Super Pumped : The Battle for Uber (9780393652253)

by Isaac, Mike

  Smith’s bubbly personality made him a wonderful dinner guest; his affable manner often disarmed the people he reported on. But those qualities belied a pugnacious streak. Smith had become known in Washington DC for never backing down from a fight. As a reporter at Politico he often sparred on Twitter with those he covered and those he competed with for scoops. When he moved to BuzzFeed in 2012, his mandate was to turn the outlet, long famous for its lolcats and list-oriented viral articles, into a respectable, hard-hitting news organization. Smith rebranded his division as BuzzFeed News, and soon built a serious outfit whose reporting standards and aggressive pursuit of scoops rivaled that of the most traditional newsrooms.

  Smith was thus shocked when he, a member of the media, found himself sitting across from an Uber executive who was so openly disdainful about Uber’s relationship with the press. As the group dug into seared halibut and ribeye, Emil Michael, thinking he was amongst a room full of Uber sympathizers and friends, had gone off on a rant about how Uber was unfairly targeted by the press, and had been a victim of its own success.

  As the dinner progressed, Smith noticed Michael’s arrogance take over. Michael wasn’t used to Smith’s subtle challenges, pushing back on Uber’s claim that it was providing a public good, or that drivers who complained about pay just didn’t understand the math. Michael didn’t notice that Smith was tapping notes onto his phone as the conversation moved into more controversial areas.

  “It’s just bullshit,” Michael said, referencing the waves of negative press coverage. “The way we’ve been singled out like we have.” The worst, he noted, was Sarah Lacy.

  Lacy wasn’t a universally beloved figure. She and her partner, Paul Carr, would pick fights with other journalists as frequently as they skewered the people they covered. Michael knew this. Probably too well.

  “What if we gave them a taste of their own medicine?” Michael continued. “What if we spent, I don’t know, a million dollars hiring a few journalists and top oppo people,” he said, referring to “opposition researchers”—those who get paid to dig up information on other people for a living. “They could look into your personal lives, your families. Help us actually fight back against the press,” Michael said. He was convinced there was dirt to be found investigating Lacy’s marriage and her relationship with her business partner, Carr.

  Michael wasn’t finished. “Ask 100 women whether they’d feel safer in an Uber or in a taxi,” Michael went on, referring to a recent story in which Lacy posted that she would stop using Uber, fearing for her safety because of the drivers. “If any women decided to delete the Uber app, like she did? And then they go on to take a taxi ride and, god forbid, are assaulted? She should be held personally responsible for that,” he said.

  Smith couldn’t believe his ears. Why was an executive at the most reviled tech company in Silicon Valley dumping this in his lap? Did he know who he was talking to?

  Importantly, the dinner was supposed to be off the record. That could explain some of Michael’s bravado. But Michael Wolff had forgotten to relay this detail to his friend Smith when Wolff forwarded him the invitation to the dinner party.*****

  Smith wanted to give Michael a chance to save himself. If Uber were actually to go through with this, he asked, the story would no longer be about Lacy, it would be about Uber. What if, someone at the table suggested, it were to get out that Uber was behind the plan to dig up dirt on Lacy?

  “That won’t be a problem,” Michael said. “Nobody would know it was us.”

  Smith, still taking notes, waited politely and finished the rest of his dinner as the conversation floated across the low-lit back room of the Waverly.

  Then he got up, thanked his hosts, and went home to start typing on his MacBook.

  Nairi Hourdajian woke up on Sunday morning believing Uber’s charm offensive had gone well. The comms chief knew it hadn’t been perfect—Kalanick had gone off script when talking to reporters at the Gramercy Park meeting, Hourdajian felt; he came across as a bit too self-deprecating and pity-seeking. But she was proud of herself; she managed to keep Josh Mohrer, Uber’s brash New York general manager, away from the Friday dinner even after he asked to be included. But she’d held firm. No, that weekend had gone as well as could be expected. Things were looking up; perhaps she could convince the world that her boss was not, in fact, an asshole. Or at bare minimum, at least some reporters might start believing her. The team packed up and prepared to fly back to San Francisco, having accomplished what they set out to do.

  Thirty-six hours later, at 8:57 p.m. Monday evening, Ben Smith’s story went live on BuzzFeed News’ website.

  In it, Smith outlined the details of the multiday charm offensive, the attempts at ingratiating themselves with reporters on Friday afternoon at the Gramercy, the fancy dinner and star-studded guest list at the Waverly Inn. The story revealed the details of Uber planning to start an oppositional research squad, with express intent of “slut-shaming” a prominent critic of the company.

  “Uber’s dirt-diggers, Michael said, could expose Lacy,” the article said. “They could, in particular, prove a particular and very specific claim about her personal life.”

  The backlash was swift and furious. The New York Times, the Wall Street Journal, and a host of other publications immediately seized on the comments. Morning shows on NBC, ABC, and CBS fanned the flames, underscoring the comments as proof that Michael, Kalanick, Uber—the officers and leadership of the company—were indeed the greedy, slimeball degenerates of popular imagination.

  What made the piece so damning was that it rang true. Kalanick did want to win at whatever cost. He did like the idea of hiring oppo researchers to attack his opponents. And not only did he want to win, he wanted to rub his opponents’ noses in it, too.

  After all, he and Michael had come up with idea long before the dinner, and spoke about it privately to one another at length. Close friends knew the two hated the sensationalist, uninformed media, whose only goal was to chip away at Uber’s hard-fought progress. What the pair didn’t know was that they couldn’t fight the media the way they fought their corporate opponents. The aggression they used to bulldoze cities wouldn’t shame reporters into backing off the story. For all of Kalanick’s talents, he still couldn’t see that this wasn’t a turf war, it was a popularity contest. Now, that blind spot was becoming a liability.

  That Monday evening, as Hourdajian’s colleagues panicked at Uber’s headquarters in San Francisco, she could only shake her head and wince.

  Uber’s charm offensive had failed.

  Chapter 13 notes

  §§§§ Didi Dache would eventually merge with a Chinese competitor, changing its name to Didi Chuxing.

  ¶¶¶¶ I was at the meeting and agreed to its off-the-record terms, which restricts me from recounting the events in great detail. BuzzFeed, however, published a story on the meeting; that story informs the descriptions here. I did not attend the media dinner later that evening.

  ***** Wolff, who would later write an infamous, best-selling book about the Trump administration, had put “Travis Zalanick” [sic] in the subject line, showing the BuzzFeed editor just how much his friend Wolff knew about the ride-hailing chief’s reputation or reasons for hosting the dinner. Wolff would later say he assumed Smith had known the dinner was off the record, an egregious error on Wolff’s part.

  Chapter 14

  CULTURE WARS

  If Silicon Valley was defined by “the crazy ones, the misfits, the rebels and the troublemakers,” a rising countercultural force of hackers and techno-revolutionaries described in Apple’s “Think Different” advertising campaign, then the post-recession era of the Valley was shaped by a different force: the rise of the MBA grads.

  Before the 2008 crash, business school bought one a job as a junior investment banker at Goldman Sachs, or a six-figure consulting salary at McKinsey. But the times were changing. As the finance and consulting industries lost their luster after the financial crisis
, business school graduates began to sense new opportunity out west.

  The weather was better in Silicon Valley. Meals, laundry, and gym memberships were covered by the company. They wouldn’t be required to do grunt work for older traders during the first years at J.P. Morgan. And best of all, techies weren’t (yet) hated by the 99 percent, and didn’t have Occupy Wall Street camped out in front of their offices. By 2015, some 16 percent of MBA grads went into the technology sector, the third most common destination. And of the more than 150 “unicorns” in the Valley by then, nearly a quarter of them were founded by business school graduates. Even Lyft’s co-founder, John Zimmer, was an intern at Lehman Brothers before he turned techie.

  More than most other tech companies, Uber prized the almighty Masters of Business Administration, a degree that signaled business acumen and, often, an alpha male mindset. Not every MBA grad was an asshole, by any means. It just seemed that many of the ones who were assholes tended to feel at home joining Uber.

  At Uber, being cutthroat and competitive was considered an asset, not a liability. According to Uber company value number two, “In a meritocracy, the best idea always wins and the fiercest truth-seekers rise to the top.” Fighting, Kalanick believed, was good; having a “champion’s mindset” (value number four) was what surrounded him with “winners.” And he only wanted to work with winners.

  Once Uber stuck a bunch of alpha male MBAs together in a workplace, the “champion’s mindset” became something else entirely. “Kill or be killed” was the unofficial motto at Uber, where if you weren’t watching your back you might be betrayed by a colleague looking to get ahead. Success, many believed, only came at the expense of others. The will to power was the only way to rise into Kalanick’s favor.

  Josh Mohrer was the model Uber employee. As general manager for New York City, he was responsible for one of Uber’s biggest money-making franchises worldwide. A math major undergrad with an MBA from New York University, Mohrer defined the Uber ideal. Stout and squat, Mohrer had a face like a boxer, thick-chinned and ready to take a punch. He had a boyish grin and a thinning hairline, which somehow made him look both older and younger than he actually was. Barely into his thirties, Mohrer leaned hard on his people—browbeating them when he needed to—never accepting excuses. And he loved to fight—important in a city with one of the strongest transportation unions in the world.

  Mohrer would pit his employees against one another to see who could impress him or deliver better—a tactic espoused by Kalanick himself. Subtle intimidation of his underlings sometimes meant flicking at their flaws, like inspecting the receding hairline of an employee as they tried to discuss a project with their boss. He described the shortcomings of individual employees in front of the entire office, praising winners and shaming losers.

  Mohrer thought he was empowering his staff, and felt like his high expectations were a good management strategy. But around the office, according to two employees, he seemed like a shorter version of Biff Tannen, the high school bully antagonist from Back to the Future.

  Winston, Mohrer’s small, puffy white miniature poodle, barked or nipped at some staff, and never shut up. Mohrer loved handing the dog off to company executives when they came through New York, snapping photos of them holding Winston (with varying degrees of affection) and posting them to Winston’s personal Twitter account, @WinnTheDog. One day, after he left Uber, Mohrer tweeted a photo of Winston taking a dump next to a Citi Bike, the city’s blue rental bicycles—owned by Lyft.

  Some women at the Chelsea office felt alienated by management. To some staff, Mohrer appeared more comfortable with his “bros,” other alpha-male types who shared his frat-like mentality, and the office culture reflected as much.

  But Mohrer always hit his numbers, no matter what. And that was what mattered at Uber. His business success kept Mohrer’s position secure at the company for years.

  Maintaining that high performance also made for intense pressure around the office. Employees across all cities worked late into the evenings. Some never took weekends off to enjoy time with their families. It wasn’t uncommon for bosses to call employees in the middle of the night, or for staff to be asked to join a conference call at two o’clock in the morning from New York if you were trying to talk to offices in Southeast Asia or Australia. Though employees were fed for free at work, Mohrer followed Travis’s lead and delayed dinner until 8:15 p.m.

  One employee, viewed by some as a particular offender, was a favorite of Kalanick’s, which meant he could get away with bad behavior towards his underlings. In a tense gathering with other Uber colleagues, this man called another employee a “faggot,” something he never answered for despite employee complaints. Kalanick’s protection meant you did not face consequences.

  Other managers would threaten to demote workers if they didn’t perform well enough. One manager in Rio would scream or throw coffee mugs at subordinates when he was upset. Workers were threatened by managers with baseball bats if they didn’t meet targets. Once, this manager berated an employee about his performance so intensely, he made the man cry in front of the entire office. That same manager later dated one of his direct reports, causing discomfort among staff when he started favoring her in the workplace. Yet because Rio de Janeiro was one of Uber’s top performing markets, the numerous HR complaints about that manager went unresolved. To leadership, nothing mattered—as long as you made your numbers.

  Not that HR was a particularly robust department at Uber. Like compliance, it felt like an afterthought. Ryan Graves, the company’s head of operations, was also in charge of human resources; Renee Atwood, Uber’s head of “people and places,” was supposed to be reporting issues to Graves as they came up. But Graves wasn’t focused on the day-to-day minutiae of running a complicated HR operation. And Atwood appeared to be in over her head. HR could hardly keep up with employee complaints much less address or resolve them.

  Even during recruiting, prospective employees were treated poorly. The company had designed an algorithm that determined the lowest possible salary a candidate might accept before making an offer to them, a ruthlessly efficient technique that saved Uber millions of dollars in equity grants.

  Kalanick found other ways to save money, too. In more advanced markets where Uber was popular and required fewer subsidies, executives at the company sought ways to increase profit margins. Uber’s margins were fixed for the most part; they took an approximately 20 to 25 percent cut of every ride while giving the driver the remainder of the fare.

  Until 2014, that is, when one executive had the brilliant idea of introducing the “Safe Rides Fee,” a new charge that added $1 to the cost of each trip. At the time Uber billed it as necessary for passengers: “This Safe Rides Fee supports our continued efforts to ensure the safest possible platform for Uber riders and drivers, including an industry-leading background check process, regular motor vehicle checks, driver safety education, development of safety features in the app, and insurance,” went the company’s blog post. If riders noticed the fee, they rarely complained. Many assumed it would just make their rides safer somehow.

  The reality was much less noble. As Uber’s insurance costs grew exponentially, the “Safe Rides Fee” was devised to add $1 of pure margin to each trip, according to employees who worked on the addition. That meant for each trip taken in the United States, Uber took in an extra dollar in cash. The drivers, of course, got no share of the extra buck. That number added up to hundreds of millions of dollars over years of operation, a sizeable new line of income. After the money was collected it was never earmarked specifically for improving safety. “Driver safety education” consisted of little more than a short, online video course. In-app safety features weren’t a priority until years later. “We boosted our margins saying our rides were safer,” one former employee said. “It was obscene.”

  Not that the overall tone of Uber was that of a professionally run organization anyway. Employees, sometimes fresh out of college, would occasionall
y post immature things to the company blog. One employee coined the term “rides of glory” to describe the Uber trip a customer takes home the morning after a one-night-stand. “In times of yore, you would have woken up in a panic, scrambling in the dark trying to find your fur coat or velvet smoking jacket or whatever it is you cool kids wear,” the post said, authored by Bradley Voytek, one of Uber’s data scientists. “Then that long walk home in the pre-morning dawn.” Voytek, a cognitive neuroscientist by trade, joined Uber because he loved the insight that such an enormous data set gave him into human behavior. Watching trips across cities being carried out in real time was like having his own personal human ant farm.

  “But that was then,” Voytek continued, noting the volume of people across multiple cities who were Uber-ing home from a stranger’s house the morning after. “The world has changed, and gone are the days of the Walk of Shame,” he joked. “We live in Uber’s world now.”

  Beyond immature employees and bullying managers, the real war was between departments for the most valuable prize inside the company: incentives.

  “Incentives” was the name for the free money Uber doled out to users and drivers. Uber lost money on incentives, but it didn’t matter; for one, if Uber kickstarted the demand flywheel hard enough, they’d train people to keep using Uber even after the company stopped providing freebies. Moreover, Kalanick knew he could always, always find more money.

  By 2015, Uber was globally spending more than $2 billion annually incentivizing drivers and riders, a staggering burn rate for even the most well-capitalized startup. It became clear inside of Uber that whoever controlled the money held the power, so different parts of the organization started competing for a bigger share of the piggy bank. Incentives offered the fastest route to growth. And growth was rewarded with bonuses, promotions, and praise from the top. There was the growth division led by Ed Baker, an ex-Facebook VP who was known for bringing millions of new users to the social network. Other executives from the product, operations, and finance divisions joined the fray.