The Uber Story Part One

space and beyond. And the Uber story isn't just a tale about a startup that hit the big time, although it is that in part, but it's also a story about disruption, automation, corporate culture, and controversy. So this first episode is really going to be about the founding of the company and the challenges that it faced getting started, as well as it's early rise to prominence in the

text sphere. In the second part will take a closer look at what the company has been up to over the past few years, but mainly throughout seventeen because that was a truly tumultuous year in Uber's history. But I thought it would be helpful to begin by looking at the co founder of Uber, whose behavior at times seemed to be closely aligned with some of the more criticized

elements of the company's overall culture. This is a guy who has received a lot of attention, both positive and negative throughout the years, and that co founder is Travis clanic Uh. He is a bit of a character. I mean, he definitely has earned himself a reputation among the Silicon Valley as someone who is really aggressive and really visionary in many ways. But who is he? Where did he come from? And how did the idea of Uber come about? Well, spoiler alert, the story I'm about to tell you is

only half the tail. This is the official story of Uber, the one that the company lists as its own history, and it traces everything back to a cold winter's evening in France in two thousand and eight. But the truth ends up being a little more complicated. But let's start with Klanic. So he attended the University of California, Los Angeles.

He majored in computer engineering, but he never graduated. He dropped out just a few months away from graduating in that final year in nineteen and he went on to go work as part of the original team behind a business called Scour s c O. You are. Now. That might not sound familiar to you, and that would not be a big surprise because it didn't last that long. Within a few years of its founding, it was obliterated out of existence. But I'll explain. Scour was a peer

to peer file sharing service. Now, that means you could download some software onto your computer and that would allow you to designate specific folders on your computer's hard drive as shared folders, which would be shared with the rest of the network. So other people who had also downloaded that same software would have access to those shared folders, and you would have access to the stuff they put in their own shared folders, so you could download files

stored in other people's computers. You would launch the app and let's say you're looking for something specific. You you start to use a search engine to look for a very particular file. And let's say it was a piece of freeware that someone had created but had no easy

way to distribute. It's a really big file. They don't want to pay for the hosting fees to put it up on a website and have to deal with all that bandwidth, so instead they've put it on a shared folder, and they've made it accessible by a peer to peer network. You could download that file to your folder, and if you kept it in your shared folder, it would mean the next person to download the file would have an

extra source to pull from. They could pull some of the data from the original source and some of the data from you, and this would actually make the process faster. So the more people sharing a particular file, the less time it would take to download that file in general, so it would become much faster the more people got access to it. It was a really effective way to distribute large files across a network of computers. Now, that

in itself is not a problem. In fact, it's a pretty great solution for large file distribution, particularly in the era before broadband speed's really got fast. The problem comes when you start asking yourself what types of files are particularly laur because a few things that fall into that category, like movies or TV series or computer games or other types of software, tend to be the property of very large,

very powerful corporations. And here's a spoiler alert. These corporations understandably aren't too keen on people getting their grubby little hands on the products without paying for them, so we're talking about piracy. In other words, Now, I got to be clear, there is nothing inherent in peer to peer networking that suggests it is meant for piracy, But a lot of people used it for that purpose, enough of them to get the wrath of various big studios involved

in a massive lawsuit against Scour. How massive, well, they claimed damages to the tune of one hundred thousand dollars per file. So if you added up all the files on the system that fell into the proprietary nature that belong to one of these studios, it amounted to about

two hundred and fifty billion dollars. Now, the lawsuits scared away scours financial backers, including their majority shareholder who was a former Disney president, Michael Ovits, and it became clear that the Hollywood studios would put the screws to anyone who tried to swoop in to fill the void left by the previous investors. Essentially, it was like the mafia saying, hey, if you support these guys, we're gonna come after you.

So this left Scour without any real financial support and the company had to file for Chapter eleven bankruptcy protection by the end of two thousand. It was no more. Its assets were auctioned off to a company called Center Span Communications, and Scour was a thing of the past. Now klan I took the whole thing as a learning experience.

His contemporaries would describe him as being incredibly intelligent, ambitious, and a restive and they say things like he's a big thinker and he's relentless, which can be both a good and a bad thing. His move after the Scour disaster was to create what he would describe in a talk as a quote revenge business end quote. So what does that mean? It sounds really ominous. Well, in business terms, it was pretty clever. It wasn't so dark as what

it might sound like. What he meant was that he was determined to create a business that would appeal to the very entities that had sued Scour out of existence. So he wanted to take the people who had filed lawsuits against him and turned them into customers, effectively taking money from them, which you know now that I say it does sound a little mafia esque, but pretty pretty clever and completely legal. Obviously, you have to create the business and you have to convince people that it's worth

using the business. So it's not like it was a done deal from the beginning, And in fact his idea was not a big departure from scour. Actually he wanted to take that peer to peer technology and turn it into an enterprise software package. So the idea would be that big businesses like movie studios often need to move large files around in house, right Like, there might be one department that has a very large digital file and

they need to transfer it to another department. But even within a company, there wasn't always an easy way to do this. Using the peer to peer network, which would be locked to a particular studio or company, they could

do that much more quickly than with other methods. So, in other words, instead of downloading a piece of software that would give you access to all the shared files in the network, each one would be its own little, self contained island of computers, its own intra net, and you could use the peer to peer network to move files around that way, but no one from outside the company would have access to it. So he created this new company and he called it Red Swoosh, and this

all started in two thousand one. But he also had some pretty hefty obstacles in his way, and a lot of it came down to timing. For one thing, this was just around the time that broadband prices were starting to come down, which meant that other options for companies that needed to share large amounts of data across multiple machines were opening up. Another problem for him was that the dot com bubble had burst and the Internet startup

world was totally upside down as a result. You can listen to episodes of tech Stuff where I talked about the Internet dot com bubble. It was spectacular and it had really an incredible effect across the industry for years and years, and no one at this time was really bullish about getting into startup companies because so many had just gone belly up over the course of about a year and a half. So it was really hard to

find financial back. According to a Fast Company article I read, at one point, red Swosh got down to just two employees. You had Klanic and you had an engineer, and Clinic himself had to move back in with his parents, and eventually his one engineer left the company too, so it became a one man operation. But he didn't give up. He kept plugging away, He kept looking for investors and

eventually he found one in Mark Cuban. Cubans investment allowed Clinic to get red Swush on track, hiring a new team, although a small one, and landing a client named Echo Star, which is a satellite TV service provider, And this was enough to make red Swoosh and attractive property. And in two thousand seven, another company called akam I made an acquisition offer to that which Clinic accepted. He said sure.

He sold his company for an amount that has been reported to be between fifteen and eighteen million dollars, which is not a bad chunk of chain age, though by no means the enormous amount of money represented by other acquisitions we've seen in the text space. Still, this experience

reinforced Calantics confidence in himself and his ideas. He bought a home in San Francisco and became kind of an angel investor, and he would invite lots of younger people to come by and pitch ideas to him for various businesses because he loved that part of the experience. He seems to be the kind of guy who just really enjoys innovative ideas and disruptive ideas, whether they come from other people or he can take an idea that he thinks is maybe seventy of the way there, and help

try and get it all the way there. Sometimes he would just argue with people and say, your idea just doesn't make sense, it's not a it's not a big enough idea for a business. And he would have these discussions on a regular basis and invited a lot of people over to be part of them. And he seems to have the instincts really necessary to go from practically nothing to something and in an accelerated amount of time. Well, in December two thousand eight, Clinic attended a conference in

Paris called loeweb I Love the French. During his stay there, it snowed, which is a pretty rare event in Paris actually, and the snow was sticking to the ground, which is even more rare, And he found himself in need of a taxi cab and he was frustrated that he couldn't find one. He happened to be with another attendee. That guy was named Garrett camp who is the other co

founder of Uber. And it was this experience of being stuck in snowy Paris near the Eiffel Tower with no cab in sight that inspired the two to dream up the service that would become known as Uber, or so the official story goes. The real one, Well, let's talk about Garrett Camp for a little bit. He was born in Canada, and while attending the University of Calgary's graduate school program, he and a friend named Jeff Smith founded a service called stumble Upon. Now, this was a recommendation

engine and discovery platform. In other words, stumble Upon was a service that let people share the cool things they came across on the web with their friends. Now keep in mind, this is before you have stuff like Facebook or Twitter. This was a way for you to say, Hey, I just happened to find this really great web comic that hasn't really taken off yet, and I think you need to know about it. You can use stumble Upon

to help your friends discover this stuff. It was one of the first services to hit upon this formula, and it became very successful. By the mid two thousands, Camp and his team had to relocate to San Francisco, largely because that's where the investment money was coming from. So they actually left Canada and moved to San Francisco, and stumble Upon grew into an enormous endeavor. In two thousand seven, eBay acquired the company for seventy five million dollars, making

Camp a wealthy guy. Camp would continue to work with the company as an eBay employee. A couple of years later, eBay would spin out stumble Upon so that it would once again be an independent company, and Camp was CEO until two thousand twelve, when he moved off to pursue other interests, and by two thousand fifteen, stumble Upon was in trouble, but Camp came back and reacquired the company because he didn't want to just see his baby go

away anyway. During those years when Camp first moved to San Francisco, he found getting around in the city to be a bit of a challenge. He was never really a driver in Calgary, and he hadn't really planned on becoming a driver in San Francisco. He had been vexed by the problems he saw on the taxi cab industry for a while, and he saw that there were too few cars servicing too many people who needed to go somewhere.

He had actually bought himself a really expensive sports car once eBay came in, but he found driving in San Francisco was way too stressful, and if you've never driven in San Francisco, the first time you come to an intersection at the top of an extremely steep hill, you'll start exploring lots of philosophical and religious concepts and the hopes that you can make it through the light once it changes. But options outside of personal transportation were pretty

limited or lackluster. Public transportation in San Francisco has often been the subject of consternation, let's say, so, Camp began using what The Guardian called in an article the gypsy cab fleet of San Francisco. Now I'm not a big fan of the word gypsy, I mean, it's essentially a slur, but what the paper meant by this was that there were people trying to earn extra money by driving black sedans and transporting people to various places in the city.

Most of this was unofficial stuff, and they might be livery drivers, but they might be doing this on their own time, not on company time, So essentially it was kind of like a black market for taxi services. And Camp found that many of the drivers were reliable and friendly and they weren't overcharging him, so he began to collect phone numbers of the drivers he liked so that he could use them instead of the official taxi service, and that led Camp to envision an app that would

allow you to hail a ride at any time. It would also keep you informed of where your driver was, how long it would take the car to reach you, and when you could expect to arrive at your destination. Now this was all just in the concept phase, but sometime in early two thousand and eight, Camp wrote down an idea for the services name. He called it Uber, but he actually put an umble out over the you, which I, I guess means you would call it Uber anyway.

Camp decided he would call the service uber Cab. He registered uber cab dot com in August two thousand, eight months before he would have that snowy meeting with Clanic in Paris. Now that same summer, Apple had launched the App Store for iPhones, which opened up the opportunity to create a smartphone app that could do exactly what Camp had been imagining. So that things were falling into place.

On the other side of the equation where the drivers, Camp had figured out that a lot of those drivers were spending a huge amount of time not transporting anyone at all, They were just waiting for a potential fair, maybe at an airport or at out front of a hotel. They would just park in these areas and wait, which was wasted time. Camp knew that the driver's side of such an app could help them maximize their time and

their fares, which meant everyone would benefit. Cars would be able to move throughout the city going to where they were needed, and drivers would have less downtime and therefore make more money while they were actually working for this app service. Camp registered uber Cab as a limited liability company on November two thousand and eight, still a month

before he has that meeting in Paris. He was trying to decide if it would make sense to purchase several cars so that a small group of people he knew could become the first drivers in the service. He talked of an engineer named Oscar Salazar about developing the app side of the business. Now, Salazar was in the United States on a student visa, and as such he could not accept cash as payments, so instead Camp offered Salazar some ownership of the company. If it paid off, Salazar

would make a profit. As it turned out, Salazar would make hundreds of millions of dollars. As for Camp, he took a little trip to Paris in December two thousand eight, where, through a mutual friend, he was put into contact with a certain Travis Kellenic. And while the story goes that the two started coming up with Uber while trying to get a cab on that snowy Parisian night, the truth of the matter is that Camp and Kalanic had been talking about it all week, and you had two different

arguments here. Kalin Nick wanted to create a startup that was a lot like what Airbnb would turn into. He was thinking of a sort of a luxury apartment kind of business that you could book using an app, whereas Camp was advocating for the idea that would become Uber. And eventually they decided to go with Camp's idea. So what happens next, Well, I'll tell you, but first let's take a quick break to thank our sponsor. So Clinic and Camp get to talking at LOWBB in Paris and

they decided to work together on Camp's Uber cab idea. Immediately, the two founders were at a disagreement, so Camp wanted the business to purchase several Mercedes luxury cars and own the cars outright and just hire the drivers. Clinic felt that this was a mistake and that the business should instead rely on drivers supplying their own cars in return for access to the app, and eventually Clinic convinced Camp to try it his way, and Camp backed off of

making the purchase. At the beginning, uber Cab focused on contacting limo drivers only. It was a black car service, so a bit posh and definitely not something that relied on the average automobile. That would come a couple of years later. Camp got to work with Oscar Salazar, the engineer who was working on the promise of equity in the company, and they started to build out the uber Cab app for real zs. He also reached out to

a friend of his named Conrad Wheland. Now, Wheland had worked for a Canadian company called excel Aware, and he had cashed out of that and he wasn't exactly looking for a new job at the time, but Camp called him up, or he called up Camp, and Camp was able to convince him to come on over and join the uber Cab team as the first official software engineer for the company. Now in a piece in Fortune, Whelan revealed that when he joined the Uber Cab apps development

it was in its earliest stages. It allowed a user to order a car, but there was no link to create an account or associate a payment method with the service, so you would have to pay in some other method. Now, this was all in the development phase. Nothing was rolled out to the public at this stage, but it was

still pretty primitive. Wheland got to work building out the various aspects of the app that would allow you to create an account and associate a credit card or PayPal account with it, so that that way you could pay for everything seamlessly. It was an idea that would appeal both to writers and to drivers, and he also wanted to guarantee that Uber would get a cut of the action. You had to have some sort of way for the

company to earn some money from every transaction. Whelan also worked on creating algorithms for the dispatch side of the service. So when you look at what Uber does from a

macro level, it's pretty fascinating. On the one hand, it's an app that allows you to send out a message to nearby drivers, and that message essentially says, I need a car to drive me somewhere the app connects to an account and payment method so that no cash is needed to change hands, which is pretty useful as more and more people are going cashless in their day to day lives. But on the other side of that app is the management system that decides things such as which

drivers will get contacted for specific jobs. So it's both proximity based and takes into account what sort of service is being requested and whether or not the Uber drivers in the area are currently engaged in another job. So the goal on the corporate side of things is to do two things. Cut down on the idle time a driver experiences between dropping someone off and picking up the next fair because whenever they're idle, they're not making money

for themselves or for the company. And the second thing is to cut down the wait time for someone who needs to get a ride, because if the wait times are really crazy, no one's going to use your service. Wheeland worked on that technology to improve the experience for both sides, both drivers and riders. Now, according to that same piece and Fortune, Uber's second engineer are was a guy named Ryan McKillen who found things in a pretty

unusual state for a startup in San Francisco. At that time, Uber was using a small space in the office of another company called Zozie. The story of Zozie is also filled with lots of ups and downs and tons of drama. It was acquired in seen by another company called Peak. Anyway, that's a story for another time. The important thing here is that this is before Uber having any sort of headquarters of its very own. It was just cohabitating with

another company. So McKillen comes in and he walks into the conference room that's serving as Uber's offices and sees on the table there that there's a bunch of books and most of them are on coding and database management and computer science, but none of them looked like they had really been used very much. But there was one book that obviously had seen a lot of use, and so he takes a look at it and he sees that it's a Spanish to English dictionary. So why was

it there? Because Salazar, who had done that initial coding on the app, was from Mexico, and he coded in his native language. And so the engineers who were building out the early functionality of Uber, we're doing so on a foundation written in another language. So they needed that dictionary there on top of all the coding books. Now.

In August two thousand nine, Garrett Camp and Travis Kellanic invested two thousand dollars of their own money into the company, and at this time, Uber the service still didn't exist. The company existed, but they hadn't had anything that was public facing yet, so there were rumors about it. There was a lot of buzz in the tech space, but there was no way for you to actually use the service yet. The engineers had to build out the technology

that would make everything work. So while Uber the company was rolling along in two thousand nine, it would not be until mid that Uber would officially start taking customers for rides in San Francisco, and it wouldn't be until October twenty that the company would receive a round of funding from angel investors. There would be twenty nine angel investors in that round and they contributed a total of

one point three million dollars of first round capital. Sticking with investments for a second before we get back on track with Uber rolling out its first rides. The company has had several rounds of funding and debt financing throughout its history. By August, Uber had raised more than four hundred million dollars in various rounds of funding. The most recent round, which happened in December, was for one point

three billion dollars. So if you total it all up, the company has raised at least ten point seven billion dollars in various series funding rounds and private equity rounds. There are other ones that we could talk about two, but the point is it was a crapload of money. Okay. Back to those early days of Uber, in Jenue wary ten, Travis Clanic needed to find someone to oversee the business side of Uber, so he sent out a tweet, because

that's how things work at these levels. I guess the tweet read looking for that's the number for darn Twitter limitations entrepreneurial product manager slash business developer killer for a location based service pre launch, big equity, big peeps involved any tips wells. Tweet got a response from a guy named Ryan Graves. Graves would be brought on to act as the general manager for Uber before eventually becoming the

CEO of the company. For a short while, he took over that role from Clanic, but then in December he would step aside and Clanic would become CEO again. Graves would also serve as present for a while before taking on the role of senior vice president of Global Operations. His first day on the job was March first. According to Klanic, I found some sources that would refer to him as quote the first Uber employee end quote. But based off my knowledge of the engineers, that seems a

tiny bit misleading. But maybe there's some particulars I'm not aware of. Actually, there are probably many particulars I'm not aware of. Anyway. Graves would stay on with Uber until seventeen, when he would step down from the company, and I'll talk about that more in the next episode. In the summer of Uber still known as Uber Cab at this point, launched its app in the iPhone store and began connecting drivers with writers, but only in San Francisco. It was

the only city where they were active at that time. Now, when they did this, a ride cost about one and a half times more than it would cost in a cab, But the whole point was it was really hard to get a cab in San Francisco, depending upon the time and place. Uber, on the other hand, was user friendly and gave writers a sense of what was actually happening when they were looking for a ride, unless like the less tech savvy cab services that were operating in San

Francisco at that time. Now I've covered how this works a little bit just in the earlier section. The app consults your phones location data, such as your GPS coordinates, and uses that to help guide drivers to your location. A later building the app would add in the feature

where you could designate a specific pickup spot. You would put a little virtual pin on a map that would designate where you wanted the driver to meet you, and once a driver accepts a job, the writer will see the driver's car appear on the map with an estimated arrival time for pickups. So you can actually follow the little graphic and watch the drivers slowly make their way to your location, which I have done on numerous occasions.

The initial response from customers in San Francisco was largely positive, but a couple of big organizations were not nearly as happy be about Uber Cabs operations. They were the San Francisco Metro Transit Authority and the Public Utilities Commission of California. The two sent a message to Uber Cab, which was cease and desist all ride hailing services or face hefty fines. Uber cabs response was, quote, we believe that the service we offer is in compliance with the cited regulations end quote.

The taxi business in San Francisco was in an uproar about Uber Cab, and this would become a familiar story to the company over the following years. In fact, it would play out repeatedly in city after city around the world. Sometimes Uber would make a quick, solid case for this business and the taxi cab companies had to grit their teeth and just accept it. But other times things went a little further, and I'll cover a few of those in the next episode. The taxi cab companies said their

concerns were prompted by the following issues. Uber Cab was operating much like a cab company, but did not have a taxi license. Its cars did not have the insurance equivalent to taxis insurance. Uber cab would possibly threatened taxi dispatchers ways of earning a living, and limos in the United States have to have a pre book period, usually about an hour in advance by law, While only licensed taxis would be allowed to pick someone up right away

for example, when they were being hailed. However, Uber Cab was operating as a limousine service but behaving like a taxi service and without a taxi license. Now, one of uber CAB's responses to this complaint was to drop cab from its name, so it became Uber, the one we talked about today. What's in the name? Though a cab by any other name would smell as well, Let's let's not think about what a cab may or may not

smell like. The point is that changing the company's name, while a prudent step, might not have been seen as significant enough to escape legal troubles. So what did the company do in the face of this resistance, Well, it kept going as if nothing had happened. Ryan Graves, who was the CEO at that time, said that the company was working with s F M t A to fix the problems that the organization said Uber was causing, and the taxi cab industry was still quite upset. But why

is that. Well, to understand the taxicab industry's concerns, it helps to know how they work in general, as well as get a kind of brief overview of the history of regulations in that industry. So we'll get to that in just a moment, but first let's take another quick break to thank our sponsor of King. So you got the taxicab industry. Clearly, Uber services and all ride hailing services for that matter, pose a competitive threat to establish

taxicab companies. But competition is healthy, right, I mean it pushes companies to create more compelling products and are for more competitive rates than their rivals, which ultimately benefits the consumer. Right, So what exactly is the issue? Well, one big issue is that taxicab drivers have specific rules they have to follow taxicab companies to Actually, these are rules that Uber

drivers didn't necessarily need to observe. So you could argue that Uber is more convenient than a taxi, but the taxi industry said that was largely because Uber could ignore the protections that were in place to keep the taxicab industry from causing big problems. The history of taxicab regulation dates back in the United States to the Great Depression. During that era, many people found themselves out of work, so some people in big cities like New York City

became entrepreneurs by offering unlicensed taxi cab service. This led to an increase in accidents with more drivers on the roads competing for fairs, and that in turn had a ripple effect and created new traffic woes which impacted everybody. And then there was the fact that many people didn't have very good insurance coverage, which minimustate could become very costly. It could be difficult to figure out who could pay

for what if someone was injured in the process. That made things even more difficult to figure out, and this affected people who are already in a vulnerable financial position. Cities around the United States responded by passing local laws that were intended to improve safety and assign liability in the event of an accident. They also looked to regulate taxi cabs to make certain qualified drivers were the ones picking people up and not just anyone who happens to

have access to a vehicle. Now. In the seventies and eighties, some ease eased off on regulations because it was politically advantageous to do so. The word regulation has often been associated with negative consequences, such as stifling innovation and investment in infrastructure. But when those cities eased up on regulations, several things happened that made those cities question their decisions, and those things probably will not surprise you. For one thing,

taxi prices went up. For another, without the regulations requiring vehicles meet certain standards, the quality of vehicles decreased and the average age of vehicles increased. Before there was a limit on how old a car could be and still be used for taxi cab service. With those regulations lifted, suddenly you could use any old vehicle, didn't matter how decrepit it was or badly maintained. There were less incentives to keep cars in good shape and to phase out

older cars. Fares would become really complicated, with lots of different variables that could affect the price, and most of them were so convoluted that the average writer had no clue how much a cab fair was going to be in any given situation. Driver quality also would decrease because those regulations no longer meant that you had to meet certain criteria, and accidents increased. So in short, taxis were causing a big mess, the same mess that we saw

in the Great Depression. So, of course, most of these cities started to enact new regulations to address these problems, saying whoop seedes are bad. Turns out, regulations in this sense are totally realistic and important, and they are good for the protection of not just the people but the cities themselves, and therefore taxi cab companies had to follow these rules in order to be licensed businesses. Part of those regulations included a cap on how many drivers a

taxi company can employ at any given time. Now you get in with ride hailing services like Uber, and suddenly you've got a service as doing the same thing that tax cabs do, picking up people and taking them to a destination for a fee. But it was largely unregulated, so no wonder there's been stiff resistance from the taxi industry in various cities around the world. One regulation that many cities require from taxi cab companies is that all

drivers submit fingerprint based background checks. Now this is not universal, but in many cities in the United States it is a prerequisite. These checks are administered, typically by the respective state governments. Uber and other right hailing services claim they do extensive background checks on perspective drivers themselves, and that those background checks negate the need to file paperwork like

that with state agencies. They don't need to do this fingerprint background check that taxi cab companies do, and some cities have agreed to that exception. Others, such as Austin, Texas, stood their ground. They held a referendum and the voters said no, we want fingerprint fingerprint background checks to happen for right hailing services. And they said that this would otherwise create an unfair advantage for right hailing services over

other companies. And that's why services like Uber and Left left Austin, Texas. But why put up a resistance? Why would Uber or Lift or any right hailing companies say no, we don't want to do fingerprint background checks. Well, this comes down to a business reason more than a technological reason. Uber drivers are considered contract workers in most states, not employees of Uber. And this designation isn't just trivial. There are lots of tax issues, there are benefits that can

come into play. There are a lot of things that could affect Uber's bottom line if their staff, if their drivers are considered employees rather than contract workers. So does that have to do with fingerprinting. Well, the i r S states that if a company exerts a certain amount of quote control end quote over those who work for it.

Those people might be considered employees rather than contractors. So in other words, if Uber can boss you around, Uber is your boss, and there are certain obligations the company has to meet if that's your relationship. Uber and other ride hailing services don't want to go down that path because it would mean a complete overhaul of their business model.

So there was this fear that if Uber were to require fingerprinting, then the I R s would say that seems like you have some control over your drivers, and they could mean that drivers if they ever had a labor dispute with Uber, could claim that they are employees, not contractors, and therefore they have other protections in place. The whole matter would likely have to be settled by

a court. But it all boils down to the fact that Uber and Lift and other right hailing services would much prefer to avoid that problem entirely, and thus they resist any move to our choir companies to fingerprint their drivers. Unfortunately, that opens up the possibility that the drivers that the companies do employ could be problematic citizens, so in some

cases they might have criminal backgrounds. Typically, a new company will partner with a third party provider to conduct background checks on staff, and sometimes those background checks are cursory and could easily miss important information. And this is not just a hypothetical situation. In two thousand seventeen, state regulators in Colorado went after Uber, saying that the company had hired more than fifty drivers with criminal records or serious

vehicle offenses in their backgrounds. The regulators find Uber eight point nine million dollars. Now, according to the regulators, it wasn't just that Uber had allowed these people to drive for the service, It was also that the company was

aware of their backgrounds. New whose Week quoted Doug Dean, director of Colorado's Public Utilities Commission, and he said, we have determined that Uber had background check information that should have disqualified these drivers under the law, but they were allowed to drive anyway. These actions put the safety of passengers in extreme jeopardy. Now, according to that same Newsweek article, the list of drivers included twelve who had felony offenses

in their background. There were three who had drunk driving convictions of recent nature, and there were a whopping sixty three drivers on Uber's payroll in Colorado who had issues with their driver's licenses. Some of them might have had suspended license or driving with an expired license, that kind of thing. Uber's response was that this was all just a quote process error in the quote and not really as big a deal as the story made it out

to be. That Rather, Uber's process was just in consistent with Colorado's regulations for ride sharing, and this was all an honest misunderstanding that could be adjusted by just changing up that process a little bit. If that is the case, it's not the only time it's ever happened. Uber had earlier been accused of hiring drivers with criminal records in Los Angeles and San Francisco, and there have been numerous stories of drivers who made passengers uncomfortable or outright scared

during their experiences. But we should remember these problem drivers are outliers. Most of the people driving for Uber and other services like it do not have criminal backgrounds. They are responsible adults. They're just doing a job. The instances of Uber falling short of expectations should not reflect on

all the people who work hard for the service. Rather, I would say this is a cautionary tale for investors and customers, and it points out the issues that the company should work to resolve rather than just attempt to explain away. Now getting back to Uber's history, By two thousand eleven, the company was looking to expand in numerous cities. One big one, New York City, was a huge target. Uber started operating there in May two thousand eleven. To

say things when smoothly would be incorrect. In other words, Uber's operations in New York City have been really rocky, but it didn't stop the company from expanding in New York City and beyond. By the end of two thousand eleven, Uber tested out service in its first country outside the United States. And how fitting should it be that that first place where Uber opened up operations outside of the

United States was in France, in Paris. For it to be really specific, and as we learned, that city is the city of Uber's origin according to the company's own official history, if you ignore all the stuff that Camp did before he went to the web. But yeah, according to the official Uber story, Paris, France is where the whole idea got started. Uber would face much more resistance in multiple markets, including outright protests. In fact, in France

there were some extremely violent ones. I'll talk a bit about some of those in our next episode, but my real focus for part two of the Uber story is going to be two thousand seventeen. Now, a lot did happen between two thousand and eleven and two thousand seventeen, but a lot of it can be summed up with Uber made a bold move into a market, face resistance, and either persisted or bailed. There are a few other

things will need to look at. There's some battles between Uber and the competitor Lift that got really nasty and involved some seriously shady behavior allegedly on both sides. But as I said, most of the episode is going to focus on the chaotic and tumultuous events of two thousand seventeen and how Uber changed as a result of those events.

In the meantime, if you guys have suggestions for future episodes of tech Stuff, maybe there's a company you would like me to cover, or specific technology you would like to learn more about, or a guest I should interview on the show or have as a guest co host for an episode. Let me know your thoughts. You can send me a message. The email address is tech Stuff at how stuff works dot com, or you can drop me a line on Twitter or Facebook. The handle I use for both of those. For this show is text

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you can watch me record the show live. I have a chat room there you can chat with me and whenever I'm on a break, I'll chat back. Otherwise I'm I'm kind of doing the show because that's that's how That's how sausages made. All right. That wraps up this episode. I'll talk to you again. Release soon for more on this and thousands of other topics because it how stuff works. Dot com