Super Pumped: The Battle for Uber

by Mike Isaac

Billboards lining the stretch of Highway 101 down to Palo Alto were advertising internet companies that no longer existed.

One fifth of all office space in the SoMa area was vacant in the summer of 2001, an enormous increase from the record lows of .06 percent just eighteen months before.

Beside him was John Doerr, the Intel engineer turned venture capitalist. Doerr, too, was a titan of industry.

Both Camp and Kalanick loved the idea. The problem was, neither Camp nor Kalanick wanted to run it.

Silicon Valley is teeming with people with big ideas and empty bank accounts. It is a town where being first to an idea doesn’t always mean you’ll end up the winner.

Throughout his career Gurley had been enamored with what he called “marketplaces,” a category of business that neither made new products nor sold others, but merely matched the desires of one side of a market with the products of the other side, and took a cut as the middleman.

Crunching numbers and picking emerging tech trends was what Gurley already did for fun. Getting paid to do it—that was the dream.

That call also earned Gurley the ire of a young entrepreneur who would one day become another influential venture capitalist—Marc Andreessen. Andreessen was a co-founder of Netscape and is credited with helping to invent the consumer internet. Though Netscape eventually floundered and sold itself to AOL, Andreessen never forgot Gurley’s report.

Years later, after both men had achieved personal success and enormous wealth, the two still carry a grudge. In an interview with the New Yorker years later, Andreessen remarked of Gurley: “I can’t stand him. If you’ve seen Seinfeld, Bill Gurley is my Newman.”

Clayton Christensen’s “Innovator’s Dilemma” articulated the perils that awaited any company that grew so large that it no longer saw threats coming from more nimble competitors. The venture-backed startups became the new establishment.

Uber had discovered a winning formula to expansion. But each new city required capital, an upfront investment to kickstart what they called the demand “flywheel.” Drivers wouldn’t work for Uber unless there was enough demand from riders. And new riders wouldn’t sign up or return unless there was a critical mass of available drivers. It was a classic chicken-and-egg problem. “Uber solved that problem by straight-up buying the chicken,” Ilya Abyzov, an early Uber manager in San Francisco, told friends of the strategy. Uber began torching hundreds of thousands of dollars, giving away the money as driver subsidies. They paid bonus cash when a driver completed a certain number of rides or drove for a certain number of days. Uber would also flood the rider side of the market with cash, doling out thousands of dollars in free rides to new customers. Their theory was, if we can get people to use our service, they’ll see how amazing it is and won’t want to stop. And they were right.

Page was the type of founder Kalanick had worshipped from a young age. He was a self-made man who had engineered an elegant solution to an insanely difficult problem, organizing the entire world’s information using search algorithms.

Ostensibly, it was also true that just because you were getting a GV investment didn’t mean you had Google’s support.

In nearly every major metropolitan area, the “product-market fit”—a tech industry term to describe how well a given service may do with the public—was near perfect.

In New York in 2015, when Mayor Bill de Blasio threatened to cap the number of cars on the road, Uber tweaked the software inside of its app for New York based riders to show what it called “De Blasio’s Uber.”

More than just a douche: Kalanick checked all the boxes of what people imagined cocky tech founders were like. He imagined himself as the hero in his own narrative—to the point that his Twitter avatar was the cover of Ayn Rand’s The Fountainhead, a book espoused by libertarians for its celebration of self-reliance and disdain of government.

After years of thinking of Gurley as his personal cheerleader, Kalanick started to see Gurley as a gadfly, always harassing Kalanick and poking holes in Kalanick’s ideas.

When Travis Kalanick decides he likes someone, they might as well be his best friend.

When Travis Kalanick decides he doesn’t like someone, they might as well be dead.

So Gurley decided to do what he often done over the years with thorny problems: he blogged about it.

Like the mythical Greek figure, Gurley forecast a collapse of apocalyptic proportions. Gurley howled about the impending downturn in venture capital, exacerbated by the waves of new money.

“We are in a risk bubble,” Gurley wrote. “Companies are taking on huge burn rates to justify spending the capital they are raising in these enormous financings, putting their long-term viability in jeopardy.”

Tucked away on Bank Street, a quiet, tree-lined road in hip Greenwich Village, The Waverly Inn was a storied institution for New York media, made famous by Graydon Carter, the longtime head of Vanity Fair, who used the restaurant to host exclusive evenings with Manhattan society.

Robert S. Mueller, a decorated war hero who would later go on to investigate President Donald J. Trump, handpicked Sullivan to work in the computer hacking and intellectual property cybercrime unit, a prestige position in the Northern District US Attorney’s Office in San Francisco.

Holzwarth, then twenty-four, was a classically trained violinist who grew up studying music. She often played in public as a street performer in San Francisco and Palo Alto, where she was raised. When Pishevar ran into Holzwarth performing music in front of a candy store, he hired her to perform at a fundraiser for Cory Booker, held at Pishevar’s house, where she and Kalanick first met.

Despite Drummond’s talents, there was no smoothing over what happened that night. After the dinner, Brin asked Holzwarth to hang out with him and talk by the pool later that evening. Kalanick stewed. Google was going out of its way to screw him. And now he watched as the man who was going to kill his company tried to steal his girlfriend.

Kalanick, seeking to defend himself against Google’s self-driving division, had begun staffing up. He had opened an entire center in Pittsburgh dedicated to self-driving car research—the Advanced Technologies Group—in a joint program with researchers at Carnegie Mellon University.

On August 18, 2016, Kalanick and Levandowski unveiled the acquisition. The press covered it as the coup it was; with one of Larry Page’s protégés at the helm, Uber was suddenly ready to challenge Google in the race for self-driving cars.

But he had also learned from Ovitz. When the superagent had reigned over Creative Artists Agency, and dominated Hollywood for twenty years, Sun Tzu’s The Art of War had been his bible. Now it became Kalanick’s, too: So in war, the way is to avoid what is strong and to strike at what is weak.

They had a pet phrase to describe expensing strip clubs to the corporate card: “Tits on Travis.”

Clinton hadn’t come after Big Tech quite yet; she was closely tied to major donors in the Valley, including Facebook’s Sheryl Sandberg, John Doerr of Kleiner Perkins, and Marc Benioff of Salesforce. But if there was a company a Clinton presidency might come after, it could be the most hated startup in the country: Uber.

After two years and billions of dollars in losses and fraud, Kalanick’s investors demanded he abandon China. No American tech company had been able to crack the country, and Uber wasn’t going to be the first. Despite Kalanick’s efforts, the Chinese government had chosen to support DiDi, a Chinese company, and remained hostile to Uber.

for Kalanick, the defeat was more bitter than sweet. He would not outdo Page, or Dorsey, or even Zuckerberg and become the first American tech CEO to conquer the Chinese market.

The call was brief and awkward; Kalanick apologized and gave a pitiful explanation. Trump grumbled through it.

Often, the emphasis on growth created unintended side effects, or “negative externalities,” in management-speak. Managers would pursue growth even if it led to staggering inefficiency in other parts of the business.

“This is outrageous and awful. My experience with Uber HR was similarly callous & unsupportive,” tweeted Chris Messina, another Uber employee who had recently left the company. “In Susan’s case, it was reprehensible.”

But Page’s investigators may not have pieced all of it together were it not for a mistake from one of Waymo’s own lidar component suppliers. In February 2017, months after the Otto acquisition, the manufacturer accidentally included a Waymo employee on an email, an email which happened to include a schematic of a component from Uber’s most recent lidar design. The Waymo engineer noticed something peculiar; Uber’s lidar component looked like a carbon copy of Waymo’s hardware.

The theft, Waymo claimed, was a rejuvenation of Uber’s thus far unsuccessful efforts to build self-driving technology on its own.

With this lawsuit, Waymo was sending a message—to Levandowski and to the rest of Silicon Valley. No one steals from Larry Page and gets away with it.

Kalanick knew he needed to fire Levandowski, but he couldn’t bring himself to do it. Levandowski, like Kalanick, was a born charmer, full of charisma and showmanship. Their long walks along the Embarcadero together, the ongoing jam sessions, the “brother from another mother” mentality—all of it had enraptured Kalanick.

Photographing Jean Liu at the exact moment she learned of Uber’s $3.5-billion Saudi investment—that was revenge for the pain DiDi had caused him in China. People

When Uber’s rape controversy exploded in India in December 2014, Eric Alexander was one of Kalanick’s first calls. Alexander parachuted into the region and immediately did effective damage control with Indian politicians and the press. Eventually, Uber was able to settle a lawsuit the woman had initiated against the company.

They pleaded with the board for the termination of Emil Michael, who leaders saw as an accelerant to Kalanick’s worst impulses.

Those who read the report in its entirety were shocked. It was hundreds of pages long, a winding, repetitive list of infractions that had occurred across Uber’s hundreds of global offices, including sexual assault and physical violence. The company had numerous outstanding lawsuits against it, and would likely face many more. After Ryan Graves read the report, he felt he needed to vomit.

Travis Kalanick needed to take a leave of absence from his own company, relinquish his control of Uber’s business, and hire a proper chief operating officer to help him do so.

The second order of business, the report recommended, was to fire Emil Michael.

“I’ll tell you what it shows,” Bonderman said. “It’s that it’s much likelier to be more talking on the board.” The room froze. Had one of Uber’s board members just made a sexist comment about women talking too much?

Nine months later, Alex Trebek asked Jeopardy! contestants the name of the Uber CEO who “took a leave of absence to work on Travis 2.0.” Kalanick tweeted a photo of the question on TV, adding the hashtag: “#bucketlist.”

Of the eight-person board, most were aligned with him: Arianna Huffington, Wan-Ling Martello, Yasir al-Rumayyan, Ryan Graves, and Garrett Camp all followed Kalanick’s lead. And in 2016, during the $3.5-billion Saudi investment round, he negotiated for himself another ace in the hole. The terms of that round, all of which were unanimously agreed upon by the board, gave Kalanick the ability to appoint three additional board members whenever he desired.

The plan Gurley devised was simple. He would lead a syndicate of Uber’s largest shareholders—Benchmark, First Round, Lowercase, Menlo—all of whom collectively held a more than a quarter of Uber’s stock. They would approach Kalanick with a letter that put forward a simple request: Step down from your position as chief executive for the sake of the company. If Kalanick refused to do so, the group would go public. They would call up the New York Times, tell the reporter the entire plan, and their letter to Kalanick would land on the front page of the paper the next morning. That was strategic, too; going public would help rally more of Uber’s dozens of investors to the cause.