by Isaac, Mike
But he was after more than just money and hacking. For years, Levandowski believed that humans moved around the world in a way that made no sense. Tens of thousands of people were killed in automobile accidents annually. Traffic in major urban areas, especially the San Francisco Bay Area, was abysmal. People clogged the streets with inefficiently operated cars. One person to every vehicle on the road was inefficient and wasteful. A fleet of self-driving cars, used only when necessary, would be far cleaner and more cost-effective.
Once Google had bought Levandowski’s startup, he dove headlong into mapping and self-driving tech for his superiors, joining the secretive Google X division. Colleagues said Levandowski deserved much of the credit for convincing Google’s top brass, especially Larry Page, to pour millions into self-driving research. And by virtue of working on a project dear to the CEO’s heart, Levandowski began to develop a special relationship with Page.
But he was also shrewd. When Google bought 510 Systems, Levandowski sold it for just under the amount that would have required him to share the profits with the fifty or so employees under him, depriving dozens of his colleagues of a rich payday. Even worse, Google hired less than half of 510 Systems’ staff. The rest had little to show for their time spent working on Levandowski’s robots.
Levandowski should have been ecstatic. Instead, a few years later, as Page was hashing out terms with Kalanick, Levandowski felt handcuffed. He had come to Google to build self-driving cars and upend the world of transportation. But Google, for all its foresight, was proving skittish.
Google was terrified to approve what Levandowski really wanted; true, open-road testing of autonomous vehicles. Aside from the ever-present concern about negative public opinion, the nonsensical design of San Francisco’s traffic-clogged grid presented an absurdly thorny engineering problem. The smallest error risked a dangerous accident. Naysayers imagined a video of a Google-branded SUV wrapped around the mangled chassis of another car—or worse, the mangled body of a pedestrian.
But Levandowski knew Google needed real-world testing to get autonomous vehicles out of the conceptual phase. Levandowski imagined a future without automobile deaths or congestion, where carpooling was automatic and simple. And here was Google, dragging its feet because it was too scared to break a few rules.
Levandowski’s leadership style often irritated other Googlers. He had sharp elbows, was pushy, tough on people, sneering when someone disagreed with him. While Google was careful and methodical, employees saw Levandowski as corner-cutting and occasionally reckless. Without telling his bosses, Levandowski hired an outside lobbyist in Nevada to write a new law that allowed autonomous vehicles to operate in the state without a backup safety driver. Google executives were furious, yet the law passed statewide in 2011.
Levandowski’s divisive methods earned him enemies. When he made a play to become leader of the Google X autonomous vehicle unit, a group of employees staged a mutiny, requiring Page himself to step in and name Chris Urmson, a rival of Levandowski’s, the head of the self-driving division. Levandowski was crushed and made no attempt to hide it; at one point, he stopped coming into work entirely.
Levandowski was in agony; he worked for the company with the most advanced tech in self-driving vehicles, yet seemed happy to let some other, more aggressive competitor take the lead. There had to be another way.
Chapter 11 notes
†††† Levandowski and his team still ended up winning, in a way; Ghostrider is on display at the Smithsonian Institution.
Chapter 12
GROWTH
Grow or die.
It is the maxim by which every entrepreneur in Silicon Valley lives. From the moment a founder signs their first term sheet from investors, they’ve made a pledge to fight to keep the startup alive and growing, growing, growing.
Growth became Kalanick’s mantra. Each morning, he would crack open his MacBook and skim through progress reports from his lieutenants in the field. He tracked new users in each city. He tracked “supply”—the name Kalanick used for the workforce of human drivers. He lived by the numbers. One day, people would be able to open the Uber app and get an array of items—from diapers to iPhone chargers—delivered anytime, anywhere on earth. Uber would be the logistics company that moved people and things across the planet. Amazon on steroids.
Since he was working all hours of the day, Kalanick expected the same of his employees. A job at Uber wasn’t just a job, after all—it was a mission, a calling. If you weren’t ready to stay late at the office and work nights and weekends, you shouldn’t be working at Uber. Company-wide dinner service—a perk that most large Silicon Valley companies offered for those who worked after hours—wasn’t served until 8:15 p.m. That meant you couldn’t work an extra hour after five o’clock and strategically grab a free meal at, say, six on your way out the door. You’d have to work an extra 3.25 hours to get your meal.
And there was always work to be done. Each time Uber entered a new city, the company’s “hockey-stick growth” attracted attention and competition. That meant employees would have to put in overtime to beat back their opponents, who were most often city regulators and taxi owners and operators, or if not them, then the local city councilman who served them. This dynamic—with Uber entering cities and taxi workers bitterly fighting back—would affect Kalanick. He began to act as though he were under siege.
To Kalanick, local “laws” were hypocritical rules that city officials put together at the behest of transportation groups. The way Kalanick saw it, Uber was engaged in a crusade; the company needed to win over consumers while battling the underhanded, street-fighting tactics of the entrenched interests—from the city council to the governor’s office—who were colluding to keep taxi service bad and overpriced. He thought the taxi industry was run by “cartels.” The whole system was corrupt.
But the “cartels” weren’t messing around.
Taxi owners knew they had to stop Uber. In some major cities, taxi owners had paid hundreds of thousands of dollars to purchase “medallions,” taxi-service permits required by the local government. Medallions could be absurdly expensive, upwards of a million dollars in peak markets like New York City. Drivers and dispatchers took out huge mortgages to buy them. The limited number of medallions created an artificially constrained market, which meant cab drivers and taxi company owners could charge enough to earn a decent living (and pay for the medallion.)
Then Uber showed up. The medallion system—a market based entirely on scarcity and exclusivity—was threatened to its core. With UberX, the company’s peer-to-peer service, anyone with a car could drive for Uber. That simple concept destroyed Big Taxi’s barrier-to-entry system, sending the price of medallions plummeting. In 2011, medallions in Manhattan were going for $1 million apiece; six years later, one fire-sale auction of forty-six medallions in Queens fetched an average price of $186,000 per medallion. Overnight, taxi drivers whose entire livelihoods were tied up in paying off an expensive medallion went underwater.
Cabbies were aghast. Doug Schifter, a livery driver from Manhattan, faced financial ruin after the rise of Uber wrecked his income driving for traditional car services. Schifter drove to City Hall in Lower Manhattan on a cold Monday morning in February 2018, put a shotgun to his head, and pulled the trigger.
“When the industry started in 1981, I averaged 40–50 hours,” Schifter wrote in a final post to his Facebook page. “I cannot survive any longer with working 120 hours! I am not a Slave and I refuse to be one.” From Uber’s early days up through 2018, more than a dozen other taxi drivers in New York and other major metropolitan areas also took their own lives.
Taxi drivers who didn’t give in to despair, however, fought back. Some tried to beat Uber at its own game by forming taxi alliances and creating their own apps like iRide, Arro, Curb, and others. But taxi operators soon found the best way to fight back wasn’t to compete with an app. It was to protect the turf they already had.
When Uber la
unched in a new city, taxi operators would often lean on their local transit agencies and taxi authorities, who would dispatch an official to Uber’s local headquarters. Armed with a thick rulebook and a scowl, officials in New York, Nevada, Oregon, Illinois, Pennsylvania, and other states would point out the rules and laws the company was breaking. The “Weights and Measures” book was supposed to tabulate the cost of a ride, they would say, not some complicated algorithm inside the Uber app. When that didn’t work, local legislators were known to dispatch city and state agencies to shut Uber down.
If none of these things worked, there was always good old-fashioned skull cracking. Taxi cartels in areas like Las Vegas and elsewhere had deep ties to organized crime, which meant serious and sometimes violent retaliation. Cars were stolen. Sometimes taxi owners would assault drivers and set their cars aflame.
In Italy, Benedetta Lucini faced pushback from local taxi thugs. As general manager of Uber’s Milan office, she worked overtime to convince Uber drivers to stay on the road, even as taxi operators would hail Ubers to their location, pull drivers out of their cars, and beat them.
Eventually, taxi drivers targeted Lucini. They plastered posters with a photo of her face on taxi stands across the city, along with the phrase “I love to steal.” On another occasion, cabbies threw eggs at her during a press conference. And one night when Lucini was returning home from work, she found a sign hung from a power line not far from her apartment. On the sign was Lucini’s home address, and a message calling her a prostitute who provided her “services” to Milan’s transportation chief.
And yet, under Kalanick, Uber didn’t flinch. As they struggled with local officials, Uber teams devised a playbook for evading crackdowns. Deregulation—a pure, free market, untouched by the corrupt hands of government and Big Taxi—was the ultimate goal for Uber in every city.
Barging into a market first gave Uber a major advantage. In Philadelphia, for example, Uber pushed headlong into the market illegally, much to the consternation of the local Public Utility Commission. The city would levy a $12-million fine on Uber for its 120,000 violations of the transit code. (The company settled the matter for $3.5 million.) By then it didn’t matter. Uber was up and running, having courted more than 12,000 new drivers and spinning up the demand for rides among consumers.
If transit authorities began policing transportation laws, local managers would blast emails and text messages to their driver corps, telling them Uber had their back. Kalanick viewed fines and tickets as just another cost of doing business. Text messages, like the one below, often promised full restitution from Uber if you happened to, say, have your car impounded by the police:
UBERX: REMINDER: If you are ticketed by the PPA, CALL US at XXX-XXX-XXXX. You have 100% of our support anytime you are on the road using Uber—we are here for you, and we will get you home safe. All costs associated will be covered by us. Thank you for committing to providing safe, reliable rides to the citizens of Philadelphia. Uber-ON!
At the same time, local managers were given millions in “incentives” to kickstart demand. Everyone had a smartphone, everyone was fed up with their local metro and taxi services, and everyone loved the free rides.
Uber made it as easy as possible for drivers to sign up. The company used a background check system that moved new recruits through the system quickly. Taxi and livery services used fingerprint testing, which offers a thorough history of a driver’s past, but often took weeks to complete. Uber used an outside firm, Hirease, which boasted an average turnaround time of “less than 36 hours.” Hirease did not require fingerprint tests.
Waiting weeks for a background check was intolerable for Uber. A week was a year; a month was eternity. After perfecting the quick background check process, Uber’s political machine went to work. In states where fingerprint-based background checks were legally required, Uber hired lobbyists to get laws rewritten that mandated drivers undergo the traditional checks.
Uber spared no expense on local lobbying campaigns. The company regularly topped the list of biggest spenders across states like New York, Texas, and Colorado—and dozens of others where they faced legislative opposition—throwing down tens of millions of dollars annually to sway lawmakers. David Plouffe, a former Obama administration political operative, was a major hire who knew how to influence city-level as well as national politics. In Portland, Uber hired Mark Weiner, one of the most powerful political consultants in the city. In Austin, Uber and Lyft paid $50,000 to the former Democratic mayor to lead their campaign against regulation. Later, as Uber matured, the company’s staff swelled to include nearly four hundred paid lobbyists across forty-four states; the number of ride-hailing lobbyists outnumbered the paid lobbying staffs of Amazon, Microsoft, and Walmart combined.
The money was well spent. Uber was able to sway legislation in many states. As a result, legislators rarely, if ever, raised the issue of Uber’s employment liability for its “driver-partners.” That meant Uber could define Uber drivers as contract workers—designated 1099 in tax code parlance—which allowed Uber to skirt paying for benefits like unemployment tax, insurance, and health care. Avoiding these normal employment expenses saved enormous amounts of money, and wildly decreased Uber’s liability for drivers’ actions.
Lobbying wasn’t always a silver bullet; sometimes Uber had to play hardball. Kalanick would order lieutenants to threaten to withhold service to customers or cease operations entirely if it looked like city legislators weren’t going to cave to Uber’s demands on issues like fingerprint background checks or driver caps.
Uber treated each market less like a negotiation and more like a hostage situation. Kalanick had no problem pulling out of a market entirely—as it did in Austin—especially after they had been operating for a number of months beforehand. The company had leverage: people loved using the service. In nearly every major metropolitan area, the “product-market fit”—a tech industry term to describe how well a given service may do with the public—was near perfect. People hated taxis, and loved ordering a car with their phone. To have such a service taken away roused public anger.
Kalanick saw that weakness and did what he did best: he exploited it. Uber general managers would run entire campaigns harnessing public frustration and telling people to direct their anger to their local lawmakers and elected officials.
In New York in 2015, when Mayor Bill de Blasio threatened to cap the number of cars on the road, Uber tweaked the software inside of its app for New York based riders to show what it called “De Blasio’s Uber.” That option showed fewer animated cars driving around on the mini-map inside the Uber app, with approximate wait times of up to a half hour—five to six times longer than people usually had to wait for a ride. “This is what Uber will look like in NYC if Mayor de Blasio’s Uber Cap Bill passes,” said the text inside a small, pop-up notification. Users were invited to “take action,” and were presented with a button inside the app that emailed the mayor and the city council directly with a form letter prewritten by Uber. By the end of the campaign, the mayor’s office had received thousands of letters from upset users protesting the potential ban. De Blasio ended up shelving the proposal.‡‡‡‡
The strategy was extremely effective. So effective, in fact, that Uber decided to systematize and weaponize it across the company. To this end, Uber hired Ben Metcalfe, a caustic, outspoken British engineer who described his job on LinkedIn as building “custom tools to support citizen engagement across legislative matters” to drive “social good and social change.” Metcalfe and his team built automated tools that the company used to spam lawmakers and rally users. With easy, in-app buttons, users could send emails, texts, and phone calls to elected officials whenever an important legislative matter was up for debate. By 2015, more than half a million drivers and riders had signed petitions supporting the company across dozens of states. After Uber sent out a mass text message asking for support, petitions began gaining new signatures rapidly, in some cases as many as seven per seco
nd.
If all else failed, theatrics and pageantry worked, too. After the Metropolitan Taxicab Commission blocked Uber from operating in St. Louis, Sagar Shah, Uber’s local general manager, called local television news stations and print reporters to the MTC offices, where a line of Uber employees marched up with nine white, 15-by-12-inch file-folder storage boxes labeled “1,000 PETITIONS.” After stacking the boxes high against the front door of the MTC, Shah delivered a short, lofty speech on democratic ideals and “listening to the voices” of the people supporting Uber.
After the cameras were turned off and Uber officials had left the scene, a reporter decided to look inside one of the boxes the company had left. It was filled with six-packs of plastic seventeen-ounce water bottles, as were the eight other boxes that accompanied it.
On another occasion in New York City, Josh Mohrer, the brash and contentious general manager who led Uber’s Manhattan office, organized a rally on the steps of City Hall to take a stand against Mayor de Blasio. Mohrer’s team had pushed out alerts to drivers and riders in the days prior, asking them to show up on a sweltering June day to “make your voice heard to your elected leaders.”
Not many drivers or riders showed up to the protest. To make it look like Uber had grassroots support, Mohrer ordered his employees to rush from Uber’s Chelsea office to City Hall, where Mohrer led them in a chanting protest. Mohrer never let on to reporters or city officials that the protesters, sweating in black, Uber-branded T-shirts, were paid employees of the company.
It didn’t matter. In both St. Louis and in New York, Uber’s tactics worked. The lawmakers backed down.