If You Saw Uber’s CEO Testify Before the DC Council, His Downfall May Come as No Surprise

06/21/2017 12:39 pm ET
Travis Kalanick
ADNAN ABIDI / REUTERS
Travis Kalanick

Travis Kalanick is out. The 40-year-old Uber CEO resigned Tuesday as the ride-hailing giant faces crises on multiple fronts and investors called for a change in leadership.

Kalanick, who co-founded Uber, will likely continue to be involved with the company due to his control over substantial voting shares. But Kalanick, and his rules-be-damned approach, will no longer be leading Uber, now valued at close to $70 billion.

For many Kalanick’s sudden departure may come as a shock. But for those who watched him testify before the DC Council five years ago, the only wonder may be that he lasted this long.

Kalanick Testifies

It was September 2012, before Uber became so gargantuan. Back then, fighting off pesky regulators and councilmembers in a market like DC warranted a visit from the head honcho himself.

And when Kalanick showed up to testify before the Council’s transportation committee, he was raring for a fight.

When then-Ward 1 Councilman Jim Graham asked how Uber determined the number of drivers to contract with, Kalanick replied, “How does the ice cream store know how much ice cream to get? He just figures it out and he buys some freakin’ ice cream.”

Freakin’ ice cream aside, Graham, who passed away earlier this month, wanted to know how many vehicles Uber had on the road, a legitimate public safety concern. But Uber’s then-35-year-old CEO refused to specify. “We’re in the hundreds,” he said. “It’s not low hundreds and it’s not high hundreds.”

Today there are almost certainly many more Uber vehicles clogging DC’s streets, but how many more isn’t clear. (DC’s taxi commission, now renamed the Department of For-Hire Vehicles, is legislatively prohibited from collecting this information from private transportation companies like Uber.)

Back at the hearing, Kalanick continued interrupting at will, only now he was talking over Councilmember Mary Cheh, the committee chair.

Any attempt by the city to regulate Uber’s variable pricing model, which can jump quickly, would be like “communist Russia” where “there were long lines for toilet paper” due to government controls, said Kalanick, who seemed to be channeling Ayn Rand. (Kalanick used to have as his Twitter avatar a picture of Rand’s “The Fountainhead,” which he previously described as “one of my favorite books.”)

Bro Culture

It may be telling that Kalanick couldn’t find it in himself to show respect for a woman heading up the very committee overseeing ride-sharing in DC. In subsequent years, a lack of respect for women has manifested itself throughout Kalanick’s company.

Among the many examples: A female reporter who’d written critically of Uber was tracked by the company through its “God View” tool. The medical records of a woman raped by an Uber driver in India were obtained by the company and shared among top executives including Kalanick; the victim, a resident of Texas, has sued Uber, Kalanick and two other executives who have also left the company (one was fired, the other quit after an investigation recommended his removal). These same executives took part in a company outing to a South Korean escort bar, prompting a female worker to speak out despite feeling pressured not to. Kalanick himself described how Uber had turned him into a chick magnet, saying, “we call that Boob-er.” Within the company itself there have been damning reports of sexual harassment, which recently led to over 20 firings.

To help counter this bro culture, Uber board member Arianna Huffington suggested having a greater female presence on the board. But that’d make it “much more likely to be more talking,” said fellow board member David Bonderman (who resigned later that day).

Bonderman’s comment came at the very meeting at which Uber released 13 pages of recommendations compiled by former Attorney General Eric Holder and his law firm, Covington & Burlington, which spent nearly four months investigating sexual harassment and other issues at Uber. (Uber has not released the full report.)

Uber’s board said it was accepting all of Holder’s recommendations, which included reducing Kalanick’s control over the company but did not call for his termination.

Uber Right-Wing

The sexism prevalent throughout Uber has received lots of media attention of late, and for good reason. Less discussed is the right-wing, anti-government ideology that fueled Kalanick and Uber, and which was on full display before the DC Council five years ago.

“No single company or interest should have the power to use its wealth the way Uber does,” said Robert Weissman, president of Public Citizen.

In city after city, Uber runs roughshod over local elected governments and law enforcement, according to a blistering report by Public Citizen.

Uber’s willingness to break rules has been crucial to its explosive growth, which has greatly benefited its investors.

But even absent fantastic returns, some Uber investors may support the company’s rules-be-damned approach.

Take, for example, Washington Post owner Jeff Bezos, who’s a major investor in Uber.* (You’d be forgiven for not knowing this since the Post regularly fails to disclose this clear conflict of interest.) Bezos, of course, has made his fortune as founder and CEO of Amazon, which has itself been accused of bullying competitors, cheating the government and mistreating workers. (Kalanick admires Amazon so much he mimicked the company’s 14 core values by creating the same number for Uber, which include “always be hustlin’” and “toe stepping”).

Another major Uber investor is Saudi Arabia’s Public Investment Fund. In addition to being as authoritarian a country as they come, Saudi Arabia prohibits women from driving. (This sexist ban benefits Uber which makes money off rides Saudi women depend on, many pointed out in an online campaign.)

Kalanick has done a good job of playing down these right-wing ties. Today, you’re unlikely to see him giving a speech at, say, the Koch brothers-backed Heritage Foundation, as he did in December of 2011, the week he launched Uber here in DC.

Image is everything, and Kalanick understood that coming across as a right-winger could damage Uber’s business model, which depends heavily on riders (and drivers) in left-leaning cities across the country and world.

This may explain why Kalanick hired ex-Obama officials and why he stepped down from Trump’s economic advisory council in February.

The latter came as #DeleteUber took off. The online campaign was in response to Uber’s announcement that it would hold off on surge pricing and keep prices low as New York cab drivers were striking at JFK airport in protest of Trump’s travel ban. (Uber denies it was trying to undermine the strikers.)

Up Against It

While Uber has had success in pushing around struggling taxi drivers and local law enforcement, the company hasn’t had as much luck with two bigger foes: Didi and Waymo.

Kalanick had big plans for Uber’s expansion in China but it was not to be. After suffering staggering losses, Uber sold its China division to its Chinese competitor, Didi, receiving a stake in the company in return.

Uber also faces a potentially damaging situation back home in a lawsuit brought by Waymo, Google’s driverless car division. Uber recently fired the former Waymo employee, Anthony Levandowski, who’s accused of bringing Waymo’s trade secrets with him when he came to work for Uber. Despite the termination, Waymo’s suit against Uber continues and has the potential to be damaging.

For Uber, being at the forefront of driverless technology is crucial; if it isn’t, “then Uber is no longer a thing,” said Kalanick. That’s because there’s tremendous competitive advantage in getting rid of “the other dude in the car,” as Kalanick put it, referring to the struggling drivers who’ve turned him into a billionaire.

It will now fall to Uber’s next CEO to deal with this lawsuit and the other crises Kalanick is leaving behind.

* NOTE: Jeff Bezos is presumably still an investor in Uber, although neither he, Amazon nor Uber responded to emails asking for confirmation of this. Washington Post executive editor Marty Baron did respond, but said, “I have no insights into his [Bezos’] personal investments.” Previously it was the Post’s policy to “frequently” disclose Bezos’ Uber investment when covering the ride-hailing company, but now the Post seldom does. Nevertheless, Baron said there’s been no change in policy.

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