I don’t know if this will be an annual thing, but I couldn’t help but piggyback on TIME’s coattails this year.
On to the update:
Tech’s Person of the Year
TIME announced their annual person of the year yesterday, and in this case, it was people — The Silence Breakers:
This reckoning appears to have sprung up overnight. But it has actually been simmering for years, decades, centuries. Women have had it with bosses and co-workers who not only cross boundaries but don’t even seem to know that boundaries exist. They’ve had it with the fear of retaliation, of being blackballed, of being fired from a job they can’t afford to lose. They’ve had it with the code of going along to get along. They’ve had it with men who use their power to take what they want from women. These silence breakers have started a revolution of refusal, gathering strength by the day, and in the past two months alone, their collective anger has spurred immediate and shocking results: nearly every day, CEOs have been fired, moguls toppled, icons disgraced. In some cases, criminal charges have been brought.
I applaud the choice, and thought it worthwhile to focus on one of the people featured on TIME’s cover: Susan Fowler. She is, without question, tech’s person of the year.
I know you all know the story, so I’ll recap quickly: on February 19, 2017, Fowler published a post on her personal blog entitled Reflecting on One Very, Very Strange Year at Uber. What followed was a dispassionate overview of a fundamentally broken and actively harmful workplace, for women in particular. Fowler told TIME the tone was deliberate:
When other women spoke out, they were retaliated against. So there were certain things I thought I could avoid: ‘I’m not going to sue, because they’ll make me sign a nondisclosure agreement. I’m not going to do press right afterward, because they’ll say I’m doing it for attention. I can’t have any emotion in my blog. I have to be very, very, detached.’ And I had to make sure that every single thing thatI included in there had extensive physical documentation, so it couldn’t be ‘he said, she said.’ And that’s what I did.
The blurb that includes this quote notes that Fowler’s post led to “an investigation that led to the ousting of [Uber’s] CEO Travis Kalanick and more than 20 other employees”, and while that is true, I think it actually understate’s Fowler’s impact; thus this post.
Uber at the End of 2017
Start with Kalanick and Uber: TIME’s summary of the situation is certainly not wrong — it was the publication of the Holder Report, from an investigation initiated by Fowler’s post, that led to Kalanick first taking a leave of absence and then, a week later, resigning under pressure.
The intervening four months, though, were filled with a whole host of additional controversies: more reports of improper behavior from top executives, Waymo’s lawsuit, and the revelation of Greyball, leading to an ongoing U.S. Department of Justice investigation. Perhaps all of these stories would have come out without Fowler’s post, but I’m not so sure: nothing happens in a vacuum, and Fowler’s post and the subsequent outcry undoubtedly affected the willingness of people to come forward, to report bad behavior, and, in the case of Google, to calculate that the political winds of Silicon Valley would at that precise moment be very much in their favor. I don’t mean that to be cynical, but even if you take it as such there can be no question that the impact of all those subsequent revelations was magnified by Fowler’s post.
Moreover, it wasn’t simply that Kalanick lost his job, which, while deserved, certainly had repercussions for Uber’s business. It’s that the entire enterprise is far less of a sure thing than it was before Fowler’s post. In the United States Lyft is telling investors it “will have boosted its share of U.S. ride-hailing business some 61 percent by the end of the year, climbing to about a third of the market”; what is even more damaging is Lyft’s partnership with Waymo, which made Lyft the best way to invest in Google’s self-driving technology — Google apparently agreed, leading a $1.5 billion investment that Lyft announced this week.
The situation is arguably worse internationally: in Europe the company is facing the usual regulatory problems, but the even bigger issue is Asia, where Softbank is consolidating all of Uber’s competitors. I wrote in July:
The chief way to fight a network effect (or to accelerate one) is to drive down the price, and that means capital. This is why Uber raised money so rapidly, but by the same token, it is why the company is uniquely vulnerable, particularly in markets where it is not dominant, to a company — Softbank — that has even more. In other words, if owning the customer is the source of power, owning the means of acquiring the customers — that is to say, huge amounts of capital — is the most powerful of all.
To that end Softbank has pulled a neat trick: its actions in Asia have helped drive down Uber’s valuation such that Softbank can buy in at a lower price — a $48 billion valuation for the shares it buys from current investors, according to Bloomberg, about 30 percent lower than Uber’s last valuation of $69 billion (under the terms of the deal, Softbank will also invest $1 billion directly in Uber at that prior valuation, preserving the cap table). Recode is reporting that Benchmark plans to sell some of its shares, which isn’t surprising: the governance reforms the firm won in recent months are tied to the Softbank deal going through, and Benchmark is best placed to ensure Softbank acquires the necessary 13.4% share of the company to make the deal a reality.
Fowler’s True Impact, and Means
One could argue that everything that has happened to Uber this year was inevitable, particularly what I covered in the last few paragraphs: Lyft partnering with Waymo, Google investing, Softbank negotiating. I certainly believe that Fowler created the conditions for much of this, but I’m not going to belabor the point: I think her true impact was far greater.
The most obvious point is that sexual harassment came to the forefront in Silicon Valley in a way it never has previously. There absolutely have long been whispers and scattered reports, but Fowler’s post was the initial note in a drumbeat of sexual harassment allegations that, given the structure of venture capital, were sadly unsurprising.
Fowler herself, though, captured an equally important development in TIME’s article:
Corporate boards, wary of alienating female employees and customers and of drawing bad press, have been among the quickest to make changes. Uber, for example, which built its reputation on a willingness to flout norms, used to be a guiding light for small startups. Now nobody is pitching their company as the next Uber, says Fowler. “There’s a shift to, ‘We’re not disrupting anymore. We’re trying to build something that’s good for consumers and treats employees fairly.'” It’s a start.
I suspect Fowler and I have different definitions for the word “disrupt” (under my definition, startups are definitely still looking to disrupt, appropriately so!), but I think the broader point that few are modeling themselves on Uber is correct, and a relief.
Something that happened over the last few years — for which I am as guilty as anyone — is that the idea of Uber became separated in the minds of many from the reality of Uber. For example, leveraging sunk costs is a great idea, cajoling uninformed drivers into predatory leasing arrangements, less so. Bringing local constituent pressure to bear on corrupt local governments is a great idea, purposely deceiving regulators, less so. Raising massive amounts of capital to capture a massive market that actually makes the world better is a fabulous idea, making obviously irrational investments because you can, less so.
I will continue to argue that the Uber I wrote about in November, 2014, remains the incredible company and investment opportunity it was then; I also believe, as I wrote after Fowler’s post, that November, 2014 is when it all went off the rails. That is when Travis Kalanick chose personal loyalty over what was best for the company, creating the exact sort of culture that Fowler wrote about.
So to review: in 2014 a high-ranking Uber executive commits a clearly fireable offense, but he is not only not fired, he is lauded, while the company as a whole is further validated by investors. Given that, the real surprise would have been if this week’s crisis had never happened; culture is the accumulation of decisions, and Uber had long since decided that unacceptable behavior would be tolerated as long as the perpetrator was a “high performer”. Rigetti’s [Fowler’s] allegations were set in motion years ago.
I concluded that piece with the following:
This is rapidly becoming an existential question for Uber: exactly how much of the company’s success was due to the idea, and how much was due to the executives? The surest route to a company allegedly rife with the behavior documented this week is to strongly credit people, who soon come to believe that nothing matters but the (short-term) bottom line; the potential casualty for being wrong, though — for rewarding people who just happened to be in the right place at the right time — is the very idea itself.
This is a question I have wrestled with for a long time: on one hand, things happen when they were meant to happen. If Bill Gates hadn’t started Microsoft, someone else would have. If Steve Jobs wouldn’t have introduced the iPhone, someone else would have. History is rife with truly important discoveries being made simultaneously — everything from calculus to the transistor. Doesn’t that suggest that circumstances matter more than individuals?
Moreover, you could make the same argument about The Silence Breakers: I wrote in Goodbye Gatekeepers that the Internet is disrupting structures that created the conditions for sexual harassment. Note too Fowler’s method: an individual blog post, completely free of editorial (or lawyer or publisher) interference that completely shook a $69 billion company. Indeed, it is the Internet and social media, so derided as of late, that created the conditions for The Silence Breakers.
And yet, there are still those that, in Steve Jobs’ words, “put a ding in the universe.” The conditions may be ripe, but it falls on that one individual to actually do something about it. Uber may have been ripe for a fall, the Internet may have made it possible to lift the veil on an ugly side of Silicon Valley, but Susan Fowler is the one who actually did it.
She is tech’s person of the year.
To read this daily update you must be a subscriber (Current members login here.)
Stratechery.com is supported by subscriptions to the Daily Update.
- $10 per month or $100 per year
The Daily Update consists of substantial analysis of the news of the day (~1800 words) delivered via three daily emails in addition to the free weekly article (four total articles per week). These updates are always timely, but also timeless in their investigation of “Why” and “What’s next.” If you love Stratechery’s Weekly Articles, you’ll love the Daily Update.
Ben Thompson’s depth of thinking and analysis around technology trends and market disruption is pretty much unparalleled. The ratio of “Wow that’s an interesting way to think about it” reactions to dollars spent on the Stratechery subscription is off the charts.
Aaron Levie, CEO Box and Daily Update subscriber
Stratechery is one of the few websites that makes me angry. It makes me angry because Ben Thompson consistently writes things that I wish I had written myself.
John Gruber, Author of Daring Fireball and Daily Update subscriber
I love reading Ben’s daily strategy pieces. As an investor in startups and public markets, I want to hear what passionate thinkers and strategist think of all the product and feature news released by the leaders. Ben takes the time to dive deep after digesting the daily tech news.
Howard Lindzon, Founder Stocktwits and Daily Update subscriber
In a world of hyperbolic tweets and biased content marketing, Stratechery is a daily shot across the bow of tech’s echo chamber.
Hunter Walk, Partner Homebrew and Daily Update subscriber
Ben Thompson’s Stratechery is usually the smartest thing I read all day, and the first thing I open in my inbox each morning.
Mike Arrington, Partner CrunchFund, Founder TechCrunch and Daily Update subscriber
In addition to the Daily Update, subscribers get access to the Stratechery Membership Forum for in-depth discussion of tech strategy, moderated by Ben, as well as priority email access.
You can see samples of some Daily Update articles here or see a list of recent topics in the sidebar (bottom of the page on mobile). Please note that all subscriptions auto-renew monthly/annually (but can be cancelled at any time; there are no refunds).
If you are interested in ordering and managing multiple subscriptions for your team or company, please fill in the form here.
Can you create a custom invoice that meets my government/company requirements?
I am happy to create an invoice to your specification for annual subscribers; however, it is simply not viable for me to offer this service to monthly subscribers. Therefore, if you need a custom invoice please subscribe or switch to an annual subscription.
Do you offer a student discount?
Stratechery is purposely kept at a low price — thousands of dollars less than other analyst reports or newsletters — to ensure it is accessible to everyone, including students.
I can’t purchase/login.
Check the security setting of your browser: if you have disabled 3rd-party cookies then Stratechery’s membership software won’t work. Either use another browser or change your setting; after you register/login you can change the setting back for a good long while.
Can I switch to an annual plan?
Yep! Just go to your account panel and select the alternate plan. You’ll be switched after your current subscription period ends.
Can I give a subscription as a gift?
Yes! Please visit this page.