Is Uber the worst company in Silicon Valley?
Is Uber the worst company in Silicon Valley? The taxi app company has proved to be one of the most aggressive of the new generation of tech startups – showing a willingness to take “disruption” to new heights. Governments, states, taxi drivers, tax authorities, rivals, even blind people – all have come up against Uber and lost.
On Monday, the company stepped it up a gear when it was revealed that at least one senior executive at Uber had considered a smear campaign against one journalist who has had the temerity to question the company’s ethics.
At a private dinner last week at Manhattan’s Waverly Inn, Uber’s senior vice-president of business, Emil Michael, suggested the company could spend “a million dollars” to hire “four top opposition researchers and four journalists” to “help Uber fight back against the press” by looking into personal lives of reporters who write unflattering stories about the company, BuzzFeed’s editor-in-chief Ben Smith reported.
The meeting was part of a series of events apparently meant to be a “charm offensive” to woo the media. Among the attendees for at least one of the events were Uber chief executive Travis Kalanick, BuzzFeed’s Smith and Johana Bhuiyan, the actor Ed Norton, Arianna Huffington, and, reportedly, representatives of the New York Times, Business Insider, Capital New York and Newsweek. Smith was there as a guest of columnist Michael Wolff.
When somebody at the table at the dinner suggested the plan could be problematic for Uber, he allegedly replied: “Nobody would know it was us.” Well, they do now.
On Tuesday, Kalanick tweeted an apology to Lacy and said Michael’s comments “showed a lack of leadership, a lack of humanity, and a departure from our values and ideals.” He said, however, that “folks who makes mistakes can learn from them … and that also goes for Emil,” suggesting that Michael would be remaining with the company.
The revelation is just the latest in a series of escalating clashes between Silicon Valley and the press, regulators and politicians. After years of disrupting each others’ businesses, tech is looking outside the Valley for new businesses. And as it does, it is finding that assumptions people make in tech don’t always travel well.
Michael singled out Sarah Lacy, editor of the tech blog PandoDaily, who has been a persistent critic of the company and recently accused Uber of “sexism and misogyny” over a promotional deal in France that paired riders with “hot chick” drivers. Photos of women in lingerie appeared on the app for customers to choose from. “I don’t know how many more signals we need that the company simply doesn’t respect us or prioritize our safety,” she wrote, declaring she would delete the Uber app from her phone.
In a piece titled ‘The horrific trickle down of asshole culture: why I’ve just deleted Uber from my phone’, Lacy pointed to comments from founder Kalanick about “how his company should be called ‘Boober’” in reference to his desirability among women.
Lacy is rightly furious about Uber’s response to her criticism. As she pointed out in a PandoLive podcast shortly after the story broke, she has never discussed personal or family matters pertaining to Uber executives, and her criticisms were based on the actions of the company.
“What’s astounding to me is that this is a ‘holy shit’, whistleblower moment that the culture of this company is so rotten that an executive was bragging about this to a journalist at dinner. They don’t even think there is anything wrong with this,” she said.
In what was almost an aside, Smith also said Uber had accessed the profile of a journalist to see she had traveled while using Uber, without permission. Given the picture that can be built from travel data, that news could arguably be the most alarming thing in his report. An Uber spokesperson told Smith this was against Uber’s policies.
On Tuesday, Kalanick tweeted an apology to Lacy and called Michael’s comments “showed a lack of leadership, a lack of humanity, and a departure from our values and ideals.”
Shocking as Michael’s comments are, they will not surprise many who have followed the company. In five years, Uber has managed to build itself into a company operating in more than 205 cities across 45 countries, and with a $25bn valuation, by cracking heads across the world as it attempts to disrupt the economics of the taxi industry.
That valuation is built in large part on the idea that Uber will expand beyond its taxi app base into other services – and they too can expect the hardest of hardball tactics.
The company is currently being sued in San Francisco by the family of a six-year-old girl who was killed by an Uber driver. The company claims its driver was not performing an Uber ride at the time, but the family argue he was on the road because he was working for Uber. The company has been sued by the National Federation of the Blind for allegedly refusing rides once the driver saw the passenger had a service dog. The case alleges that one driver even put a service dog in the trunk of his car.
In the UK and India Uber has been challenged on taxability of its activities. Overseas the company’s tax structure includes maintaining companies and partnerships in Bermuda, Ireland and the Netherlands. The Wall Street reported last month that Indian tax authorities were raising questions over the company electronically running transactions through another country.
Last month Uber was referred to the UK tax authorities by London’s taxi and minicab regulator, Transport for London, after senior Labour MP Margaret Hodge said Uber was “opting out of the UK tax regime”.
Its dirty tricks campaign isn’t restricted to journalists. Uber and rival Lyft have been engaged in an internecine battle for drivers and riders, which has seen both sides ordering cars only to cancel them in order to frustrate each other’s business. Verge reported in August that Uber would request rides from Lyft drivers only to cancel them en masse; Forbes, meanwhile, documented Lyft’s aggressive attempts to hire drivers away from Uber.
For Kalanick, the company’s combative chief executive, this is all the price of doing business. Much of the heat on the company comes from local taxi lobbies and their supporters, he argues. And the libertarian boss sees it as his mission to fight the power. “We don’t have to beg for forgiveness because we are legal,” he told the Wall Street Journal last year. “But there’s been so much corruption and so much cronyism in the taxi industry and so much regulatory capture that if you ask for permission upfront for something that’s already legal, you’ll never get it. There’s no upside to them.”
Worryingly, Kalanick’s sharp-elbowed approach works, as far as investors are concerned, and it comes as Silicon Valley eyes an ever larger share of the “1099 economy” – self-employed people often engaged in the service industry. Taxi drivers, laundry workers and home cleaners are just the first guinea pigs for a new breed of tech firms looking to make big business out of often low-paid workers. The trend is unlikely to stop there with other, even more regulated, industries like home help, even nursing, seen as lucrative markets.
Lacygate may well be a turning point for Uber. The company has serious investors – Google Ventures and Goldman Sachs among them. David Plouffe, the former campaign manager for Barack Obama, recently joined the company to head policy and strategy. Even with Uber’s bro-ocracy there are some serious grown-ups in the room who will be pushing for the company to contain this scandal, not least to protect its astronomic valuation.
But as Silicon Valley looks ever more closely at “disrupting” the real world economy, and the legislation that binds it, the culture wars look set to intensify.
This story was amended on Tuesday 18 November to clarify that there were several events attended by Uber representatives and media. An earlier version of the story had mischaracterised several members of the media as having attended the dinner rather than an event beforehand. According to Ben Smith’s reporting, of the members of the media mentioned in the story, only Smith, Michael Wolff and Arianna Huffington attended the dinner.