By Hubert Horan, who has 40 years of experience in the management and regulation of transportation companies (primarily airlines). Horan has no financial links with any urban car service industry competitors, investors or regulators, or any firms that work on behalf of industry participants
One of the recurring themes of this series has been the poor quality of Uber coverage in the mainstream business and tech press.
On September 3rd, Mike Isaac, who has been covering Uber for the New York Times since 2014, published Super Pumped! The Battle For Uber.[1]
Isaac’s central argument is that Uber is a fundamentally successful company that was nearly undone by ‘[CEO Travis] Kalanick’s boundary-pushing behavior, unabashed pugnacity, and eventually, the CEO’s own personal decline.” (p. xviii). “Uber was the unicorn to end all unicorns” (p. 6), with the potential to “drag the entire transportation industry out of the analog world and into the digital one” (p. 64). Uber represented the “best and worst of Silicon Valley” (p.xviii). It was “a company worth tens of billions of dollars that succeeded in changing the way we move through the world, yet nearly destroyed itself in a bonfire of bad behavior, ugly decisions, and greed” (p. xx) and provides a cautionary tale “about how blind worship of startup founders can go wildly wrong” and threaten the survival of “a multi-billion dollar empire.” (p. xix). The misogyny and rest of the bonfire of bad behavior directly reflected Kalanick’s personality, and became rampant because Kalanick prevented the Board from exercising normal discipline and control.
Isaac argues that Uber was brought back from the depths of its 2017 crises when key Board members realized “Uber didn’t have an image problem, it had a Travis problem” (p.235) and began to assert their role as the adults in the room, initiating the “Battle for Uber”. When an outside investigation led by former Attorney General Eric Holder produced damming findings, the Board forced Kalanick’s resignation as CEO. Since his hiring, new CEO Dara Khosrowshahi has worked to “systematically undo nearly everything his predecessor had stood for.” (p. 331)
Every component of Isaac’s argument is wrong.
Uber is not a successful company. It has lost over $20 billion and does not have a plausible path to profitability. It took billions in unsustainable predatory subsidies and narratives manufactured by Uber’s massive PR spending to create the appearance that it had disrupted the taxi industry. Uber actually has higher costs than the incumbents they disrupted and is incapable of producing taxi service at a cost the market would be willing to pay for. It is not the unicorn to end all unicorns. It has never had any sustainable competitive advantages and its valuation has never had any relationship to economic reality.
The misogyny and rest of the bonfire of bad behavior was the direct, inevitable result of a “growth-at-all-costs” strategy that combined the massive spending on subsidies and PR narratives with a ruthless, monomaniacal culture designed to convince the world that Uber’s industry domination was inevitable and any resistance was futile. The strategy also drove the rapid revenue and valuation growth Uber’s investors wanted.
Uber’s 2017 crisis was not triggered by the Board’s sudden desire to reign in governance problems. Instead, it was a rebellion against Kalanick’s refusal to rapidly move toward an IPO that would allow investors to realize cash gains on their investments. Kalanick’s resignation was not triggered by the Board’s sudden awareness of bad management behavior, or by unexpected disclosures in the Holder report, that bad behavior had been going on for years with the full knowledge of the Board. In the two years he has been CEO Khosrowshahi has not made a single significant change to Uber business model or growth strategy that had been in place under Kalanick.
Isaac’s approach to the Uber Story is fatally flawed
Before addressing the many problems with Super Pumped! It is important to emphasize that the facts presented in the book (records of events, quotes) are entirely accurate. There is nothing in the book that even remotely suggests active bias or that Isaac had any kind of agenda.
Super Pumped! obviously includes a lot of material from his published New York Times stories, which have been regularly cited in this series. Isaac broke the “Greyball” story (the software Uber developed to obstruct local law enforcement efforts against it) and major stories about the Board rebellion against Kalanick. This book includes the previously unpublished story about how Uber used the entire proceeds from a “Safe Rides Fee” to improve its bottom line, rather than to finance the consumer safety protections as it had promised.
The book is highly readable, but the audience won’t get an accurate understanding of Uber. It is understandable that Isaac’s day-to-day reporting on Uber would focus narrowly on things like events and quotes. A full length book gave Isaac the opportunity to dig deeper into the story and to analyze broader issues that would have been difficult to address while working against deadlines, but he didn’t. The book illustrates how one can string together factual points that clearly meet the Times’ day-to-day reporting standards and still get the bigger-picture “story” badly wrong. [2]
Isaac’s approach to Uber’s history suffers from three fatal flaws.
Isaac thinks the Uber story can be told without any reference to economic or financial data. Normally one evaluates company performance in terms of things like profitability and investor returns. Isaac doesn’t present any of the P&L results showing growing massive losses over ten years. Nor does he present any data on investment funding, cash flow, efficiency, productivity, pricing, cost competitiveness, or anything else. There are a couple passing mentions of Uber’s valuation, but no explanation of where it came from, or what caused changes. Readers thus have no idea what Uber’s current business situation or future outlook is, and have no way to understand Kalanick’s impact of the company’s performance.
Isaac thinks Uber can be explained solely on the basis of personalities. Super Pumped! focuses almost exclusively on the personalities of a handful of key Uber insiders (primarily Kalanick and Board member Bill Gurley of Benchmark Capital) and readers get no information about Uber other than descriptions of what that this particular handful of people say and do. Since Isaac excludes all economic and financial data, readers have no clue what business issues might be driving those people’s behavior and have no way to evaluate whether claims they make might be powerful insights or self-serving nonsense.
Isaac convincingly portrays Kalanick as an arrogant asshole, and many readers may have a negative visceral reaction to this portrayal. But managers with no offsetting abilities do not remain in place long, and readers they have no way to develop a balanced understanding of Kalanick’s actual record. By discussing personal styles outside of the business context, Uber comes across as an adult version of a high school student council or college fraternity, where the social dynamics may be colorful but are inconsequential in the grand scheme of things.
This narrow framing means readers never see counter-arguments and cannot understand how Uber behavior compares to comparable companies. If, as Isaac suggests Kalanick’s power and lack of accountability caused serious damage at Uber, why didn’t similar governance problems cripple Google or Facebook? Wasn’t Kalanick’s “arrogant asshole” style common across the Silicon Valley? Uber is presented as an engine solely powered by Travis Kalanick’s personality and drive, an engine that inexplicably failed in 2017.
Isaac appears totally oblivious to Uber’s massive spending on PR narratives. As this series has documented at length, one of Uber’s top priorities was always the creation of PR narratives [3] that provided simplistic explanations of Uber’s amazing competitive strengths that would make its global domination of the taxi industry inevitable, tried to justify Uber’s huge valuation, and diverted attention from Uber’s terrible economics. [4] Isaac doesn’t seem to understand the size and importance of these efforts, so his readers aren’t shown how they established the widespread perception that Uber was a highly innovative, successful company despite billions in ongoing, growing losses.
More problematically, Isaac uncritically repeats many of these manufactured narrative claims which may mislead readers into thinking they are backed by objective evidence. His own efforts to portray Uber as a successful company (aside from misogyny and other bad behavior) suggests that he couldn’t see through Uber’s spin, and after five years on the Uber beat, never bothered to investigate whether the company’s claims were honest. Since he doesn’t understand the importance of these narratives, he doesn’t understand why the public actions of the Board and both CEOs have always been tightly aligned with them, and given a choice between seemingly irrational marketplace actions and doing things consistent with the narrative, the narrative always won.
Isaac doesn’t seem to understand Uber’s business model, or its investors’ strategy for earning outsized returns
Another major flaw is that Isaac never provides his readers with a coherent summary of Uber’s business model or strategy, and it is not clear he would have been capable of doing this. Isaac’s book purports to tell the story of what Kalanick did as CEO, and the conflict with the Board that led to his dismissal. But this focus ignores the question of what Kalanick and the Board thought management should be doing to eventually produce sustainable profitable growth and returns on the money invested in the company. It also overlooks whether the conflicts might have had anything to do with performance against those strategic objectives, or changing views about what those objectives and priorities ought to be.
Explaining the business model and strategy would require economic data (where will competitive advantages come from? what will drive growth and productivity improvements?) and industry comparisons (does Uber have lower costs than traditional taxis?). Isaac’s story clearly underscores Uber’s focus on rapid growth, but every other Silicon Valley funded company had the same priority.
Instead Isaac uncritically repeats bits of Uber’s PR narrative—Uber is based on highly innovative technology that is changing the world, and is following a tech industry strategy directly based on Amazon’s (“More than any other company, Amazon embodied the company [Kalanick] wanted Uber to become” p.11). Again, Isaac doesn’t understand that much of the PR narrative was in fact PR—designed to distract attention from Uber’s terrible economics, and nothing that an outsider should take at face value.
While it will never be realized, Kalanick and Uber’s investors were always fully aligned around a highly innovative strategy for achieving outsized returns. Uber never intended to follow the difficult and risky parts of Amazon’s strategy, such as developing major new product and efficiency breakthroughs that would give it huge, sustainable advantage over incumbent retailers and constantly plowing its strong positive cash flow into expansion opportunities where there were huge synergies with its core business. Uber’s strategy was to skip all of the hard parts of corporate business development and to use billions in predatory subsidies to bulldoze their way to global industry dominance. Which is why Uber required 2300 times more pre-IPO funding than Amazon.
As noted, the monomaniacal “growth-at-all-costs” culture and the PR narratives provided critical support to this subsidy-driven strategy. The first accelerated progress towards the hoped-for industry dominance, and the latter created the false impression that Uber’s “success” was based on the triumph of its superior products and efficiency in competitive markets, and the false impression that since Uber had the same economics as tech companies like Amazon and Facebook, it would quickly become robustly profitable and enjoy many years of huge equity appreciation.
Uber’s investors did hope to replicate the second part of Amazon’s strategy, where its dominance and platform ubiquity would create the anti-competitive market power needed to vastly improve margins in its core business and to profitably expand to many new businesses where it had no natural competitive strengths. This has not happened because Uber has not achieved the level of dominance needed to exercise anti-competitive market power.
The strategic use of enormous predatory subsidies and manufactured PR narratives was totally unprecedented, but it was a coherent, rational strategy. Kalanick and the Board totally understood and agreed on the strategy. Kalanick’s ruthless, monomaniacal style was not a problem, but was exactly what the Board was looking for. As noted, the bad behavior that eventually produced systemic sexual harassment had been present at Uber from day 1, was integral to “growth-at-all-costs” and until Susan Fowler’s blog went viral, the Board never had any problem with it.
Isaac ignores every significant Uber question his readers might have
Why has Uber lost over $20 billion? Isaac completely ignores this question and there is nothing in the book that helps readers answer it. The book ignores the fact that Uber actually is higher cost and less efficient than the operators it has driven out of business, ignores that Uber has none of the growth economics that allowed other Silicon Valley-funded startups to “grow into profitability” and skips over the fact that taxis and other urban transport services have always been marginal, and that Uber’s business model did not transform industry economics or solve longstanding structural cost and demand problems.
Did Uber ever build a sustainable core business? Obviously not, given its inability after ten years to generate positive cash flow, its lack of cost competitiveness and the absence of any other powerful, sustainable competitive advantages. Instead of providing readers with a clear answer to this question, Isaac simply cites vague narrative claims (“harnessing the power of the internet”). He mentions “innovations” but never mentions any evidence showing they had a significant impact on cost efficiency or productivity. If Uber’s smartphone app was so powerful why hasn’t any other company in any other industry been able to overwhelm competition and produce tens of billions in corporate value from a smartphone app?
Does Uber have any path to profitability? None is apparent, and nobody inside or outside of Uber has been able to articulate a half-way plausible theory of how Uber could achieve sustainable profitability. Isaac completely ignores this question and there is nothing in the book that helps readers answer it. Price increases cannot cover more than a trivial portion of the current profit gap. The market is simply unwilling to support prices that would cover Uber’s actual costs. Price increases and service cutbacks would also throttle Uber’s already rapidly declining growth rates, which would help kill any remaining perceptions that Uber is a high-growth company.
Uber’s only major source of margin improvement has come from cutting driver compensation, to (and below) minimum wage levels, so there is no potential for further driver cuts. All of the new businesses Uber has expanded into (food delivery, scooters) appear to have even worse profit margins than car service, and their sole purpose appears to be to boost revenue growth rates, and mislead naïve investors that Uber has Amazon-like potential for profitable long-term growth and can become the “Amazon of Transportation.” Normally startups do not undertake major expansion without a core business producing strong positive cash flow, and major synergies between the businesses; Uber has neither. Cutting back those businesses, or spending on speculative future businesses (self-driving and flying cars, trucking) would not get Uber anywhere near breakeven, but would also help kill the “high-growth” narrative that Uber believes is critical to its equity value.
What actually drove Uber’s meteoric growth? Isaac suggests this is totally explained by Kalanick’s personality and his monomaniacal focus on “growth at all costs.” But since he did not understand the investors’ strategy, Isaac never mentions the tens of billions in predatory investor subsidies that allowed Uber to provide much more service at much lower prices than could be economically justified. [5] Traditional taxis could not compete with Silicon Valley billionaires willing to funds years of multi-billion dollar losses.
Did Uber benefit drivers? Isaac tells readers that “Everyone in the company knew…driving for Uber was miserable” (p.190) but since he hasn’t looked at financial data can’t tell them why, and can’t explain the responses of Uber management. Since Uber entered the market driver take home pay has fallen over 40%, and in many cities is now below minimum wage levels. To recruit drivers, Uber willfully lied about pay, and can terminate drivers (who are locked into expensive vehicle obligations) or change their compensation at will. Almost all of Uber’s margin improvements in recent years came from these unilateral driver pay cuts. Instead of telling readers about driver pay and conditions, Isaac describes Uber executives who think morale problems can be solved with better communication programs. When Kalanick undermines these programs with further pay cuts, Isaac attributes this to Kalanick’s nasty personality, ignoring the P&L problem he is actually struggling with.
Did Uber create sustainable benefits for cities and taxi users? Isaac completely bypasses these issues and there is nothing in the book that helps readers answer them. The simple answer is obviously not, since Uber has not and cannot provide its existing service on a sustainably profitable basis. The more complete answer is also no, since there is no evidence that a quasi-monopoly Uber, controlled by Silicon Valley investors totally free of any legal or regulatory oversight would produce more car service at lower prices than the (admittedly not very good) taxi companies they had driven out of business. Cities could not possibly come out ahead unless Uber could sustainably produce service at much lower cost, and had huge incentive to pass on many of those savings to consumers. Isaac fails to consider this question, and instead repeats a series of egregious falsehoods from Uber’s narrative about all traditional taxi service problems being caused by corrupt regulators desperate to block innovation and job creation in order to protect The Evil Taxi Medallion Cartel. [6]
Was Uber’s lawbreaking justified? Isaac documents a lot of this lawbreaking, including the willful refusal to obey laws governing entry, pricing, licensing, insurance and safety, deliberate obstruction of local police enforcement of these laws, competitor sabotage and so forth. But Isaac never answers this question which would require economic evidence showing that the laws materially reduced industry efficiency and that the lawbreaking produced sustainable consumer benefits. Instead of telling readers that none of this evidence exists, Isaac confuses them by quoting vague and totally unsubstantiated claims from Uber’s PR narrative. Uber’s “principled confrontation” with legal authority was fine because “it came from a place of principle” (p.13) Similarly, Isaac tells readers that Uber’s refusal to obey laws requiring driver background checks was a matter of “principle.” But those “principles” were nothing more than the ideological assertion that the since all local governments are inherently corrupt, companies owned by Silicon Valley billionaires should not have to obey any laws they don’t like. Isaac reports Uber’s claim that it was fighting for the principle of “a pure free market, untouched by the corrupt hand of big government and Big Taxi” (p.114) but doesn’t point out Uber’s complete disregard of this principle, spending massive sums to lobby those corrupt governments to artificially rig those markets in its favor, ensuring it was freed from rules that Yellow Cab would still be required to obey.
Was Uber’s misogynist “bro” culture an incidental, fixable problem? Isaac is clearly disgusted by sexual harassment and misogynistic behavior. But he can’t properly explain the importance of these issues because he hasn’t tried to understand Uber’s core business model issues. He recognizes that Kalanick established a monomaniacal “growth at all costs” culture, but doesn’t recognize the problems this creates in a company that doesn’t have competitive economics. Managers who can produce “growth at all costs” in this environment can hit on female staff whenever they want. Sexual harassment at Uber was never the problem of a “few bad apples” and was not going to be solved by increased sensitivity training. It was the absolutely inevitable result of investors demanding “growth at all costs” in a company with totally uncompetitive economics.
Why did Uber fail miserably in China? In the U.S., Uber—a company with limitless cash and the freedom to use it to fund billions in predatory subsidies—easily overwhelmed tiny, fragmented, undercapitalized incumbents. That formula does not work in a market like China, where the competition had even greater funding than Uber, and an even greater determination to achieve market dominance. [7] Isaac blames this debacle on Kalanick’s irrational egotistical desire to achieve a China victory that had eluded every other large US company and valorizes Bill Gurley for getting the Board to reverse Kalanick’s terrible error.
Since Isaac doesn’t understand the importance of Uber’s manufactured narratives, he fails to see that they had locked Uber into the failed China expansion. Uber’s narratives claimed Uber’s growth was due to incredibly powerful technological advantages that could overwhelm incumbents anywhere in the world, and that Uber’s huge valuation was justified by the many years of profitable expansion it could pursue.
Expansion to China and other international markets had the Board’s full support, and failing to do so would have been an explicit admission that the claims about powerful competitive advantages and limitless growth opportunities were complete nonsense. Perhaps Kalanick and the Board had blinded themselves to obvious risks after consuming too much of the narrative Kool-Aid, but given a choice between acting in accordance with the narrative or setting cash on fire, Uber management has consistently defended their narrative.
Why is Uber investing in autonomous cars? As with China, Isaac explains this in terms of Kalanick’s irrational egotism. Enraged when he discovered in 2014 that Google (an Uber investor) had secretly mounted a major AV investment program, Kalanick began an Uber program to outdo (the incredibly better financed) Google effort. Kalanick also argued that AVs would allow Uber eliminate the cost of drivers.
As with China, this move is better understood in terms of Kalanick understanding the need to defend the narratives supporting its long-term growth and valuation claims at any cost. Uber’s valuation would have been seriously threatened if (realistically or unrealistically) the perception that AVs would eventually wipe out human-driven taxi business became widespread. Announcing a Uber AV program also supported the valuation narrative by creating the appearance that Uber was already making investments needed (realistically or unrealistically) to sustain growth over many decades.
Five years later, claims that Level 5 AVs will soon be commercially operated on public roads are no longer taken seriously. It is also clear that if commercial AVs ever became feasible, they would make Uber’s economics worse. Commercial AVs would be more expensive than cars with drivers for many years, and would require staggering levels of risky capital investment that Uber currently avoids. Khosrowshahi has continued this seemingly irrational spending on AVs because of the same need to protect narrative claims that Kalanick faced. Even though Uber’s losses are much more visible, and the prospects of AVs much more remote, Khosrowshahi knows he needs to have a “long-term growth” narrative to prop up the stock price. .
What caused the 2017 Uber Board rebellion? Isaac describes this as the inevitable reaction to Kalanick’s hubris, egotism, arrogance and demand for absolute control finally pushing the Board to a breaking point. Kalanick and the Board had worked together productively for years but Kalanick’s personality dramatically changed, and all hell broke loose.
Once again, Isaac disregards simple corporate economics. The investors, had spent years telling everyone that their investment in Uber was one of the most spectacularly profitable moves in Silicon Valley history, but after 8 years had not seen a penny of actual return. The private valuation of Uber had reached $68 billion because of Silicon Valley’s myopic focus on rapid revenue growth (while ignoring profitability) and Kalanick’s great skill [8] in attracting new investors at continually higher prices. This created irresolvable tension between investors who wanted an IPO as soon as possible and Kalanick, who was smart enough to realize that an IPO would begin to expose Uber’s terrible underlying economics.
The run of terrible 2017 publicity that Uber experienced was not the cause of the Board rebellion, but merely the excuse to force the company on a direct path to an IPO. The Board had totally supported Kalanick’s “growth at all cost” approach, and prior to 2017 had never uttered a word of complaint about the bad behavior (lawbreaking, competitor sabotage, journalist harassment, etc.) it produced. Khosrowshahi was hired because he promised an IPO, and the Board provided him with massive financial incentives to complete the IPO at the valuation they were seeking within 18 months.
__________
[1] WW Norton (2019)
[2] It is also important to emphasize that Isaac’s book is far superior to many of mainstream media reports this series has taken pains to criticize. The worst Uber reporting fails basic tests of intellectual integrity—pieces purporting to be independent journalism or academic analysis that uncritically present Uber’s PR narrative claims written by authors have obvious financial or ideological incentives to present a biased, one-sided pro-Uber position. See, Can Uber Ever Deliver? Part Six: Latest Data Confirms Bleak P&L Performance While Stephen Levitt Makes Indefensible Consumer Welfare Claims, Naked Capitalism(2 Jan 2017), Can Uber Ever Deliver? Part Eight: Brad Stone’s Uber Book “The Upstarts”– PR/Propaganda Masquerading as Journalism, Naked Capitalism(16 Feb 2017) and Can Uber Ever Deliver? Part Fourteen: The New Yorker Lays Out the Template for Pro-Uber Propaganda, Naked Capitalism(15 Mar 2017)
[3] Readers who are not familiar with this series’ extensive analysis of Uber’s PR/propaganda narrative programs should see Section IV of my Transportation Law Journal article; Will the Growth of Uber Increase Economic Welfare? 44 Transp. L.J., 33-105 (2017) available for download at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2933177or pp.115-117 and pp.122-128 of my more recent “Uber’s Path of Destruction” American Affairs, vol 3, no 2, Summer 2019, pp.108-133. https://americanaffairsjournal.org/2019/05/ubers-path-of-destruction/
[4] Among the many examples: there are radical differences between the economics of ridesharing and traditional taxis; the awesome power of Uber’s technology could overwhelm competitors anywhere in the world; Uber will soon be able to produce “transportation as reliable as running water” and eventually displace car ownership; Uber is not actually a transportation company—it is strictly a software company selling to independent “driver-entrepreneurs”; Uber will have vehicles capable of Level 5 autonomy on the road by 2018; Uber will soon become the “Amazon of Transportation.”
[5] Isaac does mention subsidies for incentive programs used to initially attract drivers (a small part of overall subsidies), but failed to explain the connection between reduced driver incentives and much higher driver turnover.
[6] Uber’s nonsensical claims about the Evil Taxi Medallion Cartel and their corrupt regulatory defenders are addressed in the Transportation Law Journal article at pp. 61-63 and 71-86.
[7] Isaac correctly notes that the Chinese government would have never allowed a foreign company like Uber to achieve dominance, but this political support was unnecessary given Didi Chuxing’s superior funding and clear commitment to market dominance.
[8] Isaac notes Kalanick’s money raising skill, (p.188) and also notes growing division on the Board between early investors and what I would call the “dumb money” (post 2015 investments), but still treats IPO issues as much less important than Kalanick personality issues.
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I had a discussion with a coworker about Uber some months ago, and when I pointed out that that the only way Uber could actually make any money if if they sharply increased their rates. His response was that Uber would become dominant because they have “mindshare.” I have to admit that I was speechless – how do you respond to something like that? The coworker then went on to distract me by blathering on about how self-driving cars were just around the corner. That was as clear as a demonstration that one could have, at how these PR campaigns have been very successful with what would otherwise seem to be reasonably intelligent people.
I made what readers would probably regard as an obviously predictable misjudgement this weekend and went with my mother-in-law on a research expedition for a new car. I’d booked in a day-long test drive for something that I thought would be suitable and reasonably future-proof for her. Which shows how much I know.
Anyhow, the test drive was in a Toyota Prius plug-in hybrid. It has all the latest safety aids, which I thought was important as, let’s just say her driving skills aren’t what they used to be (and weren’t the best to begin with).
During the course of the day, the automatic traffic sign recognition misread one sign (notably indicating a 120 mph limit… in a 70 mph zone) and failed to detect another clearly-visible one (and it was important as it indicated a transition form a 30 mph limit to 40 mph, I’d set the speed limiter to enforce the maximum speed as my mother-in-law isn’t great at sticking to low speeds when required and “drifts” to higher than permitted speeds) and when I said that she’d need to over-ride the limit by flooring the accelerator, my mother-in-law was a bit too literal about it and kicked down the transmission resulting in a sudden burst of acceleration which fortunately wasn’t dangerous at the time but could have been. The lane-keep assist was very nervous and clearly hadn’t been set up on your average British road with its plethora of road markings so there was a lot of false positives and unnecessary steering assist triggering, which, again, wasn’t used to narrow British rural roads and had a tendency to over-compensate in the other direction. I will not even get started on the parking assist (which I thought would make my mother-in-law’s life easier but merely made things worse) — it refused to recognise several viable parking spaces in a supermarket car park, again, it had obviously been set up for perhaps a typical US-sized space and was flummoxed by your typical small UK sized space.
I was assured by the dealer that the systems on the Toyota were “state of the art” in terms of driver aids. To which I could only think, if this is the current level of development of autonomous vehicles, I’d rather risk my mother-in-law driving.
Oh my god! is there any low-automation version of the plug-in hybrid, or can the gadgets be disabled? I am truly interested on plug-in hybrids.
Yes, you can turn everything off, fortunately. I think keeping them on their lowest intervention settings as true emergency mitigation would be a good thing, but I’d never rely on them for serious taking responsibility for safety. Apart from that, the car itself was excellent, it got a genuine 25-30 mile range on electric power only, given my mother-in-law’s typical journey pattern, it would never need to use the conventional motor at all, but would have some reassurance of non-electric power if the rare longer journey was involved (or it was a stuck in traffic situation).
Thank you!
I watched a video of a Tesla using the autopilot on some of those narrow British roads. The driver was a private individual and clearly an enthusiast, so it was being presented in a generally positive light, but I did get the sense that he was being honest about it and not presenting the kind of heavy editing and/or highly controlled environment that you see in the official videos.
Overall my impression was of a really high end cruise control function. It did get a lot of things right, but rarely consistently or reliably enough that I would have felt comfortable leaving it in charge. The guy was attempting to leave it to its own devices as much as possible, but his hands never strayed more than an inch or two from the wheel, and there were a few “don’t even try” moments where he preemptively took control because he said he knew the autopilot wouldn’t handle it. One example was a curved intersection with multiple exits, no clear lane markings, and moderate traffic. He also did this any time pedestrians were on the road, and any time a child was visible pretty much anywhere.
By and large the AI and decision processes seemed sound, and it would generally make the best decision based on the information it had, erring on the side of caution if it wasn’t sure. The biggest issues seemed to be in signal processing and interpretation. It outright failed to detect some jaywalking pedestrians, for example (the driver was expecting this and took control instantly, but you can imagine the potential for bad outcomes here). It also really struggled with understanding lane/road positioning unless there were clear markings. It could infer it correctly from traffic patterns, but it needed to be really obvious, and you had the sense that it might get stuck following some random vehicle willy-nilly.
Overall, while it was an impressive technical accomplishment, I’m not sure if it’s a net advance for the industry at this point. The driver did get to leave it alone about 80% of the time, but the level of concentration and knowledge that was required to understand where to draw the line (and also react quickly and appropriately in that other 20% of cases) seemed like it might actually be beyond what’s required for normal driving. If they can get to full level 4 autonomy that would be another story, but on this evidence I would say that is not even a speck on the horizon at this point.
Can somebody please start making 1964 Mustangs again? Just re-enforce the floor so it doesn’t rot out, install a catalytic converter and you can drive the thing on the cheap for 25 years. Easy to repair and pretty good gas milage too with the 6-cylinder version. It’s not like we’re talking about a rotary phone here.
You’d think there would be a demand for a low priced car that isn’t larded up with unnecessary tech. One where if some small problem arises, you can either fix yourself or bring to a decent mechanic, not a dealer who hooks your car up for a computer diagnostic.
The last time I remember someone trying that in the US it didn’t get very far (the Yugo), but that was a generation ago when there was a lot less tech and added expense in your average vehicle.
The automakers say they’re just producing what the consumer wants, but I find it hard to believe that everyone wants to pay $30K + for a basic automobile which because of all the added tech has many new ways to malfunction and then can’t be easily fixed. That’s not what I want, and I’m dreading the need for a new vehicle.
Living in a place that has high humidity and of course a salty atmosphere due to the fact being a rather small Island where you can drive once around in 45 minutes obeying the speed limit, I am weary of all the new vehicles loaded with technology.
There is no new vehicle around except some micro cars that might fit the purpose of a low tech reliable vehicle, so I settled on a Ford Focus 2003 with 120k km. No electric powered windows, no electric mirror adjust, no central electric door lock.
There are still a lot of old Peugeots, Fiats, Citroens etc. around driving reliable for over 20 years in this atmosphere plus body shops who still are willing to repair rust damage – not with bondo but with mig or tig welded metal parts – and where a few thousand € can buy you a really severe car body makeover from the bottom up.
Yeah, that lane assist can take some getting used to in the U.S. I can’t imagine what that would be like on those narrow British roads. I’ve noticed that about the parking assist as well – it only works for large spots (in fact, I’ve only ever used mine once, during the test drive). I think there are a couple of really nice safety features to have, such as a backup camera, and the blindspot indicator that my car has on the side mirrors. I’m still not sure about the collision assist, as that can be a bit sensitive, but on balance it’s probably a good thing.
With all that in mind, I can’t believe that some people are convinced that self-driving cars are just around the corner.
I can’t believe that some people are convinced that self-driving cars are just around the corner.
The same folks or the progeny thereof who believe for the past 50 years flying cars are just around the corner….
But it’s all true! You want proof? DATA was last seen on the Starship Enterprise, which has been decomissioned and is now serving as a flying taxi.
PR and marketing work quite well is what I glean from the story. Most people will not read or dig below the surface, especially over a narrative that they seem to like. Who doesn’t like on demand cab service hailed from their phone with no tipping? People will all be shocked when the house of cards comes tumbling down.
Looks like the book falls prey of personality cult as the way to explain everything. Kind of Game of Taxi-Thrones. The “technical details” that Horan summarizes no longer matter. Success or failure is a question of Personalities. Isn’t it?
RE: Can UBER ever deliver? More to the point; NO, but modern public transit can and does all the time. Abandoning your ###box, and instead using Chicago transit,the T,Wash Metro,and about a hundred others,works far better than any conceivable fantasy about the possible end of the ####box. Proof: Hard-headed pols are standing in line with plans to build such systems, with exceptions like “Cuomo the epithet” increasingly rare. Successful results
are plentiful in many parts of the world.
Uber and Lfft will fade away (their losers will pick up the pieces). Taxis will always be there for the unusual cases that occur.
I live in Los Angeles. I have occasionally looked into public transit. Buses take twice as long as driving and trains have the first/last mile problem. So, for now, not for me.
Blimey! That was a hot read.
Rather reminds me of the last 10 years of UK politics
Hubert Horan, Arizona Slim would like to make the following request:
Please write a book. ASAP.
That’s a very good question. Unfortunately the cost to develop a robust mobile phone app is non-trivial and the overhead and knowledge to maintain the back office systems to support it are well out of the realm of providing taxi service. The app and infrastructure would have to be provided by a third party and traditional cutthroat bare bones taxi services would have to subscribe to it, otherwise, who’d want to install a separate app for every taxi service anyways? From my experience in a restaurant delivery service provider company, their compensation was over 20% of the meal cost (I’m being nice), a level which would be prohibitive for taxis. I would like to see it deployed, but being the dumbest person in the room, I can’t see how the smartest people in the room wouldn’t have rolled it out by now, unless it’s because it wouldn’t immediately shower investors with torrents of irrationally outsized gains immediately.
It is trivial to a company with a valuation of 1+ billion.
My local (pretty traditional) taxi service has a working,reliable app, probably boiler plated from somewhere else.
As I do not care to use a smartphone, not much use to me, but plenty others seem happy with it.
If you don’t, after a few messages encouraging you to download the app, you can use human speech.
For some reason I am reminded of the wonderful buzzcocks
Everybody is happy nowadays
The example of London disproves your assertion. The black-cab drivers have been aggregated into a couple of app-based services, most notably at present MyTaxi. The app works great, you see your cab approaching, normally within three minutes–plus, you get a driver who actually knows where you’re going and how best to get there, not a GPS reader.
London taxi drivers are required to pass a comprehensive roads test: the knowledge of London.
https://www.thesun.co.uk/news/3307245/the-knowledge-taxi-test-london-black-cab-drivers-exam/
One of my very first posts in this series back in 2015 pointed out that one of the local cab companies here in Phoenix had actually purchased a software company that had developed an app with all the Uber app functionality. It got nowhere because its app wouldn’t show any drivers available when you wanted a cab, since its drivers had to cover 100% of costs out of passenger fares. The popularity of Uber’s app had nothing to do with the user interface or underlying software—it was entirely due to massive subsidies—Uber had many more drivers available because fares didn’t have to cover the actual cost of trips.
Hubert Horan is in Phoenix? Really?
Well, Slim down here in Tucson would love to host an NC meetup with you as the guest of honor. And, hint-hint, if you’d package your posts into a book, we could turn it into a book signing party.
Hubert Horan for Secretary of Commerce. Supreme Court?
Great read, Mr. Horan.
Hotel doorman here. I watched Uber crowd out the traditional cabs in 2015 and dominate through 2018. Now I am starting to see more cabs during a shift. Two years ago it would be normal not to see a single taxi during an 8-hour stretch. Now I see 4-6, almost all of them with hefty airport fares on the meter. This is not to say that Uber has gone away. I would guess that perhaps they are running out of drivers, and so with fewer drivers, surge pricing has taken away price advantages. I hardly ever see the same drivers, and this is a busy destination point. Would love to see some stats on driver turnover.
I recall seeing a driver turnover stat in the order of 90 per cent per six months a year or so ago. It may be in one of Mr Horan’s earlier articles in this excellent series.
I’d like to see those stats myself. What you see from your vantage point is certainly a valid indicator of something. I’m seeing the same thing myself. I’d call it an encouraging sign, but there are some unknown quotients and variables that have to be taken into consideration. From my own vantage point I see what Uber/Lyft refer to as “driver churn”. The new rideshare drivers I see appear to be predominantly Haitian, with hispanics in second place and caucasians a distant, negligible third. They drive into town from about 150 miles away, work through the weekend, sleep in their cars when not driving, then return home. I understand that what’s bad for the rideshare drivers is good for traditional taxi drivers, and vice versa. I also understand that what’s good for the taxi companies and the fleet owners, (more cabs on the road), is bad for taxi drivers. (Diluted earning pool). It’s always been a trade off though. (Razor thin margins and all that).
Very good read.
Reasons listed for Uber’s failure – that’s what it is – sound right.
One more reason or hunch that might be a factor in Uber’s failure: the Uber boys see the company as the next Facebook or Google or Amazon. However, Facebook and Google have MIC support/tie-in with user data, surveillance, and MIC psychology experiments. FB and Google are also advertising platforms for politicians. Amazon was gifted tax-free sales status to encourage its growth delivering stuff to your door, and now has an MIC cloud service. Uber has no national govt/MIC level support, as far as I know.
My opinion of Uber: it’s a digital hitchhiking app that charges a fee. The best govt “support” Uber can claim is flouting the local laws and not getting caught or reined in, as far as I can tell.
If the Uber boys thought they could be the FB, Google, or Amazon without massive govt subsidies(subsidies of more than money) and depend on private subsidies to win (money only, unconnected to law making or MIC interest), I think they miscalculated. My 2 cents.
I found your comment very good reading. Not 100 percent certain what MIC stands for though. Google offers various answers. Among the choices I found, “Media Integrity Control” is probably an unlikely one if the interpretation of its meaning is taken at face value…(It could be true in an Orwellian sense, of course). When discussing some of the key advantages and differences between Uber and the others, it sounds like you are referring to platform power or the network effect, something that Google, FB and Amazon achieved and benefited from, while Uber/Lyft never did despite their claims to the contrary. As HH said in one of his many articles, Uber’s greatest strength may be its pr narrative. While Google and FB may serve as advertising platforms for politicians, Uber and Lyft’s contributions to the reelection campaigns of politicians who supported them are a factor. I also know that statewide preemption legislation has exempted them from the licensing fees and similar expenses, as well as the rules and regulations that taxis companies are obligated to comply with in many locales. So that’s a kind of tax advantage. What you said about the Uber boys believing themselves to be the next Amazon or FB may be true. If so it’s a disturbing thought because it indicates they’re utterly delusional. Less malignant explanations might be self deception, a selective interpretation of business economics, or intentional, bald faced lying. Disturbing thoughts as well. My opinion, just from how they treat their drivers, what they offer them is modern day sharecropping with no guarantee of any benefits. Not even enough to survive.
I believe in this case MIC stands for Military Industrial Complex.
How is Mike Isaac not an Uber shill? Focusing on Kalanick is THE way to say Uber is fine.
The articles referenced in footnote 2 represent the (surprisingly large) genre of works by true Uber shills—writers with extremely obvious Uber advocacy agendas, who were making absolutely no effort to explain any of the complexities of the business, or concede possible downsides, and whose claims that weren’t (and couldn’t be) substantiated.
Issac’ story is substantially different from all of the Uber advocacy hackwork. The book’s story is fundamentally negative. No one who reads it is going to think Uber is an admirable company. Some Uber shills have demonized Kalanick just to set up a false “redemption” narrative under Khosrowshahi; Issac didn’t do that. Yes, the Uber story is a lot less negative than it should be if you absurdly leave all business/economic/financial evidence out as Issac has done but no one reading the book will think Issac is saying “Uber is fine.”
The distinction here is between coverage that gets the story largely wrong because of common (but unfortunate) MSM reporting biases/deficiencies, and reporting that deliberately set out to mislead readers in order to further a private, corporate agenda. Since I’ve written a lot in this series about the malicious malfeasance in the second (footnote 2) category, I just want to be absolutely clear that Issac’s book (although highly problematic) in not in that category.
To stick to the subject closer at hand, this narrative that describes Uber as a success is one more journalistic faux pas in a string of them. One example that comes to mind is a New Yorker article from last year wherein the word “success” was used at least a half-dozen times on the first page alone. One would expect better from the New Yorker, or any other reputable organ that purports to tell the truth. Instead, we get stenography from the PR department.
I think that you have to take into account the power of the all important Uber/Lyft pr narrative and how deeply it is still embedded. It’s damn near omnipotent and omnipresent. Remember the aggressive, hostile tactics they once pondered using to target any journalists who questioned the narrative or challenged the Uber/Lyft business model? Your average, or even above average mainstream journalist is still probably going to be influenced by the pr narrative. I guess an exception would be investigative journalism, but you wouldn’t find, (or at least wouldn’t have found), such articles in the msm. Mr. Horan addressed that issue, explaining it in terms of practical considerations such as journalistic deadlines. That and the guarantee of ongoing future access to the bigwigs at the rideshare companies for future articles by any journalist who faithfully, (and haplessly), repeated the company line. One would indeed expect better and I, (for one), have been continually disappointed. I don’t even have to go back as far as a year ago to find stunning propaganda pieces written by credentialed academics, (such as assistant professors of economics), that repeat verbatim and even expand on Uber/Lyft’s most outrageous lies and exaggerations. It would certainly be valid to question the academic integrity of the author(s) of such articles. Aside from that, whether it be intentional or unknowing, anything that sustains and spreads the fabricated Uber/Lyft pr narrative is providing a great disservice.
As I’m fond of saying to my rich, neoliberal friends where Uber is concerned, “enjoy the ride — while it lasts …”
I was hoping Uber and Lyft would die before the laws were altered to allow them to operate where I live (Vancouver area) – sadly that didn’t happen so I expect to see the usual “disruption” of the taxi industry, increased number of cars on the road and reduced use of transit that these companies bring.
I just finished Isaac’s book and found it fascinating with some of the details within the Uber penthouse. I congratulate the author on his work. However, I wish he would have expose all the crime since Uber’s inception. I’m thinking about writing a book, CRIMINALLY PUMPED ! …..The largest CONCERTED criminal conspiracy EVER !
My background is a seasoned entrepreneur businessman of over 60 years and know as a no-nonsense guy.
I did my undergrad and grad work in Traffic Safety Education and Health Education, taught high school, had sideline ventures, ex-insurance and registered securities rep, and a livery operator for the past 28 years in Tulsa and OKC. In addition, both my startup companies, ( viplimo.net and limopreneur.com) grew from scratch to a multi-million dollar venture.
Uber entered the OKC market in October of 2013 and then the copy cat, Lyft landed six months later.
As President of the Oklahoma Limousine Association, I spearheaded several complaints with Oklahoma authorities regarding their refusal to comply with State regulations, USDOT/FMCSA rules and regs. Like most other states (42) , Uber brought wheelbarrels of money to local lobbyists and attorneys to pass its rigged, boilerplate legislation and corrupted politicians. government officials, and the media. This deceptive pattern prevail quickly through out America. Our compliant livery industry became frozen.
I soon started investigating thoroughly both Uber and Lyft developed an understanding of a very large concerted conspiracy. I started exposing the criminal activities by commenting on media articles for the past six years. I believe I have more credible evidence of their wrongdoings and criminal activities than anyone. Much have been submitted to AGs,IRS, FTC, state and local enforcement agencies and especially the SEC regarding the faulty, corrupt S-1s registrations of their IPOs. Sadly, there has been nothing but silence which breeds corruption.
There are a handful of us who are dedicated to exposing the criminal activities of Uber and lyft because we know the transportation business. We certainly appreciate you Mr. Horan as you also know the business and write beautifully. It is my hope you too will author your rideshare works of Uber and Lyft.
America is finally waking up and the media is starting to get a grasp on unicorns that don’t work. Investors are dismayed and can’t believe they were lured to put public monies into such shams.
My advice is AVOID RIDESHARE INVESTORS GET OUT NOW DRIVERS AND PASSENGERS-AVOID at all costs. The toxic businesses have too much liability and zero protection for you. Simply, there is no OPERATING AUTHORITY. No one can operate legally as a unregulated company in a regulated industry. Currently, there are five Federal Investigations ongoing with many more expected. I have pinpointed over 120 US CODE violations yet to be dealt with. State and municipal transportation law violations exist in every state and city. The aiding and abetting of individuals who have or are in concerted criminal conspiracies are in the thousands. Mainly, Co-founders, key executives, investors, politicians, government officials, media members, enforcement personnel, lobbyists and attorneys are involved.
The rideshare business as we know it — is over. The bubble is about to burst. both Lyft and Uber are insolvent and chapter 7 may be the next step after criminal indictments are issued.
Good luck with that. Providing it wouldn’t be a conflict of interest, maybe former AG Eric Holder, (aka “Shane”), can make another guest appearance as a hired gunslinger when the time comes to prosecute the many Uber miscreants. After all, he did such a fantastic job of of holding to account the architects and instigators of the ’08 crash…Didn’t he?
Great summary, but…
I wish you had followed through this point & its inevitability more comprehensively. Sexual harassment is certainly not exclusive to growth industries (restaurant and hotel workers are at high risk, for example), and workplace sexual harassment (both at Uber and other workplaces) goes far beyond ‘managers hitting on female staff’. You may well be right about the link between Uber’s precarious economics and their culture of sexual harassment but proof of this would rest on the extensive research and literature that’s out there on sexual harassment.
You’ve articulated your frustration with the lack of substantive economics in most reporting about Uber; this is a frustration that I have when it comes to declarations about sexual harassment. It’s not an off-the-cuff topic and it’s immensely disappointing to see it treated as such. I would be interested in seeing you delve into research to explore this point further.
You recall the events that unfolded in the wake of Susan Fowler’s accusations of sexual harassment. Prior to going public, and serving in part as a catalyst for doing so, there was her frustration at not being taken seriously by Uber’s HR. Their tendency to turn a blind eye. The “bro culture” acceptance. The boundaries between what is merely tolerated, as opposed to behaviour that is accepted or endorsed get blurred. HH pointed out that the underlying “growth at all cost” philosophy, the foundationally flawed business model and scofflaw operating tactics at Uber tended to valorize such behaviour. You already know this because you’ve repeated what he said almost word for word. Mr. Horan has done the world a great service with his ongoing reportage, but I don’t think that sexual harassment in the workplace and it’s underlying causes are his area of expertise.
You’ve taken the “sexual harassment” point completely out of any Uber/business context.
Incidents of sexual harassment can occur anywhere. The Uber context, as Susan Fowler’s original blog post clearly explained, was that repeated, systemic patterns of harassment had developed and (most importantly) Uber management refused to take action, especially when the harassers were senior managers who had consistently hit their revenue targets. Thus those managers knew that if they hit their numbers, they could hit on female staff and no one would do anything.
The even more important Uber context was a much broader pattern of rule and law breaking going back to Uber’s earliest days–lawbreaking, obstruction of local law enforcement, competitor sabotage, journalist harassment, etc etc. Systemic sexual harassment is the absolutely inevitable byproduct of a company culture that openly celebrates rule and law breaking in the pursuit of revenue growth
People on the left shouldnt be concerned about whether uber is profitable or not, they should be concerned about the employees(drivers, programmers,all). When companies focus on profits, its not that better.