Epic Fail

How Uber CEO Kalanick exposed the failure of the Internet at Failcon

FailCon

Big Brother might be dead, but one department of the old totalitarian state remains in robust health. Orwell’s Ministry of Truth — in fact, of course, the Ministry of Propaganda — was supposed to have gone out of business in 1989 with the fall of the Berlin Wall.

But, like other failed twentieth-century institutions, the ministry has relocated its operations to the west coast of America. It has moved to the epicenter of twenty-first-century innovation — to Silicon Valley, a place so radically disruptive that it is even reinventing failure as the new model of success.

On the list of all-time greatest lies, the idea that FAILURE IS SUCCESS doesn’t quite match the Orwellian trinity of WAR IS PEACE, FREEDOM IS SLAVERY, or IGNORANCE IS STRENGTH, but it’s still an astonishing perfidy, worthy of the best Ministry of Truth propagandist. And yet, in Silicon Valley the “failure is success” lie has become such an accepted truth that there is now even a San Francisco event called FailCon, dedicated to its dissemination.

Along with several hundred other aspiring disruptors, I’d gone to FailCon to learn why, in the Valley at least, failure is the internet is not the answer considered to be desirable. Held at San Francisco’s luxury Kabuki hotel a couple of miles west of the Battery, FailCon was part countercultural remix of the old Protestant work ethic, part classic Californian self-help therapy, and — like most technology events in Silicon Valley — wholly divorced from reality. It’s as if Orwell’s Ministry of Truth had, to borrow another fashionable Valley word, “pivoted” into the conference business. “Stop being afraid of failure and start embracing it,”1 the event instructed its audience.

And to help us overcome the fear, to make it feel good to fail, FailCon invited some of Big Tech’s greatest innovators to outfail each other with tales of their losses.

At FailCon, the F-word was ubiquitous among illustrious Silicon Valley speakers like Airbnb cofounder Joe Gebbia, the billionaire venture capitalist Vinod Khosla, and Eric Ries, the author of a bestselling handbook for Internet success called The Lean Startup.

Indeed, the more uncannily prescient the investor, the more moneyed the startup entrepreneur, the bigger the influencer, the more boastfully they broadcasted their litany of failures. At FailCon, we heard about failure as the most valuable kind of education, failure as a necessity of innovation, failure as a version of enlightenment, and, most ironically, given the event’s self-congratulatory tenor, failure as a lesson in humility.

But the award for the most successful and least humble of FailCon failures went to Travis Kalanick, the cofounder and CEO of the transportation network Uber, whose prematurely graying hair and hyperkinetic manner suggested a life of perpetual radical disruption. Both his appearance and his business “innovations” personified Schumpeter’s “perennial hurricane of creative destruction.” This self-styled “badass,” a pinup for our libertarian age who identifies himself as one of the violent criminals in Quentin Tarantino’s movie Pulp Fiction, certainly isn’t too shy to present himself as a historic risk taker. On Twitter, @travisk even once borrowed the cover of The Fountainhead, Ayn Rand’s extreme libertarian celebration of free-market capitalism, as his Kalanick’s $18 billion venture is certainly a badass company, with customers accusing its drivers of every imaginable crime from kidnapping to sexual harassment. Since its creation, the unregulated Uber has not only been in a constant legal fight with New York City, San Francisco, Chicago, and federal regulators, but has been picketed by its own non-unionized drivers demanding collective bargaining rights and health-care benefits. Things aren’t any better overseas. In France, opposition to the networked transportation startup has been so intense that, in early 2014, there were driver strikes and even a series of violent attacks on Uber cars in Paris. While in September 2014, a Frankfurt court banned Uber’s budget price UberPop product entirely from the German market, claiming that the massively financed startup unfairly competed with local taxi companies. Uber drivers don’t seem to like Kalanick’s anti-union company any more than regulators do. In August 2013, Uber drivers sued the company for failing to remit tips and in September 2014 around a thousand Uber drivers in New York City organized a strike against the company’s unfair working conditions.

“There’s no union. There’s no community of drivers,” one sixty-five-year-old driver who has been working for Uber for two years complained to the New York Times in 2014. “And the only people getting rich are the investors and executives.”

The fabulously wealthy Silicon Valley investors, who will ride the startup till its inevitable IPO, love Uber, of course. “Uber is software [that] eats taxis. . . . It’s a killer experience,” you’ll remember Marc Andreessen enthused. Tragically, that’s all too true. On New Year’s Eve 2013, an Uber driver accidentally ran over and killed a six-year-old girl on the streets of San Francisco. Uber immediately deactivated what they call their “partner’s” account, saying that he “was not providing service on the Uber system during the time of the accident.” How generous. And happy 2014 to all our partners, Uber might have added.

So much for shared responsibility in the sharing economy.

No wonder Kalanick’s own drivers, whom he calls “transportation entrepreneurs,” are picketing Uber. And no wonder that the parents of Sofia Liu, the San Francisco girl killed by the Uber driver, are suing Uber itself in a wrongful-death lawsuit.

It’s not just drivers and pedestrians who are being killed by Uber. If you don’t like it, walk, Uber tells its customers, with Kalanickian tact, about a service that uses “surge” pricing — a euphemism for price gouging — which has resulted in fares being 700–800% above normal on holidays or in bad weather. During a particularly ferocious December 2013 snowstorm in New York City, one unfortunate Uber rider paid $94 for a trip of less than two miles that took just eleven minutes. Even the rich and famous are being outrageously ripped off by the unregulated Uber service, with Jessica Seinfeld, Jerry’s wife, being charged $415 during that same December storm to take her kid across Manhattan.

Along with other startups such as Joe Gebbia’s Airbnb and the labor network TaskRabbit, Uber’s business model is based upon circumventing supposedly archaic twentieth-century regulations to create a “what you want when you want it” twenty-first-century economy. They believe that the Internet, as a hyperefficient and so-called frictionless platform for buyers and sellers, is the solution to what they call the “inefficiencies” of the twentieth-century economy. No matter that much of the business generated at networks like Airbnb is under investigation by US authorities, with many of the fifteen thousand “hosts” in New York not paying tax on their rental income. Nor that TaskRabbit’s so-called distributed workforce model — whose simple goal, according to its CEO, Leah Busque, is to “revolutionize the world’s labor force” — profits from what Brad Stone calls the “backbreaking” and “soul-draining” nature of low-paying menial labor.

“This revolutionary work built out of Silicon Valley convenience is not really about technological innovation,” warns the podcaster and writer Sarah Jaffe about the role of labor brokers like TaskRabbit in our increasingly unequal economy. “It’s just the next step in a decades-old trend of fragmenting jobs, isolating workers and driving down wages.” And with 7.5 million Americans working in part-time jobs in July 2014 because they didn’t have full-time jobs, Leah Busque’s “revolutionizing” of the world’s workforce is, in truth, a reflection of a new poorly paid class of peer-to-peer project workers, dubbed the “precariat” by the labor economist Guy Standing. “With piecemeal gigs easier to obtain than long-term employment,” warns the New York Times’ Natasha Singer, this highly insecure labor model, the dark underbelly of DIY capitalism, is becoming an increasingly important piece of the new networked economy.

But that’s all beside the point for these self-styled disrupters who, without our permission, are building the distributed capitalist architecture of the early twenty-first century. The market knows best, hard-core libertarians like Travis Kalanick insist. It solves all our problems. “Where lifestyle meets logistics” is how Uber all too innocently describes its mission to become the platform for the way people and things are transported in our electronically networked age. But Uber-style, let-the-market-decide companies are actually building an on-demand superhighway of luxury services and products for members of the new elite. As George Packer argues, companies like Uber have been designed to solve “all the problems of being twenty years old, with cash in hand.” Tap your smartphone and these companies deliver whatever you want: an instant limousine, an instant worker, an instant teacher, even an instant currency like Bitcoin. They represent Ayn Rand’s free-market fantasy of radical privatization: everybody’s private jet, everybody’s private hotel room, everybody’s private doctor, everybody’s private employee, everybody’s private charity, everybody’s private economy. In short, everybody’s private society.

Kalanick is no stranger to controversy. Back in the late nineties, he cofounded a peer-to-peer music-sharing startup called Scour, which, like Napster, helped decimate the recorded music industry by enabling consumers to steal the latter’s products.

While Kalanick paced relentlessly around the FailCon stage as if he’d just strode out of an Ayn Rand novel, he quantified his own dramatic failure at Scour by explaining that he’d been sued for a quarter of a trillion dollars by some of the world’s most powerful entertainment companies.

“Two hundred and fifty billion dollars!” Kalanick exclaimed, jumping around as if even he didn’t quite believe such a staggering sum. “That’s the GDP of Sweden — the gross national product of a mid-sized European economy.”

Among the FailCon audience, these revelations were greeted reverentially, with a collective nodding of heads. Only in Silicon Valley does getting sued for a quarter of a trillion dollars grant rock star status. A number of amateur paparazzi even waved their iPhones in the air to capture Kalanick’s image — the surest sign of approval from a crowd for whom the ontological argument “pix it or it didn’t happen” is gospel and an experience isn’t considered real until it is publicly posted on Instagram or Twitter.

A young, disheveled, and unshaven fellow seated next to me seemed particularly taken with the enormity of Kalanick’s failure. “Awesome,” the guy muttered to his friend. “That’s so totally awesome.”

And his friend, also young, male, and disheveled, was, if anything, even more impressed with Kalanick’s losses. “Epic…fucking…fail,” he added, iterating these three words so slowly that each was designed to sound like a fully formed sentence.

Epic. Fucking. Fail.

The Real Failure

At the FailCon cocktail party later that evening, I ran into Kalanick, whom, as a fellow startup Web entrepreneur, I had known for almost twenty years. Back in the nineties, while he was failing with Scour, I was also failing with my own music startup, AudioCafe.

We had shared some of the same investors and appeared on the same panels to argue about the value of disruption. He’d even spoken at an event I’d produced in 2000 about the future of music.

But, compared with his, my failure was pathetic. I’d only lost a paltry few million dollars of other people’s money. And nobody, I’m ashamed to admit, has ever sued me for the GDP of a midsized European country.

“Hey, Travis, here’s to failure,” I toasted, raising a glass to the paper billionaire, who, in his hyperkinetic way, was conducting several conversations simultaneously with an entourage of admirers.

“Yo, dude, success is failure,” Kalanick said, stopping momentarily and bumping his fist against my glass. “He who fails most — wins.”

“Yo, dude, doesn’t that make you the big winner,” I replied, with a thin smile.

No wonder FailCon had been held at the Kabuki. It was bizarre theater. Here we were, at an exclusive San Francisco hotel, surrounded by some of the most successful, the most powerful, and the wealthiest people on earth. And what was this elite doing?

They were toasting failure. Yes, the Ministry of Truth really had relocated to Silicon Valley. FailCon is building an entire media company around the failure meme. It has introduced another event called FailChat, which instructs entrepreneurs to “come prepared with your own personal stories of struggle, confusion or doubt.” And it is going international, too, holding FailCon conferences in Germany, Singapore, France, Norway, Brazil, India, and, most absurdly, in recession-ravaged Spain — where there’s certainly no scarcity of people with personal stories of struggle, confusion, or doubt.

But the truth, the real truth about failure, is the opposite of the glossy version choreographed by Silicon Valley’s slick apologists of disruption. Real failure is a $36 billion industry that in a decade shrank to $16 billion because libertarian badasses like Travis Kalanick invented products that destroyed its core value.

Real failure is the $12.5 billion in annual sales, the more than 71,000 jobs, and the $2.7 billion in annual earnings estimated to have been lost just in the United States’ music industry because of “innovative” products like Napster and Scour. Real failure is the 55% drop in Spanish music sales between 2005 and 2010 because of online theft. Real failure is such a decimation of Spanish musical talent that a country that had historically produced international stars like Julio Iglesias hasn’t had an artist selling a million copies of an album in Europe since 2008. No wonder FailCon is coming to Spain.

FailCon is coming everywhere soon. While it’s amusing to satirize libertarian clowns like Travis Kalanick with their pathetic boasts about $250 billion lawsuits and their adolescent Ayn Rand fetishes, this really is no laughing matter. Behind many of today’s hyperefficient network companies like Google, Facebook, Amazon, Airbnb, and Uber — with their assault on traditional market regulations, their “free” business models, their “disintermediation” of paid human labor by artificial algorithms, and their “transparent” big data factories in which we all unknowingly work — there is failure. Traumatic failure. Indeed, the real failure, the thing that nobody at FailCon ever dreamed of associating with failure, is the digital upheaval itself.

Rather than the answer to our contemporary problems, the Internet, that human-computer symbiosis that J. C. R. Licklider believed “would save humanity,” is actually diminishing most aspects of our lives. Instead of creating more transparency, we have devices that make the invisible visible. Instead of a globally connected online citizen, we now have the selfie.

Instead of the village pub, we have the Battery. Instead of a cultural cornucopia, we have a post–“Golden Mile of Vinyl” Berwick Street. Instead of a thriving economy, we have downtown Rochester, New York.

The Ministry of Truth is back in business. In Silicon Valley, everything is the opposite of what is claimed. The sharing economy is really the selfish economy; social media is, fact, antisocial; the “long tail” of cultural democracy is actually a long tale; “free” content is turning out to be shatteringly expensive; and the success of the Internet is, in truth, a huge failure.

Epic. Fucking. Fail.

At the FailCon cocktail party, I shared a drink with the twodisheveled guys who’d been sitting next to me during Kalanick’s speech. “So, the Internet, is it working?” I asked them about the intergalactic computer network created by J. C. R. Licklider, Paul Baran, Bob Kahn, and Vint Cerf. “Has it been an unqualified success?”

“A success?” one of them of them repeated, glancing at me as if I’d just been whisked down to earth by an UberCHOPPER. In a sense, perhaps, I had. It was a question so taken for granted at evangelical events like FailCon that, amid this technology crowd, I might as well have been speaking Sanskrit or Swahili.

In Silicon Valley, everyone knows the answer. Their answer is an unregulated, hyperefficient platform like Airbnb for buyers and sellers. Their answer is the distributed system of capitalism being built, unregulated cab by cab, by Travis Kalanick. Their answer is a “lean startup” like WhatsApp that employs fifty-five people and sells for $19 billion. Their answer is data factories that turn us all into human billboards. Their answer is the Internet.

“It’s obviously been a success for all of us,” I explained, sweeping my hand around the room packed with fabulously wealthy failures. “But is the network the answer for everyone else? Is it making the world a better place?”

My question triggered a couple of lies that, while not quite in the same league as the FAILURE IS SUCCESS whopper, could still have been coined at the Ministry of Truth. Yes, they both affirmed, nodding their heads vigorously, the Internet is the answer.

“The Net gives power to the people,” one said, smiling broadly. “For the first time in history, anyone can produce, say, or buy anything.”

“Yeah, it’s the platform for equality,” the other added. “It allows everyone an equal share in our new abundance.”

The Internet gives power to the people? The Internet is the platform for equality? Neither of these disheveled guys knew anything about “the people” or “the platforms” outside Silicon Valley. They were the very kind of twenty-year-olds with cash in hand for whom Uber’s expensive private black limousine service was designed. Both had recently graduated from Stanford. Both worked at big data startups with insatiable appetites for collecting other people’s private information. Both were engineers of an increasingly unequal future, in which ordinary people will experience a scarcity, rather than an abundance of economic, political, and cultural power.

“That’s not true,” I said. “The Internet is a winner-take-all economy. It’s creating a two-tiered society.”

“Where’s the evidence?” one engineer responded. He wasn’t smiling anymore.

“Yeah, I’d like to see your data,” the other chimed in.

“Open your eyes,” I said, pointing at the bustling San Francisco street outside the hotel window. “There’s your data.”

Excerpted from The Internet is Not the Answer © 2015 by Andrew Keen; reprinted with the permission of the publisher, Atlantic Monthly Press, an imprint of Grove Atlantic, Inc.

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