50):
lessons that he might have needed to from the beginning
things that he went through. I'm thinking as you talk
that maybe the difference here is between insecurity and paranoia.
That paranoia it might be a good thing, but a
fundamental insecurity and a person which might be tell me,
if you agree with this, what Travis Kalinek has might
be a very dangerous thing. I try to get into
his head in this, and he wouldn't talk to me
(07:13):
for this book, and so I had to sort of
do a lot of reporting around him, and so I
think talking to hundreds of people who have dealt with him,
around him, got a good insight into how he sort
of operates and a lot of a lot of this posturing,
this sort of broneness and you know, we're we're the
ship and we're cool or whatever, and you know we're
going to take over the world. I think does fundamentally
(07:34):
stem from this um, this insecurity and his that went
even in his childhood, that went from a sort of
like nerdy guy trying to like seem like he was cool.
You know, sometimes that drives people, but I think it
also has its limits, as we as we see. I
thought this sentence in your book perhaps sums up his
inability to grow, and you wrote, Travis Kalenek couldn't figure
(07:56):
out why everyone hated his guts. So what's your absolute
favorite Travis Kalinic story. You have so many great anecdotes
in the book. What's the one that really stood out
to you that you had that aha moment when you
were reporting. It's not as sort of sexy as some
of them, but I think he really he really didn't
understand drivers super well. One of the things he really
(08:17):
pushed back on for a very long time was this
idea that drivers deserved tips, right, and he just he
was the only stopping block. Literally everyone in the company
was like, we need to tip these people like it's
just part of how labor works, right, Like LYFT is
doing it like this is something that this is a
table stakes minimum and he didn't get this obsession with
(08:38):
customer experience and if we add another like thing in
the app, it's going to make people mad and there's
too much friction, blah blah blah. And you know, it
wasn't until he literally was pushed out of the company
that they were able to add tipping. And it absolutely,
you know, helped drivers a lot. And I think the
way you can look at how he saw the people
who worked for him was he referred to drivers as
supply instead of people, which is which really just gives
(09:02):
you a perspective on how he looks at you. An
entire class of workers that company a little bit of
an engineering brain, although perhaps that's not fair to most engineers. Yeah,
there's a quote from another article that I loved that
the company's new chief HR person I think told you,
and it was every strength in excess is a weakness.
What has driven Uber to immense success. It's aggression. The
(09:22):
hard charging attitude has toppled over. And I thought about
that slightly differently. Could you have had the success without
the way Travis was. That I think is the ultimate
question that even folks who have invested in this company,
even folks who don't have a relationship with Travis anymore
and once really cared about him or believed in him,
(09:44):
but he is now alienated, still are questioning to this day. Right,
Like one of my verses told me, he was the
right guy for a certain period of time in the company,
and then it was clear that he wasn't the right
guy anymore, and he wasn't able to see that he
wasn't you know. They tried giving him executive coaching, they
tried to sort of like put people around him. There's
(10:05):
this sort of i would say, legendary figure in the valley,
Bill Campbell, who you probably know who's been on the
board of Apple, and he's they call him the coach, right,
and they wanted folks like that to really bring him
into a new phase of leadership. And he can't do it.
He really can't do it. I think he's sort of
(10:26):
the way I wrote this book, I just saw him
as like a Greek tragic figure where he was he
flew too close to the sun and then and then
just sort of fell over because he wasn't able to
wasn't able to see it himself. Do you think it
ultimately is a story that says Silicon Valley has to change?
Or do people look at this and because Uber was
such a success, do you think there's more emulating of
(10:47):
him going on. The ending, which people vaguely know, at
least in the public eye, is that everyone got really rich. Right, yeah, exactly.
But even if the company, like the company now is
the funny thing is the IPO didn't go at all
the way they wanted it to. You know, they had
a real bust first price that actually opened lower than
the price they set at the market, which is very
(11:08):
embarrassing for the for the company, it's just not what
you want. People didn't make as much money as they
wanted to. But at the same time, you know, Travis
is a billionaire right now. Ryan Graves, another longtime employee,
is a billionaire. Garrett Camp, the guy who came up
with the idea, is a billionaire, and Bill Gurley a benchmark.
The main venture capitalist that was involved in the company
probably made what was considered one of the greatest venture
(11:30):
capital investments of all time. Everyone quote unquote one in
a way, and in the like lesson, if I'm being
super cynical, is is maybe it did work. You know,
maybe this sort of terrible behavior did works, got rewarded
and right, even if he lost control of his company,
he got the money. That's right the way I feel.
You know, I'm not exactly crying for him in his
(11:51):
billions of dollars, but I you know, ultimately Uber was
his baby, and that was more about the company entire life.
He had a girlfriend, lost her, had a mother, had
a family, and his mother died tragically and completely out
of the blue. He really had no one. Even his
closest friends and colleagues sort of alienated him towards the end.
(12:11):
So the one thing he had and really the reason
he started fighting for it so desperately later on, is
this company. And so you might argue that, you know,
he did get fabulously wealthy, but he lost one of
the most important things in his life too. I can
see why you call it a tragic story in some ways,
and it'll be interesting to see what the lesson becomes,
(12:32):
what the valley does with this. So going back to
the inner workings of Uber, you talk in your book
about this competitive intelligence and about an uber's case, you
could argue they crossed the line, but where where is
the line? Because you also write everyone in Silicon Valley
has some version of this, So where does it go
from being okay to being not okay? It's really funny.
(12:52):
There was a saga the other day on the Internet
about this company that just came out. It was called Superhuman.
It's an email company. It's it's totally a value thing.
But basically they use a tracking pixel, which is fairly
common in email marketing and sort of basically tells you
when you open an email, but it sends tracking pixels
to anyone that you send an email for. And so
(13:14):
the idea is you can tell when you have opened
an email, if you send it to someone, how many
times they've read it, where in the world they are
when they've read it. And the company sort of launched
thinking that this was an okay thing, right because so
many other types of services do this, And when someone
pointed out, like, oh my god, what do you like?
This is crazy? This is like Fucoldian panopticon, right, like
(13:38):
why are you doing this? And there was a minor
freak out. Again it was like a tech thing, but
but I think we're in a moment right now where
the norms of what is acceptable in tech is starting
to at least be questioned, if not changing, you know,
and I think people are reckoning with the power of
how tech can shape and transform society. I get in
(13:58):
my book, like I do think that the moment that
Trump was elected was this sort of moment that folks said,
oh my god. You know, immediately everyone turned to Facebook
and these disinformation campaigns. And there's still question on how
much that shape things at all, but like the idea,
just the idea that people were manipulated by ads and
(14:18):
even fake information on Facebook gave people this idea that,
oh my god, tech tech has more power than we
thought it did. And so I think the norms around
what is acceptable, which is you know, maybe surveillance type
tech that Uber was doing, or you know, monitoring how
much people spend on their credit cards per month, monitoring
what Lift its biggest competitor was doing. Heaven in Hell. Yeah, totally,
(14:41):
Heaven in Hell. These two really nefarious programs that they
thought were cool, but we're actually pretty quickly they were sure.
So Heaven was this internal program at Uber that allowed
basically for a time, anyone inside the company to see
where any car and any user was on Earth ever, right,
and there were no safeguards around it internally, anyone could
(15:02):
look it up. Like there's one scene where Travis at
an event with just sort of a bunch of folks
at a hotel dinner, he displays Heaven on this big
screen in a room and anyone can just sort of
look at where all these users are. It's just really
sort of no care for user privacy and where anyone is.
It's sensitive information where I take a car in the world, right,
(15:25):
Like I don't want people knowing where I am all
the time, right, Yeah. Terrifying and so hell. The counterpoint
to that hell was Uber's way of monitoring its biggest
American competitor, Lift, and sort of through a bunch of
different tracking methods, were able to tell which drivers were
driving for Lift, how much they were getting paid, so
Uber would spend slightly more money to get them to
(15:48):
abandon Lift and come over to Uber. And there's just
questions around how ethical that was and how much spuying
on your competitors you should do, and what's acceptable, which
are big questions. Do you think they felt they were
crossing the line, or do you think when you tell
me that story about Travis putting this up on a screen,
it doesn't seem like it was some big internal secret, right.
And that's the thing I ran up against in my
(16:09):
reporting over and over when I would discover something or
someone else would discover something, employees inside would be like,
why are you freaking out about this? This is like
a common thing, or we've had this for years that
you just very everybody does this, yes, or everyone does it,
and like that's the thinking that I think is really
pervasive even now in the valley and really dangerous. And
I don't think folks in the tech world fully appreciate
(16:31):
that normal people don't know these things, right. They don't
really know what norms are or what they're comfortable with.
And part of that, I think is the failing of
the media too getting into how these things work that
we use every every part of our lives, you know,
are involved in them, and what we're okay with. I
want to go to the role of the venture capitalists
and this talk a little bit about Bell Gurley. I
(16:51):
love this quote you've gotten your book from Gurley about Kalinnik.
If we let him out of the box at any
point during the day. He'll destroy the entire world. But
why couldn't the vcs control Kalinik? I sort of look
at VC from a few different angles, you know. I
think part of how VC works shapes how these companies
have to act the way venture capitalists invest. They don't
(17:12):
want to flip a company for two x. They need
to flip it for ten x or whatever. You know.
They need to make it sell or ipo and make
their investment really a grand slam. Yeah, because a lot
of investing is a lot of failures, right, So it's
pushing harder and Gurley eventually turns on Kalenik. But for
a lot of the time, you supported all the moves
(17:33):
that Kalenik was making and was just as aggressive as him.
And there's a question as to his indemnity in this
whole thing, and how culpable he is for some of
the things. Our adventure capitalist part of the problem in
the valley. If you ask an entrepreneur who has raised
VC again, I don't pity them too much once they
say it's a series A worth thirty million dollars or whatever,
(17:54):
because you just get a lot of these damn, investors
are trying to make me do something. But but but
that puts you on a trajectory and you have to grow.
It's grow or guy, you can't do anything but go
up into the left on your charts when you have
to make your presentations to vcs and to get there,
that means doing anything you can, and a lot of
(18:16):
the times that means shady, subversive practices. You know, whether
it's in like social networking and sharing phone book contact
lists without people's knowledge, or in ride hailing where you're
doing sort of shady tracking mechanisms or even thinking of
ways to track other drivers or even passengers. I think
it perverts the idea that you should in some entrepreneurs,
(18:38):
at least who don't have like a fully formed moral compass.
It just it sort of makes you think you have
to grow at all costs, and sometimes that means going
into the darker side of how how growth works. And
it's making me think that the venture capitalists don't always
have they're not always the adult in the room either.
They don't always have the moral compass. Ideally, you have
someone that's very involved and can guide you. But I
(19:00):
don't think that's the case at the end of the day,
they need to make this company worth a lot of
money and sell it, either take it to IPO or
sell it to Facebook, Google, microsore one of the big
five companies that end up buying a lot of these
companies anyway. And that's that's a motivation, right and that
provides perverse incentives over time, and a lot of the
time vcs vcs are just as aggressive as any entrepreneur.
(19:24):
And do you think that's changed over time? I mean,
do you think was there a mythical period in the past,
speaking of myths, where venture capitalists were all about creation
and all about building a company and the money kind
of came second, or do you think it's always been
all about the money and the big cash out day.
The rise of MBA business culture, I think kind of
changed how people think and work a lot. Once the
(19:46):
finance guys started flooding into tech companies. I think that
that kind of just changed how these companies work. That's
why engineers are still so vaunted and because like the
roots of the valley are about building and cre and tinkering.
Steve Jobs is this still mythical figure because he cared
about users and the user experience, and it's really about computing, right,
(20:08):
And I think earlier on it was about building a
computer in a garage and worshiping that, and now it's
really about the Internet and software, and you see different
types of folks sort of flooding into that. So you know,
we're always instalgic for periods of the past, and it
may or may not have existed, yeah exactly, Like I'm
probably oversimplifying some things, but I think I think it
has changed a lot with the rise of the Internet
(20:30):
and the rise of this sort of NBA culture. And
maybe there's also a point where the money has just
become so big that it's a tipping point, right, And
so many of these stories are about a tipping point.
And that might be true for Uber, and it might
be true for the valley broadly. Writ Right, once the
money just got to a certain point, the corruption sets in.
And I'm using the word corruption loosely. Yeah, yeah, right,
not necessarily in the legal sense. But I think these numbers,
(20:53):
even the small rounds, what a series a round of
venture capital used to be was like maybe five million
or less, and now you know, you're seeing like thirty
to forty million dollars series A's right, these are wow.
The amount of money getting put in earlier on is
increasing exponentially in some cases, and that is having again
(21:14):
adverse effects on how companies operate. So I do think
they're going to hit a wall with some of this,
or maybe I hate to use the B word of bubble,
but it can't keep going like this. But that has
also invited private equity and hedge funds and all this
other money coming in start flooding in, and so it
gets bigger and bigger until it all goes splat. Right,
that's right. Why is it that some companies like Uber
(21:36):
get the special dispensation to continue to lose money and
other companies have immense pressure put on them to be profitable.
Is that decision made in some kind of fair and
calculated way, or is it that certain people just get
a dispensation that others don't. It's so funny, and I
go head to head with some vcs on this all
the time. Their favorite buzzword is economies of scale. Right,
(22:00):
once you hit certain large enough point, the math starts
to work apparently, and you need to be able to
have metal I guess I mean that's TVD on Uber
at least, but you need to be have the metal
to burn enormous amounts of money to get there, and
that means raising enormous amounts of money up front in
order to do that. I don't think that works for
(22:21):
every company, right Like I think at some point because
a lot of folks like to look back at the
first dot com bubble and say, look that these IPOs
were happening and everyone crashed. This going to happen again.
And the distinction they make is that the revenues that
current internet companies have are not insignificant. There are like
in the tens or hundreds and millions of dollars in
revenue which didn't exist during the first dot com era.
(22:44):
But you just wonder whether you can push into profitability,
you know, and what point and how long it's going
to be in what point you have to do that?
And I think it's just different mindsets. You think the
West Coast is vcs are much more comfortable with burn
huge piles of cash over time, and the East Coast
and folks who actually like to see profitable companies make
(23:07):
a profit are more conservative, they would say in that respect.
And I don't know if that's going to ever change.
Can Uber ever make money? Is it structurally unprofitable or
do you think there's just going to be a moment
where they can cut back on the expenses and achieve
those economies of scale. What Uber would say is their
current business is driving other lines of business. They everyone
wants to be a platform Silicon Valley, and that's the
(23:29):
argument that Uber, right, yes, and that's what they're saying now,
we're not a car service, where a transportation platform, right,
which is like I sort of rule my eyes at
because literally everyone wants to be a platform, and they
all say that that. I didn't know that was the
new cliche. That's fast. Oh yeah, someone says a platform.
You know, they're full of it. But I think but
(23:50):
I think the thing that shows some promise even though
it's still the new cash suck for them is their
food delivery stuff and using some of their existing assets
to try to push into a new industry. But you know,
you could also argue they're just kicking the can down
the road, right, Like, at the end of the day,
you either have to increase prices for customers or decrease
(24:11):
profits for drivers, right, And you're balancing a very fine
three sided marketplace essentially between customers drivers in the company itself,
and someone has to at the end of the day
eat those costs. And you and I have seen artificially
depressed prices on the rides that we take for a
very long period of time, and slowly those either have
(24:31):
to go up or the drivers have to get paid less.
If you look at lifts S one and paperwork, they
subtly say that they're essentially going to increase costs for
drivers over time or decrease what they're paying them because
like the only way they can get closer to profitability
at all is by doing one of those two things.
Lift is even more screwed in a way than Uber
because they don't have these other lines of business to
(24:53):
point out. It's interesting, though, is you talk. I'm thinking
that Uber is obviously really different from a Google and
a face Book because there's no network effect with Uber, right,
And I think it might even be fundamentally different than
an Amazon because once you shop on Amazon it's just
so easy, whereas Uber, the consumer switching costs from Uber
to Lift is not that high, and so I don't
(25:14):
I wonder how much flexibility do they have? No, you're
exactly right. And the problem Uber had and has is
that it's been commoditized and done very quickly. Right. So
like even though the verb and brand, Uber is still
sort of there, and that's like a positive thing. A
lot of folks, myself included, will open Uber, look at
the price, and then open Lift and see if there's
(25:35):
like a buck or too cheaper, and then I might
go over to the other one, right, because it's essentially
the same service, all this driver's drive for the same company.
There's this really good book called hard Landing about the
airline industry. It compares because airlines are also like a
sort of commodity industry. Right. They look at Southwest Air
as a case study where brand and the lock in
of customers based on these added things, and a lot
(25:57):
of it was like brand and then over time like loyalty,
point programs and things like that become the differentiator for you, right,
And so I think people are still price sensitive on
it airlines a lot of the time. But you have
to find ways to attract people to your service, and
I think Uber is testing that right now, or at
least dipping his toe into it with rewards programs. How
(26:21):
do you think about Dara so far. Reid Hoffman and
his book Blitz Scaling talks about how in all startups
you have to move from being a pirate to commanding
and Navy. Is Dara the guy to do that. So
he's been at the Helm for a little more than
a year. He was not who you know. We get
into towards the end of the book. There's this big
board fight. The board becomes entirely dysfunctional, and so many
(26:42):
great anecdotes it was so fun to report, actually insane
and maddening. It essentially comes down to a few candidates
and no one really wanted Dara to be the guy
to take over, but they end up with him over
a series of essentially yeah exactly like no one was satisfied,
but he became the guy. He's a very straight laced
professional CEO. He knew how to take a company public
(27:05):
in some ways, and in that most of his job
was not being Travis for the first year of his
entire CEO And he's got a great quote. Over the
next eighteen months, Uber's new chief executive would systematically undermine
nearly everything his predecessor had stood for. That's it. He
went on an apology tour if there's a moment in
London where they are trying to bar Uber from operating
(27:26):
and he had to sort of give maya cop post
to everyone. If you look at all of his statements,
it's basically we are not the old Uber. And so
in the sense that he's not Travis, he was probably
pretty good. But there's also a question of can he
be as inspiring to some of the people there as
the former leader was. It's back to that dark side,
but also the positive side. Can he what was good
(27:48):
about Travis? And can Dara replate ken Dar replate takeaway
what was bad? And is there can you can you
still have what was good? Yeah? Totally. I mean, look again,
for all of Travis's faults or many, I think one
of the things he was really able to do is
is rally these troops around him and like so like
cried Hoffman was saying they were a pirate ship company,
but they didn't know when they turned into a navy right,
(28:11):
And he wasn't able to sort of operate on any
mode but rallying his fellow pirates and taking over everybody.
But you'd say, you'd say it's still tbd whether whether
whether Dara can keep the good while getting rid of
the bad. Dar's a numbers guy. He was a CFO
at m I see for a very long time Barry
Dealer's company. He and Barry Diller are still really close.
(28:31):
And he's a numbers guy, right, So he looks at
the balance sheet, sees how much they're bleeding, and has
to start cutting and changing things in the street. Probably
really likes that. But you know, employees there were used
to some level of whatever comfort or just decisions that
might not be as popular. So it's still only eighteen
months in or whatever he's at now, it's still I'll
(28:54):
give him like a little more time to see what here.
You start to make a judgment. Yeah, On that note,
I also wonder a sort of corollary to that. As
much as he's tried to change the culture, is the
culture of a company set with its founder? In other words,
is that darker side of Uber still? Is it a
seed that's waiting to blow up in some ways, not
just through the ongoing investigations, but just that is going
(29:15):
to exist in the company, regardless of what Darr tries
to do to change it. Right. No, I love that
point because if you look at I mean every smart
VC that's trying to give advice to the founders. Is
talks about like culture set from the very beginning and
tone at the top. I think it's very difficult to
change that, and the authority that a founder has over
that is very powerful. Right. So even if you look
(29:37):
at like Twitter, there was a time when Twitter was
in the news all the time for being one of
the most dysfunctional companies ever, right, And a lot of
that came with the in fighting between the three founders
of the company from the very beginning, and to this
day it's still it still shapes Twitter in some ways,
it still shapes the company. Google is seen as like
a sort of grad school of the valley and very
(29:58):
engineering heavy, and that's from Larry Page and Sergey On
down right. That's how they started the company, and that's
what's most treasured inside of Google. So that DNA really
sets the tone for the company and it's hard to
change that. Over Travis Kalenik is gone, but as a
ghost haunts the hallways. I love despite all the press
around the culture and around the destructiveness of the brolite
(30:22):
culture at Uber, which is a huge part of your
book as well, with Susan Fowler's letter. Is that going
to change? I mean again, this is the question, because
you know, bad behavior ultimately got rewarded, like a lot
of people got rich at the IPO. Right. I live
in San Francisco, and I'm already seeing home prices go up.
I live around many Uber employees, you know. I talk
(30:43):
about this thing called the like the cocktail party test,
where it's whether or not you're embarrassed to where your
T shirt or tell people at a cocktail party where
you work. And there's like a version of the old
Wall Street Journal test. Right, if you're not afraid to
see it a headline in the Wall Street Journal, that's it.
And so there's a period where Uber employees didn't wear
their swag out in public, and now they're back to it,
(31:04):
you know, now they're they're sort of wearying again. And
maybe that's just the proof that you can act, you
can act with impunity and get away with it as
long as everybody gets paid. Yep, that's a fairly devastating quote.
You quote another CEO, female CEO named Karina Lake, which
she wrote in an email it's demoralizing and said that
something like Uber can even exist and even thrive. Do
(31:25):
you agree with that? Look? I think if there are
founders trying to do things the right way, it's really
it is really depressing to see that other companies can
thrive when they're not doing it quote unquote the right way.
And maybe that's naive. Maybe maybe someone like me or
someone like her look at the world in a way
that is moralizing and not cynical enough. Sometimes, you know,
(31:48):
maybe maybe this is how you have to build companies.
But I'd like to think that that you don't have
to be an asshole to build a great company, you know,
and like you can be an entrepreneur and guide things
in a way that you're proud of, or that like
you can have a headline in the Wall Street Journal
and not have to cringe about it, or at least
not have to cover up your behavior. You wrote at
the end of the book, And I think it's it's
(32:08):
interesting that it is an open question. I wondered if
there would be a new generation of Travis Kalenik protege
as soon. The hope I have in this I met
a young kid I was at like a New York
Times event last year when I was reporting the book,
and I met a young, like nineteen year old who's
fresh out of Harvard and he was African American and
(32:30):
identified as gay. And he heard me talk and he
was like, you know, part of why I want to
go into tech is to try to like change what
that culture kind of looks like. And since tech is
not going away, be a part of the force for
representing like all types of people building these things instead
of like young white men who've grown up in largely
(32:51):
in it was at least safe financial bubbles or whatever. Right,
maybe maybe the people building these products should look more
like the rest of the world instead of a monoculture
in the valley. And that I thought was pretty hopeful.
Maybe there's maybe the people behind it are going to
look different in a generation. I love this. We get
to end on a positive note here, it's not all dark.
Thank you so much for coming, Thanks for having me.
(33:21):
It's striking to me how many things about Travis Kalenik
and the Uber story turn accepted wisdom on its head.
Most of all, it's supposed to be good to be paranoid.
It's supposed to be good to have failed in the past.
But in Kalinich's case, the past failure it seems to
have sharpened already sharp edges to a knife point, and
the paranoia took an indisputably dark turn that still might
(33:42):
destroy Uber. It's also interesting to me that there are
all these big questions that we want answered, at least
that I want answered, but real life, a real business,
doesn't always yield clarity, or at least not the clarity.
Would like. We want there to be a moral to
this story, a good moral, but I'm not sure there is.
At least the moral might be to do as Kalenick
did rather than the opposite. Would like for a kindler,
(34:05):
gentler company to have had the same degree of success
that Uber did. It's not clear to me that it
would have. Most of all, would like to believe that
Silicon Valley, which is so critically important to our economy
and our lives, is going to have a day of reckoning.
It's going to leave its ugly childlike aspects in the past.
It's going to grow up. It's not so clear to
me that's going to happen, at least not anytime soon.
(34:30):
Making a Killing is a co production of Pushkin Industries
and Chalk and Blade. It's produced by Ruth Barnes and
Rosie Stoffer. My executive producers are Alison mcclein. No relation
in making Casey. The executive producer at Pushkin is Mia Loebell.
Engineering is by Jason Gambrell. Our music is by Jed Flood.
(34:51):
Special thanks to Jacob Weisberg at Pushkin and everyone on
the show. I'm Bethany mcclein. Thanks so much for listening.
Find me on Twitter Bethany mac twelve and let me
know who you've enjoyed hearing from.
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