Speaker 1: Technology with tech Stuff from half stuff works dot com.
Speaker 1: Hey there, and welcome to tech Stuff. I'm your host,
Speaker 1: Jonathan Strickland. I'm an executive producer here at how stuff
Speaker 1: Works and I love all things tech. And in our
Speaker 1: last episode, I talked about the founding of Uber and
Speaker 1: how it went from idea to a working service. I
Speaker 1: also touched on why Uber and other ride hailing apps
Speaker 1: have faced criticism and resistance from various cities and transportation agencies. Today,
Speaker 1: we're going to look at a few other noteworthy elements
Speaker 1: of Uber's history, and then we're really going to take
Speaker 1: a deep look at what happened to the company during
Speaker 1: two thousand seventeen, because boy howdy, was that a crazy year. Now,
Speaker 1: one thing I did not cover in the previous episode
Speaker 1: was Uber's surge pricing model. So Uber uses algorithms that
Speaker 1: dynamically a just fair prices. When user demand is greater
Speaker 1: than what the current Uber drivers on the road can supply,
Speaker 1: the algorithm starts to crank up the cost of fares. Now,
Speaker 1: not only can this curtailed demand, which alleviates stress on
Speaker 1: the system and also creates an incentive for off the
Speaker 1: clock drivers, they get a little notification that says, hey,
Speaker 1: surge pricing is an effect that means that they are
Speaker 1: more likely to go hit the roads and start picking
Speaker 1: up some of those fares, and as the supply starts
Speaker 1: to meet demand, the surge pricing prices come down. Meanwhile,
Speaker 1: while surge prices are in effect, drivers are making more money.
Speaker 1: They get to keep more money because the affairs are higher.
Speaker 1: But the practice has prompted a backlash whenever its spirals
Speaker 1: out of control. So for example, on New Year's Eve
Speaker 1: two thousand and eleven, surge pricing drove fares up to
Speaker 1: seven times the standard rate or even higher in some areas,
Speaker 1: which would mean if you were taking a trip that
Speaker 1: would normally cost ten dollars, that same trip would suddenly
Speaker 1: cost you seventy dollars. In two thousand thirteen, Uber would
Speaker 1: really get dragged over the coals for surge pricing when
Speaker 1: New Yorkers in a snowstorm saw steep surge prices hit
Speaker 1: the service, and that motivated Uber executives to promise they
Speaker 1: would cap surge pricing during things like blizzards and floods
Speaker 1: and other similar events. In May, Lift launched a beta
Speaker 1: test of its ride hailing service, in San Francisco. Now.
Speaker 1: The company behind Lift is zim Ride, which is a
Speaker 1: network that connects people who wish to car pool with
Speaker 1: each other. So, in other words, zim Right is what
Speaker 1: I would call an honest to goodness ride sharing platform.
Speaker 1: It lets people share rides with one another. While services
Speaker 1: like Uber and Lift have been called ride sharing companies,
Speaker 1: often by themselves, I would argue that's not really a
Speaker 1: fair designation. Ride sharing to me suggests that the driver
Speaker 1: is heading to a general location and is happy to
Speaker 1: give a lift to someone else who also wants to
Speaker 1: go that way. But what Uber and Lift do is
Speaker 1: allow you to hail a ride and to direct a
Speaker 1: driver to a specific destination that he or she may
Speaker 1: not have been going toward otherwise. So I think of
Speaker 1: that as a ride hailing company, not a ride sharing company.
Speaker 1: And you might argue that this is all semantics, but
Speaker 1: it turns out the ends up being really important when
Speaker 1: you're looking at stuff like legislation. Anyway, in two thousand twelve,
Speaker 1: zim Ride launched Lift. Their model was a slightly peculiar
Speaker 1: one designed specifically to get around issues with regulation and licensing.
Speaker 1: So it's not that I feel super cuddly toward Lift,
Speaker 1: but I do acknowledge that they had a slightly different
Speaker 1: way of going about things. Rather than set a fee
Speaker 1: and return for a ride, drivers would get what Lift
Speaker 1: was calling a donation from the rider. Lift would give
Speaker 1: a uh suggested donation, and typically that was about thirty
Speaker 1: percent less than what it would cost you to take
Speaker 1: a cab to that same place. Lift also built in
Speaker 1: a tipping feature in its app, allowing writers to add
Speaker 1: a tip to their payments, something that Uber would not
Speaker 1: offer until John Zimmer, the chief operating officer for Left,
Speaker 1: told All Things d that quote. I'm sure people will
Speaker 1: get upset about more competition, but our understanding is that
Speaker 1: when it's ride sharing, you can use your personal insurance policy.
Speaker 1: As for regulation, a lot of state laws are supportive
Speaker 1: of car pooling and ride sharing and want to make
Speaker 1: that work. End quote. Now, again, that seems like people
Speaker 1: were playing a little fast and loose with definitions in
Speaker 1: order to turn them to their advantage. Of course, a
Speaker 1: lot of areas want to encourage car pooling in order
Speaker 1: to alleviate traffic congestion. But that suggests that you are
Speaker 1: having a group of people who are all going to
Speaker 1: the same place anyway, and you just consolidate them into
Speaker 1: a single vehicle, as opposed to each taking their own cars.
Speaker 1: I would argue that Uber and Lift don't do that
Speaker 1: because you have the drivers on the road already, But
Speaker 1: it can help alleviate traffic if otherwise the people who
Speaker 1: are taking Lift or Uber would be driving themselves. Still,
Speaker 1: that's neither here nor there. Lift and Uber would engage
Speaker 1: in a really bitter rivalry over the years. That's still
Speaker 1: going on today, obviously, and that rivalry has had a
Speaker 1: few scandals associated with it. In two thousand fourteen, news
Speaker 1: outlets began to cover the ways that the two companies
Speaker 1: were waging war against each other. Forbes reported that Uber
Speaker 1: was offering Lift drivers big bonuses to jump ship and
Speaker 1: work for Uber instead of Lift. Lift reportedly was following
Speaker 1: suit shortly thereafter, creating something of a bidding war for drivers,
Speaker 1: and both sides were accused of setting up rides with
Speaker 1: their rivals in order to try and recruit drivers, or worse,
Speaker 1: to arrange a ride and then cancel it after a
Speaker 1: driver had already accepted the assignment, which would end up
Speaker 1: jamming the system for both companies, with reportedly thousands of
Speaker 1: bogus car requests hitting Both drivers were in the middle
Speaker 1: of this, both as pawns and as victims. Uber and Lift,
Speaker 1: in an attempt to hurt the other competitor, would lower
Speaker 1: their fare prices on their services so they would attract
Speaker 1: more customers, saying, hey, our prices are lower than Ubers,
Speaker 1: or our prices are lower than Lifts, which was great
Speaker 1: if you're a customer, but terrible if you're a driver,
Speaker 1: because it meant that the drivers were taking home less
Speaker 1: money on every ride, and the drivers were worrying that
Speaker 1: customers would get used to those lower fares, meaning that
Speaker 1: if one company were to win out over the other one,
Speaker 1: there still would be an incentive to keep the fares
Speaker 1: really low, because otherwise you could upset your customers. And
Speaker 1: so they were worried that they were setting a precedent
Speaker 1: that was ultimately going to hurt drivers in the long
Speaker 1: run and make it less uh less, make less economic
Speaker 1: sense actually drive for the companies. Now back to Uber's
Speaker 1: timeline and back to two thousand twelve. Starting that summer,
Speaker 1: Uber began to stretch beyond partnering with driver was of
Speaker 1: town cars and limousines. The company introduced a news service
Speaker 1: called Uber X, and this service included the option to
Speaker 1: be picked up in a hybrid car like the Toyota Prius,
Speaker 1: or in an suv or a couple of other options.
Speaker 1: The fairs for those vehicles, on average were thirty lower
Speaker 1: than if you were to try and get a town
Speaker 1: car or a limo. So it was to kind of
Speaker 1: open up the platform to both more drivers and more
Speaker 1: riders to be more attractive for folks who you know,
Speaker 1: didn't necessarily need to roll up in a town car
Speaker 1: or a limo. Also, at that time, it was already
Speaker 1: pretty clear that they were going to have to make
Speaker 1: some adjustments because Lincoln was no longer making the town car,
Speaker 1: so they had to figure something out otherwise their fleet
Speaker 1: of vehicles would get progressively older and there will be
Speaker 1: no replacement for them now. Kala Nick was quick to
Speaker 1: dismiss claims that this turned Uber into a taxi service.
Speaker 1: He actually told tech Crunch, the difference is that you
Speaker 1: can also hail a taxi with an Uber you have
Speaker 1: a prearranged situation, you have the driver's name and phone number,
Speaker 1: end quote, and that distinction seems pretty flimsy to me.
Speaker 1: But I'm not an expert in this area by any
Speaker 1: stretch of the imagination. It is true that when you
Speaker 1: hail a taxi, you typically have no idea which driver
Speaker 1: is going to arrive, what is or her name is,
Speaker 1: or how to contact them directly, because you're generally working
Speaker 1: through the taxi company. If you haven't just hailed them
Speaker 1: on the street and you've called a taxi cab company,
Speaker 1: it's the dispatcher that's doing all of this for you,
Speaker 1: and the company ends up taking care of all that
Speaker 1: communication and you just stay out of the loop. But
Speaker 1: I'm not sure that that difference is significant enough to
Speaker 1: dismiss the argument that Uber was operating pretty much like
Speaker 1: a taxi service. Now, in September, California would become the
Speaker 1: first state to regulate services like Uber and Lift. According
Speaker 1: to those regulations, drivers would first have to obtain a
Speaker 1: permit from the cpu CE the California Public Utilities Commission
Speaker 1: before being allowed to work for a ride hailing company.
Speaker 1: The regulations also standardized criminal background checks and required the
Speaker 1: companies to offer insurance coverage for their drivers. The CPUC
Speaker 1: would also collect a third of a percent of total
Speaker 1: revenues in fees as a result of all this. Meanwhile,
Speaker 1: Uber was forming partnerships with several auto manufacturers to create
Speaker 1: a program that would reduce car ownership costs for Uber drivers,
Speaker 1: to try and create another incentive to work for Uber
Speaker 1: as opposed to lift or some other service. Now, two
Speaker 1: thousand fourteen began with a real horrible tragedy. And there
Speaker 1: are a couple of these in this story and uh
Speaker 1: or in this podcast, and it's gonna be tough for me,
Speaker 1: but I'll try and get through it. So an Uber
Speaker 1: driver hit a family that was crossing an intersection crosswalk,
Speaker 1: and in the process, a six year old girl died
Speaker 1: from her injuries. The family of that girl sued Uber
Speaker 1: for damages, but the company fought back and said that
Speaker 1: it wasn't their fault, their insurance shouldn't be held accountable,
Speaker 1: they shouldn't have to cover it because the driver was
Speaker 1: not actively in the process of completing a trip. And
Speaker 1: whilst true he had his app open, his Uber app
Speaker 1: open to look for the next fair, he had not
Speaker 1: yet accepted a new job request at the time of
Speaker 1: the accident, and so Uber was claiming that because this
Speaker 1: was in between picking up and dropping off someone else
Speaker 1: and taking the next job, they were not really responsible
Speaker 1: for this. And they shouldn't be held accountable, and the
Speaker 1: terrible experience led to more serious discussions about corporate liability
Speaker 1: in the wake of accidents. Uber would eventually change his
Speaker 1: policy to say it would cover accidents involving drivers who
Speaker 1: had the app open, even if they were not actively
Speaker 1: transporting someone or had not yet accepted a fair and
Speaker 1: as for that lawsuit, Uber would eventually settle with the
Speaker 1: girl his family out of court for an undisclosed amount.
Speaker 1: In April, Uber branched out from the ride hailing business
Speaker 1: and dipped its toes in bike messenger services, starting in Manhattan.
Speaker 1: This service is called Uber Rush, and the fees begin
Speaker 1: at three dollars as a flat fee, plus four dollars
Speaker 1: per mile traveled by the courier, so a minimum of
Speaker 1: seven dollars for one job. The service would eventually expand
Speaker 1: to Chicago and to San Francisco, and at one point
Speaker 1: it was a really popular option that restaurants were using
Speaker 1: in order to send deliveries to people, but in seventeen
Speaker 1: Uber said that restaurants would no longer be eligible to
Speaker 1: use Uber Rush, and instead they would need to switch
Speaker 1: over to a different program Uber was running. That Uber
Speaker 1: had launched in twenty fifteen called Uber Eats, which is
Speaker 1: an on demand food delivery service. Um It's in several
Speaker 1: cities now, not just the three, not just New York,
Speaker 1: San Francisco, and Chicago. In fact, Atlanta has it as well.
Speaker 1: Rush also still exists still in New York, San Francisco,
Speaker 1: and Chicago, but it's meant for other types of jobs,
Speaker 1: not food delivery. Also was the year that Uber really
Speaker 1: made its first serious steps into China, which ultimately would
Speaker 1: become a quagmire for the company. The temptation to get
Speaker 1: into China was huge because there was enormous potential to
Speaker 1: do incredible amounts of business there. In fact, early reports
Speaker 1: were suggesting that Uber's business in China was going to
Speaker 1: outpace all other markets in the company by a crazy amount.
Speaker 1: Like if you looked at the charts, you would see
Speaker 1: all the figures for China were rocketing skyward while everything
Speaker 1: else was kind of in a steady climb, which was,
Speaker 1: you know, the steady climb is good, but the the
Speaker 1: China numbers were out of this world. But while those
Speaker 1: numbers look great, other issues told a different story. So
Speaker 1: China already had a righte hailing service that was dominating
Speaker 1: the market called d D Shu Shing and like Lift,
Speaker 1: d D competed against Uber by offering bonuses to drivers
Speaker 1: to work on d D service rather than its competitor,
Speaker 1: and both de D and Uber were operating in a
Speaker 1: market that had not yet caught up to this business.
Speaker 1: This is what courts media called a legal gray zone,
Speaker 1: meaning that most cities in China weren't really equipped to
Speaker 1: handle this yet, and no one had quite figured out
Speaker 1: how to regulate or legalize the sort of service, and
Speaker 1: so there were a lot of questions about whether or
Speaker 1: not what d D and Uber were doing would actually
Speaker 1: be legal, and this would continue until when Chinese cities
Speaker 1: began to actually create legislation and regulations for the industry.
Speaker 1: Not long after that happened, d D, Shu Shing and
Speaker 1: Uber would merge in a thirty five billion dollar deal,
Speaker 1: so the new company was evaluated at a thirty five
Speaker 1: billion dollars. D D ended up making a billion dollar
Speaker 1: investment in Uber Global and Uber China's investors, the people
Speaker 1: who had backed Uber's move into China in the first place,
Speaker 1: would receive a ownership of the new company, which all
Speaker 1: sounds pretty great, but really it marked an exit strategy
Speaker 1: for Uber. The company had bet big on getting into
Speaker 1: China and had burned a huge amount of cash competing
Speaker 1: against d D without gaining enough of a foothold for
Speaker 1: the effort to really be profitable. D D had been
Speaker 1: dominating Uber with an eight percent hold on the market
Speaker 1: share for ride haling services in the country, so Uber
Speaker 1: was effectively defeated and dragging itself out of China. In fact,
Speaker 1: if you here, if you read up on the the
Speaker 1: stories of how much money Uber burned through over those years,
Speaker 1: it is an astronomical amount of money. Now, Uber is
Speaker 1: not a publicly traded company and as such it is
Speaker 1: not required to report its earnings to the public. It's
Speaker 1: not like a public filing where you can actually see
Speaker 1: how much a company claims it made versus the expenses.
Speaker 1: But there are a lot of phone calls that have
Speaker 1: to happen with investors, and most of the time that
Speaker 1: information ends up getting communicated to the outside world in
Speaker 1: some way. And because of that, we know that Uber
Speaker 1: was burning through billions of dollars per year. It was
Speaker 1: not making a profit. Some of the cities were said
Speaker 1: to be profitable, but overall, as a company, Uber was
Speaker 1: spending more than it was making. Now. In August, Uber
Speaker 1: announced Uberpool, and this is the service that lets you
Speaker 1: share a ride with someone else going in the same
Speaker 1: general location or direction of travel that you need to take.
Speaker 1: The two parties in the car will split the fair,
Speaker 1: so it ends up being cheaper. And if there aren't
Speaker 1: any other passengers who need to go where you're going
Speaker 1: or go in the same direction that you're going, you
Speaker 1: would still get an Uber ride at a reduced fair. Now,
Speaker 1: when it launched, Uber published a blog post that said,
Speaker 1: quote on average, uber x already costs less than a taxi.
Speaker 1: Imagine reducing that cost by up to another end quote.
Speaker 1: So again, Uber's really playing to the customer there. Now,
Speaker 1: for drivers, it's a different story because you know, you're
Speaker 1: you're talking about cutting into the potential take home pay
Speaker 1: as long as enough people are in the car where
Speaker 1: you know, even though they're each splitting the fair, if
Speaker 1: you add it up, it ends up amounting to a
Speaker 1: decent fee for the trip. It's not that big a deal,
Speaker 1: but it's one of those things that's a delicate balance.
Speaker 1: How do you balance out the needs of the people
Speaker 1: driving for you versus your customer base In two thousand fifteen,
Speaker 1: Uber unveiled Uber Cargo in Hong Kong. Now this was
Speaker 1: really Uber's foray into creating a logistics service. It just
Speaker 1: happened to be a logistics service in the form of
Speaker 1: a rent a van kind of business, but it really
Speaker 1: meant the at Uber was starting to see the potential
Speaker 1: of moving into logistics in general, and not just booking
Speaker 1: a trip from point A to point B. According to
Speaker 1: a blog post, Uber Cargo works like this. With Uber Cargo,
Speaker 1: a van arrives wherever you want it to be in minutes.
Speaker 1: You can load your items in the back of the
Speaker 1: van yourself, or request the driver's assistants if you need
Speaker 1: an extra hand. Deliveries can easily be tracked in real
Speaker 1: time through the app. The item's location can be shared
Speaker 1: with the recipient, and you can even ride along with
Speaker 1: your goods, so you'll have ease of mind that your
Speaker 1: items are safe. A couple of years later, Uber would
Speaker 1: extend that branch of its business and create Uber Freight,
Speaker 1: which connects truck drivers with people who need to uh
Speaker 1: ship stuff a good distance away, So that would be
Speaker 1: an extension of this logistics element of Uber's business. Also
Speaker 1: in Uber was moving to make its first acquisition kind
Speaker 1: of surprising that it took that long in some ways,
Speaker 1: just because a lot of companies that's kind of how
Speaker 1: they would grow early on, instead of just trying to
Speaker 1: increase business, which I say dismissively, but it is actually
Speaker 1: a really really hard thing to do. Some companies gobble
Speaker 1: up other smaller companies and they are able to grow
Speaker 1: that way. In this case, it was Uber's attempt to
Speaker 1: build out its own capabilities and reduce its reliance on
Speaker 1: third parties. The acquisition was Dakarta, which was a mapping
Speaker 1: tech and company. It was a startup company that was
Speaker 1: all about localized data, map applications, turned by turn directions,
Speaker 1: that kind of stuff, and Uber executive said this was
Speaker 1: to streamline operations behind the scenes, but a lot of
Speaker 1: analysts pointed out that it also probably had something to
Speaker 1: do with Uber wanting to decrease its reliance on Google
Speaker 1: and Google Maps. Now, two other big things happened in
Speaker 1: that I really really need to talk about. But first
Speaker 1: let's take a quick break to thank our sponsor. All Right,
Speaker 1: those two other things in that I mentioned before the break.
Speaker 1: The first was that Uber snipe about forty people away
Speaker 1: from Carnegie Mellon University in an effort to establish a
Speaker 1: new robotics research facility. This was when the world learned
Speaker 1: that the Calais vision of Uber's future was one in
Speaker 1: which all those pesky drivers weren't part of the problem anymore. Instead,
Speaker 1: a fleet of autonomous vehicles that would be owned and
Speaker 1: operated by Uber would whisk across cities to pick up
Speaker 1: and drop off people, and best of all, every single
Speaker 1: scent earned would go to the company. There be no
Speaker 1: need to pay a robot a wage, so you didn't
Speaker 1: have to, you know, share the fair with the robots.
Speaker 1: Tipping wouldn't be a consideration either. Now that could mean
Speaker 1: that Uber could slash fair prices too, which would pass
Speaker 1: savings on to the customers. But the focus was mostly
Speaker 1: on how a company that depended upon a population of
Speaker 1: contractors is now actively pursuing a strategy that could ultimately
Speaker 1: render that population moot. Uber had been one of the
Speaker 1: more aggressive companies pursuing an autonomous car future. Many in
Speaker 1: the field give conservative estimates as to win will have
Speaker 1: a truly autonomous vehicle fleet, something that is able to
Speaker 1: handle virtually any scenario that could happen on the roads. Meanwhile,
Speaker 1: Uber has launched pilot programs or maybe I should say
Speaker 1: pilotless programs in a few cities to provide driverless car
Speaker 1: service to test out the feasibility of the strategy. When
Speaker 1: we get to seventeen and a little bit later in
Speaker 1: this episode, i'll talk more about this program and some
Speaker 1: of the concerns people had about it. The other major
Speaker 1: news story happening to Uber in had to do with
Speaker 1: a driver named Barbara and Berwick. Now. Berwick had started
Speaker 1: driving for Uber in the summer, and that fall she
Speaker 1: filed a claim with the California Public Utilities Commission arguing
Speaker 1: that her status as contractor wasn't accurate and that she
Speaker 1: should instead be considered an Uber employee. Being an employee
Speaker 1: meant she would receive more benefits, such as reimbursements to
Speaker 1: the tune of about four thousand dollars of owed expenses.
Speaker 1: The CPUC eventually ruled in her favor, saying she was
Speaker 1: in fact an employee, since that set a precedent at
Speaker 1: Uber and completely would turn their business model topsy turvy.
Speaker 1: The company immediately filed an appeal. Now, Berwick's case did
Speaker 1: not mean that all other Uber drivers in California magically
Speaker 1: transformed into employees. They would have to take their cases
Speaker 1: individually to the cpu C to argue for that designation,
Speaker 1: but a group of them did get together to file
Speaker 1: a class action lawsuit against Uber to make it a
Speaker 1: more broad, sweeping change. And Uber has been fighting that
Speaker 1: court case and it kind of stagnated in the court system.
Speaker 1: The plaintiffs filed a new, updated lawsuit in summer of seventeen,
Speaker 1: and that has yet to be resolved. Alright, so we're
Speaker 1: up to seen and then after that we'll get to
Speaker 1: look at what I'd argue has been Uber's most important
Speaker 1: years so far. But big stuff also happened in sixteen.
Speaker 1: At the beginning of the year, Travis Kalanik addressed investors
Speaker 1: and talked about the expense Uber shouldered as part of
Speaker 1: the battle in China. Analysts estimated that Uber would lose
Speaker 1: about two point eight billion dollars over the course of
Speaker 1: ten even as its valuation would top sixty billion dollars.
Speaker 1: So here's a company that is considered to be worth
Speaker 1: more and more while it's still losing billions of dollars
Speaker 1: of cash, which I know I work for how stuff works.
Speaker 1: But y'all I don't know how that works, all right.
Speaker 1: Uber was battling one class action lawsuit with drivers in California,
Speaker 1: but it also saw a second class action lawsuit come
Speaker 1: to a close. Now, this time it was with passengers.
Speaker 1: This revolved around Uber using certain phrases in their advertising
Speaker 1: language that may have stretched the truth a bit. Phrases
Speaker 1: like referring to its background check process as quote industry
Speaker 1: leading end quote, for example, and passengers were saying there
Speaker 1: were numerous examples of the background checks failing to bring
Speaker 1: out the criminal past of various drivers, or Uber was
Speaker 1: ignoring it. In any case, Saying it was industry leading
Speaker 1: was misleading, and the cost of that mistake was twenty
Speaker 1: eight and a half million dollars. Now that amount was
Speaker 1: divided up among the twenty five million people represented in
Speaker 1: the class action lawsuit minus lawyer fees, so you know,
Speaker 1: people got like a nickel per rider or something. Sixteen
Speaker 1: was also the year that Uber pulled out of Austin, Texas.
Speaker 1: So did Lift for that matter. I mentioned this in
Speaker 1: Part one of the Uber story, but this was in
Speaker 1: response to a voter referendum that ruled rid hailing services
Speaker 1: would need to require drivers to submit to a fingerprint
Speaker 1: based background check. Uber and Lift didn't want to do that,
Speaker 1: largely because it could be seen as a quote unquote
Speaker 1: control move. Now, that could mean that drivers would be
Speaker 1: able to make the argument that they are more employees
Speaker 1: than contractors, because one of the defining elements of employees,
Speaker 1: at least in California is the amount of control a
Speaker 1: company has over that employees day to day duties. And
Speaker 1: again that would mean both Uber and Lift would have
Speaker 1: to change how they compensate and reimburse drivers, changing up
Speaker 1: their business strategy. So if they make this exception in
Speaker 1: Texas and say, yeah, well, fingerprint background check these folks,
Speaker 1: that could have a ripple effect throughout other states, which
Speaker 1: then could end up making them have to change the
Speaker 1: designation of contractor to employee and that would affect their
Speaker 1: bottom line. And ultimately that is the real reason why
Speaker 1: they pulled out of Austin, Texas, mostly in the hope
Speaker 1: that at the state level, the state government would end
Speaker 1: up changing rules that would benefit them and allow them
Speaker 1: to come back and work in those places. Toyota and
Speaker 1: Uber entered into what they called a strategic partnership in
Speaker 1: two thousand and sixteen. As part of that agreement, Uber
Speaker 1: drivers could lease vehicles from Toyota and cover their vehicle
Speaker 1: payments through their earnings as Uber drivers. Over on the
Speaker 1: corporate side, it also meant that Uber and Toyota would
Speaker 1: start looking into countries that did not yet have rides
Speaker 1: sharing markets and look into introducing services there. Toyota also
Speaker 1: agreed to invest money in Uber, but they were a
Speaker 1: little shy when it came to how much money that was.
Speaker 1: They didn't they didn't say. But in July two thou sixteen,
Speaker 1: another big setback for Uber. They pulled up stakes in Hungary.
Speaker 1: The country's government had passed legislation that Uber executive said
Speaker 1: would make it impossible for Uber to operate there. The
Speaker 1: followed This followed months of strife in Hungary. There were
Speaker 1: taxi drivers who were protesting across the country. This follow
Speaker 1: to other protests that had happened in places like England
Speaker 1: and France. And France it got really violent, actually, uh
Speaker 1: and so they were saying Uber was coming in and
Speaker 1: they were being an unfair competitor against the taxi industry.
Speaker 1: So Hungary passes this law and it gave the Department
Speaker 1: of National Communications the authority to block internet access to
Speaker 1: what we're considered quote illegal dispatcher services end quote, and
Speaker 1: Uber says, well, we can't really do anything here, so
Speaker 1: peace out, y'all and they left. Also in July, a
Speaker 1: judge had harsh words for Uber executives who apparently decided
Speaker 1: to go all cloak and dagger on perceived threats. So
Speaker 1: what exactly happened? Well, back in December two thousand fifteen,
Speaker 1: there was a lawyer named Andrew Schmidt who took up
Speaker 1: the case that was filed by his client, Spencer Meyer,
Speaker 1: and that case was against Uber. The claim stated that
Speaker 1: Uber was violating anti trust laws through coordinated surge pricing. Now,
Speaker 1: left alone, that case probably have just fizzled out or
Speaker 1: been quietly settled. But instead, someone at Uber decided to
Speaker 1: go a touch nuclear in their attack. According to the
Speaker 1: proceedings in court, top executives at Uber reached out to
Speaker 1: an investigative firm staff with former c i A and
Speaker 1: National Security Council employees in an effort to dig up
Speaker 1: dirt on Schmidt and his client. Schmidt got wise when
Speaker 1: he found out some of his colleagues and friends were
Speaker 1: getting these weird phone calls about him, so he confronted
Speaker 1: Uber in a letter, and he was assured by Uber
Speaker 1: that they weren't responsible for all those calls, and then
Speaker 1: a little later he got another call from Uber that said, well,
Speaker 1: hang on, maybe we're a little responsible. The judge said
Speaker 1: that Uber's actions created quote a reasonable basis to suspect
Speaker 1: the perpetration of fraud end quote. This would not be
Speaker 1: the last time that Uber would employ or executives at Uber,
Speaker 1: I guess I should say, would employ these sort of
Speaker 1: tactics that get real super dodgy. So what exactly happened
Speaker 1: behind the scenes. Well, according to The Verge, which has
Speaker 1: an excellent piece about this story, Uber's general counsel Sally You,
Speaker 1: sent an email to Uber's chief security officer, Joe Sullivan,
Speaker 1: and she asked for more information on Schmidt. That request
Speaker 1: was routed to Matthew Henley, who was the head of
Speaker 1: Uber's Global Threat Intelligence, which, wow, it's a heck of
Speaker 1: a name for a department. Surely thereafter, Henley engaged a
Speaker 1: research firm called Global Precision Research LLC, also known as ERGO,
Speaker 1: and Ergo's job was to dig up the dirt. And
Speaker 1: as I said, that wasn't the only time Uber was
Speaker 1: said to engage in such tactics. There was a journalist
Speaker 1: named Sarah Lacey who had criticized the company multiple times.
Speaker 1: On her website Pando Daily. Lacy published stories detailing accounts
Speaker 1: of Uber passengers who said they had been attacked or
Speaker 1: harassed by their drivers, and she referred to Uber as
Speaker 1: the most misogynistic startup in Silicon Valley, according to BuzzFeed
Speaker 1: editor Ben Smith, and Uber executive named Emil Michael voiced
Speaker 1: how he'd like to employ researchers to dig up dirt
Speaker 1: on Lacey's background, her friends, and her family. So Smith
Speaker 1: calls up Lacy and says, Hey, I was at a
Speaker 1: dinner thing and this Uber guy was saying this stuff
Speaker 1: about you, saying that you know, you were worth like
Speaker 1: a million dollars worth of expenses to to shut you up.
Speaker 1: Do you have a quote for me? Do you have
Speaker 1: a response to that? And she debated on whether or
Speaker 1: not she wanted to get into this fight, and ultimately
Speaker 1: decided she did, and so she gave a statement. And
Speaker 1: after he told her about this conversation, and then since
Speaker 1: that point, she said she was perpetually hounded by Uber
Speaker 1: and its investors for speaking out. In seventeen, her accusations
Speaker 1: against Uber would find some validation because of the actions
Speaker 1: of another woman who had awful story to tell, and
Speaker 1: that woman was Susan Fowler. Now, I have a story
Speaker 1: I want to talk about from January seen, but I'm
Speaker 1: going to come back to that in just a minute.
Speaker 1: It's an important story in Uber's year of tumultuous chaos.
Speaker 1: But I think we really first should continue this threat
Speaker 1: about Susan Fowler. Her story would really unveil in February seventeen.
Speaker 1: She had worked for Uber as an engineer, and on
Speaker 1: February nineteen seventeen, she published a blog post that laid
Speaker 1: out a really ugly picture of Uber's corporate culture. The
Speaker 1: post is titled reflecting on one very very strange year
Speaker 1: at Uber. Now, Fowler had left Uber in December, and
Speaker 1: she had started work at another company called Stripe at
Speaker 1: the beginning of twenty seventeen. She said a reason for
Speaker 1: writing the blog post was because she had repeatedly been
Speaker 1: asked by people what it was like working for Uber
Speaker 1: and why did she leave, and so she thought, rather
Speaker 1: than go through it over and over again, she would
Speaker 1: lay out the entire story and everyone could just read it.
Speaker 1: She had begun at Uber in November two thousand fifteen,
Speaker 1: as part of the site reliability engineering team. She had
Speaker 1: the opportunity to choose the team she'd work with, and
Speaker 1: she made the decision to work with some fellow engineers
Speaker 1: that were focusing on a project she felt she was
Speaker 1: really well suited for, and immediately it seems trouble began.
Speaker 1: She wrote that on her first day of working with
Speaker 1: the team, she received a string of messages from her
Speaker 1: manager that we're implying he wanted to have sex with her. Uh.
Speaker 1: This is obviously beyond problematic when a boss is intimating
Speaker 1: that he wants to have sex or she, for that matter,
Speaker 1: wants to have sex with an employee. Even if you
Speaker 1: wanted to be generous, which by the way, I do
Speaker 1: not want to be generous, you'd have to say these
Speaker 1: messages were wildly inappropriate for the workplace. Fowler took screenshots
Speaker 1: of the chat messages she was receiving from her manager,
Speaker 1: and she reported his behavior to Human Resources. Now. The
Speaker 1: response she got from HR and upper management was not
Speaker 1: what she expected. She was told her manager was a
Speaker 1: quote high performer end quote in the company and that
Speaker 1: this marked his first offense with those qualifiers in mind,
Speaker 1: the company's response would be a warning to the guy
Speaker 1: to say, hey, knock that off, don't do that. As
Speaker 1: for Fowler, she was told she could either go work
Speaker 1: for another team and remove herself from the situation, or
Speaker 1: she could stay on the team that she had picked.
Speaker 1: But it was almost certain that her manager would give
Speaker 1: her a poor performance review no matter how well she
Speaker 1: did her job, and there just wasn't anything management could
Speaker 1: do about that. So, in case you weren't aware, this
Speaker 1: is a classic case of victim blaming, a classic and
Speaker 1: brazen case, and it is really awful Fowler chose to
Speaker 1: leave her team despite the fact that she had really
Speaker 1: wanted to work on this project and go and find
Speaker 1: a different group to work with. She would meet with
Speaker 1: other women in Uber, and she found out that a
Speaker 1: lot of them had similar experiences. Them even had experiences
Speaker 1: with that same manager, and they had said they also
Speaker 1: filed complaints. This contradicted HRS claim that it was the
Speaker 1: manager's first offense. According to Fowler, another engineer complained about
Speaker 1: the same manager later on after Fowler's complaint, and that
Speaker 1: lady was told it was the manager's first offense. So
Speaker 1: apparently every offense he committed was his first one. Fowler
Speaker 1: also said that management at Uber was incredibly cut throat.
Speaker 1: Sometimes managers were actively working against other departments in an
Speaker 1: effort to advance their own personal careers. Projects would get
Speaker 1: started and abandoned because of this sort of action, and
Speaker 1: a lot of progress was lost as a result of it,
Speaker 1: and a lot of people were kind of tossed aside
Speaker 1: in the in the whole process. She recounted stories about
Speaker 1: how her own advancement was being blocked because her manager
Speaker 1: wanted to keep her in place because her work made
Speaker 1: his team look good, so rather than lose a star performer,
Speaker 1: he worked very hard to make sure any request she
Speaker 1: had to transfer into another department was blocked. She also
Speaker 1: said that her organization's demographic was originally women when she started,
Speaker 1: but that number had dropped to less than six percent
Speaker 1: at this point. She said that the misogynistic culture and
Speaker 1: the office politics were the two main contributing factors driving
Speaker 1: women out of her part of Uber, and she said
Speaker 1: that on the day she left the company, the number
Speaker 1: was down to three percent. Now, Fowler's blog post didn't
Speaker 1: just fade away. Uber executives couldn't sweep it under the rug.
Speaker 1: It started a much more critical analysis of Uber's culture.
Speaker 1: Fowler's account also became one of the critical pieces of
Speaker 1: information to get the hashtag me too movement going, and
Speaker 1: will likely see more of that as time goes on
Speaker 1: and more women step forward to speak out about behaviors
Speaker 1: that for decades were ignored or sometimes even encouraged in
Speaker 1: male dominated businesses. Fowler's essay demanded a response from Uber,
Speaker 1: and the company would go on to hire two law
Speaker 1: firms to launch investigations into our allegations. I'll talk more
Speaker 1: about what they found in a little bit, but first
Speaker 1: let's take another quick break to thank our sponsor. I
Speaker 1: mentioned that Uber had a different pr problem before Fowler's
Speaker 1: essay was published earlier in seventeen. Something had happened in January. Well,
Speaker 1: that was when many people felt Uber was taking advantage
Speaker 1: of a politically charged situation, particularly after the company made
Speaker 1: the decision to disabled searge pricing for JFK Airport see
Speaker 1: Donald Trump had placed an immigration ban and New York
Speaker 1: City's JFK Airport in particular, and in reaction to this,
Speaker 1: taxi drivers called for a strike in protest. Uber at
Speaker 1: first committed to continuing service to JFK with the elimination
Speaker 1: of searge pricing, and that seemed to undermine the protest.
Speaker 1: It seemed to be saying, hey, if you can't get
Speaker 1: a cab, at least you can get an Uber and hey,
Speaker 1: there's no searge pricing. So a lot of people, including celebrities,
Speaker 1: began to promote a new hashtag, hashtag delete Uber, and
Speaker 1: it went viral. Now here's an ironic part. What is
Speaker 1: it ironic? I don't know. I need to ask Atlantis Morisset.
Speaker 1: But anyway, here's the thing. It's possible that Uber was
Speaker 1: viewing this as a way to support the protest, not
Speaker 1: to undermine it. Let me explain. By removing searge pricing
Speaker 1: from JFK Airport fairs, Uber was removing an incentive for
Speaker 1: drivers to actually go to JFK Airport because they wouldn't
Speaker 1: make as much money off of regular priced fares from
Speaker 1: the airport without that searge pricing. In effect, other areas
Speaker 1: of New York City might still have searge pricing, so
Speaker 1: drivers would more likely be lured elsewhere in New York
Speaker 1: City away from JFK Airport until the matter was resolved.
Speaker 1: But the percept sin was that Uber was trying to
Speaker 1: take advantage of this situation, and that became the narrative,
Speaker 1: and Uber never managed to get out in front and
Speaker 1: say no, let me explain how our model works and
Speaker 1: what our thinking was behind this. Lift, on the other hand,
Speaker 1: got in front of it right away. They did not
Speaker 1: touch their surge pricing during the strike. They still serve
Speaker 1: JFK Airport as well. However, the company donated a million
Speaker 1: dollars to the a c l U, and they publicly
Speaker 1: denounced Trump's immigration ban, which made Lift seem like the
Speaker 1: much more woke company and it worked. People began to
Speaker 1: leading their Uber apps and for the first time, Lift
Speaker 1: app downloads outnumbered Uber downloads. Also in January, Uber had
Speaker 1: to pay twenty million dollars to the United States government
Speaker 1: in order to resolve an FTC complaint that the company
Speaker 1: had misled drivers about potential earnings. Essentially, the argument stated
Speaker 1: that Uber's claims were at best wildly optimistic and based
Speaker 1: off an unreasonable number of hours driven per week in
Speaker 1: order to make the amount of money they were claiming
Speaker 1: a driver can make working for Uber back in February.
Speaker 1: To get back to February twenty seventeen, Uber was scrambling
Speaker 1: to respond to Fowler's blog post, so the company hired
Speaker 1: former U S Attorney General Eric Holder to investigate the matter,
Speaker 1: as well as a second law firm to look into it.
Speaker 1: Holder would eventually file a report with thirteen pages of
Speaker 1: recommendations to make big, big changes at Uber. This would
Speaker 1: happen later on, like in June of twenty seventeen, but
Speaker 1: among those recommendations were to reallocate Travis Kalini's responsibilities. The
Speaker 1: CEO was getting a lot of heat for the culture
Speaker 1: at the company, and while many people, including Klinis eventual successor,
Speaker 1: would say it would be unfair to lay all the
Speaker 1: blame on any single person, many also acknowledged that as CEO,
Speaker 1: kalin Nick had to assume responsibility for many of the
Speaker 1: problems the company found its health in his report also
Speaker 1: urged the company to adopt a zero tolerance policy for
Speaker 1: any substantiated complaints to HR, regardless of whether or not
Speaker 1: the focus of the complaint was on the previously bulletproof
Speaker 1: high Performers list. He recommended that Uber create an employee
Speaker 1: Diversity Advisory Board to help address problems with the lack
Speaker 1: of diversity in the company's management, and the company would
Speaker 1: should agree rather to publish diversity statistics on a regular
Speaker 1: basis to see how things are going in order to
Speaker 1: kind of take a metric of this. He also recommended
Speaker 1: that the company restructure the board of directors to create
Speaker 1: new independent seats that could be occupied by people who
Speaker 1: are not employed by Uber to provide some more oversight
Speaker 1: to the company. And he said that Uber should launch
Speaker 1: some training programs for all levels of employees, particularly leadership
Speaker 1: on appropriate workplace behavior, leadership behavior, that kind of thing,
Speaker 1: and that they should review their pay practices to verify
Speaker 1: that they were actually complying with state and federal equal
Speaker 1: pay laws. Oh, and he should say that the company
Speaker 1: needed to target some really rich, diverse sources of talent
Speaker 1: and perhaps employ some good practices like blind resume reviews,
Speaker 1: meaning you're not looking at anything that would identify a
Speaker 1: person the UH for a to a specific ethnicity or
Speaker 1: culture or anything like that. You're looking specifically at their qualifications.
Speaker 1: And he presented his report in an epic six hour
Speaker 1: long meeting at Uber, at the end of which the
Speaker 1: board voted unanimously to adopt all of his recommendations. That
Speaker 1: thirteen page report is available to read if you search
Speaker 1: for it. On Google. On top of those recommendations, UH,
Speaker 1: the other law firm had investigated Uber and as a
Speaker 1: result of that investigation, more than twenty people were fired
Speaker 1: during that whole rigamar role. Reasons for the terminations ranged
Speaker 1: from allegations of sexual harassment to using retaliatory tactics. Again,
Speaker 1: employees and a few high ranking Uber executives left the
Speaker 1: company or were fired as part of that fallout. Some
Speaker 1: of them left because they were being wrapped up in this,
Speaker 1: some of them left because they were disgusted by it,
Speaker 1: and a few of them didn't leave on their own account,
Speaker 1: they were fired by the company. It was an incredibly
Speaker 1: disrupt a few months for Uber, and based upon the report,
Speaker 1: this was a shakedown that was long overdue. And while
Speaker 1: that story would be a big one throughout, it's really
Speaker 1: just part of the overall chaos Uber waited through that year.
Speaker 1: Let's get back to the calendar. I'm gonna skip over
Speaker 1: any stories that had to do with the investigation because
Speaker 1: we pretty much covered that and enough to tail with
Speaker 1: maybe one or two tiny exceptions. February was when Google
Speaker 1: made allegations against Uber, and this was another huge story
Speaker 1: in twenty seventeen. They were claiming that Uber had possession
Speaker 1: of stolen proprietary information courtesy of Anthony Lewandowski. Lewandowski had
Speaker 1: worked for Google's self driving car division later known as Weymo,
Speaker 1: but he had left Google and first he created his
Speaker 1: own company called Auto O T t O that was
Speaker 1: consulting for Uber, and later he ended up joining Uber itself. Now,
Speaker 1: this in particular is an ongoing story and not all
Speaker 1: the details are out, but Lewandowski has since gone on
Speaker 1: to found a religion that plans to worship an artificially
Speaker 1: intelligent godhead. I'm gonna have to do an episode about that,
Speaker 1: or get stuff they don't want you to know to
Speaker 1: do an episode about that. Anyway. Lewandowski first said he
Speaker 1: was moved to Uber projects that were unrelated to his
Speaker 1: work at Google, and then later still he was fired
Speaker 1: by Uber. Uber stated the reason for firing Lewandowski was
Speaker 1: his refusal to hand over thousands of documents as requested
Speaker 1: by a judge in the Google Uber case. In late
Speaker 1: February early March, Kalinek suffered some public embarrassment. Bloomberg published
Speaker 1: a record warding of Klani swearing at an Uber driver
Speaker 1: who had been complaining about fair prices. Now, this did
Speaker 1: not make Klink sound like a leader, and he would
Speaker 1: eventually apologize for this outburst, but it didn't do his
Speaker 1: reputation any favors. Following hot on the heels of that
Speaker 1: recording was news that California had forced Uber to agree
Speaker 1: to file for a testing permit for self driving cars
Speaker 1: after the company had run a test program in San
Speaker 1: Francisco without going to the trouble of getting permission first.
Speaker 1: Uber's defense was that there was always a driver in
Speaker 1: the driver's seat during these tests, but the state was
Speaker 1: firm and said that any test involving autonomous cars would
Speaker 1: first require a permit. Uber would later move much of
Speaker 1: its autonomous car tests to Arizona as a result of this.
Speaker 1: A couple of weeks after Uber's capitulation to the California government,
Speaker 1: a report concluded that Uber's self driving cars weren't doing
Speaker 1: so well without human intervention. According to the report, the
Speaker 1: drivers had to step in on average once per mile.
Speaker 1: Compare that with Google's tests, which said their testers had
Speaker 1: to intervene once every five thousand miles, and that doesn't
Speaker 1: sound like Uber was doing really well. Also in March,
Speaker 1: the New York Times published a piece about a tool
Speaker 1: that Uber was using called gray Ball. Now. Grey Ball's
Speaker 1: apparent purpose was to confound law enforcement officials in various
Speaker 1: places that either resisted or outright banned Uber's operation. It
Speaker 1: would collect information about specific individuals using the Uber app
Speaker 1: and other methods, identify them as law enforcement, and then
Speaker 1: steer drivers away from them. In other words, gray Ball
Speaker 1: was a tool that helped Uber evade law enforcement and
Speaker 1: regulatory enforcement. Gray Balls origins were arguably from a legitimate
Speaker 1: use of this technology. It was part of Uber's response
Speaker 1: to v toss vt o S that stands for violation
Speaker 1: of terms of service. Uber wanted to create a tool
Speaker 1: that made it easy for the system to identify problem individuals,
Speaker 1: such as people who were abusing the system to cause trouble. So,
Speaker 1: for example, I mentioned in those battles between Uber and Lift,
Speaker 1: sometimes the employees of one company were accused of arranging
Speaker 1: and then canceling a trip that with the other company,
Speaker 1: and this was all on an effort to tie drivers
Speaker 1: up on wild goose chases across the city. And the
Speaker 1: v t o S tool was meant to identify accounts
Speaker 1: that engaged in that kind of behavior and then effectively
Speaker 1: ignore them boot them from the system. Gray Ball, however,
Speaker 1: was really meant to help Uber sidestep investigations. A video
Speaker 1: recorded in showed it in use. There was a code
Speaker 1: enforcement inspector named Eric England out of Portland, Oregon, and
Speaker 1: he was part of a sting operation who was trying
Speaker 1: to hail an Uber ride in downtown Portland. Now, the
Speaker 1: city had deemed Uber illegal within the city limits, but
Speaker 1: Uber was being Uber then operating within the city anyway,
Speaker 1: and essentially just waiting for legislation to catch up and
Speaker 1: make it legal for them to do what they were
Speaker 1: already doing. England was essentially just trying to catch out
Speaker 1: Uber by hailing a ride, but Uber had used gray
Speaker 1: ball to identify England as a problem. So when he
Speaker 1: opened up his Uber app, it would show cars in
Speaker 1: the area, drivers in the area that could potentially come
Speaker 1: and pick him up. But those were fake. They were
Speaker 1: just icons on a map. They weren't representative of actual
Speaker 1: real cars. This was gray ball in action, giving a
Speaker 1: false sense of where things were going for the investigator,
Speaker 1: and meanwhile, all of his requests were being canceled behind
Speaker 1: the scenes. The Justice Department would later launch a criminal
Speaker 1: probe to investigate this issue, and we're still kind of
Speaker 1: waiting to hear more about that as of the recording
Speaker 1: of this podcast. At the end of March, the Uber
Speaker 1: president Jeff Jones announced he was going to leave the
Speaker 1: company because he felt his own personal values did not
Speaker 1: mesh with the corporate culture at Uber. Specifically, he said
Speaker 1: in a statement to Recode, the beliefs and approach to
Speaker 1: leadership that have guided my career are inconsistent with what
Speaker 1: I saw and experienced at Uber, and I can no
Speaker 1: longer continue as president of the ride sharing business. So
Speaker 1: this was another blow in that series of detailed accounts
Speaker 1: of what was going on behind the scenes at Uber
Speaker 1: and seemed to give a lot of legitimacy to the
Speaker 1: claims and allegations. In April, the Mayor of Pittsburgh, Bill Paduto,
Speaker 1: said in an interview with The Wall Street Journal that
Speaker 1: Uber was falling short on the promises the company had
Speaker 1: made to the city with regards to their self driving
Speaker 1: cartest program. They had said that they were going to
Speaker 1: do a lot of contributions to the city of Pittsburgh
Speaker 1: and seemed to be falling short on that, and so
Speaker 1: the shine was wearing off on the self driving program
Speaker 1: within the city of Pittsburgh. Also in April, the Information
Speaker 1: A Journal filed a story that said Uber had a
Speaker 1: top secret internal program code named Hell, which identified lift
Speaker 1: drivers and also set out processes to create incentives for
Speaker 1: drivers who worked both for Lift and for Uber, with
Speaker 1: the goal of getting those drivers to commit to Uber
Speaker 1: over Lift, and some said that process marked an unfair
Speaker 1: business practice and could be legally actionable. Back in California,
Speaker 1: Uber was alerted that it might have to pay more
Speaker 1: than a million dollars in fines after a report showed
Speaker 1: that Uber had only investigated of passenger reports claiming their
Speaker 1: Uber driver was operating a vehicle while under the influence
Speaker 1: of alcohol, and Uber had promoted its service as a
Speaker 1: way to be responsible by avoiding drunk driving, so this
Speaker 1: was particularly problematic for a company that was claiming it
Speaker 1: was trying to solve a problem while seemingly ignoring that problem.
Speaker 1: In June of seventeen, Uber fired an executive who had
Speaker 1: apparently obtained private medical records of an alleged rape victim
Speaker 1: in India who was pursuing a case against Uber after
Speaker 1: she had been assaulted by an Uber driver. Now, the
Speaker 1: Uber driver was found guilty of rape, and he was
Speaker 1: sentenced in fifteen to life in prison. The victim then
Speaker 1: sued Uber and the and he settled with her out
Speaker 1: of court. But then she discovered that this particular executive
Speaker 1: had obtained her private medical records without her permission, so
Speaker 1: she filed a new lawsuit against Uber. Now eventually the
Speaker 1: company would settle that second lawsuit in December. Also in June,
Speaker 1: kala Nick announced he would take a leave of absence
Speaker 1: from the company. Not only was Uber weathering this PR storm,
Speaker 1: the series of PR storms these disasters, but Klinik had
Speaker 1: also suffered a personal tragedy. His parents were in a
Speaker 1: boating accident in California. His mother tragically died from her injuries,
Speaker 1: and his father was badly hurt. So he said he
Speaker 1: needed to have some time to grieve, as well as
Speaker 1: time to care for his father. One of Uber's board
Speaker 1: of directors, a guy by the name of David Bonderman,
Speaker 1: resigned in June after making a tasteless joke about women
Speaker 1: at Uber during an all hands meeting, which definitely didn't
Speaker 1: sound like a good use of d jgment and in
Speaker 1: fact seemed indicative of the very cultural problems Uber had
Speaker 1: been accused of. Uber then launched a PR program a
Speaker 1: little late, but they did it to try and turn
Speaker 1: things around. It started on June twenty and it was
Speaker 1: called on eighty Days of Change. The following day, that
Speaker 1: change took on real meaning because Kalenik, who was pressured
Speaker 1: by major Uber investors, resigned as CEO. It was pretty
Speaker 1: clear that Kalinnick didn't do this of his own choice.
Speaker 1: He was kind of forced to by the investors. He
Speaker 1: was still on the board, however, and he tried to
Speaker 1: convince the board to bring on Jeffrey Immelt, who was
Speaker 1: the former chief of General Electric and someone that Kalinnik
Speaker 1: was buddies with. The directors disagreed, and instead they hired
Speaker 1: on Dara kasro Shah, He the CEO of Expedia Incorporated. Now.
Speaker 1: According to Bloomberg, kasro Shah he told friends that it
Speaker 1: still felt like Kalenik was calling the shots when he
Speaker 1: first came over to Uber, and he's a very different person.
Speaker 1: Casro Shah he is uh from Kalinnik. He's known as
Speaker 1: a listener and for being diplomatic. Kala Nick is known
Speaker 1: for being very uh to the point and not really
Speaker 1: much of a listener very aggressive and direct, and in September,
Speaker 1: news broke that the City of London had decided not
Speaker 1: to renew Uber's license to operate within the city at
Speaker 1: the end of the month for a host of reasons,
Speaker 1: including the use of gray ball, among them kausro Shaw.
Speaker 1: He wrote an open letter saying that Uber would appeal
Speaker 1: this decision, but also acknowledged that Uber had to change
Speaker 1: the way it did business. And he also said we
Speaker 1: don't have a PR problem, we have an US problem,
Speaker 1: stating that Uber's culture was the heart of the problem,
Speaker 1: not public relations. Uber's leadership was owning up to a
Speaker 1: systemic cultural problem within the company. This is a positive
Speaker 1: change in my view, but obviously just the beginning of change.
Speaker 1: In August, Ryan Graves, the quote unquote first employee at Google,
Speaker 1: although not really he had followed a couple of engineers,
Speaker 1: announced that he was leaving his position as s VP,
Speaker 1: but he would stay on as Uber's on Uber's board
Speaker 1: of directors and help with the transition of c e O.
Speaker 1: S oh, and there was one more disaster to cover
Speaker 1: before we conclude. Actually, there are quite a few others
Speaker 1: I could cover, but this episode is running along, so
Speaker 1: we'll just focus on one. In November, several magazines and
Speaker 1: journals reported that Joe Sullivan, Uber's chief security officer, had
Speaker 1: tried to cover up a data breach by paying hackers
Speaker 1: one hundred thousand dollars in return for which they would
Speaker 1: delete the stolen data they had taken. Stolen data the
Speaker 1: represented personal information of fifty seven million Uber drivers and customers,
Speaker 1: so Sullivan wanted the hackers to sign a non disclosure agreement,
Speaker 1: and according to The New York Times, he had Klini's
Speaker 1: approval to do all of this. Uber ultimately fired Sullivan.
Speaker 1: He had earned a reputation for clandestine and frankly kind
Speaker 1: of shady dealings, including ordering surveillance on potential problematic people.
Speaker 1: I mentioned some of that before UH. He had himself
Speaker 1: designated as Deputy General Counsel, presumably in order to grant
Speaker 1: his communications secrecy under attorney client privilege and other somewhat
Speaker 1: suspicious kind of policies, like he wanted everyone to use
Speaker 1: apps that would allow people to send messages, but those
Speaker 1: messages would be deleted after a certain amount of time,
Speaker 1: so there would be no trail left in case there
Speaker 1: was a following investigation. Kind of black ops sort of
Speaker 1: stuff if you ask me. Now. Kalink recently announced that
Speaker 1: he plans to sell about of his stake in Uber.
Speaker 1: That wouldn't let him about one point four billion dollars.
Speaker 1: So he's not exactly hurting for cash in the wake
Speaker 1: of all this, but he might find it could take
Speaker 1: a while for some people to view him in a
Speaker 1: positive light given the way things unfolded at Uber. And
Speaker 1: by the way, Bloomberg states that at Uber operated at
Speaker 1: a loss of four billion dollars in seen and yet
Speaker 1: investors are still optimistic. They point to Amazon and they say,
Speaker 1: look over here, there's a company that operated in the
Speaker 1: red for years before it ever turned a profit. And
Speaker 1: that's true. Amazon did not operate at a profit for
Speaker 1: many years. They took losses for quite some time, but
Speaker 1: nowhere near on the same level as Uber. Like, the
Speaker 1: losses didn't come in the form of a billions of dollars.
Speaker 1: So Uber has a lot of challenges. They've got tough
Speaker 1: competition with Lift and other competitors. They've got a huge
Speaker 1: hurdle to overcome along with a with a public perception.
Speaker 1: They have to shed a tarnished reputation that seems like
Speaker 1: it was really well earned. They have to demonstrate that
Speaker 1: it's a new company with new values that it's absolutely
Speaker 1: committed to support. And they need to make sure that
Speaker 1: they are not just catering to their customers, who definitely
Speaker 1: need to be thought about, but also their drivers, whether
Speaker 1: that's to acknowledge that drivers are employees and thus change
Speaker 1: their business model or treat them well as contractors. They
Speaker 1: have to do all of these things, and none of
Speaker 1: them are easy. They're they're easy to say, but they're
Speaker 1: not easy to enact. But if they can do all
Speaker 1: of that, then Uber might just emerge as that powerhouse
Speaker 1: that the investors believe it is going to be. And
Speaker 1: if they can't, they might just continue on until the
Speaker 1: investment money starts to dry up and the company ends
Speaker 1: up spending itself out of business. UH. Personally, I really
Speaker 1: hope they're able to turn things around for the sake
Speaker 1: of the people working for Uber and the people who
Speaker 1: depend upon Uber. I really hope the company can can
Speaker 1: fix things, because Uh, I don't want to see anyone fail.
Speaker 1: At the same time, I am hopeful that the trend
Speaker 1: we're seeing where they're accepting accountability for some pretty questionable
Speaker 1: and in some cases potentially illegal decisions that have been
Speaker 1: made by various executives throughout the years can be corrected.
Speaker 1: That's my hope. Now that concludes the Uber story for now. Anyway,
Speaker 1: Hopefully we'll have more to talk about in a couple
Speaker 1: of years, maybe some great success stories. I would love
Speaker 1: to do an episode that talks about how they rose
Speaker 1: from the ashes and and really blossomed. But until then,
Speaker 1: I'm going to have to start looking at other topics.
Speaker 1: But you guys can help me out. You could suggest
Speaker 1: topics I should cover for tech Stuff. You can get
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Speaker 1: talk with me in the chat room. Every time I
Speaker 1: haven't a break, I chat with everybody who's there, and
Speaker 1: you can see when I mess up, and believe me,
Speaker 1: if you could have seen this recording session, you would
Speaker 1: have noticed it on multiple occasions. Also, yeah, I know
Speaker 1: I've pronounced Kala Nick's name in two totally different ways
Speaker 1: in two different episodes. I know that. Uh if you
Speaker 1: wrote to me to explain how stupid I am for
Speaker 1: pronouncing it one way and then pronouncing it the other way,
Speaker 1: ha ha, I knew already and you probably didn't even
Speaker 1: listen to this, So that shows who's the stupid one now,
Speaker 1: stupid face, But now you you guys, I love. I
Speaker 1: love all of you, the ones who actually listened. It's
Speaker 1: the stupid faces who stopped. I should probably go and
Speaker 1: get some COYE and I'll tell to you guys again
Speaker 1: really soon. For more on this and thousands of other
Speaker 1: topics because it has to have works dot com who