by Isaac, Mike
Chapter 12 notes
‡‡‡‡ De Blasio got his revenge and imposed a cap in 2019.
Chapter 13
THE CHARM OFFENSIVE
Travis Kalanick couldn’t figure out why everyone hated his guts.
Feelings had no place in the business world. Being cutthroat was a quality to be celebrated, not hidden, in a CEO. When it came to describing an executive, “pugnacious” was never meant to be an insult.
Kalanick had proven himself to all his doubters. By 2014, Uber was a transportation behemoth, backed by the best of the best in venture capital and expanding globally. His company was growing so fast his rivals could barely compete.
And yet every time he looked at his mentions on Twitter, he’d read at least two or three tweets from random people calling him a jerk. Two technology reporters in particular—Sarah Lacy and Paul Carr—seemed to be on jihad against Kalanick, blaming him for the “asshole culture” spreading throughout Silicon Valley. GQ had made him look like a caricature of a “bro,” a dirty word in techland. The opening sentence of a Vanity Fair profile—which he had hoped would be balanced—said he had a “face like a fist.”
“What the fuck?” Kalanick wondered. He didn’t think the public perception of him matched up to reality.
Every time someone cited Uber’s belligerence, they cited Kalanick’s attitude toward Lyft, Uber’s closest US competitors. Reports that Uber employees were hailing Lyfts and then trying to recruit the driver were met with disgust—something that confused Kalanick and Uber employees. Business, they thought, was supposed to be a competition. Logan Green, Lyft’s CEO, was a good tactician. But Kalanick outmaneuvered his rivals every single time. And he felt fine trouncing his competition.
One prime example: Kalanick’s network of spies in the Valley—mostly made up of other tech workers and venture capitalists—picked up early rumors of Lyft’s new carpooling service. To get the jump on Lyft, Kalanick tasked his chief product officer, Jeff Holden, to drop everything and copy the carpooling feature immediately. Uber announced the impending launch of “Uberpool,” a carpooling feature, mere hours before Lyft announced the product it had invented. By the time Green and Zimmer hit the publish button on their corporate blog, they looked like also-rans. Kalanick had scooped his competition, but his glee at upstaging his rival outraged the public.
Kalanick knew he had made some unforced errors. In the midst of the GQ profile, he let it slip that his newfound tech celebrity, and the attendant riches, made attracting women much easier now than it was when, say, he was living with his parents while building Red Swoosh. On-demand women, he joked, wasn’t that far off.
“We call that boob-er,” Kalanick told the reporter.
Suddenly, Kalanick wasn’t just a grown man-child in readers’ eyes, he was a blatant misogynist. One particularly cringe-worthy paragraph in the GQ story had Kalanick quoting the infamous Charlie Sheen, describing Uber’s potential success as “hashtag winning.” He name-dropped boutique hotels in Miami like the Shore Club and SLS as places he’d rather be than hustling at Uber. He was trying to be honest—and perhaps a little bit cool—but to the public he sounded like an enormous douchebag.
More than just a douche: Kalanick checked all the boxes of what people imagined cocky tech founders were like. He imagined himself as the hero in his own narrative—to the point that his Twitter avatar was the cover of Ayn Rand’s The Fountainhead, a book espoused by libertarians for its celebration of self-reliance and disdain of government.
When other people looked at Kalanick, they saw another rich white guy riding the wave of venture capital while putting hard-working, blue-collar taxi drivers out of their jobs. Worse, he was living large—women, wine, song—and flouting it.
Kalanick didn’t understand. He was hardly the first CEO to enjoy the fruits of his success. He knew how Mark Zuckerberg and Sean Parker had partied after their first few big rounds of venture capital. Larry and Sergey were literally jumping out of airplanes and burning millions of dollars building robots.
“And yet, I am the asshole?” Kalanick wondered aloud, pacing around Uber’s headquarters. He’d take the anger home with him, obsessing over it while complaining to his girlfriend, continuing to pace in his living room.
Every time Uber got a bad run of press—which was happening more and more frequently—Kalanick fumed that reporters were out to get him. They couldn’t appreciate the success of Uber. They were jealous of the company he had built. “Perception versus reality,” he said to employees who worried about the company’s image. “Their perception of us is nowhere near matching with our reality.” This became his refrain. He needed to believe it. It was that, or believe the torrent of negative press, or the daily cascade of vitriolic tweets.
“Exploitative piece of shit.”
“You don’t give a fuck about drivers.”
“DOUCHE.”
The random commenters didn’t bother him. But Sarah Lacy got under his skin. Lacy, a long-time tech journalist who made her name at Bloomberg Businessweek and Time, frequently bashed Kalanick. While other journalists were writing about the eye-popping amounts of money Uber was raising, Lacy focused on Uber’s cult of staff “bros.” “It troubles me that Uber is so OK with lying,” Lacy tweeted, referring to some of Uber’s lobbying practices. “Uber driver hits, kills 6-year-old girl. Is ‘Not our problem’ still an appropriate response?” she said, referring to a tragic accident and subsequent tone-deaf response from the company. “The horrific trickle down of Asshole culture: Why I’ve just deleted Uber from my phone,” read the headline of one of her popular articles. According to those close to Kalanick, the CEO felt like Lacy was dragging him for no reason.
“How would they like it if we did it to them?” Kalanick asked Emil Michael, his second in command.
Kalanick’s bad boy image was starting to get in the way.
While Kalanick stewed about the press, Bill Gurley was growing annoyed with his founder.
In the early days of their relationship, he and Kalanick were a dynamic duo. Gurley had a keycard tied to his belt loop granting him full access to Uber’s 1455 Market Street headquarters. Gurley would walk past the glass-paned, street-level front doors, ride the elevator up to the fifth floor and scan himself through security uninterrupted, never breaking stride. Everyone knew Gurley—the beanpole Texan was unmistakable.
That was back when Travis cared what Gurley thought, when the founder still looked up to Gurley for advice. And Gurley was no softy. He encouraged Kalanick to be competitive. Kalanick and Gurley shared a frustration with existing legislation, and the older man appreciated the way Kalanick exploited cities’ weaknesses. He saw how easy it would be to replicate the playbook worldwide, and cheered Kalanick at every step.
But by the end of 2014, things had changed. Kalanick had begun to sour on Gurley. In public, Gurley was still Kalanick’s biggest cheerleader. In private, he expressed doubts. Kalanick grew tired of Gurley’s concerns that the company was spending too much money trying to expand across the world into every possible market, or that Kalanick was doing end-runs around his own chief financial officer.
Worst of all, Gurley worried about Kalanick’s obsession with China, the El Dorado of Western capitalism, a market few tech companies had yet to successfully crack. Kalanick wanted to fight his way inside and take on Didi Dache,§§§§ the “Uber of China.” Gurley wasn’t as keen. In China, Gurley saw a market he didn’t fully understand, a set of cultural norms unfamiliar to Uber employees, and a protectionist government hostile to most American businesses. When Gurley looked to the region, all he could see was red ink.
After years of thinking of Gurley as his personal cheerleader, Kalanick started to see Gurley as a gadfly, always harassing Kalanick and poking holes in Kalanick’s ideas. Where Kalanick saw opportunity, Gurley started to see problems.
When Travis Kalanick decides he likes someone, they might as well be his best friend. People close to Kalanick describe it as a fr
agile infatuation, a platonic mini-affair where Kalanick thinks you can do no wrong. Gurley, when the two first met, was the object of Kalanick’s infatuation.
When Travis Kalanick decides he doesn’t like someone, they might as well be dead. If someone challenges Kalanick—in the wrong way, not via “principled confrontation”—they get iced out. If someone doesn’t live up to Travis’s lofty expectations? Iced out. Or, in Gurley’s case, nitpicking Travis with questions and doubts. Gurley got iced out.
Kalanick rarely told someone directly to get lost. It was a slow, subtle frost. The person’s name would start to drop off the email list for important strategy and planning meetings. Maybe they wouldn’t get invited on as many walk and talks. Suddenly, the person wouldn’t be on the “A-Team” anymore—Kalanick’s cadre of top lieutenants. When “TK” fell out of love with someone, everyone knew it.
Gurley recognized what was happening, but had few options to rein Kalanick in. When the firms had been itching to invest in Uber, Kalanick had made sure to gut their investor rights. They had board seats but limited power. So Gurley couldn’t leverage a board vote to influence Kalanick—at least not by himself.
He started using other means. Gurley began a whisper campaign to try and influence Kalanick, reaching out to people Kalanick trusted for advice. At times, Gurley was on the phone on a near daily basis with Emil Michael.
“He needs to recognize his fiduciary duty to shareholders,” Gurley said. “This is crazy.” Of all Kalanick’s transgressions, his pushing out of Brent Callinicos, Uber’s chief financial officer, peeved Gurley the most. Kalanick believed Callinicos was unnecessary, and felt that most of the position’s duties could be executed by Uber’s head of finance. Gurley suspected that Kalanick didn’t want a CFO watching how he spent Uber’s money.
Finance wasn’t Gurley’s only worry. He knew Uber didn’t have a particularly strong legal department in place, partially by design. Salle Yoo, Uber’s chief legal officer, was someone Kalanick felt he could control. She would push back on Kalanick occasionally, but her fear of being “iced out” kept her from getting in Kalanick’s face about every legal concern she had.
In almost every other area of her life, Yoo was a leader; she sat on the council of the Asian Art Museum of San Francisco, was a member of the Council of Korean Americans, and worked as the secretary, director, and chair of the judiciary committee for the Asian American Bar Association of the Greater Bay Area. Later that year, Yoo would be named one of San Francisco Business Times’ Most Influential Women in Bay Area Business. And yet Yoo was often unable—and at times reluctant—to influence her boss. When she did decide to raise an issue with Kalanick, Travis regularly treated her concerns as just another annoyance, especially when they had to do with legal compliance.
Uber’s compliance division was marginal. Compliance is one of the most important safeguards a company can have, as it ensures a company acts within the law. But when a company actively seeks out legal “grey areas” during rapid expansion, compliance, by definition, is not a priority. By the end of 2014, Uber was operating in hundreds of cities across dozens of countries around the world. Even if she had the tools to do so, there was no way Yoo’s team could keep track of what each city manager was doing.
In one meeting with top general managers, Ryan Graves—who was by then head of all operations—made it clear where Uber stood on compliance. While legal claimed it wanted employees to follow the rule of law, Graves cared more about getting things done.
In effect, GMs had free rein. Kalanick wanted to keep Uber from feeling too “big company,” like a Google or an Apple. That meant protecting his employees from corporate bureaucracy. He wanted them to ignore all rules except Kalanick’s beloved fourteen principles. As Kalanick looked upon his empire, he was proud of what he saw—dozens of young, hungry entrepreneurs, autonomous and improvising as each situation required.
What Gurley saw was a sprawling mess. He was trying and failing to convince Kalanick to hire another CFO. Talking to Michael got Gurley nowhere. Kalanick had no intention of slowing down his spending. And every time Gurley brought up concerns about finances in board meetings, Kalanick would find a way to dodge the issue, or reassure everyone he knew what he was doing.
So Gurley decided to do what he often done over the years with thorny problems: he blogged about it. He had always been a contrarian, warning founders and venture capitalists about the pitfalls of their unpredictable industry. But 2014 and ’15 brought out a new version of Gurley. Over a series of entries on his personal blog, Above the Crowd, Gurley slowly morphed himself into Silicon Valley’s Cassandra.
Like the mythical Greek figure, Gurley forecast a collapse of apocalyptic proportions. Gurley howled about the impending downturn in venture capital, exacerbated by the waves of new money. Savvy investors in the Valley assumed this was Gurley playing the game; the more he scared off late-stage, institutional funds from investing in tech companies, the better the chance the landscape would return to the old model; startups would go public at a normal time in their life cycle rather than deferring, and investors would see their paydays much sooner.
But these blog posts were privately aimed at Kalanick. Gurley was telegraphing his concerns for Uber, his pride and joy company. “We are in a risk bubble,” Gurley wrote. “Companies are taking on huge burn rates to justify spending the capital they are raising in these enormous financings, putting their long-term viability in jeopardy.”
The apotheosis came in front of thousands of people at South by Southwest, the annual springtime music, film, and technology festival in Austin. Dressed in extra-long blue jeans, a pair of brown leather boots and a white University of Texas pullover stamped with the school’s burnt orange Longhorn mascot, Gurley took to the stage in a crowded auditorium for an hour of questioning from the writer Malcolm Gladwell.
He launched into his usual bit. “There is no fear in Silicon Valley right now,” he said to Gladwell. He noted that there were more than a hundred “unicorns” running loose in the Valley—in his view an insane amount. A unicorn earned the name by being unspeakably rare. Practically overnight, dozens of consumer startups had been valued well into the billions, many with little revenue to speak of. A hundred unicorns suggested to Gurley that some would turn out to be ponies with papier-mâché horns.
“I do think you’ll see some dead unicorns this year,” he told Gladwell.
Seventeen hundred miles away back at Uber headquarters in San Francisco, Kalanick and Michael scoffed at their overbearing investor, who always thought the sky was falling. They had a nickname for Gurley: “Chicken Little.”
The Waverly Inn was a good place to woo the East Coast media elite.
Tucked away on Bank Street, a quiet, tree-lined road in hip Greenwich Village, The Waverly Inn was a storied institution for New York media, made famous by Graydon Carter, the longtime head of Vanity Fair, who used the restaurant to host exclusive evenings with Manhattan society. On summer evenings passersby would notice celebrities dining outside on the ivy-lined front patio. Dinner at the Waverly meant something.
For Kalanick, it meant expensing a meal to ingratiate himself to East Coast reporters who hated him. That week, he had come to New York to check on the Manhattan office and meet with bankers. Nairi Hourdajian, his head of communications, thought they could kill two birds with one stone. Hourdajian bet that if the reporters got to know Kalanick in person, they might realize he wasn’t such a bad guy.
Hourdajian had gone through the same process herself. Hourdajian, a proud Armenian-American who breezed through her government studies at Georgetown and Harvard, came from the world of politics. She was familiar with schmoozers and phony executives. Though she knew her boss had rough edges, she had come to believe that inside, Travis Kalanick was a good person.
Hourdajian worked alongside Kalanick through some of Uber’s earliest, toughest days. He trusted her to build out the communications team from scratch, and then run it. And when Uber was up against
its nastiest early opponents—including taxi operators and government officials—Hourdajian and Kalanick fought side by side in the trenches. She knew Kalanick would never change. But perhaps, if she got reporters closer to him, they would see Kalanick the way she did.
Hourdajian set up a meet-and-greet that Friday afternoon with reporters at the Gramercy Park Hotel, a swank destination in Manhattan’s Flatiron District. In a private room, sitting on leather sofas over plates of brie and mini-muffins, Kalanick made the case to reporters that he wasn’t a monster, and suggested that Uber wanted to build a relationship.¶¶¶¶
They had handed off the job of organizing dinner to Ian Osborne, a well-connected British media fixer, whose job it was to pair important members of the business community with equally important members of the press and Hollywood.
Guests were seated in a private room in the back of the Waverly, away from the common dining area. After cocktails, the diners were asked to sit at a long, skinny wood table—almost too skinny to eat over. Guests were uncomfortably close to one another. Kalanick sat at the head, flanked by Arianna Huffington, the media mogul and celebrity who had built influence in politics and publishing. Huffington and Kalanick had grown close in recent years, meeting for the first time at a technology conference in 2012.
Down the table from Huffington was Leigh Gallagher, a senior editor at Fortune who oversaw the “40 Under 40” list of influential leaders in the business world. On Travis’s other side sat Hourdajian, then Osborne, Uber chief business officer Emil Michael, a handful of other influential New York media writers, and Edward Norton, the actor turned Uber investor. Norton, who had become pals with Kalanick, was Uber’s first official rider when the company launched in Los Angeles.
As Kalanick settled in to schmooze with magazine writers at one end of the table, Emil Michael, his deputy, was cozying up to the media writer Michael Wolff on the other end. Wolff had brought along Ben Smith, editor in chief at BuzzFeed.