Despite its meteoric rise, Uber had always lingered with disgraces and scandals.
- Twitter user @Bro_Pair condemned Uber’s decision to turn off the “surge pricing” during the protest with a hastag #DeleteUber on Jan 2017. The perfect storm led to about 200,000 deletion of Uber app.
- On Feb 2, 2017, CEO Travis Kalanick resigned from Trump’s “business advisory council” with mounting pressures.
- On Feb 2017, Susan Fowler whistlebrowed the sex proposition from her manager.
- On March 1, 2017, a video of Kalanick argued with Uber driver about falling fares was leaked in the internet.
- On March 2017, New York Times disclosed the “Greyball” to identify a person as a threat and “greying” over their eyeballs — to obscure or highlight specific vehicles.
This book, Super Pumped shed more lights on the crannies behind the spotlights:
- Uber had organized a group called “competitive intelligence” team, aka COIN to carry out privacy invasion and espionages.
- Uber paid a ransom as “bug bounty” to conceal a severe data breach in 2016 with 600,000 drivers and 57 million users’ personal data. On Oct 5, 2022 Joe Sullivan, the former Chief Security Officer of Uber was convected guilty for covering up the data breach.
- Uber’s lax background check in Brazil resulted “Uber roulette” crimes against Uber drivers, they ”were assaulted, robbed, and occasionally murdered“.
- Uber leveraged InAuth technology to fingerprint iPhone device after Apple revoked the access to deviceId. Uber also disabled the code within Cupertino’s geofence in the hope to bypass the App Store review. It did not work, and Kalanick was summoned to Cupertino to meet Tim Cook to fix the problem.
Controversy aside, I am still amazed that Uber managed to survive this uphill battle, and might win if the gig economy is financially sound. Uber tried to build a marketplace to matchmake riders and drivers to avoid heavy operations and investments, but it MUST grow both the buyer and seller sides with massive incentives. By 2015, Uber was globally spending more than $2 billion annually incentivizing drivers and riders.
In the winner-takes-all mindset, Uber needs “blitzscaling”, a term coined by Reid Hoffman, to dominate the global transportation markets. Kalanick granted regional general managers autonomy for campaigns, and promotions. It is no wonder that corruption, bribery, nepotism, and backstabbing emerged from the cut-throat competition for bigger slices of the piggy bank.
But it worked, at least in the United State. Uber almost crushed Lyft, 72% vs 28% market share according to Bloomberg. This strategy was outmaneuvered by other deep-pocket players, such as Didi in China, Grab, Gojak in Southeast Asia.
One of DiDi’s preferred tactics was to send new recruits over to Uber to join as engineers. As soon as they were hired they acted as moles, feeding proprietary Uber information back to DiDi and carrying out corporate sabotage on some of Uber’s internal systems.
Uber poured $40 million to $50 million incentives to China market, and eventually threw the towel for fear of the “king-making” government policy in favor of Didi.
Pipe dream of self-driving
In Kalanick’s vision, Uber would become the central stage for moving things from point A to point B. The major cost is associated with drivers, — they need to be paid, insured, recruited and retained. In 2015, Uber opened Advanced Technology Group(ATG) center in Pittsburgh, and raided Carnegie Mellon University’s National Robotics Engineering Center for talents.
Google’s affection on the self-driving went back on 2009, the Project Chauffeur, led by Sebastian Thrun, and legendary Anthony Levandowski. Levandowski was a prodigy engineer, but disdained the authority and rules. In 2011, he hired a lobbyist to push Nevada state’s legislation to pass a law to allow testing self-driving vehicles without leadership’s approval. In January 2016, Levandowski left Google to launch Otto because “was eager to commercialize a self-driving vehicle as quickly as possible”. Otto was acquired by Uber on July 2016, and morphed to Uber Freight later.
In February 2017, Waymo sued Uber for trade theft, which kicked off the saga of legal battles between three.
- Uber settled with Waymo and agreed to pay Waymo 0.34% of its equity, roughly $245 million.
- Google also sued Levandowski for poaching Google employee, which violated the contract. The panel ordered Levandowski to pay Waymo $179 million, $120 million for the salary he received, and the remainder for interest and legal fees.
- In May 2017, Levandowski was fired by Uber.
- On August 27, 2019, Levandowski was charged by US Attorney with 33 counts of theft for stealing 14,000 documents from Google on 2020. He pleaded guilty, was sentenced to 18 months, and agreed to pay $756,499.22 in restitution to Waymo and a fine of $95,000.
- On August 2020, Levandowski sued Uber for $4B damage, cited that the undisclosed Waymo vs. Uber agreement reneging the support on Otto Truck. The case was settled on 2022, under the agreement, Uber would pay Google a “substantial portion” of the $179 million, and pay Levandowski $2 million.
2017 was a tough year for Travis Kalanick, not only a string of scandal tarnished his reputation, his mother passed away, resulted from a boating accident. Kalanick took a leave of absence to mourn his mother on June 13, when the internal investigation led by former U.S. Attorney General Eric Holder was presented to the all-hands employee meeting.
The investors, led by Bill Gurley, the investor from Benchmark took the opportunity to weather a coup. The investors, collectively controlled 40% of voting shares force Kalanick to sign the immediate resignation letter on June 21, 2017.
After a decade, Uber has still been struggling with profitability, so are its rivals. Is possible that the business model just does not work? The market is so inflated by VC’s money that the low-cost rides are simply non-sustainable? That might explain why the platform is bleeding, and the drivers barely make minimum wage with all costs taken into account.
Will Uber can continue grow its 37% global market shares and eventually has the monopoly to hike the price some day; or the autonomous driving renders the peer-to-peer gig economy obsolete?
Only time can tell.