WEBVTT - How Extreme Risk-Taking Pushed Uber to the Brink 0:00:00.640 --> 0:00:04.280 Eric. On October three, something important was happening at Uber's 0:00:04.280 --> 0:00:07.840 headquarters in San Francisco. Yeah, they had sort of a 0:00:07.920 --> 0:00:10.800 brawler of a board meeting after sort of weeks of 0:00:10.880 --> 0:00:14.680 negotiations and now what nine months of trouble and trials 0:00:14.680 --> 0:00:19.920 and tribulations. On the table is a massive ten billion 0:00:19.920 --> 0:00:24.080 dollar potential investment from soft Bank, the Japanese technology giant 0:00:24.280 --> 0:00:27.760 run by the very shrewd Masa Yoshi Son. This is 0:00:27.760 --> 0:00:30.400 the deal that's supposed to sort of heal all wounds, 0:00:30.400 --> 0:00:34.519 somehow reform governance and just somehow make peace. So this 0:00:34.600 --> 0:00:37.640 is not just an investment, This is about healing the 0:00:37.680 --> 0:00:41.000 wounds of the past. Yeah, it's it's the kitchen sink, 0:00:41.120 --> 0:00:43.879 just sort of of reforms to try and prepare the 0:00:43.880 --> 0:00:47.080 new CEO, Dara Kazra Shah. He to sort of empower 0:00:47.120 --> 0:00:48.640 him to actually run the company and not have all 0:00:48.680 --> 0:01:01.440 this in fighting constantly. I am Brad Stone and I'm 0:01:01.440 --> 0:01:04.399 a Mary Newcover. And this week on Decrypted, we're bringing 0:01:04.440 --> 0:01:07.440 you an update on Uber, which was the ultimate Silicon 0:01:07.560 --> 0:01:10.640 Valley success story just a few months ago. But as 0:01:10.680 --> 0:01:13.720 you probably know, a series of high profile crises have 0:01:13.800 --> 0:01:17.559 brought this once mighty company to its knees. Today, Uber 0:01:17.640 --> 0:01:21.399 is facing five criminal probes from the Justice Department on 0:01:21.480 --> 0:01:25.520 topics ranging from bribery to price discrimination to theft of 0:01:25.560 --> 0:01:29.520 intellectual property. There's also facing dozens of civil lawsuits, including 0:01:29.520 --> 0:01:33.039 one from Alphabet, the parent company of Google, that's set 0:01:33.040 --> 0:01:35.880 to go on trial in December. So we'll ask how 0:01:35.920 --> 0:01:38.960 things that Uber went so badly wrong, and we'll introduce 0:01:38.959 --> 0:01:42.560 you to two Uber executives who behind the scenes, signed 0:01:42.560 --> 0:01:47.120 off on and supervised some of the company's most controversial programs. Finally, 0:01:47.360 --> 0:01:49.880 as a new CEO takes the reins, we'll see what 0:01:50.000 --> 0:02:00.000 lies ahead for the company. Stay with us. So, Eric, 0:02:00.000 --> 0:02:02.560 we're gonna work our way up to this portentous board 0:02:02.640 --> 0:02:06.200 meeting on October three. But you know, first, Uber goes 0:02:06.240 --> 0:02:10.640 into this moment with a reputation as an absolute corporate pirate, right, 0:02:10.720 --> 0:02:14.320 a lawbreaker. How did it develop that reputation in the beginning? 0:02:14.400 --> 0:02:18.320 Travis Kalenik, who is Uber CEO and is this fighter 0:02:18.360 --> 0:02:22.840 and sort of paranoid competitive guy, like, that's a deserved reputation. 0:02:23.040 --> 0:02:25.480 But in the beginning he was saying, oh, everybody should 0:02:25.480 --> 0:02:28.079 follow the law and not break the rules. Right, he 0:02:28.200 --> 0:02:30.640 was faced in two thousand twelve, after they had operated 0:02:30.680 --> 0:02:33.359 for a few years as a very legal black car company. 0:02:33.400 --> 0:02:36.680 By some other companies, Lift among them, that introduced the 0:02:36.680 --> 0:02:39.760 idea of ride sharing. Anybody could offer a ride in 0:02:39.760 --> 0:02:42.640 their own car, right, and Uber was opposed to that 0:02:42.720 --> 0:02:45.720 until they realized that regulators weren't going to do anything, 0:02:45.760 --> 0:02:47.600 and so that they were gonna lose out to this 0:02:47.760 --> 0:02:51.200 cheaper service and that they needed to take action. Now, 0:02:51.240 --> 0:02:55.640 around this time, Travis hires his really his corporate attorney, Sally. 0:02:55.680 --> 0:02:57.959 You tell us about her and why she's important. Yeah, 0:02:58.000 --> 0:03:00.960 she's like a litigator, like from law firms. She'd been 0:03:00.960 --> 0:03:03.520 there thirteen years, she'd made partner. She didn't really think 0:03:03.560 --> 0:03:06.400 she was gonna leave, but then a friend showed her 0:03:06.400 --> 0:03:08.880 this random job at Uber in the very early days, 0:03:08.919 --> 0:03:12.359 and she sat down with Travis and then quickly joined 0:03:12.360 --> 0:03:15.120 the company. And one of her first challenges that the 0:03:15.120 --> 0:03:17.920 company is should Uber a black car service, be more 0:03:18.400 --> 0:03:21.360 like Lift and a company called sidecar in the ride 0:03:21.360 --> 0:03:24.840 sharing category. Ultimately, obviously they decided to get into that 0:03:24.919 --> 0:03:27.800 with Uber X. What were the implications of that decision? 0:03:28.240 --> 0:03:31.160 So Travis writes this white paper number one, you know 0:03:31.200 --> 0:03:33.919 where they say where there's a legal gray area where 0:03:33.919 --> 0:03:36.040 the law is enforced. We're going to take that as 0:03:36.080 --> 0:03:41.760 a tacit endorsement that it's okay they've deleted that block post. 0:03:41.800 --> 0:03:43.720 I think it's where that's That's all you need to 0:03:43.720 --> 0:03:46.400 know on it um. But that idea that they would 0:03:46.520 --> 0:03:48.360 do what they wanted as long as somebody was stopping 0:03:48.400 --> 0:03:51.200 them define the company right. It meant that they were 0:03:51.200 --> 0:03:54.360 going to really challenge taxi regulations all around the world. 0:03:54.560 --> 0:03:56.280 And it also meant that they were going to get 0:03:56.320 --> 0:03:59.840 into a very competitive environment with a lot of down 0:04:00.160 --> 0:04:03.240 pricing pressure, which of course would have implications for all 0:04:03.280 --> 0:04:07.480 their drivers, would have implications for how they had to 0:04:07.520 --> 0:04:10.200 function as a competitor because they're competing basically in a 0:04:10.440 --> 0:04:16.320 modified environment. So we're in the year two thousand thirteen. 0:04:16.480 --> 0:04:18.960 Here uber X rolls out, and this is a period 0:04:18.960 --> 0:04:22.479 of hyper growth for the company. It's valued at seventeen 0:04:22.520 --> 0:04:26.359 billion dollars. It's expanding in cities every single week. We 0:04:26.480 --> 0:04:28.520 sort of thought this was coming, but now we know 0:04:28.600 --> 0:04:31.520 it's confirmed seventeen billion dollars, and there was a lot 0:04:31.560 --> 0:04:34.679 of competition to leave the rounds other investors in the round. 0:04:34.720 --> 0:04:39.719 Kleiner Perkins, Google Ventures, and low Ventures. Obviously, demand was 0:04:39.800 --> 0:04:43.159 very much there. Travis is a competitive guy, as we 0:04:43.200 --> 0:04:46.000 both know. What are some of the techniques he introduces 0:04:46.040 --> 0:04:48.760 back then to compete against companies like Lift. I mean, 0:04:48.800 --> 0:04:51.000 I think it's so funny that Uber is this quote 0:04:51.040 --> 0:04:54.680 unquote technology company, but it was really sort of fighting 0:04:54.680 --> 0:04:57.599 in the streets. And one of the key elements was 0:04:57.680 --> 0:05:00.359 this thing called slogging. You know, where they would have 0:05:00.360 --> 0:05:03.400 employees and this happened all over the world go and 0:05:03.560 --> 0:05:06.320 ride in a competitor's car and say hey, why don't 0:05:06.360 --> 0:05:08.000 you work for Uber? And you know, that's a very 0:05:08.080 --> 0:05:10.880 manual way to get new business. They would also say 0:05:10.920 --> 0:05:13.400 that their competitors did that to them as well. Yeah, 0:05:13.400 --> 0:05:15.960 I mean, it was sort of industry practice. But this 0:05:16.000 --> 0:05:18.480 is like the level of street fighting we're talking about. 0:05:18.520 --> 0:05:22.000 It's one to one, like spend employee time going to 0:05:22.080 --> 0:05:25.040 recruit individual drivers to get them on your team. So 0:05:25.080 --> 0:05:28.120 slogging may have been industry practice. But around this time, 0:05:28.200 --> 0:05:31.960 Uber starts to introduce other programs that are somewhat unique 0:05:31.960 --> 0:05:35.240 and perhaps ethically dubious. For the first time, you reported 0:05:35.240 --> 0:05:38.320 on one of those programs called surf Cam. There's another 0:05:38.320 --> 0:05:41.680 one called Hell doesn't sound so good. They're really good 0:05:41.720 --> 0:05:44.480 at naming. Really what what are? What were these things? 0:05:44.760 --> 0:05:48.560 They let Uber scrape their competitors API, which is a 0:05:48.600 --> 0:05:51.040 way of saying, okay, as a tech co'many you put 0:05:51.040 --> 0:05:53.600 out this information for people to sort of partner with you. 0:05:54.120 --> 0:05:58.120 Uber would abuse that information and use it to understand, 0:05:58.200 --> 0:05:59.960 you know, where a lift was it any given time, 0:06:00.040 --> 0:06:03.279 more in Southeast Asia, where grabs car was, or how 0:06:03.400 --> 0:06:06.000 how much they were being utilized, like, learn things about 0:06:06.040 --> 0:06:09.000 their competitors and what was the Hell program? Hell is 0:06:09.040 --> 0:06:11.599 the u S version of that. It's sort of a 0:06:11.600 --> 0:06:15.400 tongue in chic name. So Uber internally has Heaven, which 0:06:15.440 --> 0:06:17.760 is their sort of view of everything where all their 0:06:17.760 --> 0:06:20.040 cars are ating and given moment. So Hell is the 0:06:20.120 --> 0:06:22.600 version where they get to figure out where they're competitors 0:06:22.600 --> 0:06:25.240 cars are and you know, take advantage of that information. 0:06:25.400 --> 0:06:28.360 So now going back to sal you the in house lawyer, 0:06:28.720 --> 0:06:31.880 what is she thinking about all this? So the legal 0:06:31.920 --> 0:06:35.440 team gives sort of initial okays of you know, Hell 0:06:35.560 --> 0:06:37.960 and these other programs. They look at it and say, 0:06:38.400 --> 0:06:42.720 all right, you know, API scraping is okay within these parameters. 0:06:42.760 --> 0:06:46.039 But then the programs sort of go wild. By the 0:06:46.040 --> 0:06:49.760 way back into fourteen, these programs were still very secretive, right, 0:06:49.800 --> 0:06:52.760 nobody really knew about them. But what was starting to 0:06:52.800 --> 0:06:56.040 bubble up where some of these very bad incidents you 0:06:56.040 --> 0:06:59.719 know in ubers, including a sexual assault case in India. 0:07:00.040 --> 0:07:01.839 Think we would both argue that perhaps that was a 0:07:01.839 --> 0:07:05.440 little bit of a turning point for Uber's reputation, right, so, 0:07:05.520 --> 0:07:08.120 that a woman you know, was in an Uber and 0:07:08.279 --> 0:07:11.240 was raped by a driver. The driver was later convicted. 0:07:11.480 --> 0:07:15.000 It was a crazy story in India. The company, though 0:07:15.520 --> 0:07:19.440 internally handled it poorly. So at the time of this incident, 0:07:19.600 --> 0:07:24.760 Uber is consumed with the competitive environment and and somewhat grotesquely, 0:07:25.160 --> 0:07:27.920 you know, management thinks that this could be you know, 0:07:28.000 --> 0:07:31.880 a competitive tactic. This this sex crime by a rival 0:07:31.920 --> 0:07:36.080 in India. UM they they hire a firm to investigate it, 0:07:36.560 --> 0:07:39.520 and the firm obtains the medical records of the victim, 0:07:39.760 --> 0:07:42.520 and then maybe some Uber executives to get those medical records. 0:07:42.520 --> 0:07:46.640 That is, you know, just by any measure, grotesquely wrong. Right. 0:07:47.000 --> 0:07:49.800 This went to the top levels of the organization. I mean, 0:07:49.800 --> 0:07:54.040 Travis Kalenik was involved in sort of raising questions even 0:07:54.080 --> 0:07:57.200 after the woman s driver was convicted of the rape, 0:07:57.440 --> 0:08:00.160 about whether their competitor, Ola had set them up for this, 0:08:00.840 --> 0:08:03.680 and his top business executive in a close confidence on 0:08:03.720 --> 0:08:06.600 it of his Eric Alexander had the report at one 0:08:06.640 --> 0:08:09.400 point and was going around talking about the woman's very 0:08:09.480 --> 0:08:13.400 private rape report. And so that's continuing to haunt them, 0:08:13.440 --> 0:08:15.760 and there are questions now about how they got in 0:08:15.800 --> 0:08:18.640 the first place and whether they were in violation of 0:08:18.880 --> 0:08:22.000 you know, anti bribery laws. So Eric tell us more 0:08:22.000 --> 0:08:24.440 about Sally. You are are her and Travis kind of 0:08:24.480 --> 0:08:26.520 birds of a feather when it comes to pushing the 0:08:26.520 --> 0:08:29.800 boundaries of the law. She really has this funny moment 0:08:29.880 --> 0:08:32.400 where Travis tells her he wants her to be innovative. 0:08:32.880 --> 0:08:36.560 It really made her angry. In another interview, Uh sort 0:08:36.559 --> 0:08:39.120 of accounts, you know, playing tennis with her husband and 0:08:39.360 --> 0:08:42.240 getting this feedback that Travis wanted her to be innovative, 0:08:42.440 --> 0:08:44.000 and at the end of the match she's sort of, 0:08:44.360 --> 0:08:47.600 I guess, as exhausted as processed it and decides that 0:08:47.640 --> 0:08:50.000 you know, he's telling her that their their team can 0:08:50.040 --> 0:08:53.199 act differently than everybody else's legal team, that Uber can 0:08:53.240 --> 0:08:55.440 be creative in ways that other people won't, and that 0:08:55.960 --> 0:08:58.560 Basically she needs to sort of figure out how to 0:08:58.640 --> 0:09:00.920 make it possible for Uber to do all this stuff 0:09:01.480 --> 0:09:03.600 even when the law doesn't seem to be in their favor. 0:09:03.720 --> 0:09:05.800 By the way, I mean that in most cases was 0:09:05.840 --> 0:09:09.480 a successful approach. Right. If they hadn't pushed the boundaries, 0:09:09.559 --> 0:09:11.800 Uber never would have launched in cities like New York 0:09:11.920 --> 0:09:20.720 or London or San Francisco for that matter. Okay, so 0:09:20.760 --> 0:09:23.240 now I want to introduce another person in a position 0:09:23.280 --> 0:09:27.280 of authority at Uber. His name is Joe Sullivan. Most 0:09:27.280 --> 0:09:29.200 people have never heard of him, but he's a big 0:09:29.240 --> 0:09:31.959 tech figure. He worked at Hey pal eBay, he was 0:09:32.000 --> 0:09:34.960 the head of security for Facebook, and so Uber brings 0:09:35.040 --> 0:09:39.080 him in as his heavy hitter. But then his portfolio 0:09:39.240 --> 0:09:41.480 is like all the sketchy stuff, like all the dark 0:09:41.600 --> 0:09:44.960 arts of Uber is basically Joe Sullivan's organization. Yeah, you 0:09:45.120 --> 0:09:47.199 describe him in a in a recent story as running 0:09:47.280 --> 0:09:50.199 kind of a corporate spy agency inside Uber and all 0:09:50.240 --> 0:09:53.439 these programs that we've just talked about, these ethically dubious 0:09:53.559 --> 0:09:58.600 kind of monitor your rivals programs, Like hell, Joe runs those, right. 0:09:58.640 --> 0:10:02.119 Any program with idious sounding name was part of his organization. 0:10:02.280 --> 0:10:05.439 You know, one part of his fifdom was called competitive Intelligence. 0:10:05.600 --> 0:10:08.839 They called it coin that contained hell and other data 0:10:08.880 --> 0:10:13.280 scraping efforts. He ran SSG, which you know literally sounds 0:10:13.280 --> 0:10:17.360 like the KGB, which strategic services group, which would hire 0:10:17.400 --> 0:10:22.000 people to surveil competitors and their employees. Right, Uber had 0:10:22.320 --> 0:10:25.320 the head of its Chinese business who was the cousin 0:10:25.760 --> 0:10:28.439 to the head of its primary rivals business d D. 0:10:29.000 --> 0:10:31.880 And we reported in a recent story that you know, 0:10:31.960 --> 0:10:36.679 allegedly Joe's group had their own employee monitored because perhaps 0:10:36.679 --> 0:10:39.080 they were questioning her loyalty to the company. Yeah, they 0:10:39.080 --> 0:10:40.920 just want to make sure she didn't interfere with the 0:10:40.960 --> 0:10:44.200 deal and sort of help her cousin out right the 0:10:44.240 --> 0:10:47.040 deal where Uber sold its business to d D in China. 0:10:47.120 --> 0:10:49.720 But here's the key question, you know, which is to 0:10:49.800 --> 0:10:52.960 what extent did Uber's board know about all of these 0:10:53.040 --> 0:10:56.400 slightly nefarious activities. Certainly the board claims and not have 0:10:56.480 --> 0:10:59.880 known knowing Uber and Travis, they must have known that 0:11:00.000 --> 0:11:03.080 they were pushing the boundaries and then chose not to 0:11:03.080 --> 0:11:05.680 get into the specifics. I think that's how it's looking 0:11:05.760 --> 0:11:07.840 right now, and certainly on a lot of fronts, there's 0:11:07.840 --> 0:11:10.000 an effort from the board to say, we had no 0:11:10.040 --> 0:11:13.000 idea what was going on right now. Throughout this period 0:11:13.040 --> 0:11:15.120 of time around two thousand and fifteen, the company is 0:11:15.160 --> 0:11:18.840 growing by leaps and bounds. But we've been told that 0:11:18.960 --> 0:11:21.560 Sally You, the chief lawyer, is starting to get a 0:11:21.600 --> 0:11:25.920 little nervous and she cautions Travis. But you know, Travis headstrong, 0:11:26.080 --> 0:11:29.880 very competitive. He keeps pushing the boundaries of the law. 0:11:30.120 --> 0:11:32.680 Right in an all hands meeting to his employees, like 0:11:32.760 --> 0:11:36.080 lots of people there, he says they don't need to 0:11:36.120 --> 0:11:39.000 follow laws that aren't being enforced. He says, you know, 0:11:39.080 --> 0:11:41.760 we'll have to see what the regulators doing. If they're 0:11:41.760 --> 0:11:44.040 not doing anything to our competitors, we should push the 0:11:44.040 --> 0:11:48.080 boundaries too. And Sally's just like, you can't say that, 0:11:48.120 --> 0:11:49.960 Like she sends an email be like, you know, the 0:11:50.000 --> 0:11:53.000 message of compliance is very important here, and this is 0:11:53.040 --> 0:11:56.319 gonna matter if we face criminal investigations down the line, 0:11:56.640 --> 0:11:59.920 because if something individually does something bad, the whole company 0:12:00.240 --> 0:12:02.040 could be held responsible if we don't have a good 0:12:02.120 --> 0:12:05.560 corporate compliance culture. So, in other words, after a two 0:12:05.640 --> 0:12:09.280 year period of successful what they would call legal innovation, 0:12:09.920 --> 0:12:13.000 Sally You and Travis Klinik are on a collision course. 0:12:28.679 --> 0:12:30.920 By now, it's the summer of two thousand sixteen, and 0:12:31.080 --> 0:12:34.760 Uber is a huge company. It's raised twelve billion dollars. 0:12:35.120 --> 0:12:39.320 It's evaluation is an insane sixty nine billion dollars. And 0:12:39.640 --> 0:12:42.880 amidst all this kind of hype and energy, Uber very 0:12:42.960 --> 0:12:47.080 quietly changes the way it calculates fairs. So Uber announces publicly, Okay, 0:12:47.120 --> 0:12:50.160 we're gonna do upfront fars. We're gonna be super transparent, 0:12:50.160 --> 0:12:53.960 We're telling people beforehand how much we're charging you. But 0:12:54.240 --> 0:12:57.080 what they didn't really make clear publicly is that that 0:12:57.120 --> 0:12:59.720 also meant that they were going to start paying drivers 0:12:59.840 --> 0:13:02.680 in dependently from what they charged passengers, which made it 0:13:02.679 --> 0:13:05.000 possible for them to find all sorts of crafty ways 0:13:05.320 --> 0:13:09.280 to charge passengers more without paying drivers more. There is 0:13:09.320 --> 0:13:13.280 a federal statute called the Robinson Patment Act, which you know, 0:13:13.320 --> 0:13:16.960 forbids any kind of pricing discrimination. You know, to what 0:13:17.080 --> 0:13:20.679 extent is Uber wandering into this, you know, legally gray 0:13:20.840 --> 0:13:23.040 or even just a illegal territory? And what a sally 0:13:23.080 --> 0:13:25.679 you thinking about this? Well, they're being investigated for their 0:13:25.679 --> 0:13:29.600 pricing policy, so definitely wandered sufficiently for prosecutors to look 0:13:29.679 --> 0:13:32.000 into it. I think there are all sorts of questions. 0:13:32.040 --> 0:13:35.720 I mean, Uber's operating in physical locations, going from neighborhoods, 0:13:35.760 --> 0:13:39.640 you can imagine actual discrimination, not just pricing discrimination being 0:13:39.640 --> 0:13:42.640 an issue. So yeah, it's it's a big set of 0:13:42.640 --> 0:13:45.839 their troubles at this point. And then at the same time, 0:13:45.880 --> 0:13:48.720 as it is experimenting with some of these pricing tools 0:13:48.840 --> 0:13:52.760 with names like Casscade and Firehouse, Uber makes what I 0:13:53.160 --> 0:13:57.280 might argue is its biggest mistake yet, which is over 0:13:57.320 --> 0:14:01.400 the summer of two sixteen, it acquire fires a small 0:14:01.440 --> 0:14:05.520 autonomous car startup in San Francisco called Auto and Otto 0:14:05.640 --> 0:14:09.559 is run by a farmer, a very recently former Weymo 0:14:10.120 --> 0:14:15.319 division of Google executive named Anthony Lewandowski. In when they 0:14:15.360 --> 0:14:18.240 bought Auto, they seemed like geniuses, Like it looked like 0:14:18.760 --> 0:14:21.120 Uber was flying high. The valuation was super high. They 0:14:21.160 --> 0:14:24.240 just expanded their self driving car unit. It seemed like 0:14:24.280 --> 0:14:27.400 they were really on the path to do great things. Well, 0:14:27.440 --> 0:14:29.760 it was a bold move, right because it's not it's 0:14:29.800 --> 0:14:32.480 really not related to Uber's business, you know, And they say, 0:14:32.480 --> 0:14:35.280 we're going to get into deep tech and compete with Google. 0:14:35.680 --> 0:14:38.800 So they buy Auto, which is largely made up of 0:14:38.920 --> 0:14:43.520 former Google employees and run by a former Google employee, 0:14:43.880 --> 0:14:46.200 and that seems great. It's going quiet, quite quiet, and 0:14:46.240 --> 0:14:49.960 then all of a sudden, alphabet the barren company of Weymo. 0:14:50.120 --> 0:14:52.200 You know that Google. They have so many names over there. 0:14:52.200 --> 0:14:55.320 But you know, basically, Google sues Uber and a mega 0:14:55.440 --> 0:14:59.200 lawsuit and says you stole our trade secrets by buying 0:14:59.200 --> 0:15:01.960 this company, and it turns the attention to the question 0:15:02.080 --> 0:15:06.080 of okay, uh, Anthony Lewandowski, you know, it's still I 0:15:06.080 --> 0:15:09.720 guess allegedly had downloaded all these files from Google before 0:15:09.720 --> 0:15:12.720 he left. And the question that you know, Sally you 0:15:13.040 --> 0:15:16.160 must have been asking herself, is you know, how much 0:15:16.200 --> 0:15:19.720 did Uber know about the way in which Anthony Lewanowski 0:15:19.760 --> 0:15:23.160 had left Google? A lot? A lot. I mean, that's 0:15:23.200 --> 0:15:26.080 what we've been learning now that Uber. It wasn't like 0:15:26.120 --> 0:15:28.240 they bought the company and then they realized, oh crap, 0:15:28.320 --> 0:15:33.800 this guy might have stolen stuff from Google. It was, oh, 0:15:33.920 --> 0:15:36.640 it seems like he's taken He's told us that he's 0:15:36.640 --> 0:15:40.840 taken five hard disks of information. What do we do now? 0:15:41.160 --> 0:15:44.000 And Travis is like, no, we should definitely buy the company. Still, 0:15:44.080 --> 0:15:46.680 let's figure out how to protect ourselves. So to your 0:15:46.680 --> 0:15:50.560 point that Uber knew before they finalized the acquisition of Otto. 0:15:50.760 --> 0:15:54.560 They hired a forensics firm called Straws Friedberg, Right, And 0:15:54.560 --> 0:15:57.760 and Straws goes and tries to assemble a portfolio of 0:15:57.800 --> 0:16:01.120 all the information that Anthony has his team have from 0:16:01.160 --> 0:16:04.760 Google and kind of isolated, get it out of the company, right, 0:16:04.800 --> 0:16:06.960 The ideas of it never gets to Uber. We're fine, 0:16:07.160 --> 0:16:09.560 And I mean it was sort of you can read 0:16:09.560 --> 0:16:13.280 the report now and Lewandowski is literally like emptying the 0:16:13.320 --> 0:16:15.640 trash on his computer like the day of their meeting 0:16:15.680 --> 0:16:19.000 with him. It's just it's clear that the investigators themselves 0:16:19.040 --> 0:16:21.800 are sort of troubled by some of the activity when 0:16:21.840 --> 0:16:24.160 he's really supposed to try and hand everything over to 0:16:24.240 --> 0:16:27.040 them so they can sort of know about it and 0:16:27.080 --> 0:16:29.400 wall it off from Uber so that Uber can't get 0:16:29.440 --> 0:16:32.920 in trouble. And this is all happening very quietly over 0:16:32.960 --> 0:16:34.800 the summer and fall of two thousand and sixteen, so 0:16:34.880 --> 0:16:38.920 quietly that board member Bill Gurley from from Benchmark, one 0:16:38.960 --> 0:16:41.280 of Uber's investors, claims he doesn't even know about that. Right. 0:16:41.320 --> 0:16:45.080 He testified under oath that the board was never told 0:16:45.400 --> 0:16:49.520 about Uber's findings. Meanwhile, they'd approved all these contractual things 0:16:49.560 --> 0:17:01.680 like indemnifying Anthony Lewandowski for past bad acts. So hopefully 0:17:01.720 --> 0:17:04.280 we've laid the groundwork here for what then happens. In 0:17:04.320 --> 0:17:06.959 early two thousand and seventeen. You know, Donald Trump has 0:17:07.000 --> 0:17:10.280 been elected. It's sort of different political environment that sends 0:17:10.280 --> 0:17:13.960 on Silicon Valley, and it's in that environment that we 0:17:14.000 --> 0:17:17.760 start to see the delete Uber hashtag. Susan Fowler, a 0:17:17.840 --> 0:17:21.360 former Uber employee, writes a very critical blog post of 0:17:21.359 --> 0:17:25.119 of what she called the misogynistic and harassing culture for women, 0:17:25.560 --> 0:17:29.160 and one by one, a rough week for Uber appears 0:17:29.200 --> 0:17:31.640 to be getting rougher. The New York Times is reporting 0:17:31.760 --> 0:17:34.800 Uber you use software to elude authorities in cities where 0:17:34.800 --> 0:17:37.880 the ride hailing service is not yet approved by using 0:17:37.920 --> 0:17:41.480 the program known as gray Ball. And amid all these crises, 0:17:41.520 --> 0:17:45.399 all these controversies, a video emerges, a very unflattering video 0:17:45.400 --> 0:17:48.280 of Travis Klink. It's so funny because it's so mundane 0:17:48.359 --> 0:17:50.640 in some ways. I mean, Travis is just bopping around 0:17:50.640 --> 0:17:52.400 in the back of the car with these two women 0:17:53.080 --> 0:17:57.200 and having sort of mild conversation, and then the women 0:17:57.200 --> 0:17:59.280 get out of the car and the driver sort of 0:17:59.280 --> 0:18:02.679 starts interacting Travis, and Travis opened the conversation and by 0:18:02.720 --> 0:18:05.360 the end of it they're having this fight where Travis 0:18:05.440 --> 0:18:08.920 is swearing and it's just very unco like and also 0:18:09.000 --> 0:18:12.000 it just sort of shows is sort of lack of 0:18:12.040 --> 0:18:15.920 compassion for one of his drivers. But people are not 0:18:16.040 --> 0:18:18.200 trust in you anymore. Do you think people would blank 0:18:18.200 --> 0:18:22.679 cards anymore? I lost plenty seven thou dollars because of you. 0:18:23.160 --> 0:18:26.120 I bankrupt because of you. Look, he does, he does, 0:18:26.320 --> 0:18:30.200 he does? You keep changing every day? What you keeping? 0:18:31.160 --> 0:18:34.080 What have I changed about black? What have you changed 0:18:34.160 --> 0:18:38.440 the whole business? What you dropped the prices on black? Yes? 0:18:38.480 --> 0:18:42.359 You did? Did with twenty dollars. He started with twenty dollars. 0:18:42.440 --> 0:18:45.040 You know how much is the mile now to you 0:18:45.080 --> 0:18:49.240 know what? What? Some people don't like to take responsibility, 0:18:49.320 --> 0:18:55.720 to take something playing everything car good luck. And then 0:18:55.760 --> 0:18:58.560 what happens is earlier in the summer, you know, all 0:18:58.640 --> 0:19:03.240 the scruise and t Havis's position becomes basically untenable. The board, 0:19:03.520 --> 0:19:06.520 led by you know, the investors at a benchmark who 0:19:06.640 --> 0:19:08.600 have claimed to be surprised by all the things that 0:19:08.600 --> 0:19:11.280 we've talked about. Uh, you know, they confront him in 0:19:11.320 --> 0:19:14.760 a hotel in Chicago and they tell him that his 0:19:14.760 --> 0:19:22.639 his tenure as CEO is over. So Eric back to 0:19:22.680 --> 0:19:25.280 the board beating on a Cobra third. In light of 0:19:25.320 --> 0:19:28.480 all of these scandals, it's it's not that surprising that 0:19:28.520 --> 0:19:31.439 the board wants to further limit Travis Kalinic's power. Right, 0:19:31.440 --> 0:19:33.960 he's no longer CEO, but he's on the board. He 0:19:33.960 --> 0:19:36.960 controls two other seats. Maybe one day he'll come back. 0:19:37.240 --> 0:19:40.200 But this is Silicon Valley, right, We revere the founder, 0:19:40.280 --> 0:19:44.080 We revere the founding CEO, which Travis basically is well. 0:19:44.160 --> 0:19:46.480 Part of the fight here is just how bad was 0:19:46.560 --> 0:19:49.560 it uber. I think they're different camps. There's sort of, 0:19:49.880 --> 0:19:52.160 you know, the benchmark camp, which is it was terrible, 0:19:52.280 --> 0:19:55.199 like we are being sued by Alphabet like everything is. 0:19:55.400 --> 0:19:56.840 And then there are board members who want to sort 0:19:56.840 --> 0:19:58.120 of saying, you know, it's sort of bad. We got 0:19:58.160 --> 0:20:00.280 rid of him, but he can stick around. I think 0:20:00.320 --> 0:20:03.800 another key point is that when Travis resigned, he agreed 0:20:04.040 --> 0:20:05.920 to hand over a lot of his power over these 0:20:06.200 --> 0:20:09.439 board seats, and then he renegged on the deal like 0:20:09.480 --> 0:20:11.560 in the other aspect. And this is a little technical, 0:20:11.680 --> 0:20:14.200 but it's it's true. At a lot of Silicon Valley companies. 0:20:14.400 --> 0:20:17.359 There are different classes of stock, right, and Travis owns 0:20:17.400 --> 0:20:21.639 shares of stock that come with super voting powers, and 0:20:21.680 --> 0:20:24.560 the board at this momentous meeting is trying to get 0:20:24.640 --> 0:20:26.720 rid of those and limitous power in that way too. 0:20:27.720 --> 0:20:31.280 And ahead of the board meeting, fearing that the board 0:20:31.359 --> 0:20:32.760 was gonna take away a lot of his power, it 0:20:33.440 --> 0:20:37.399 Travis filled his two board seats suddenly, uh John Thane 0:20:37.400 --> 0:20:41.280 and Ursula Burns to you know, very senior former executives 0:20:41.600 --> 0:20:44.760 one Merrill Lynch, one Xerox. But he fills them, sort 0:20:44.800 --> 0:20:48.720 of proving the impulsiveness and sort of power of this 0:20:48.800 --> 0:20:51.560 ousted founder that wasn't going to go quietly. And and 0:20:51.600 --> 0:20:54.440 this is a very fractis board, right. You have Travis 0:20:54.440 --> 0:20:56.800 and some of his supporters. I think Ariana is still 0:20:56.920 --> 0:20:59.760 somewhat in as camp You have you know, the first 0:20:59.760 --> 0:21:02.840 seat EO. Ryan Graves and the one of the co founders, 0:21:02.840 --> 0:21:06.240 Garrett camp Um. But you've got Benchmark, you know, You've 0:21:06.280 --> 0:21:09.879 got David Trujillo at TPG. I mean, yeah, there are 0:21:09.880 --> 0:21:11.879 a lot of characters, and it was an eleven person 0:21:11.920 --> 0:21:15.760 board before this meeting started, and Darak shah He the 0:21:15.800 --> 0:21:19.080 new CEO who's right in the middle and really trying to, 0:21:19.520 --> 0:21:21.760 you know, get rid of all this divisiveness and just 0:21:21.920 --> 0:21:24.480 safeguard the future for the company. Dark as are Shah 0:21:24.560 --> 0:21:27.440 He the new CEO who would come over from Expedia, 0:21:27.520 --> 0:21:31.600 the dark horse candidate who is now controlling everything. He's 0:21:31.640 --> 0:21:34.639 doing a pretty good job of playing the convener, like 0:21:34.640 --> 0:21:38.080 getting everybody on the same page. Even as he's one 0:21:38.119 --> 0:21:40.200 of the authors of these reforms. They're gonna live a 0:21:40.320 --> 0:21:44.080 limit Travis's power. His appointment surprised almost everyone. Right the 0:21:44.119 --> 0:21:46.879 names we were hearing were Meg Whitman from HP or 0:21:46.960 --> 0:21:50.480 Jeff Emil formerly from g e U Dara. You know, 0:21:50.560 --> 0:21:53.199 as a as a professional CEO, he ran Expedia for 0:21:53.240 --> 0:21:56.119 many years. He feels like an adult frankly in this 0:21:56.240 --> 0:21:59.240 scenario for sure. Yeah, And I think he wants to 0:21:59.280 --> 0:22:02.040 make sure that it while he's new and he has 0:22:02.080 --> 0:22:04.800 all his support and good press and everything, that he 0:22:04.840 --> 0:22:07.679 can sort of get the company's governance under control. So 0:22:07.760 --> 0:22:10.240 that meant, you know, moving the company to one share, 0:22:10.320 --> 0:22:14.040 one vote, having a lot of new independence board members, 0:22:14.080 --> 0:22:17.760 so that the power of Travis spord members and the 0:22:17.840 --> 0:22:21.479