Travis Kalanick: Uber-capitalist who wants to have the world in the back of his cabs
His confrontational business approach has provoked a ban in Delhi, protest in Paris and a PR disaster in Sydney, but the meter on his Uber cab app is at £25bn and shows no sign of slowing down
Bron: the Observer
21 december 2014
Pity the put-upon urban dweller with a conscience. If it isn’t enough that he or she has to worry about carbon emissions, social inequality, non-taxpaying coffee chains and any number of other ethical concerns, there is now the added guilt of using Uber, the smartphone app for hailing cabs.
The global transport revolution that the San Francisco-based company has initiated suffered a difficult time last week. In Delhi, Uber was ordered to stop operations after one of its drivers was arrested for allegedly raping a female customer. As a consequence, the company has finally committed to vetting cab drivers in countries that do not legally enforce background checks.
Central Paris was closed down by taxi drivers protesting at the rising domination of the booking app. And perhaps the worst news in PR terms was that passengers seeking to escape the Sydney hostage crisis fell victim to Uber’s “surge pricing” policy – determined by algorithm –for busy periods, and were charged four times the usual rate. (After a social media outcry, the company offered free lifts out of the city.)
Not that any of this will unduly bother Travis Kalanick, the 38-year-old co-founder and chief executive officer of Uber, and perhaps the most hostile force to hit the taxi trade since Travis Bickle (the New York cab-driving protagonist of Martin Scorsese’s Taxi Driver). Within five years, his company has grown from nothing to a multinational powerhouse valued at around $40bn (£25bn), with a presence in 53 countries and more than 200 cities worldwide.
The licensed taxi business is one of the most regulated on the planet. The model of a select group of metered drivers that enjoys a kind of municipal monopoly is standard in very many cities, nowhere more so than in London, where the renowned “Knowledge” test has restricted cabs that can be hailed to a protected group of qualified drivers.
Taking on such vested interests is not a job for the timid or faint-hearted. And Kalanick, a tautly-built Californian, prides himself on his all-action tough image. As one of the early investors in Uber has said about Kalanick: “It’s hard to be a disrupter and not be an asshole.”
“Creative disruption”, with its call to forge a new paradigm by destroying the existing one, has been the buzz phrase of the computer-tech business era. Kalanick prefers his own adaptation of the same idea to describe his antagonistic approach to local government, licensing authorities and professional taxi bodies. He calls it “principled confrontation”.
It’s an outlook that isn’t big on compromise or negotiation, which is why he tends to avoid meeting his opponents. Kalanick sees any laws and regulations that are unfavourable to Uber by definition as anachronisms in need of overhauling. His preferred method of making his case is a combination of provocative statements and aggressive lobbying – Uber employs 161 lobbyists in the US alone.
But when you’ve been the subject of a $250bn lawsuit at the tender age of 23, then no doubt you become inured to opposition.
Kalanick grew up in Los Angeles and studied computer engineering at UCLA. In 1998, along with some college friends, he dropped out to found Scour, a search engine and file-sharing service. Two years later, it was targeted by the film and music industries in a $250bn copyright suit and filed for bankruptcy.
The following year, Kalanick returned with Red Swoosh, another file-sharing service, which was bought in 2007 by Akamai Technologies for $19m.
They say 30 is middle aged in Silicon Valley; Kalanick got his midlife crisis in early, wondering if he had the energy and motivation to build another company. Uber’s founding myth seems to be an evolving story.
The initial inspiration came while Kalanick was watching Woody Allen’s Vicky Cristina Barcelona, made when the director was in his 70s. “I’m like, that dude is old!” Kalanick told Wired magazine. “And he is still bringing it!… And I’m like, all right, I’ve got a chance, man. I can do it too.”
Kalanick, who thinks Ayn Rand’s libertarian novel The Fountainhead is “an awesome” book, may talk like a surfer but he thinks like a salesman. Legend has it that he discovered what he wanted to sell on a wintry night in Paris in 2008, when he and his Uber cofounder Garrett Camp couldn’t find a cab.
They decided there was a large and lucrative gap in the market that could be filled with a smartphone app. What if you could press a button and GPS would unite you, wherever you were in the city, with the nearest available cab? Two years later, in the summer of 2010, UberCab opened in San Francisco with just a small fleet of cars and a handful of employees, to be greeted by a cease-and-desist order from the city’s municipal transportation agency.
The agency made several complaints – including the illegal use of the word “cab”, since Uber was operating without a taxi licence. In his first public demonstration of “principled confrontation”, Kalanick ignored the order, as he would many similar challenges around the globe, but Uber did drop “cab” from its title.
With characteristic sense of profitable timing, it bought the domain name Uber.com from the Universal Music Group for 2% of the company then later managed to buy back the shares – today worth hundreds of millions – for $1m.
A series of investment rounds followed with the company’s valuation rising exponentially. In 2011, Kalanick looked like selling 12% of the company to Marc Andreessen, the co-founder of Netscape, in a deal that valued Uber at $375m. A dispute ensued over revenue projections and Andreessen offered a lowered valuation of $220m.
At first, Kalanick looked like he would accept, but at the last moment he pulled out. It was a bold move that could have killed the startup before it had truly started. Instead, he wooed investors, including Amazon’s Jeff Bezos, and a Hollywood syndicate made up of Jay Z, Ashton Kutcher, Ari Emanuel and others stepped in. Within three years, Uber’s valuation was 10 times what Andreessen had balked at.
At what cost, though? Does Uber, as its name suggests, give rise to a super-capitalist model, as ruthless as it is exploitative? Or is it simply a 21st-century answer to consumer demand that, as Kalanick maintains, seeks to reach a point at which “using Uber is cheaper than owning a car”?
There’s some truth in both perspectives. Uber aims to get customers into cabs within five minutes. And it does so by operating algorithms based on a finely-honed appreciation of the laws of supply and demand. Prices are low – considerably cheaper than a normal black-cab ride – during off-peak hours, and surge upwards during busy periods. In a New York snowstorm in 2013 prices increased eightfold.
A window into the company’s soul was opened earlier this year when a senior US executive was heard saying that the company would spend a million dollars looking into the lives of journalists who had been critical of its corporate strategies. Further controversy followed when it was revealed that Uber employees had been summoning rival Lyft cabs on false errands and also trying to lure the drivers to defect.
Kalanick is mostly bullish about his company’s pugnacious tactics, but he does allow that he needs to start considering a more diplomatic corporate image. “What we should’ve realised sooner,” he said recently, “was that we are running a political campaign and the candidate is Uber. And this political race is happening in every city in the world. And because this isn’t about a democracy, this is about a product, you can’t win 51 to 49. You have to win 98 to 2.”
Such is the remorseless logic of the Uber approach that it even benefits from opposition. When London cabbies struck in the summer in protest at Uber, the new company simply cleaned up on the added customers and free publicity.
But in America earlier this autumn Uber’s own drivers shut off the app and staged pickets in protest at fare cuts. Kalanick claims that drivers in New York who work a 40-hour week can earn more than double the money of established cab drivers. If that’s true, he has not entirely endeared himself to his drivers by saying in one interview that driverless cars would in the future negate the problem of driver labour.
It’s this sort of statement that led one online commentator to write: “I have a love-hate relationship with Uber. I love what they do but I hate how they do it. I feel ashamed and debased a little every time I ride with Uber knowing I have conspired with their shameless business model to exploit their drivers under the capitalist system.”
That’s something to bear in mind this winter on cold nights on wet city corners. At least, that is, until your Uber car arrives.
THE KALANICK FILE
Born Travis Kalanick, 6 August 1976, in Los Angeles to Donald, an engineer, and Bonnie, who worked in advertising for the Los Angeles Daily News. He has a brother and two half-sisters. He studied computer engineering at UCLA.
Best of times It’s been a pretty fabulous five years. In terms of expansion and value, business launches don’t get any more spectacular than Uber’s.
Worst of times Being sued by the Motion Picture Association of America, the Recording Industry Association of America and the National Music Publishers Association for $250bn. It led to the bankruptcy of his first startup, Scour.
What he says “As an entrepreneur, I try to push the limits. Pedal to the metal.”
What others say “I think of them as robber barons. They started off by operating illegally, without following any of the regulations and unfairly competing. And that’s how they became big; they had enough money to ignore all the rules.” Barry Korengold, president, San Francisco Cab Drivers Association.