“We’re entering an era in which data can be used to solve all sorts of the most pressing problems, but only if there’s trust in how that data has been handled,” Rometty told me in a phone interview in 2017. “We see ourselves as stewards of clients’ data. And we don’t need to be regulated to do the right thing. We’ve been doing the right thing for a hundred years.”
To be clear, neither Apple nor IBM are perfect stewards of trust—both own apps that track data. And IBM has the advantage of dealing more with other businesses and governments than with consumers directly. But they also show it’s possible for companies to start addressing such issues.
How many companies will be able to successfully square the growing concerns over privacy, transparency, and monopoly power? What effect will these have on the markets, consumers, and citizens? How should these new platform giants, which grow to scale in a world in which the usual economic laws of gravity cease to function, be regulated? These are pressing questions, because as we’ve already seen, not just from Amazon or Google, but from start-ups like Airbnb and Uber as well, digital giants can come from out of nowhere and disrupt incumbents, consumers, workers, and even entire cities in one fell swoop, at a pace that would have once been unthinkable.
CHAPTER 8
The Uberization of Everything
February 2017 wasn’t a good month for former Uber CEO Travis Kalanick. The ubiquitous ride-hailing business he founded had been drawing criticism from municipal lawmakers and union activists—particularly in large cities like New York and San Francisco—for years, but their PR crisis reached a boiling point following a series of scandals that started with a blog post from a former engineer, Susan Fowler, alleging harassment and rampant sexism at the company. That news went viral in the same month that Waymo, an autonomous vehicle unit owned by Google’s parent company, Alphabet, filed a federal lawsuit against the ridesharing company alleging that a software engineer had stolen its trade secrets and taken them to Uber, which is developing its own autonomous vehicles.
This was followed only five days later by a shocking video showing the CEO himself blowing up at an Uber driver who deigned to complain about the company’s payment system.1 Uber’s own dashcam recorded the interaction, in which the driver claimed to have gone bankrupt after investing $97,000 in a high-end car in order to drive for uberBLACK, only to find that rates began falling and the service was being dropped in favor of cheaper cars. In the video, an agitated Kalanick says, “You know what? Some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else. Good luck!” To which the driver replies, “Good luck to you, too. I know that you aren’t going to go far.”2
Not in that car, anyway, and as it turned out, not as CEO of Uber, either. Especially not after the emergence of more sexual harassment revelations, resignations of key executives, and Department of Justice investigations into whether Uber used software to evade municipal authorities as it tried to build its network in various cities. In June 2017, Kalanick announced he was taking a leave of absence.3 Later that month, with the company under investigation for multiple issues, fielding numerous civil lawsuits in which they were accused of fostering unsafe conditions for drivers, and dealing with data breaches and a massive #DeleteUber campaign, Kalanick was finally pushed out as CEO by investors. He was eventually replaced by Dara Khosrowshahi, an Iranian American former banker and protégé of Barry Diller’s, who had formerly run the Diller-owned online travel firm Expedia. Diller tried to talk him out of the Uber job. “I said, ‘Oh my God, Dara, you must be out of your mind. That’s a very dangerous place,’ ” said Diller in a 2018 New Yorker article on the company.4
It was also a rich one—on paper, at least. Despite all the fiascos, Uber boasted the highest pre-IPO valuation for any company ever in history—a whopping $70 billion, despite the fact that the company had posted $1 billion–plus losses each quarter in 2018, and had yet to make a profit.5 But the ousting of Kalanick didn’t change the fundamental business model of Uber, a company that had built its reputation and its scale—like so many Silicon Valley “unicorns,” by focusing on growth over profit. The problem is that when companies go public, investors generally want to see some profit. Uber’s IPO on May 10, 2019, one of the most anticipated in history, was a dismal failure. The shares fell 19 percent in the first days of trading, leaving investors who’d put billions into the company underwater. Part of the problem was that Uber had simply gotten too big and fat before going to market—many institutional investors who’d already bought into the company when it was private had no reason to purchase more shares. But the poor offering was also a mark of what many investors feel is a market top in tech stocks that simply don’t make any money, despite their size and disruptive power.6
“Always be hustlin’ ”
Like most people, I first became familiar with Uber as a user of its services, and like most people, I marveled at the speed with which Uber vehicles took over my Brooklyn neighborhood, as well as much of New York and most other major metropolitan areas, provoking delight from riders who love the convenience, but also ire from public officials and citizens who complained that the service has wildly increased traffic and congestion. In 2015, I went much deeper into Uberland, as I had the chance to spend a good deal of time with Kalanick himself, who was on the short list to be named Time magazine’s Person of the Year (I was an assistant managing editor at the magazine at that time).7
It took me quite a while to persuade Kalanick’s then–PR executive, Rachel Whetstone, a tough and cagey Briton who’d formerly been at Google and would go on to Facebook, that it was a good idea for the company to allow me into Uber’s inner sanctum for a few days. She was worried about the exposure, and with good reason: Though Kalanick had yet to self-combust, he was clearly a loose cannon. But like so many high-flying business types, he was seduced by the possibility of seeing his face within the red border of a Time cover. And so I was given permission to follow him around and get the material I needed to write an in-depth profile, as Whetstone hovered nearby, trying to stage-manage Kalanick’s self-presentation.
He talked up his love of Alexander Hamilton, whose image he used as his own avatar on the Uber site. “Hamilton is my favorite political entrepreneur,” said Kalanick of the tough, self-made—some might say self-serving—former secretary of the Treasury who helped establish the country’s financial system despite vicious opposition. “Hamilton could see the future. But he also understood how to connect it to the practical reality on the ground. He was a great orator, too. Maybe too good. Maybe he spoke too much.”
I would have said the same of Kalanick. The most telling moments during my time with him highlight the ambivalence many of us feel about the company. The first was during a meeting at the Uber headquarters in Boston, attended by a couple dozen of the company’s full-time employees, most of whom were young, elite college–educated, hoodie-wearing techies who looked up to Travis like a god. The energy in the room, the excitement to simply be in the same space with the uber-Bro, was visceral. We all enjoyed the high-end snacks in the company canteen while Kalanick was peppered with questions about his career history, Uber’s new ventures into self-driving cars, and whether the company would ever consider augmenting its already hefty pay and benefits (self-driving-car engineers in the Valley can make around $2 million) by handing out perks like subsidized MBAs, as other larger tech firms do. “Oooh, it’s getting hot in here,” he quipped, to laughs and earnest nods of agreement around the room.
But in another session, a somewhat different view of the company emerged. Uber had rented a large auditorium space near the waterfront, and was feting a carefully chosen group of top revenue-generating drivers. Though officially considered contractors, rather than employees, these people embodied the image that Uber wanted to portray to the world of a company that was boldly reinventing work by offering anyone with a valid driver’s license and
a vehicle the opportunity to become an “entrepreneur” with flexibility, control, and the ability to earn as they liked in between other commitments. (There were, in attendance, single moms who drove to earn school fees, and part-time college students paying for their educations behind the wheel.)
Yet there was, even in this carefully curated group, an undercurrent of discontent. In the Q and A session with Kalanick, who appeared much less comfortable in this crowd, a familiar question came up: When will the company go public—and will contractors share in the wealth? Kalanick paused, and appeared to be choosing his words carefully. “It’s something that’s on our minds,” he hedged. “We have to be careful from a regulatory standpoint. There’s a lot of bureaucracy in being a public company.” His voice trailed off, perhaps because he knew that offering shares to drivers would support the case of those fighting to elevate them to the status of employees—and therefore deserving of things like overtime pay, minimum wage protection, and health benefits—something that Uber has spent plenty of time and money trying to avoid.
Later, things got even more awkward, as he attempted to justify the no-tips rule Uber had at the time by saying that industries that allow tipping tend to underpay employees. This didn’t go over well (despite being backed up by empirical proof), most likely because as Uber has grown, profit margins for drivers have been compressed. “That’s ridiculous,” muttered one middle-aged female driver, clearly underwhelmed by Kalanick’s presentation. Others sitting near me grumbled in agreement. The CEO was quickly shuttled offstage, while the drivers and their families were placated with free pizza and popcorn.
Uber allows tips now, and it also awarded a limited number of stock options to veteran drivers.8 Khosrowshahi, who is clearly a cooler head than the company’s founder, has tried to address the various cultural problems he inherited, though others have flared up on his watch (most notably the death of an Arizona woman hit by an Uber self-driving car that slammed into her at forty miles per hour as she was walking across the street). Undoubtedly, he’s made improvements, but he hasn’t really changed the fundamental business model of the company, which is to move fast and break things—such as established city transportation infrastructures by displacing traditional cabbies with cheaper, freelance drivers. And move fast it does; since 2010, Uber has shot from being a two-car operation in San Francisco to employing (though the company doesn’t like that word) 3 million active drivers around the world.9
Kalanick, whose unofficial motto was “Always be hustlin’,” has been called a visionary, a disrupter, a genius, and a jerk. One thing is certain: His company is unlike anything the world has seen before. Not only has Uber become a verb, as Google did, it has created an industry shorthand, sending countless entrepreneurs into boardrooms to pitch the “Uber of…” The company’s own ambition ranges from autonomous vehicles to hovercrafts. (Its flying cars are projected to hit the skies of Los Angeles, Dallas, and Dubai by 2020.) In France, Uber can already get you a helicopter. In San Francisco, Uber Eats will bring takeout to your door in under ten minutes. As Kalanick once put it to me, rather open-endedly, “If something is moving from one place to another in a city—that’s our jam.”
But Uber is disrupting more than just transportation; it’s rewriting the contract between employees and labor. Over the past several years, it has cemented its role as the most prolific and pugnacious among companies shaping the “gig economy,” including Airbnb, TaskRabbit, and dozens more. They are all emblematic of accelerating shifts in the way we work: 24/7, directed by technology, and without many of the traditional protections and benefits enjoyed by the middle class. On the one hand, there is something magical about the way these companies allow people to monetize resources they already possess—a home, a car, their free time. On the other, this model is a slippery slope that, some argue, ends with workers being taken advantage of. Many experts believe that the rise of the gig economy is a key reason for stagnating wages, as it has accentuated the power imbalance between workers and companies that has been increasing for the past forty years or so with the decline of unions, and the deregulation of industry in general.
The Plight of the Gig Worker
“Gig work” seems to have reached a new apex with the rise of companies like Uber. Consider the typical non-medallion taxi driver in New York, who might work for three or more companies at once: Uber, Lyft, and perhaps even an unlicensed cab firm. There is some truth to the claim that such people are essentially entrepreneurs, with all the freedom that working for themselves entails. With Uber, drivers set their own hours and are in a sense their own boss, something Kalanick always lauded as highly empowering. “There is a core independence and dignity you get when you control your own time,” he told me in 2015. Fair enough. But that’s about all Uber drivers are in control of. They have no say in the company’s pricing, which changes regularly depending on the level of demand and often means lowering rates to get more people into Uber cars. That varies based on the algorithm; according to my own anecdotal interviews with drivers in NYC, it has been decreasing as Uber has built its market share, and is around 20 percent now, as opposed to roughly 30 percent for the local independent cab services that some people in the neighborhood still use.
Uber touts its drivers as “free and independent” contractors, yet thanks to its automated algorithmic management system, the company is able to control how they work and penalize them when their behaviors deviate from what might be most profitable—for Uber.10 Using artificial intelligence, Uber is able to identify a class of consumers that might be willing to pay more than others for rides, depending on their zip codes. Uber can then pocket that extra take without giving more to drivers; the pay of the worker can be fundamentally decoupled from what passengers pay. Moreover, because Uber self-identifies as a technology company rather than a transportation company, it avoids complying with protections like the Americans with Disabilities Act, that would normally apply to this type of work. In her book Uberland, the social scientist Alex Rosenblat rode five thousand miles with numerous Uber drivers in twenty-five cities across the United States and Canada. She found that, not surprisingly, while Uber itself took most of the upside of the business, drivers were often left to bear the cost and the downsides of the disruptive technology on their own.
Lyft, Uber’s biggest competitor, has always been known as the kinder, gentler ridesharing company, in part because its CEO Logan Green has been more inclined to discuss the downsides of the sharing economy in a thoughtful and open way (that and the fact that he hasn’t been caught on a dashcam screaming at his own drivers). Green is, for example, concerned about the potential mass displacement of drivers in the United States (which represents the largest single category of work for men with a high school degree or less) by autonomous vehicles. Drivers themselves have reported being able to make more money on Lyft relative to Uber, and have higher levels of job satisfaction. (Lyft was first to allow tipping to drivers.)11 Unfortunately, these things fall at the margins. At the end of the day, the business models of the two companies are almost exactly identical; both create tremendously asymmetrical relationships between companies and workers in ways that make the latter ever more insecure. This speaks to the fact that the problems with sharing-economy companies are less about the CEO than the fundamental business model.
Algorithmic Disruption of Work
Management by algorithm—which has become a fact of life not just for taxi drivers but for any number of other workers, from Starbucks baristas who can’t count on a predictable weekly schedule to delivery people who have their contracts terminated if they don’t want to take jobs in certain areas at certain times—may be new, but its by-products are typical of what technology has historically done to labor. From English textile workers to travel agents, new technology destroys job categories as fast as it creates them. History has shown that in the end technology is always a net job creator; the question is how long the creative destru
ction lasts. Today it seems to be happening faster than our political and social systems can handle it. The depth and breadth of change being effected by the gig economy is unprecedented, and while the sheer number of workers that labor solely in the gig economy relative to the traditional economy isn’t yet as high as some academics once predicted it would be,12 the changes are still happening in nearly every industry, across pretty much every geography.
What happens when everyone is, to a greater or lesser extent, a freelancer? What happens when everyone has to have some kind of a side hustle, because a single job isn’t secure enough anymore? That’s one of the big existential worries that Uber creates in many people, even while they, as customers, enjoy the huge convenience and cost savings it provides.
Companies are increasingly boasting about how they want their employees to act as entrepreneurs—while neglecting to mention that what they really mean is they want employees to work hard, 24/7, without necessarily rewarding them like entrepreneurs, say with a piece of equity or a performance-based salary. Taken to a logical conclusion, it’s hard to imagine why any number of jobs couldn’t be Uberized. Many have been already, from handymen to radiologists. But with everyone working on demand, with no safety net, constantly graded up or down, the labor market starts to feel exhaustingly Darwinian. “This is what has people so agitated about Uber,” says John Battelle, who helped launch Wired magazine and now runs a conference and events business called NewCo. “It’s not a tech story, it’s a social story—it’s about how we are going to adapt to new possibilities. It’s about what the social compact between corporations, government, and society is going to be.”
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