Summer reissue: Uber became one of the biggest companies in the world in a few short years. Duncan Greive reviews Mike Isaac’s extraordinary Super Pumped, which shows the world just what it sacrificed for cheap rides.
First published 29 September, 2019.
There are so many stories in Super Pumped, a riveting new account of the rise of Uber, which seem to capture the spirit of the big tech era. There’s the period during which 16 Brazilian drivers were murdered before Uber reluctantly introduced a layer of ID verification beyond an email address. The failed attempt to break China which saw cars driving around with stacks of iPhones in the front seat pretending to be drivers, and stacks of iPhones in the back seat pretending to be passengers. The time Uber set up a partnership with Carnegie Mellon University then, after inking the deal, simply hired the 40 researchers made available to them.
It’s a portrait of a company created in the image of Travis Kalanick, the founder of Uber and thus the man who created the company’s quintessentially tech-bro culture. Yet to pretend Kalanick is the source of all that ever ailed Uber is to miss the broader point about what a toxic combination of lax regulation, turbo-charged venture capital, indifference toward human labour, tax invisibility and an uncritical veneration of software engineers has done to the world. And the politicians – very much including New Zealand’s – seem afraid to do anything consequential about it.
Super Pumped: The Battle for Uber begins with greyball, as a good a place as any to start this saga. Uber has a specific approach when entering a new territory: hire an aggressive young city manager, load them full of share options, set up huge targets and give them deeply questionable tools to get the job done. The aim is to get in, get the population hooked on artificially cheap rides (subsidised by both investors and drivers), then launch a massive lobbying and PR push if officials attempt to enforce laws around who can transport people for money.
Uber would go into cities in complete defiance of existing laws, and when officials came to catch them, they had a plan, operating under the cartoon villain codename ‘greyball’. To get around efforts to catch and fine drivers, Uber devised an ingenious method of identifying users likely to be law enforcement, using a combination of email addresses, public data and geolocation. It meant that whenever those looking to fine Uber out of the city ordered a ride, the car would mysteriously vanish from their screen. It bought the company enough time to metastasize, get into people’s routines, and build a userbase. If the city tried to fight back, customers would be prompted within the app to bombard politicians with furious messages. The tactics almost always cowed officials into quiescence, leading to the ubiquity of the service, and now its equally ugly sibling, UberEats.
Kalanick and his army of developers were powered by a righteous mission – they saw taxi companies as inefficient and overpriced, and reasoned that there had to be a better way. They were right to identify the opportunity – Uber is an extraordinary product as a customer. A few taps on your phone can take you wherever you need to go, quickly and cheaply. Similarly, they were right to assume that a more traditional approach would have likely taken years to get across the line. Changing laws to allow for Uber meant re-organising car service legislation, which was always going to meet with stiff resistance from taxi driver unions. In the US the ‘medallion’ which allows you to drive a cab in New York City was less than ten years ago worth as much as US$1m. Drivers would mortgage themselves into oblivion to get one, and were understandably distraught when their value plummeted, to less than $200,000 with the arrival of Uber. A number have subsequently committed suicide. This is as much a product of the medallion system as Uber, but it’s a microcosm of Kalanick’s attitude that the ends justify any means.
The company’s greyball tactics toward law enforcement were mirrored in the way it approached competitors. Lyft in particular was infiltrated, and those who drove for both it and Uber targeted with aggressive offers to drive more for Uber. Uber’s engineers even created a feature which used the microphone in driver’s phones to listen for the tone which played whenever a driver accepted a Lyft ride. The idea was that they would then offer cash inducements for them to move back to the Uber app. That it was never deployed is scarcely material – Uber and Kalanick were always comfortable taking brilliant software engineers and setting them to work on projects which violate anything which might resemble the boundary of ethical corporate behaviour.
Super Pumped’s title comes from one of 14 deeply lame ‘business principles’ espoused by Uber’s Kalanick on stage at a conference in Las Vegas in 2015, before we woke up to what big tech was really up to. Beyonce played a private show for employees (in exchange for stock – she and Jay-Z are investors), and the whole Uber gang essentially operated under a ‘what goes on tour’ mentality for the entire conference.
The scene was first reported in an explosive 2017 feature by Mike Isaac for the New York Times, and his diligent coverage of the company over the last five years has now become the basis of this definitive account of the rise of Uber and Kalanick. Isaac is a superb reporter, and clearly has impeccable sources up to and including Uber board members – we’re in the room at critical times, and there’s a wealth of detail and character. He’s impressively restrained, allowing Kalanick to be a sympathetic character in his youth, and detailing the way a slight from an early would-be investor left a mental scar which would have corrosive effects later in life. There are chapters which portray him as a furiously driven 20-something, willing to go without and turn down opportunities based on principle. Yet his early years make the founder’s blindspots, responses to stress and deep moral failings all the more stark when they start to land.
The book deserves to land alongside John Carreyrou’s superb Bad Blood (about Elizabeth Holmes and Theranos) as a classic cautionary tale of big tech, one which is starting to chronicle a business era as vividly Den of Thieves and Barbarians at the Gates did the high finance excesses of the ‘80s.
Both Bad Blood and Super Pumped reveal members of the group of founders who are explicit children of the cult of Steve Jobs – in some perverse way victims (as is the whole world) of the mythmaking which became so intoxicating to a whole region in Silicon Valley. Mark Zuckerberg, whose move fast and break things credo meant never turning around to see the wreckage of massacres, measles epidemics and broken elections turned in his wake. Theranos’ Elizabeth Holmes, who aped her idol to the point of appropriating his signature black turtleneck, and was comfortable delivering wildly inaccurate tests for syphilis and hepatitis C. WeWork’s Adam Neumann is the latest, shamelessly siphoning money out of his company by selling it the trademark to ‘we’ (really) for millions, while trying to convince the world his real estate leasing company is in fact a tech startup. That mission failed when his board finally ousted him this week, but not before tens of billions were wiped from the company’s value.
Which is to say that Travis Kalanick is not a particularly aberrant example of this species – no better or worse. He was just amongst the first to get really exposed. The end came, as it did for Holmes, when outstanding reporting, by Isaac and others, went and dug into him and his company. There were revelations about misogyny – ubiquitous within the male-dominated tech scene – company-funded visits to strip clubs, managers routinely sleeping with direct reports, and an explosive blog post which detailed, among other things, a recruit being moved after she complained that her manager had hit on her.
There are glimpses of Isaac’s own reporting process at times, meeting up for an oily slice of pizza with a source who reveals the existence of greyball to him. He and other journalists were viewed with contempt by Uber, who openly talked about commissioning ‘oppo research’ (used in US politics on opposing candidates) on reporters, attempting to dig up dirt on those who exposed the company’s behaviour. This included Isaac himself – Super Pumped is in part a triumph of bravery and persistence in the face of such amorality.
What can restrain a company like this? Super Pumped shows that Uber didn’t respect regulators. It didn’t respect institutions. It didn’t respect its competition.
Only Apple. After a change in the app store’s byzantine terms of service meant that app makers could no longer view the unique code used to identify individual iPhones, Uber was in a quandary. It used such numbers to track fraudsters, who rampantly ripped off the company in various parts of the world. Uber figured out a way around the change which allowed them to access the code, in direct and unambiguous violation of Apple’s terms change. When it was discovered, Kalanick was summoned to Apple’s HQ, down the road in the Valley, and given a final warning. It’s telling that the most humbled Kalanick ever appears is during this encounter – the one person who had the power to truly destroy his business is Tim Cook, Apple’s CEO –by kicking Uber off his platform.
He did not, in the end, but it tells you a huge amount about this era that the person Kalanick fears most is not a senator or federal regulator, but an unelected business leader.
Such has been the global delinquency of duty of our elected representatives that most intelligent leaders of multi-billion dollar tech companies know that throwing complexity and lobbyists at them is enough to forestall any attempt to reform their businesses. Whether it’s tax, regulation or enforcement, central and local government nearly always caves eventually.
Behind the extraordinary consumer product lies the people which really pay the cost of Uber’s obsession with growth and indifference to the law: drivers.
Kalanick reserves a special contempt for such people, referring to them dismissively as ‘supply’, and dreaming about the day when his self-driving unit (itself brazenly stolen from Google) will render them all superfluous to need, allowing him to take the other 70% of the fare.
In developing economies drivers are beaten, robbed, murdered, their cars burned. In most western countries it’s more mundane – they simply operate under conditions outside any of the protections afforded employees. Uber weaponised contractor law against its workforce, using incentives and bonus payments to recruit them, holding the drip of payments just high enough to keep them on the road, but never enough to earn a living. They wear all the costs of the business – insurance, healthcare, providing cars up to Uber’s standards – while having none of the protections of those in employment. No holidays, no breaks, no sick leave.
New Zealand is really no different. I spoke to a consultant specialising in Uber drivers, who says that most earn around $25 an hour. But once you factor in expenses like (deep breath) fuel, car financing, repairs, registration, cleaning, licensing, tax, ACC and more, they’re nearly always below our $17.70 hourly minimum wage – generally more like $15 per hour. Part timers can make more by only operating at the peak Friday and Saturday night times – but they wear the extra cost of soiled cars, and risk of assault. Uber don’t really even deny it – a statement provided to Stuff talked about how drivers value “flexibility” over their variable earnings.
Drivers also deal with an extraordinarily capricious employer. If Uber reduces rates, or puts on a special, it comes out of the driver’s end. If there’s a glut of drivers, as in Auckland, that’s good for Uber and customers (fast and consistent service) but terrible for drivers (more unpaid downtime).
Why don’t they complain or unionise? Uber can revoke their ability to drive at any time, with no ability to appeal. One Auckland driver I spoke to spent an entire day with a malfunctioning app, meaning he earned $18 in 12 hours. But he didn’t want to be quoted discussing it for fear of what Uber might do.
Through all this, it’s unclear whether Uber is even a real business in the way we would have understood it 10 or 15 years ago. As its revenues rise, so do its losses – a staggering US$5bn in the last quarter. Along with Jobs, Kalanick idolised Amazon’s Jeff Bezos, whose company lost money for years on the path to becoming the extraordinary, diversified monster it is today. Uber finally went public this year, but after debuting at $45, its stock is trading around US$30, as it struggles to convince the market that there is a future in which it’s able to earn a profit.
It’s beset by ferocious competition, much of which it has already conceded to. Didi in China, Ola in India and Grab in Southest Asia all fought it off, and each has its own versions of Uber’s problems – signs in Indonesia warn drivers off many areas previously the exclusive domain of local taxi drivers, and those who attempt to break the ban are regularly beaten, according to drivers I spoke to.
Here, our drivers aren’t often physically harmed. They just work in the same society as the rest of us, with none of the same protections. California recently passed a law targeting Uber and Lyft’s subterfuge in designating drivers as contractors. It remains to be seen whether New Zealand’s government will do the same.
A book about Uber would be remiss in not describing its extraordinary utility. The system Uber was disrupting does not deserve to be fondly remembered. I once took a taxi from Auckland Airport to Kingsland at 2am. The car was more than 20 years old, the drive took less than 20 minutes, the fare was more than $100. Isaac adroitly brings to life the petty inconveniences of paid private transport prior to Uber, the way it has hugely reduced friction in the everyday lives of a particular class of people.
The story would be incomplete without this side, and at no point does the book resemble a polemic. It contains elements of the classic American dream narrative – an outsider who dreamed big and won bigger. Isaac’s Kalanick is single-minded, driven, intensely loyal to his key lieutenants, and clearly a see-round-corners visionary. Yet the fact that the old system was of low quality was used by Kalanick as a way of justifying any kind of behaviour or externality, from flagrant corporate espionage, to, well, death.
Thus the message of Super Pumped is unmistakable. This is business made by technology, fueled by venture capital and supercharged by the abdication of regulation. That Kalanick was eventually defeated by a board rebellion is a hollow victory. The company has reformed in some respects, but the fundamentals which drove its rise remain in place, most importantly the appalling treatment of its drivers. Kalanick has founded another sharing economy business, recycling the billions he made out of Uber into another hyper-aggressive startup, this one in cloud kitchens, whatever they are. He doesn’t seem to have learned many lessons. Why should he?
What Isaac ends up is a portrait of what happens when the government quits on its job, with Uber like a virus responding to conditions. Historically our politicians reacted to inequities in business or society by evolving law to suit changing times. Today, they are gripped by a collective paralysis, watching as tech companies destroy sector after sector – some with new business models, many by exploiting legal loopholes – and doing almost nothing to restrain them. The maddening thing is that it doesn’t have to be that way. There is a way of taking the good that Uber does – the technology, the convenience, the vision – and making it less destructive. Recognise its drivers as the employees they are. Make it pay its taxes. Demand it treats all users of its platform equally.
It will cost more, but that’s as it should be – right now the drivers are forced to endure the hidden cost of our cheap rides.
That strange period up until November of 2016, when we retained the largely benign image of the boy-geniuses building the modern world, is well and truly over. Our eyes are now open to what these companies believe, who runs them, how they operate. Super Pumped chronicles what was happening behind all those credulous stories, the cruelty, the inhumanity, the moral vacuum.
It leaves unspoken – but unmissable by implication – an obvious question: what are we going to do about it?
Super Pumped: The Battle for Uber by Isaac Mike (WW Norton & Company, $46) is available from Unity Books.