Expensive rides or cash-strapped drivers? Uber’s dilemma through the eyes of a NYTimes reporter.
Bay Area tech reporter Mike Isaac discusses his new book, Super Pumped: The Battle for Uber.
Taking the Muni bus in San Francisco is as normal as can be for someone in the City by the Bay. It’s even a local rite of passage, yet admitting to commuting this way may sound a little dated in a world where summoning a private car via cell phone is increasingly the norm.
So when New York Times tech reporter Mike Issac confesses to being a Muni regular, it may make him seem like an unlikely candidate to take a deep dive into the inner workings of the world’s largest rideshare company. Yet Issac observed how Uber best exemplified how Silicon Valley’s billion dollar companies — often called unicorns — came to touch “every part of our lives overnight.” So Isaac started exploring the basic question now commonly asked of Uber: Was the rideshare service as equitable as the name suggested or was the public being taken for a ride all along?
After graduating at UC Berkeley, Isaac’s journalism career coincided with Silicon Valley’s era of Big Tech, in which unicorns benefitted from a rocket-like ascent as revered business innovators only to descend to their more recent perception of congressionally-scrutinized behemoths (that are often publicly-despised and protested in the streets).
Breaking down the nuances of Silicon Valley made Issac an award-winning business reporter, who had, in essence, seen the full trajectory of the modern tech era. That is, until Uber’s founder Travis Kalanick became the center of a series of public controversies, and inspired Isaac to then take a deep dive into the behind-the-scenes story of the rideshare giant. His book tackles the perceptions and realities of one of the industry’s most notorious companies.
We caught up with Issac ahead of his appearance at Kepler’s Books this week to discuss all things Uber as it moves away from the pre-IPO, Kalanick-led days to its current status of a publicly traded company wrangling with both reach and reputation. Take a look.
Since tech is your beat as a journalist, what stood out about Uber that made you want to pursue a whole book about it?
I’d been writing about Facebook for a very long time and that’s another company I tracked, but Uber was fascinating to me because it did become this enormous force to reckon with. It became clear there was a great story in the rise and fall of the founder [Travis Kalanick]. And, the idea [that Uber] traced the path of how tech, for a very long time was celebrated, and now is being questioned and perhaps even reviled at least by some parts of society, and how some people view technology. It seemed the perfect catalyst to talk about the direction that tech has gone, from the past 20 years to now.
Early on, folks celebrated tech founders, the idea that you could build a billion dollar company in your bedroom or dorm room. Now we’re at a place where the question is whether or not these companies are a positive thing for the world. Perhaps they’re not. So Uber just seemed like the perfect vehicle: it was really exciting, plus, there’s tons of drama and action and crazy betrayal between people at the top of this company, that really interested me.
If I had to describe the 2010’s, it would be the unicorn decade. You’re talking about the backlash. It’s not just these companies and their particular troubles —it’s the discourse at large. Now, maybe we shouldn’t even have billionaires to begin with.
That’s exactly right. For a long time, these CEOs were aspirational figures. You too could be the next Mark Zuckerberg or the next Larry Page. We’re in a moment where workers’ rights and the idea of democratic socialism and more equality and less pure embrace of capitalism is a more popular belief.
Tech companies really benefited from, let’s say meritocracy or the powers of capitalism. They are going to face a lot of that backlash when people are wondering, should there be more equanimity around what people should earn or how people should live or how these companies should be created or governed? It’s a very different time and these companies find themselves caught in the middle of it. It happened very quickly and there’s a lot of folks internally that feel the backlash around it.
How long did it take for Kalanick’s separation to come about with the company and, in your view, was it overdue?
It’s not like [his questionable behavior] happened at once, but I think it got divulged at once. That forced people—venture capitalists, executives at the company—to act quickly. One could argue it took quite a long time for them to have this reckoning, but it all caught up at once and pushed him out of the company. There are similar cases like WeWork. The [former] CEO Adam Neumann had been saying crazy stuff for years now, and only now when it’s going to the public market, only now when people’s money is threatened, have people really acted to change things.
How much has Uber repaired its internal culture since Kalanick has been out, if at all?
I think they’ve taken large steps to try and change things. Frankly, a lot people are too scared to have bad headlines or act poorly so they don’t get called out or blasted in the press again. A lot of people have PTSD after their nightmare year working at Uber in 2017. A lot of the problematic people have cycled out, and that has contributed to change inside. To their credit, it’s a lot more quiet and perhaps more boring of a company. Maybe that’s a good thing.
They’d recently been lobbying against Assembly Bill 5 — which limits the independent contractors’ designations over employees — in California. Would you say they are on their heels after Assembly Bill 5 came to the table in California?
Absolutely. This is really essential to their business and they are doing whatever they can to push back. They devoted tens of millions of dollars and $90 million with other companies in the gig economy to push back and make sure it doesn’t pass. They are really scared. It’s core to their business and they are doing whatever they can to stop it.
Drivers are essential to their business model yet not acknowledged. Is Uber just killing time until they can have self-driving cars provide the same ride service?
The future for Uber and really a lot of these ride sharing companies has been — Travis Kalanick himself even said—‘our biggest cost is the guy in the front seat.’ And that gave all the drivers [a viewpoint of] ‘wow, the CEO of the company we work for wants to eliminate us.’ It’s been difficult for drivers [acknowledging] ‘the company doesn’t care about us.’
Now Uber is in a really difficult position where they have to prove they care about [the drivers].
Is Assembly Bill 5 a remedy at all for drivers?
I’m curious what Uber has to do to continue to make their business work. Perhaps there will be changes and drivers will feel better about it, or perhaps Uber will do a sleight of hand to try and work around what the bill requires. It’s unclear how it’s actually gonna work.
Do you see a lot of protests in Uber’s future?
There’s a group called Gigworkers Rising that has been protesting pretty regularly. That’s been getting a lot of attention. The continued focus or pressure from these folks … has been raising the consciousness around some of the labor issues. I’m not sure how effective it’ll be in the long run, but in the short-term it’s kept an ongoing pressure and that probably led to the creation of what AB5 became.
My number one curiosity surrounding Uber is if they introduced self-driving cars tomorrow, would the consumer go for that?
People are mixed on how they feel about self-driving. On the one hand, there’s a novelty and people might be super into it. A lot of folks are really nervous about getting into a robot car. It’s a new thing, a new behavior. It’s hard to change consumer behavior en masse at once. I think it would be something that would take a long time to phase into how people operate.
Uber’s new CEO, Dara Khosrowshahi, was in trouble this week for essentially comparing the self-driving car that killed someone on their watch, to the Saudi Arabia murder of Jamal Khashoggi, calling it “a mistake.” He’s walked that back, but how telling is that of Uber’s culture or do you think he honestly misspoke?
I was trying to figure it out. It’s the worst answer to any question ever. I don’t know what he was thinking. Maybe the most generous interpretation of this is he was having a really bad day and he totally messed up on the answer. The context here is he has a board member that’s connected to the [Public Investment Fund of Saudi Arabia] and has to dance a fine line between not making his board member angry and making the people who fund their company mad, while sort of acknowledging the obvious reality of how horrible it is that the Kingdom of Saudi Arabia—according to the CIA report— ordered the murder of an American journalist essentially. I think he really screwed up and it’s gonna be on him to prove he really doesn’t believe this stuff. He did lose some credibility after two years of being relatively uncriticized personally.
Saudi Arabia invests in Uber and Doordash. So what is a foreign actor like Saudi Arabia’s role as an investor?
They are definitely trying to put more money into American companies and diversify. All their money is tied up in oil. Their whole vision is: Alright, we gotta spread the money around, invest in things beyond oil because oil only lasts for so long. A lot of it is diversification of their funds. You can have arguments in whether or not you think that’s a good or bad thing…I’m not gonna say either way, it definitely involves different and tough geopolitical actors when you are asking foreign companies with their own convictions and philosophies to invest in American companies, and American CEOs have to describe where they stand on this stuff.
Uber has dominated so much of the marketshare, do you think an alternative — not Lyft — can become viable?
Right now in the United States, it’s basically a ride-sharing duopoly—Lyft and Uber. It would be difficult for me to see a third entrant make real headway unless they offered some super different value proposition. I’m unclear on what that would be right now. Would it be, a ride service that treated drivers better?
…It’s hard because they’ve already broken into these cities so well. It took so much money for Uber and Lyft to break in.
Abroad, it’s a much different story. There are so many different competitors that dominate different markets. I would say Uber has a much harder battle overseas where it has to fight so many more battles.
Kalanick recently sold a half billion dollars worth of stock. What does that mean for Uber’s stock value?
You saw one major investor, Shawn Carolan at Menlo Ventures, he tweeted saying, ‘I believe in the long-term viability of this company and I’m not going to sell any shares tomorrow.’
Normally, executives that are at the top of the company or really involved in it like to say, ‘look, I’m not gonna sell. I believe in the long-term value of this company.’ Travis clearly doesn’t care about those appearances, whether he believes in the long-term viability of the company or not, he just sold a very large chunk of stock. This could worry investors he thinks the stock won’t go up in value.
What’s the road to profitability for Uber?
There are a few levers. They can stop burning cash on initiatives that are expensive, like Uber Eats, where they have to burn a lot of money to grow, in countries where they might not even be winning. Or at the end of the day, they increase how much they charge riders or how much they take out of the driver’s cuts. It’s unclear. I think they’ve slowly been taking more out of each ride from drivers. It’s been showing in their financial results. That’s only gonna do so much. Dara said last week we have a path to profitability in 2021, but it’s still hard for me to say what exactly that will look like, or how they will get there.
In short, your estimation is they’ll pass the buck to the driver or the consumer?
Yeah. Those are the big levers to making more money that they have. Either you pay more for the ride or the driver’s get less for the ride.
Terrible options either way. So why won’t Uber release their traffic data to cities? If Uber is doing good, why won’t they work with cities or counties to alleviate congestion?
I think they see it as competitive, proprietary data that other competitors of theirs in private markets could use. It’s a hard problem … At the same time, they can’t say they want to work with cities and pretend to be a friend to cities when they are changing the entire landscape of how transportation works. It’s a hard problem. I don’t envy them, but I wouldn’t say they are a friend to cities like they say they are.
What impact would you say they’ve had on the Bay Area, where you and they both reside?
Just in the last 10 years they’ve been here and I’ve lived here, traffic has increased a zillion fold. It totally changed how transportation works here and they haven’t really done anything to address that or handle it or mitigate some of the problems. I don’t know if they will. It’s probably fundamental to their business because San Francisco is one of the biggest markets they have in the U.S. They’ve reaped the benefits of changing transportation without dealing with the side effects that comes with traffic and people driving from all over the state just to work in San Francisco. So it’s a problem.
Will Uber keep growing or does it have to stop and deal with all the fires that have been surrounding it?
The speculation I keep hearing is they might need to pull out of some markets. They definitely pulled out of a few markets when Dara first came on board. Now they might pull out of some more, but it’s unclear. It depends on where they’re spending money and how much they’re spending and if they want to keep that up, or if they can’t do it anymore and have to retrench. Which is entirely possible.
Can women request female drivers yet?
I don’t believe that’s an option yet on the platform although that’s something many women have requested over time, concerning the sexual assaults on any ride sharing platform.
What’s the big takeaway from the years you put into this book?
What I really wanted to get at was that for years Silicon Valley has operated on culture that worships tech founders and tech companies blindly and gives them complete control of their companies. And that thesis is worth questioning. Uber, where you have the wrong person having outsized control and being worshipped by his staff, that can really have adverse effects. I’m not going to say they are a bad or evil company or [that Travis is] a bad person — it’s more of a book about the side effects of this crazy growth and unbridled capitalism in Silicon Valley, something we should be more aware of in a time where tech now has to be accountable for what they do.
So accountability is the big takeaway.
I think that’s right.
Kepler’s Literary Foundation hosts a talk with Mike Isaac on Thursday November 14, at 7.30. Get tickets here.
Mike Isaac’s book Super Pumped: The Battle for Uber is out now via W.W. Norton & Co.
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