Iron Man v. Puppy Kicker: Why #DeleteUber was unavoidable
This morning -- for just a moment-- I genuinely felt bad for Travis Kalanick. That should tell you how bad things are for Uber right at this second.
This company went from a company that could seemingly do no wrong...wait scratch that. It did plenty of wrong, but its valuation and usage still grew nonetheless. Then suddenly in 2016, Uber’s play book started to fail…. Its financials were leaked causing the business press and the world to start questions the foundations of its business model for the first time. It outright failed in China, a must win market to be the dominant global ridesharing company. Even the San Francisco DMV won against Uber.
And Uber essentially capitulated that it wasn’t really a tech company, it was a commodity product company. Rivals even share the same drivers as Uber. Uber has won because of wild overspending in cash and its bigger “baller” brand. A brand that celebrities and TV show mentions help build. Edward Norton was once choreographed to be the first Uber LA user.
Uber hired Target’s Jeff Jones as it’s number two executive in the entire company in 2016, because it knows it won’t be able to burn this much cash forever. The brand was the thing.
Lyft had already suddenly come to life and thrown its first punch against Uber, with its ads depicting an evil unfeeling company that…. has the exact same product it just pays drivers less. (Which is true.)
But forget Lyft for a moment, should Uber survive an IPO and figure this business model out, its rivals in the autonomous vehicle world include Apple, Tesla, and Google-- all companies with far better brands than Uber.
Why? Because in the words of the man Uber hired as its number two: Great companies stand “for” something not “against.”
Google organizes the world’s information, and I guess technically it’s “against” evil.
Apple stands for creativity and great design and “think[ing] different.”
Tesla stands for a greener world, without sacrificing elegance and design.
Uber has defined itself its entire life on what it’s against: Taxis, critics, unfriendly regulation, fingerprinting, benefits, unions and tipping. It’s popular to say Uber stands against “government” but that is more marketing than true. Uber has always been willing to engage with politicians, outspend rivals on lobbying, cut back-room deals, and do all the things it said it stood against.
There didn’t seem to ever be a real moral calculus there: Uber was simply against anything anyone else asked it to do. Tipping has always been the strangest one to me. The Rideshare Guy’s survey of drivers showed that despite all the hubbub around benefits, most Uber drivers don’t care. Uber drivers care about making money, and the biggest reason they are far happier driving for Lyft is that they make more, mostly via tipping. There is no evidence that any users are turned off by the ability to tip (and if they were, who cares if the other players do it too.)
Tipping has always been something easy Uber could give the drivers that wouldn’t cost Uber a dime. And yet, they won’t. This is the mentality of the company. They stand for: “You’re not the boss of me.”
I have long said that when things finally turned for Uber, it was going to turn quick and viciously, because they had flagrantly and happily pissed off so many groups along the way. Women, journalists, drivers, union organizers, competitors of any stripe. Even a lot of their own investors. So many people were either waiting for a catalyst to bring Uber down, or just needed a little extra push to come out against the company.
And that was what #DeleteUber was about. The business press has taken pains to say how “unfair” it was for Uber to be singled out, compared to the actions of other CEOs who were largely let off the hook. That may be true. But I saw hundreds of people on social media who said they were deleting Uber because the actions of last weekend were the final straw. Because they’d threatened journalists already; because they broke up unions; because this sense of “greed” that has become permanently stuck to the company that surge prices during natural disasters.
I’m not surprised part of what drove #DeleteUber had to do with accusations that the company had tried to disrupt a taxi strike. I’ve said before that Kalanick dismantled Robert Noyce’s 60-year Silicon Valley labor legacy in a quick seven years. Intel didn’t unionize, not because Noyce relied on legal definitions of employees versus contractors. But because he treated his factory workers better than he had to, in hopes that they would chose not too. That is why Silicon Valley hasn’t historically had unions. That is why employees get options. Noyce changed the culture so that management and employees could be on the same side.
That is done now, at least for anyone who isn’t a knowledge worker. Noyce worked to eliminate class distinctions within his companies, codifying a lot of the culture of Silicon Valley today. Kalanick has pushed the two groups farther apart-- even having a different building in San Francisco that drivers can come to. It will be one of the lasting legacies of the on demand unicorn era, where Uber was held up as the gold standard.
Uber was easier to boycott than say, Tesla or SpaceX, for obvious reasons. It’s also easier to boycott than Facebook or Twitter, which are not interchangeable commodity products. Uber’s business made it particularly vulnerable to this. But that’s the company it built. That’s why Coke and Pepsi don’t go around punching people in the face. In their worst moments, Larry Ellison and Steve Jobs and Bill Gates can simply get away with behavior the CEO of a company like Uber never could.
Just because Uber’s “nasty” reputation hadn’t yet brought down the company, they made the fatal error in judgement of thinking it never could. It just took a while.
Behavioral psychologist Amy Cuddy writes about competence and warmth: The two main ways we size people up. Being feared versus being loved.
Interestingly, competence is easier to “maintain” than warmth. If someone has an MBA from Harvard, you don’t suddenly deem them “incompetent” because they’re bad at ping pong. But kick a puppy once? You are forever the person who kicks puppies.
This is why so many people were saying about Kalanick’s coziness with Trump: “I should have known after the company did X…” Uber is the puppy kicker. And if Cuddy’s research is any indication pulling out of that brand tailspin will be nearly impossible. This is why Kalanick’s suddenly “doing the right thing” and quitting Donald Trump’s advisory council didn’t win him many points. He’s still the puppy kicker, he was just doing this for “greed.”
If you want to understand why Elon Musk is getting more of a pass than Travis Kalanick on this: Look at every single most admired companies, companies people most want to work for list that has come out in the last year. Musk consistently ranks highest among most admired CEOs, Uber and Kalanick are nowhere.
Iron Man vs. Puppy Kicker.
So while some may argue Uber didn’t “deserve” #DeleteUber, I would argue it was a long time coming. It’s the result of years of kicking puppies, and Uber was warned again and again by insiders and investors that would come back to bite them. It has.
Now he’s angered the White House, not won back any fans, and is saddled with a $70 billion valuation and a business consuming billions in burned capital a year. A business that doesn’t want to go public, but likely needs another huge cash infusion before too long. It’s hard to imagine an “up round” after the last year. Uber has always been “priced for perfection” and nothing about its execution of late has been perfect.
Way worse than the hundreds of thousands of accounts that were deleted, is the lasting damage to that once “baller” brand. All that hard work that went into getting Edward Norton in that first LA Uber is long undone when so many other celebrities are posting that they’ve deleted it. Even celebrity investor Ashton Kutcher didn’t come to Uber’s defense this time.
Add to that the toll this may take on Uber’s ability to hire. It had already become a “meme” to turn Uber down for ethical reasons… before all this. That’s worse when you consider the war for what little self-driving car engineering talent out there, some $10 million a head based on acquisition prices paid for companies like Cruise and Otto.
How bad is this for marketing genius Jeff Jones? So far, he has either been unable or not allowed to do his job and make Uber stand “for” something.
Part of the lesson here has to be that tech CEOs get put in a no win situation if they wait too long to stand up to Donald Trump. The public has a taste for activism now and wants another win. Words were OK at first, then donations. But now people want more. Many are hoping we see may be Mark Zuckerberg firing Peter Thiel from his board or Jack Dorsey finally banning Trump from Twitter. Tech CEOs are no doubt parsing what just happened to Travis Kalanick and what it means for them.
But the wide lesson I hope entrepreneurs and VCs draw from this is that being a puppy kicker has a price. It always catches up with you, because things always turn. Kalanick and Trump in many ways have used the same playbook: Threats and underhanded tactics taken against critics, disrespect for women, repeated lies to the press, patronage from morally questionable regimes, refusing to listen to advisors, caving to no one.
The problem with playing a bully’s game is what happens when you run up against a bigger bully.