Super Pumped: The Battle for Uber

by Mike Isaac

You must know there are two ways of contesting, the one by the law, the other by force; the first method is proper to men, the second to beasts; but because the first is frequently not sufficient, it is necessary to have recourse to the second. —NICCOLÒ MACHIAVELLI, 1513 Being super pumped gives us super powers, turning the hardest problems into amazing opportunities to do something great. —TRAVIS KALANICK, 2015

Eventually, Kalanick joined six of his friends to build Scour.net, a Google-like search engine that gave users the ability to “scour” millions of files and then download them, like Napster. Kalanick later claimed to be a co-founder, though his friends disputed this status. Eventually, Kalanick was tasked with Scour’s sales and marketing efforts.

Through a friend of a friend, the group was introduced to a pair of investors to help bring Scour to the next level. Their names were Ron Burkle and Michael Ovitz, two venture capitalists who would change the way Kalanick saw VCs for the rest of his life. Burkle was a billionaire, known for his philanthropy and his private equity and venture firm, The Yucaipa Companies. Ovitz, a legend in the Los Angeles entertainment industry, was a talent agent and co-founder of Creative Artists Agency, or CAA, one of the world’s highest-profile sports and entertainment agencies. He also was coming off a gig as president of The Walt Disney Company, where he had been unceremoniously pushed out by then chief executive Michael Eisner.

“Look, we are running out of money,” Kalanick told Ovitz. “It’s clear you aren’t funding this, and we need to go find money.” If Ovitz wasn’t going to give them funding soon, Kalanick needed to raise money somewhere else. Three days later, Ovitz sued Scour for breaking the no-shop clause. Kalanick was livid. One of his investors—someone who was supposed to have his back and support the company—was suing his own founders for breach of contract. “We’ve got this really litigious hardcore dude out of LA suing us,” Kalanick later told other entrepreneurs. “Do you think anyone else is going to give us money? No.” Ovitz’s tactics worked. To keep Scour from going under, the team agreed to Ovitz’s onerous terms; the VC managed to acquire more than half the company for $4 million, wresting control of Scour away from its founders. But the episode—and the lesson in how to negotiate with venture capitalists—would stick with Travis for years to come.

Other investors looked at Red Swoosh and only saw the ghost of Akamai Technologies. A networking software firm, Akamai was the company most similar to Kalanick’s startup. Before the bust, Akamai had a $50 billion market capitalization. After the bubble burst, Akamai’s shares plunged, and the market cap sunk to $160 million.

Later, describing the incident and his hatred of venture capitalists, Kalanick would channel the West Coast rap icons of his youth, Snoop Dogg and Dr. Dre: “VCs ain’t shit but hos and tricks,” he said.

Finally, in 2005, Kalanick caught a break. Kalanick got into a flame war on a message board with Marc Cuban, the celebrity billionaire investor and owner of the Dallas Mavericks. Kalanick evangelized peer-to-peer tech, while Cuban thought Kalanick was dead wrong. Though Cuban didn’t like the tech, he did like Kalanick’s hustle, the tenacity he saw in Kalanick during the pitch. Cuban sent Kalanick a private message, offering him money to invest $1.8 million in the company. That was a crucial lifeline which eventually led to more contracts with important partners. Another investment from August Capital, a respected Valley firm, pumped even more life into the company.

Four months after the deal closed, he bought a condo in San Francisco’s Castro district, set atop one of the tallest hills in the city with a view of the Bay Area. He was able to take some time to relax and enjoy the luxuries that lured global elites to San Francisco. He and his girlfriend, Angie You, could hang out with friends from the startup scene while he let his Akamai shares vest. He could party, chill, and most importantly, figure out his next move.

Camp, a Canadian by birth and an entrepreneur by heart, had moved to San Francisco after attending business school, with hopes of growing his startup—a Web 2.0 phenom called StumbleUpon.

The taxi system’s unreliability compelled Camp to create hacks and workarounds. One trick he devised was dialing up all the major taxi services in the city, one after the other, to ask for a pickup. He’d take the first cab that arrived and ignore the rest. It was a dick move, but he felt justified; after all, they flaked on him most of the time.

The seeds of it first came to him during a Bond flick. Camp was relaxing at his new luxury apartment in South Park—just yards away from where the idea for Twitter was first conceived, and where Instagram’s early offices were located—when he decided to watch a movie. Casino Royale, the 2006 reboot starring Daniel Craig, was a favorite, something he watched when he didn’t have anything else in mind. There was something about the understated cool of Craig’s Bond; perhaps, on some level, Camp liked the idea of the world’s greatest spy being a short-tempered, crew-cut blond not dissimilar to himself. Then he saw it. There was a moment when Bond was driving a Ford through the sunny streets of Nassau, approaching a beachfront resort on the sparkling blue Bahamian seaside. What caught his eye was a small flourish on Bond’s cell phone as he drove through the beachscape. The phone, a boxy, silver Ericsson antiquated by later standards (it still had a numerical push-button keypad!) displayed a GPS-based map on its tiny screen. Bond was watching himself—a small arrow icon gliding across a dark green bitmapped grid—as his car moved across the Nassau landscape, inching toward The Ocean Club. It was a throwaway scene, something most people would have absorbed passively in the theater. It primarily served to highlight some of Bond’s cool gadgetry while plugging an Ericsson product, something the producers got paid to do. But the image stuck in Garrett’s head. The iPhone, in all its glory,...

Neither Camp nor Kalanick wanted to take on the founder’s challenge for their on-demand, app-based fleet of luxury black cars. So they tweeted out a call to arms. On January 5, 2010, Kalanick posted: “Looking 4 entrepreneurial product mgr/biz-dev killer 4 a location based service. . pre-launch, BIG equity, big peeps involved--ANY TIPS??” he tweeted. Just then, a twenty-six-year-old intern named Ryan Graves happened to be looking at Twitter, and spotted Kalanick’s request. He was interested, but didn’t want to come off as too desperate. Three minutes later, he tweeted back at Kalanick with a cheeky response: “heres a tip. email me. :) graves.ryan[at]gmail.com.” Though Graves didn’t know it at the time, that tweet would eventually net him more than a billion dollars. It proved to be the luckiest decision he’d make in his life. But at the beginning of 2010, Graves was still an aimless twentysomething, one of many trying to hit it big in the startup world. Taking a chance on a gig at UberCab seemed like a cool thing to do.

One of those was Foursquare, a buzzy, location-based mobile check-in startup that had cache among the Valley elite. He tried applying through the front door, but was quickly turned down; Foursquare was inundated with offers from eager would-be tech workers. Instead of giving up, Graves had a better idea. On nights and weekends, he started calling around bars and restaurants in Chicago, pitching owners and managers to sign their businesses up for the Foursquare app. By pretending that he actually worked for the company, Graves managed to sign up thirty new customers in the Chicago area. So Graves tried again, sending that list of new customers to Foursquare and some of its investors. Managers at Foursquare were immediately impressed. Self-starters like Graves tended to excel in startup-land. They kept Graves on as an intern doing business development work for the company, based in Chicago.

Rob Hayes, a partner at First Round Capital, saw Camp’s Twitter schtick and was intrigued. He sent an email, met the company, and quickly cut a check for nearly half a million dollars in the company’s first “seed” round of funding.

Graves was scared. “What are we supposed to do here?” he said aloud, reading his name on a piece of paper that said he could be going to jail. Hayes, the venture capitalist, wasn’t sure what to say. He was used to investing in consumer tech companies, but rarely (if ever) did they run afoul of the law. Geidt, just a few months out of college, stood quiet and nervous, too. This was her first foray into the professional world. Now she was looking at jail time. Kalanick didn’t miss a beat. “We ignore it,” he said to the room. The others looked at Kalanick like he had grown horns. “What do you mean ‘ignore it?’ ” Graves said. The ex-CEO looked at Hayes for advice, since the VC at least had some experience managing startups. Hayes shrugged back at him. “We ignore it,” Kalanick repeated. “We’ll drop ‘Cab’ from our name,” he said, something his lawyers claimed gave the company greater legal exposure to false advertising claims. UberCab was now known as “Uber,” and it was staying open for business.

Before Gurley arrived, eBay was Benchmark’s crown jewel investment. In 1997, the small, tight-knit VC firm had invested $6.7 million in eBay. Two years later, Benchmark’s position was valued at more than $5 billion.

Gurley continued with computers after college and landed a job at Compaq in Houston, down the road from his hometown. In 1989, Compaq was a growing powerhouse of computer manufacturing, and Gurley was lucky to score a job debugging software for the company. It helped that his sister, an electrical engineering major, was employee number 63. When he wasn’t spotting problems with software at work, he tracked technological advancements closely. He traded stocks on his Prodigy internet personal account. He devoured tech magazines and plowed through dense, finance-heavy analyst reports on up-and-coming tech companies. He couldn’t help himself; he was infatuated. Gurley saw an intoxicating, transformative power in technology. He wanted to get closer.

He quickly forged his reputation by making the right calls on technology stocks and market trends. So much so that he impressed one of Credit Suisse’s bigshots, Frank Quattrone, a legendary Silicon Valley investment banker involved in some of the highest profile technology company deals in history. The two men would grow close while at Credit Suisse, and eventually work together again at another firm, Deutsche Bank. Early on, Quattrone recognized that Gurley, an engineer by training and analyst by trade, possessed keen insight into the world he was covering.

The executives at the companies Gurley covered saw it too. As Amazon worked on its initial public offering to the stock markets in 1997, Jeff Bezos and his team of executives didn’t pick one of the two high-profile investment banking firms—Morgan Stanley and Goldman Sachs—to lead its IPO. Instead, Bezos’s firm picked Deutsche Bank, a less prominent but still excellent firm, to take Amazon public. It was the combo of Deutsche Bank’s star banker and his lead analyst that sealed the deal: Frank Quattrone and Bill Gurley. The duo wowed Bezos and his board with their knowledge of the online bookseller and its underlying business. Morgan Stanley and Goldman Sachs had the glitzy name, but Deutsche Bank had Quattrone and Gurley. Gurley became the go-to analyst on what was then one of the world’s largest online booksellers. Gurley saw, very early on, the opportunity for Amazon to become much, much more than a bookstore.

Across town at Uber’s headquarters, he had heard about Zimride’s plans, and he had heard whispers about Sunil Paul’s escapades, too. Kalanick considered Mark Zuckerberg a friend—or at least a familiar acquaintance—and the Facebook CEO had given Kalanick a heads up. Facebook employees were going crazy for Sidecar, Zuckerberg told him. Zuckerberg warned Kalanick that he might want to keep an eye on the company.

After that experience, Kalanick never trusted investors again. So as a condition of allowing them to offer him money, Kalanick offered them miserable terms. Private companies aren’t obligated to make their internal statistics public, but investors with a significant ownership stake are generally given insight into the company’s financials. Kalanick, however, over time stripped some major investors of all “information rights,” and limited the degree of detail offered to others. Moreover, investors had to agree that Kalanick would continue to hold his supervoting shares while newcomers only received shares with weaker voting power.

A legend in private equity, Bonderman was a founding partner at TPG who harbored connections with celebrities, executives, regulators, and heads of state around the world. Just as Drummond’s name sent a certain message to the tech world, Bonderman’s participation telegraphed Uber’s importance to the broader business community. And in the end, Kalanick just wanted the investment.

Ex-Tellme staff would have wide influence the next generation of internet development. Mike McCue, its CEO, went on to found Flipboard, while others like Alfred Lin would work on Zappos and eventually land at Sequoia Capital. Hadi and Ali Partovi, well-respected entrepreneurs and brothers, founded Code.org. Others went on to join Stripe, Facebook, Amazon, and others. Emil Michael was in good company.

Tens of thousands of people were killed in automobile accidents annually.

Without telling his bosses, Levandowski hired an outside lobbyist in Nevada to write a new law that allowed autonomous vehicles to operate in the state without a backup safety driver. Google executives were furious, yet the law passed statewide in 2011.

Then Uber showed up. The medallion system—a market based entirely on scarcity and exclusivity—was threatened to its core. With UberX, the company’s peer-to-peer service, anyone with a car could drive for Uber. That simple concept destroyed Big Taxi’s barrier-to-entry system, sending the price of medallions plummeting. In 2011, medallions in Manhattan were going for $1 million apiece; six years later, one fire-sale auction of forty-six medallions in Queens fetched an average price of $186,000 per medallion. Overnight, taxi drivers whose entire livelihoods were tied up in paying off an expensive medallion went underwater.

That meant Uber could define Uber drivers as contract workers—designated 1099 in tax code parlance—which allowed Uber to skirt paying for benefits like unemployment tax, insurance, and health care. Avoiding these normal employment expenses saved enormous amounts of money, and wildly decreased Uber’s liability for drivers’ actions.

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.” That option showed fewer animated cars driving around on the mini-map inside the Uber app, with approximate wait times of up to a half hour—five to six times longer than people usually had to wait for a ride. “This is what Uber will look like in NYC if Mayor de Blasio’s Uber Cap Bill passes,” said the text inside a small, pop-up notification. Users were invited to “take action,” and were presented with a button inside the app that emailed the mayor and the city council directly with a form letter prewritten by Uber. By the end of the campaign, the mayor’s office had received thousands of letters from upset users protesting the potential ban. De Blasio ended up shelving the proposal.‡

One prime example: Kalanick’s network of spies in the Valley—mostly made up of other tech workers and venture capitalists—picked up early rumors of Lyft’s new carpooling service. To get the jump on Lyft, Kalanick tasked his chief product officer, Jeff Holden, to drop everything and copy the carpooling feature immediately. Uber announced the impending launch of “Uberpool,” a carpooling feature, mere hours before Lyft announced the product it had invented.

If someone challenges Kalanick—in the wrong way, not via “principled confrontation”—they get iced out.

Nairi Hourdajian, his head of communications,

As CTO, Pham saw something the investors couldn’t. Uber was spending $40 million to $50 million on subsidies in China every single week, an enormous sum just to convince riders and drivers to use Uber over DiDi.

What Kalanick left out was the fact that in many cities, more than half of those trips were fake, a complete waste of money brought in by investors.

Pham, who was responsible for dealing with the fraud, wasn’t a stranger to tough situations. Born in Vietnam in 1967, Pham was thrown into conflict as young as twelve years old, as his mother piled him and his brother into a rickety wooden fishing boat, sailing out amid the rough waters of the South China Sea to escape the violence of the ’79 Sino-Vietnamese War. Pham weathered deadly storms, was robbed by Thai pirates, and felt lucky to land at a refugee camp in Indonesia, even though he was soon shuttled off to an island for other Southeast Asian immigrants that lacked basic sanitation. After finally making it to the United States, Pham shared a small, roach-infested apartment in Maryland with another family while his mother worked multiple jobs to support them. Pham studied hard in school and grew to love IBM PCs, which he discovered at a young age. An entry-level computing job at Hewlett-Packard led to the startup world and, eventually, a big break with a high-paying, high-level job at Uber as CTO. Like Kalanick, Pham worked hard, and never flinched from the pressure, intensity, or long hours as the company exploded.

Pham’s fraud specialists soon proved invaluable—and not just in China. In Brooklyn, the team watched as credit card thieves used stolen card numbers to run drug trafficking and prostitution rings using Uber vehicles. The ruse was simple: the dealers would buy stolen credit card numbers from the Dark Web, then plug those numbers into the app to charge Uber trips to the stolen accounts. Over hundreds of trips per week they delivered drugs and call girls throughout New York City—all paid by Uber incentives, or through chargebacks from credit card companies after the original card owners reported the fraud. After monitoring the criminals for months, Uber eventually partnered with the New York Police Department to help take the scammers down in a complicated sting operation. Over the course of a single Uber ride, the police would obtain a report from a credit card company, call the driver of the vehicle and tell them to pull over, then arrest the rider on a number of charges, including credit card fraud, possession of narcotics, prostitution, and so on. Though they would never brag about it publicly, the fraud team helped the NYPD take out the entire operation.

Most scammers found each other over text-based Chinese internet forums, a simple, anonymous way to match people who wanted to make a quick buck. They developed their own codified language; drivers seeking a fake ride would ask for “an injection,” a reference to the small, red digital pin that signaled a user’s location inside the Uber app. A “nurse,” or scammer, could respond in kind to give a “shot” to the original poster by creating a new fake account and going on a fake ride with the driver. The two parties would then split the bonus incentive payment from Uber. Repeated over and over across dozens of cities, small driver bonuses mushroomed into millions in squandered cash.

A scammer would request rides from his “passenger” phones, and use his “driver” phones to accept those rides. He would then drive around the streets of Chengdu with dozens of phones spread across the front and back seats of his car, racking up fares for each of the “trips” he was completing for his fake customers.

One of DiDi’s preferred tactics was to send new recruits over to Uber to join as engineers. As soon as they were hired they acted as moles, feeding proprietary Uber information back to DiDi and carrying out corporate sabotage on some of Uber’s internal systems.

The Indian response was much more severe. Indian officials, sensing public outrage, immediately shut down all ride-hailing services in New Delhi, pending an investigation. General managers in Indian cities like Bangalore shuttered their headquarters and moved into hotels, an attempt to escape nonstop protests and threats at work. For six weeks, Uber employees in India even brought their parents and families into hotels with them; taxi officials were beating up Uber employees in the street.

But then, in 2014, Quentin’s team found a way around it. After Apple’s iOS software release, about a half dozen companies sprang up overnight that claimed they could detect the sacred IMEI. Quentin tested a few of them before landing on InAuth, Inc., a small firm based in Boston. With just a smattering of code inside Uber’s mobile app, InAuth could track down the device identification number of the iPhone used to install the app, a technique known as “fingerprinting” in the security and fraud industry. Once a phone was “fingerprinted,” it was much easier for Uber to tell if it was being used for fraud. Just a few months after starting at Uber, Quentin signed a contract with InAuth. It worked perfectly. Before Uber had started using InAuth, fraud in China and other major cities cost Uber tens of millions of dollars every week—and occasionally even more than that. After Uber built a new version of its app with the InAuth code installed, Quentin watched the fraud numbers fall off a cliff. When a scammer tried to create a new account on a device Uber had fingerprinted, Uber’s anti-fraud systems would kick in and the account would be banned automatically. Finally, after years of being ripped off, Uber had found a way to fight back. There was one problem: InAuth’s service blatantly violated Apple’s rules regarding user privacy. So everything between Uber and InAuth had to be kept secret. if Apple found out, both Uber and InAuth could be in serious trouble, and could even get Ube...

But during the “charm offensive” Josh Mohrer, Uber’s brash and cocky general manager in Manhattan, had made a grave mistake. In an interview that week he let slip a mention of an early version of “Heaven,” a tool that provided a “God View” of riders on trips in real time. The reporter had taken an Uber to meet with Mohrer that afternoon. Mohrer bragged that he had tracked her the whole way. The comment would not go unnoticed. Eight days after the first story broke, Quentin’s team was hit with a bombshell. As scrutiny intensified in the wake of Uber’s recent scandals, an enterprising young hacker in Arizona named Joe Giron had decoded Uber’s Android application and found the list of data access permissions Uber’s app requested upon installation. The litany went far beyond what most Uber users expected: phone book, camera access, text message conversation logs, access to Wi-Fi connections. These were permissions that were suspect for any app to request, much less a taxi service. Why would a ride-hailing app need access to their customers’ text messages or camera? It was seen as a broad overreach into users’ privacy. Not only was Uber willing to go after journalists, but the company also wanted to know everything about you and your phone.

But this new idea was as brazen as the Trojan Horse. The engineer’s idea was to trick Apple by using a technique called “geofencing,” using the GPS and IP address data from the phone to tell Uber where the user was located. A “geofence” acts much like it sounds; if the user is within a specific geographic radius, the app would perform a certain way. In Uber’s case, if the Uber app was used within the Bay Area or near Apple’s Cupertino headquarters, it wouldn’t run the InAuth “library” of code, which asked for the personal data needed to fingerprint phones. What that Uber engineer assumed—incorrectly, as it turned out—was that all of Apple’s App Store code reviewers were located in Cupertino and the San Francisco Bay Area.

“Heaven and Hell” were just the beginning. Those programs fell under the umbrella of “competitive intelligence”—a friendlier phrase than corporate surveillance—which was shortened to an even more genial acronym, COIN. Everyone in the Valley had a version of COIN, in one way or another. The most widely used form involved scraping competitor data from websites, apps, and other publicly available repositories. “Scraping” was computer-speak for automating the collection of information through written programs and coded scripts. Uber’s most useful tool scraped information on pricing changes within the Lyft app, allowing Uber to systematically undercut its competitor.

At the Code Conference’s private dinner, Kalanick and Holzwarth were seated with the heavy hitters; powerful CEOs of the Valley’s biggest companies. He should have enjoyed his meal—this was the ultimate validation of Kalanick’s success and influence. Instead, he spent most of the evening watching Sergey Brin chat up his girlfriend. Holzwarth was polite, good at conversing with even the most awkward engineer. But Brin, who was going through a messy, public divorce after having an affair with one of his employees, ignored Kalanick, oblivious to the optics. Before the meal ended, Kalanick snapped an iPhone photo of Brin’s cozy-looking chat with Holzwarth and texted it to Drummond. He later told Drummond he saw Brin place his hand on Holzwarth’s leg, and that he believed that Brin’s behavior was a liability for Google. 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 was presented with a delicious new secret weapon by a group of engineers on “Workation.” A “Workation” was an annual Uber tradition: instead of spending two weeks in December relaxing, employees would volunteer to spend two weeks working on any kind of project they wanted.

He hated his former mentor, Michael Ovitz, for screwing him over during the Scour startup years. 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.

One founder, Oren Michels, cut Kalanick a check for $5,000 early on in Uber’s history. By the end of 2017, that $5,000 had multiplied in value 3,300 times, worth somewhere close to $20 million. Mr. Michels made more off his $5,000 Uber investment than he did when Intel purchased his entire startup in 2013.

Fowler wasn’t having it. She called on the president of Penn, Amy Gutmann, and left a message with her office. Her dream, Fowler said, was to study physics at an Ivy League university. And Gutmann said in a commencement speech that Penn would help students fulfill their dreams. Gutmann acquiesced. The president told Fowler she was absolutely right, and encouraged Fowler to press on.

“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.”

Huffington was impossible to pigeonhole. There was no cause, no point of view that others felt was consistent throughout her life. The one thing that remained true about Arianna Huffington was that she seemed unclassifiable to anyone but herself. Her only constant was change.