Uber: Revolutionary but Controversial – (The Story of Uber)


Uber’s meteoric rise to dominate the personal transport market has made it one of the most successful – and the most hated – companies in history. Along with its controversial CEO Travis Kalanick, it has developed a reputation as being iron-fisted, cruel and relentless in its pursuit of power. Inspiring an equal measure of admiration and loathing, Uber has turned the traditional taxi industry on its head – and provided consumers with a more user friendly way of getting from Point A to point B.



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00:00
Uber
00:01
Uber’s meteoric rise to dominate the personal transport market has made it one of the most
00:04
successful – and the most hated – companies in history.
00:08
Along with its controversial CEO Travis Kalanick, it has developed a reputation as being iron-fisted,
00:14
cruel and relentless in its pursuit of power.
00:17
Inspiring an equal measure of admiration and loathing, Uber has turned the traditional
00:21
taxi industry on its head – and provided consumers with a more user friendly way of getting from
00:27
Point A to point B.
00:33
Genesis
00:38
In the mid-1990’s, with the world Wide Web still in its infancy, the undergraduate Computer
00:43
Science Association or USCA at UCLA University in sunny California was a breeding ground
00:50
for future millionaires.
00:51
The association was more of a clubhouse where like-minded students could relax after class
00:56
while they played games and talked computers.
00:58
Though not a founding member, a young San Fernando Valley resident by the name of Travis
01:03
Kalanick soon become a central figure of this group.
01:06
Kalanick was pursuing a double major in computers and business.
01:10
Despite the boom in Internet companies up north in Silicon Valley, the USCA was mostly
01:14
about fun and games.
01:15
Soon, however its members stumbled upon an opportunity.
01:19
Because there were no firewalls back then, it was possible to search for files on all
01:23
connected computers and then index the results.
01:26
The group decided to replicate the time honoured practice of college kids lending out their
01:30
record albums.
01:31
But they were able to extend the lending fraternity to anybody who was connected to the internet.
01:37
The idea was molded into a start up which they named Scour.
01:40
It was a tool that would scrub a network’s files looking for MP3s.
01:45
Travis Kalanick was not involved in the founding of Scour because he was doing an internship
01:49
with Intel.
01:50
But as Scour became established and grew in popularity, he jumped on board.
01:54
He was in charge of marketing and fund-raising.
01:56
It was in this role that Kalanick developed the on the job training that would serve him
02:00
in later years.
02:01
Living at his parents’ house he would spend up to 8 hours a day on the phone, wheeling
02:06
and dealing to attract investors.
02:08
In 1999, his efforts paid off when Hollywood power player Michael Ovitz poured $4 million
02:13
into Scour in return for a 51% share in the company.
02:17
Within a year, however, the writing was on the wall for Scour.
02:20
It’s success had attracted a competitor who would do things better – Napster.
02:26
Scour’s fundamental problem was that it didn’t scale.
02:29
The site would often crash through overuse, and Scour was running out of fresh content.
02:35
Meanwhile Napster was paying close attention to Scour’s problems.
02:38
They introduced a tweak whereby listening to a song would automatically make it available
02:42
to others.
02:43
As a result Napster quickly became a viral sensation.
02:46
Scour tried to gain ground by moving into sharing movie files, but ultimately they were
02:51
doomed.
02:52
They company went into bankruptcy in 2000.
02:55
Red Swoosh
02:58
By the end of that year, with Scour gone, twenty-four year old Travis Kalanick, had
03:02
no college degree and no job.
03:04
He needed a new plan – and he needed it fast.
03:08
Within weeks of the folding of Scour, Kalanick was onto his next project.
03:11
He teamed with former Scour partner Michael Todd to form Red Swoosh, which was essentially
03:16
Scour recreated for business customers.
03:19
This new startup would allow companies to use the Internet to share similarly large
03:24
files with their customers.
03:25
Enabling large file movement was already big business, but Red Swoosh’s competitive advantage
03:30
was that it capitalized on the asset light strategy to keep its costs below that of competitors.
03:36
Red Swoosh pushed and pulled files from personal computers owned by others, foreshadowing what
03:41
Uber would later do in connecting riders with drivers whose cars represented ‘massive
03:46
unused capital’ on city streets.
03:49
As CEO of Red Swoosh, Kalanick’s job was to pitch to potential clients.
03:53
As he had done at Scour, he set a frenetic work pace, proving to be the quintessential
03:57
workaholic.
03:58
Despite his gargantuan efforts, however, Red Swoosh, became a victim of the peaking of
04:03
the Internet bubble.
04:04
Investments dried up and tensions rose.
04:07
Kalanick blamed Todd for mismanagement and wrangled for him to be kicked out of the company.
04:12
Kalanick kept wheeling and it looked as if he had found a saviour.
04:14
On September 11th, 2001 he was scheduled to meet with a potential partner investor named
04:19
Danny Lewin.
04:20
Lewin, however, was on board American Airlines Flight 11 from Boston to Los Angeles, which
04:25
crashed into the north tower of the World Trade Center.
04:28
It is thought that he was the first to die, after confronting the hijackers.
04:31
By the end of 2001, Red Swoosh was out of money.
04:34
Reprieve came in the form of a father and son team who had made a fortune from a semiconductor
04:39
business – James and Jared Chao.
04:41
They agreed to pour $300,000 into the business in return for a 30% stake.
04:46
Over the next few years, Red Swoosh stumbled along, propped up by further investment.
04:50
Then, in April 2007, major competitor Akamai purchased the company, hiring the handful
04:56
of employees of the company, including Kalanick.
04:59
Kalanick was now 31 years old.
05:00
For his share in the sale of Red Swoosh he had pocketed around $3 million.
05:05
Yet, he was now tied to a large corporation as an employee – something he had never experienced
05:11
before.
05:12
Over the next year he worked to continue building the Red Swoosh brand.
05:15
At the same time he re-styled himself as an ‘angel investor’ for young entrepreneurs.
05:19
He bought an old house in the Castro, an old San Francisco neighborhood and named it the
05:24
‘Jam Pad.’
05:25
The house became a meeting place for this with fresh tech based ideas and no money.
05:29
Kalanick revelled in the role of wiser, older sage who had been there and done that.
05:34
His blog, which he called Swooshing, became essential reading.
05:37
In it he described his home, the Jam Pad as ‘ a place where entrepreneurs regularly
05:42
come to hang out, to rap on ideas, to jam with other entrepreneurs, to play Wii Tennis
05:46
and Gears of War and to have fantastic healthy gourmet meals made by the Jam Pad’s in-house
05:52
chef.’
05:53
Kalanick quit Red Swoosh in late 2008.
05:55
He spent the next couple of years biding his time as he examined new business ventures.
05:59
He also threw himself into leisure activities.
06:01
He became a part of a group called the Random Travellers Society.
06:05
They would randomly spin a globe to decide where in the world they would travel.
06:09
In 2010, Kalanick got heavily involved with a Q and A website called Formspring.
06:13
He invested in the company, but was soon running the show.
06:16
At the same time, he was still looking out for other opportunities.
06:19
He was introduced to a smartphone app started by an old friend named Garrett Camp.
06:24
The app was called UberCab and it allowed the user to make quick contact with a limousine
06:28
in the San Francisco area.
06:30
Kalanick began sharing his time between Formspring and UberCab.
06:33
Within a few months it became obvious that he had to choose between them.
06:36
The people at Formspring were pushing him to become their CEO, but in late September,
06:40
2010 he walked into a board meeting and declared, “I’m going to be Uber.”
06:45
Uber Begins
06:49
In the Summer of 2008, Garrett Camp, a mild mannered Canadian software designer was waiting
06:53
for a cab in San Francisco’s bay area.
06:56
He’d been waiting nearly thirty minutes for a cab that had promised to be there in
07:00
fifteen.
07:01
When he saw an empty cab from a competitor company come by he hailed it and got in.
07:05
A few minutes later, though, he got a call from the original taxi company asking where
07:08
he was.
07:09
He replied that they were late so he’d gotten in another cab.
07:12
This became a regular occurrence for Camp.
07:15
Eventually both taxi companies that he dealt with, Luxor and Yellow, blacklisted him.
07:19
This annoyed the young Canadian, who just happened to have $75 million in his bank account
07:23
after selling his first start-up, StumbleUpon.
07:26
Hailing a cab was now more difficult for Camp.
07:28
The taxi switchboard companies would cut him off as soon as they saw his number.
07:32
One evening, while standing on a street corner and running late for a date, he had the proverbial
07:36
light bulb moment.
07:37
He had his brand new Apple iPhone in his hand.
07:39
That iPhone was GPS enabled.
07:41
Why couldn’t he request a cab directly from his phone, simply by pushing a button that
07:46
says ‘Pick Me Up’?
07:48
This way you cut out the dispatcher completely.
07:50
Camp also knew that the iPhone included a thing called an accelerometer.
07:54
This would allow for the tracking of not just where a car was but how fast it was moving.
07:59
With this technology, a map could be generated that showed the beginning and end of the trip,
08:03
along with its duration and price.
08:05
It would also link the rider with the driver – cutting out the middleman.
08:10
On August 8th, 2008 Camp paid $35 to reserve the website, www.ubercab.com.
08:15
He then began to elicit feedback about his idea from his circle of entrepreneurial friends.
08:20
He also interviewed taxi drivers, who complained about the hours they were sitting idly waiting
08:24
for a fare.
08:25
Slowly other people began jumping on board.
08:27
One of them was Travis Kalanick.
08:29
In early 2009, Travis contributed an idea that became pivotal to the future Uber model.
08:34
Rather than buying a fleet of vehicles, which Camp was envisioning, Kalanick told him that
08:38
he didn’t need to buy cars – just give the app to drivers and let then be free agents.
08:44
They would work when they wanted to work.
08:46
The focus for both men was on limousine rides, rather than normal taxi cab rides.
08:50
Kalanick signed on as an advisor to Uber, with a 10% stake in the company.
08:54
It took over a year to develop the app.
08:56
By January, 2010 Camp and Kalanick began testing the service.
09:00
They also began making plans to launch operations in San Francisco.
09:04
Kalanick hired a 27-year-old General Electric middle management employee named Ryan Graves
09:09
to oversee the San Francisco launch.
09:12
Graves began visiting garages to sign up limo drivers.
09:15
The service launched in late May, 2010 with just a handful of drivers and customers.
09:20
The initial customer base came from Twitter followers who had been keeping tabs on what
09:24
the entrepreneurs were up to.
09:25
Kalanick and Graves who, had been made CEO, began working together to find investors.
09:30
After receiving a lot of knockbacks, the seed funding round raised $1.25 million.
09:34
It was at this point that Kalanick decided to go full time with UberCab.
09:38
But he wasn’t content to play second fiddle to a guy that he had hired.
09:43
He orchestrated a demotion for Graves and claimed the title of CEO for himself.
09:47
He also demanded that his shareholding rise from 10% to 23%.
09:52
On the very day that Kalanick became CEO, the company received a cease and desist letter
09:56
from the San Francisco Metro Transit Authority and California Public Utilities Commission.
10:01
It stated that the name ‘UberCab’ meant that they were a taxicab company and under
10:05
the authority’s direction.
10:06
Kalanick solved the problem in 5 seconds.
10:09
He changed the name from UberCab to simply Uber.
10:13
At the time of his taking over, the operation was tiny – and it made plenty of mistakes.
10:18
On Halloween of 2010, they offered a discount to riders.
10:22
This created such a huge demand, on their already busiest day yet, that it left a lot
10:26
of people unable to get a ride.
10:28
Despite this, growth was steady throughout 2010.
10:31
Then, over the 2011 New Year period it absolutely blew up.
10:35
Word of mouth was responsible for the exponential growth in Uber’s customer base.
10:40
But finding Limo drivers was a different story.
10:42
They didn’t have the same social media habits as the young about towner’s in need of a
10:46
limo ride.
10:47
Only licensed drivers were eligible to drive for Uber.
10:50
They all had customers of their own and none of them were prepared to go exclusive with
10:54
Uber.
10:55
Uber began giving away iPhones preloaded with the Uber app to drivers.
10:59
This enabled them to increase their driver supply to keep up with the ever growing demand
11:03
in San Francisco.
11:05
Having proven the model in Frisco, Kalanick started to replicate it in other cities.
11:09
Under the guidance of head of operations, Ryan Graves, they turned their attention on
11:14
Seattle, Chicago, Boston, and Washington, D.C.
11:17
In each city, Graves made connections in the tech world fist.
11:20
This created buzz and attracted cutting edge users.
11:23
Once the word was being generated, they began looking for drivers and working through government
11:28
regulations.
11:29
As they moved from city to city, the Uber team began refining their playbook, refining
11:33
the system and making it more efficient.
11:36
The process became (1) establish buzz in the tech community (2) assess regulations (3)
11:42
recruit drivers (4) develop pricing (5) woo local media, and (6) capitalize with social
11:48
media buzz.
11:49
In the early days, Kalanick was a master at local public relations.
11:54
Promotion would start with a blog post, in which he would relate how much he loved the
11:57
city they were moving into.
11:59
He would highlight its key attributes and then talked about how much greater the city
12:03
would be when Uber had introduced their service.
12:06
By 2011, the job of securing investment was much easier.
12:09
In February Benchmark Capital poured $10 million into the company.
12:13
At this point Uber was valued at $60 million.
12:17
The company had nine thousand customers and $1.8 million in net revenue.
12:22
It was estimated that it would get to $100 million gross revenue within a year.
12:27
It achieved that goal in six months.
12:31
Enemies Emerge
12:34
As Uber sprang up in more and more cities across America, it began to receive push-back.
12:38
The sixth city that they went into was Washington, D.C.
12:41
Before they could get off the ground, however, the city’s taxi commissioner announced that
12:45
Uber was operating an illegal taxi operation.
12:47
On Martin Luther King Day, 2011 the commissioner ordered an Uber which took him to a press
12:52
conference at the Mayflower Hotel.
12:55
He then proceeded to impound the driver’s car and issued a $20,000 ticket.
12:59
But Uber didn’t back down.
13:02
They assured all drivers that they would pay all of their fines and took the moral high
13:05
ground in public, asserting that they were not a taxi company and, therefore, not subject
13:11
to regulatory provisions.
13:13
In one city after another, taxi companies, the taxi commission and local and state agencies
13:18
came at Uber to shut it down.
13:20
Under the guidance of consultant Bradley Tusk, Uber fought back.
13:24
They ran social media campaigns to stop the opposers, often meeting them in court.
13:28
The public were overwhelmingly on the side of the company.
13:31
But there was one thing that Uber’s customers were not happy about.
13:36
During busy periods, such as rush hour and bar closing times, it would apply ‘surge
13:40
pricing’ with rates going up during these peak demand times.
13:43
Surge pricing had the effect of encouraging more drivers to work and encouraging some
13:47
customers to find a cheaper service.
13:49
Both of these results eased demand on the service.
13:52
But it also infuriated the customer base.
13:55
Many of them blamed the unfairness of surge pricing at the foot of CEO Kalanick, who quickly
14:00
became known as a cutthroat businessman who refused to listen to consumer sentiment.
14:05
By the end of 2012, Uber was operating in 27 locations.
14:09
In that year they also introduced UberX, providing rides in hybrid cars.
14:13
But it was also the year that Uber faced its first serious competition.
14:17
It came in San Francisco from a young company called Lyft.
14:20
Lyft was a ride sharing business whereby a person would slap a large pink moustache on
14:25
the grill of their car and then pick up those who were in need of a ride for the shared
14:29
cost of gas and a little extra donation.
14:32
Usually this would work out to be less than a cab fare for the same distance.
14:35
It used a smartphone app that was modelled off of the Uber app.
14:38
Lyft was a hit with young people, who preferrred its friendlier, more laid back image.
14:43
Riding in a limo was starting to look elitist.
14:45
As a result, Uber set about restructuring its game plan.
14:48
It would rebrand itself with a focus on getting a rider from Point A to Point as quickly and
14:54
as inexpensively as possible.
14:55
UberX, which had started out as an eco-friendly alternative to a limo, became the means of
15:00
beating traditional taxi services.
15:03
In early 2014, Kalanick hired former Amazon executive Jeff Holden as product development
15:08
manager.
15:09
Holdren identified two things he found lacking in the Uber system; the ability of the rider
15:13
to communicate beforehand where he wanted to go and the driver’s ability to navigate
15:18
there.
15:19
He oversaw two new features to fix this – destination input by the rider and turn-by-turn navigation
15:24
on the driver app.
15:26
Both features were a hit and by the end of 2014 Uber was operating in 262 markets worldwide.
15:33
Uber was by now a genuine phenomenon.
15:35
But it was a phenomenon that had attracted a lot of enemies.
15:39
A lot of that animosity was thanks to the brash nature of CEO Travis Kalanick.
15:44
His outspokenness and inability to hold his tongue soon made him the offender in chief.
15:49
Kalanick was the poster boy for political incorrectness, once stating that he could
15:53
land women as quickly as a person could summon an Uber.
15:57
Kalanick’s divisive personality ony underscored Uber’s growing reputation as a bully in
16:02
the marketplace.
16:03
Reports were publicized of some underhanded tactics used to undermine competitor Lyft.
16:07
Publications began labelling Uber as an evil company and describing its CEO as an ‘Ayn
16:12
Rand loving libertarian nut job.’
16:13
In some cities it become politically correct to avoid Uber all together.
16:17
Uber was in a strange position.
16:20
Worldwide its business was growing from strength to strength.
16:22
At the same time, however, its reputation was tanking.
16:26
Things went from bad to abysmal when an Uber driver in Delhi was convicted of raping a
16:31
passenger.
16:32
Something had to be done – quick.
16:33
In early 2015, Uber brought in a new executive to oversee digital and physical safety, Joe
16:39
Sullivan.
16:40
He had a long to-do list, including stricter management of driver activity.
16:44
Things were tightened up to the extent that Uber management can tell if a driver is holding
16:48
his phone while driving or braking too hard or going too fast.
16:53
During that year another new executive, Sally Kay set about taking and, and overcoming,
16:57
a slew of local regulators who were intent on stopping Uber in its tracks.
17:02
By the beginning of 2016, Uber was on a more even keel.
17:06
Rather than lurching from one crisis to another.
17:09
In an attempt to change its image, the company teamed with Mothers Against Drunk Driving
17:14
to encourage young people to take an Uber rather than drink and drive.
17:18
It also partnered with hospitals to make it cheaper for cancer patients to return home
17:22
from treatment.
17:23
The Driverless Future
17:27
Travis Kalanick has been working on introducing driverless cars to the Uber mix since 2013.
17:32
He loved the idea that it would no longer rely on that most uncontrollable of business
17:37
variables – people.
17:39
Autonomous vehicles would be far safer as robots are not subject to drowsiness or distraction.
17:44
And robots would be cheaper than people.
17:46
But in 2013, the technology wasn’t yet ready.
17:49
By February 2014, Uber was canvassing the world looking for top robotics talent.
17:54
It purchased a Pittsburg company called Carnegie Robotics, making it the kernel of its self-driving
17:59
car team.
18:00
Then, in December 2014, Uber hired 60 researchers from the National Robotics Engineering center.
18:07
After two years of development, Uber announced in August 2016, that its cars were ready for
18:12
a limited showing.
18:13
The cars worked but still required a human engineer behind a steering wheel should something
18:18
go wrong.
18:19
Uber are still working on their driverless car.
18:21
In that quest they are in a race with the likes of Google, Apple and Tesla, which is
18:26
rumoured to be considering its own ride sharing business.
18:29
All of this competition will, ultimately, result in a better, cheaper service for those
18:33
of us wanting to get from Point A to Point B as efficiently
18:56
and cost effectively as possible.


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