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