The Uber Conflation

The latest Uber scandal — yes, it’s getting hard to keep track — is Greyballing. From the New York Times:

Uber has for years engaged in a worldwide program to deceive the authorities in markets where its low-cost ride-hailing service was resisted by law enforcement or, in some instances, had been banned. The program, involving a tool called Greyball, uses data collected from the Uber app and other techniques to identify and circumvent officials who were trying to clamp down on the ride-hailing service. Uber used these methods to evade the authorities in cities like Boston, Paris and Las Vegas, and in countries like Australia, China and South Korea…

At a time when Uber is already under scrutiny for its boundary-pushing workplace culture, its use of the Greyball tool underscores the lengths to which the company will go to dominate its market.

Note the easy conflation: avoiding regulators, allegedly tolerating sexual harassment, it’s all the same thing. Well, I disagree.

Uber’s Three Questions

The first thing to understand about not just the current Uber controversy (controversies), but all Uber controversies is that while they are not usually articulated as such, in fact multiple questions are being debated.

  • Question 1: Is Uber a viable business that can one day go public, make a profit, and return the unprecedented amount of capital it has raised?
  • Question 2: Is Uber’s approach to regulation wrong?
  • Question 3: Is Uber wrong with regards to the specific issue at the center of this controversy?

I and many others have spent plenty of time on the first question; it’s not the focus of today’s article. Rather, it’s the distinction between questions 2 and 3 — that easy conflation made by the New York Times — that I find illuminating.

Uber and Regulation

There is no disputing that Uber has operated in the gray zone, perhaps adhering to the letter of the law but certainly not the spirit. For example, in The Upstarts, a new book about the founding stories of Uber and Airbnb, Brad Stone explains Uber’s initial service in San Francisco:

In the summer of 2010, [San Francisco Metropolitan Taxi Agency director Christiane] Hayashi’s phone started ringing off the hook, and it wouldn’t stop for four years. Taxi drivers were incensed; a new app called UberCab allowed rival limo drivers to act like taxis. By law only taxis could pick up passengers who hailed them on the street, and cabs were required to use the fare-calculating meter that was tested and certified by the government. Limos and town cars, however, had to be “prearranged” by passengers, typically by a phone call to a driver or a central dispatch. Uber didn’t just blur this distinction, it wiped it out entirely with electronic hails and by using the iPhone as a fare meter. Every time Hayashi picked up the phone, another driver or fleet owner was screaming, This is illegal! Why are you allowing it? What are you doing about this?

Ultimately, Hayashi could do nothing: Uber drivers did not pick up passengers who hailed them on the street, but were dispatched via the Uber app. UberCab — despite the name, which was soon changed — was not a taxi service, even if the service offered was taxi-like.

That right there is enough for many observers to cry foul: getting off on a technicality does not mean a business is okay. Those cries have only grown louder as Uber has entered more and more cities with services like UberX that are even more murky from a regulatory perspective; now the questions are not just about hailing and dispatch, but licensing, insurance, and background checks, along with the ever present questions about the employee/contractor status of Uber’s drivers. Every technicality that Uber takes advantage of,1 or every new law it gets passed by leveraging lobbyists and by bringing its users to bear on local politicians, is taken by many to be more evidence of a company that considers itself above the law.

The reason this question matters is because if one takes this viewpoint, then the latest allegations against Uber are not independent events, but rather manifestations of a problem that is endemic to the company. And, in that light, I can understand the calls for Kalanick’s removal at a minimum: I will do said position the respect of not arguing against it.

On the flipside, I, for one, view Uber’s regulatory maneuvering in a much more positive light. After all, thinking about the “spirit of the law” can lead to a very different conclusion: the purpose of taxi regulation, at least in theory, was not to entrench local monopolies but rather to ensure safety. If those goals can be met through technology — GPS tracking, reputation scoring, and the greater availability of transportation options, particularly late at night — then it is the taxi companies and captured regulators violating said spirit.2 Moreover, the fact remains that both Uber riders and drivers continue to vote with their feet: Uber has gone far beyond displacing taxis to generating entirely new demand, and when necessary, leveraging said riders and drivers to shift regulation in its favor. I think it is naive to think that said changes — changes that benefit not just Uber but drivers, riders, and local businesses — would have come about simply by asking nicely.

The Uber Conflation

But I digress; I know many of you disagree with me on these points, and that’s okay — having this debate is important. The reason to point this question out, though, was perhaps best exemplified by the #DeleteUber campaign that kicked off Uber’s terrible month. As you may recall the campaign sprang up on social media after Uber was accused of strikebreaking for having disabled surge pricing while taxi drivers protested against President Trump’s executive order banning immigration from seven countries. As I pointed out in a Daily Update:

Uber was definitely in a tough position here: the company likely would have been criticized for price-gouging had surge-pricing sky-rocketed, while restricting drivers from visiting JFK would have entailed Uber acting as a direct employer for drivers, as opposed to a neutral platform (this point is in contention in courts all over the U.S.). And, I think it’s safe to say, a lot of the folks pushing the #DeleteUber campaign were probably not very inclined to like Uber in the first place.

That last sentence captures what I’m driving at, and why separating these questions is so clarifying (and, by the way, surge pricing is another reason why a not insignificant number of people feel that Uber is evil).

Kalanick’s Real Mistake

#DeleteUber was more significant than it might seem: it was the first time that an Uber controversy actually affected demand in an externally visible way; given that controlling demand is the key to Uber’s competitive advantage, that is a very big deal indeed.

However, the real bombshell was an explosive blog post from a (former) female engineer named Susan Fowler Rigetti alleging sexual harassment that was not only tolerated by Uber HR but actually used against the accuser. Said allegations, if true (and I have no reason to believe they are not), are ipso facto unacceptable and heads should roll — up to and including Kalanick if he was aware of the case in question. And Rigetti deserves praise: sadly, the novelty of her allegations may very well be her willingness to go public; based on conversations with multiple friends it’s often perceived as being easier to put up with sexual harassment than run the risk of being blacklisted.

The thornier issue is if Kalanick did not know; surely he has ultimate responsibility for creating a culture that allegedly tolerated such behavior? Indeed, he does. That’s why I drew a line from Kalanick’s refusal to fire an executive that allegedly threatened a journalist to the behavior alleged in that blog post: culture is the accumulation of decisions, reinforced by success, and Uber has collectively made a lot of decisions that push the line and been amply rewarded.

That, though, is why I drew the distinctions in this post: Kalanick’s mistake was in not clearly defining, communicating, and enforcing accountability on actions that pushed the line but had nothing to do with the company’s regulatory fight. In fact, it was even more critical for Uber than for just about any other company to have its own house in order; the very nature of the company’s business created the conditions for living above the law to become culturally acceptable — praised even.

To that end, those who already disapprove of Uber’s regulatory approach, that see the latest events as being part and parcel of what makes Uber Uber, well, that may be an unfair conflation, but Kalanick has only himself to blame: pushing the line on regulations didn’t necessarily need to equate to pushing the line internally, but to Kalanick it was all one-and-the-same. The conflation started at the top.

Taking Responsibility

Even if you agree with me about Uber and regulation, it’s completely reasonable to still argue that the company needs a change in leadership for the exact reasons I just laid out; I thought long and hard about making that exact argument. Moreover, if Uber’s scandals start impacting demand for the service, or end up impacting the company’s ability to retain and hire employees, there may not be a choice in the matter.

Still, it’s worth keeping in mind that many of Uber’s scandals implicate not just Uber but tech as a whole. The industry’s problem when it comes to hiring and retaining women is very well documented, and sexual harassment is hardly limited to Uber. Moreover, one of Uber’s other “scandals” — the fact that Kalanick asked Amit Singhal to step down as Senior Vice President of Engineering after not disclosing a sexual harassment claim at Google — reflected far worse on Google than Uber: if Singhal committed a fireable offense the search giant should have fired the man who rewrote their search engine; instead someone in the know dribbled out allegations that happened to damage a company they view as a threat. And while Google’s allegations about Uber-acquisition Otto having stolen intellectual property are very serious, it’s worth remembering that the entire industry is basically built on theft — including Google’s keyword advertising.3

Indeed, more than anything, what gives me pause in this entire Uber affair is the general sordidness of all of Silicon Valley when it comes to market opportunities the size of Uber’s. The sad truth is that for too many this is the first case of sexual harassment they’ve cared about, not because of the victim, but because of the potential for taking Uber down.

The fact of the matter is that we as an industry are responsible for Uber too. We’ve created a world that simultaneously celebrates rule-breaking and undervalues women (and minorities), full of investors and companies that are utterly ruthless when money is on the line, while cloaking said ambition in fluff about changing the world.

That’s the sad irony of the situation: changing the world is exactly what Uber is doing; for all his mistakes Kalanick has been one of the most effective CEOs tech has ever seen. Maybe Kalanick has finally seen the light and can change — I think he deserves the chance, even as I understand the skepticism — and if he cannot then by all means show him the door; in the meantime we can all certainly look in the mirror.

  1. Or Lyft: remember, it was Lyft that pioneered “ride-sharing”; Uber laid back because the company thought it was illegal! []
  2. Uber absolutely needs to accelerate the roll-out of its accessibility services []
  3. To be clear, downloading blueprints is on a different scale; again, if Uber is implicated Kalanick should be held accountable []