The Uber Story Part Two

have faced criticism and resistance from various cities and transportation agencies. Today, we're going to look at a few other noteworthy elements of Uber's history, and then we're really going to take a deep look at what happened to the company during two thousand seventeen, because boy howdy, was that a crazy year. Now, one thing I did not cover in the previous episode was Uber's surge pricing model. So Uber uses algorithms that

dynamically a just fair prices. When user demand is greater than what the current Uber drivers on the road can supply,

the algorithm starts to crank up the cost of fares. Now, not only can this curtailed demand, which alleviates stress on the system and also creates an incentive for off the clock drivers, they get a little notification that says, hey, surge pricing is an effect that means that they are more likely to go hit the roads and start picking up some of those fares, and as the supply starts

to meet demand, the surge pricing prices come down. Meanwhile, while surge prices are in effect, drivers are making more money. They get to keep more money because the affairs are higher. But the practice has prompted a backlash whenever its spirals

out of control. So for example, on New Year's Eve two thousand and eleven, surge pricing drove fares up to seven times the standard rate or even higher in some areas, which would mean if you were taking a trip that would normally cost ten dollars, that same trip would suddenly

cost you seventy dollars. In two thousand thirteen, Uber would really get dragged over the coals for surge pricing when New Yorkers in a snowstorm saw steep surge prices hit the service, and that motivated Uber executives to promise they would cap surge pricing during things like blizzards and floods and other similar events. In May, Lift launched a beta test of its ride hailing service, in San Francisco. Now.

The company behind Lift is zim Ride, which is a network that connects people who wish to car pool with each other. So, in other words, zim Right is what I would call an honest to goodness ride sharing platform. It lets people share rides with one another. While services like Uber and Lift have been called ride sharing companies, often by themselves, I would argue that's not really a

fair designation. Ride sharing to me suggests that the driver is heading to a general location and is happy to give a lift to someone else who also wants to go that way. But what Uber and Lift do is allow you to hail a ride and to direct a driver to a specific destination that he or she may not have been going toward otherwise. So I think of that as a ride hailing company, not a ride sharing company.

And you might argue that this is all semantics, but it turns out the ends up being really important when you're looking at stuff like legislation. Anyway, in two thousand twelve, zim Ride launched Lift. Their model was a slightly peculiar one designed specifically to get around issues with regulation and licensing. So it's not that I feel super cuddly toward Lift, but I do acknowledge that they had a slightly different

way of going about things. Rather than set a fee and return for a ride, drivers would get what Lift was calling a donation from the rider. Lift would give a uh suggested donation, and typically that was about thirty percent less than what it would cost you to take a cab to that same place. Lift also built in a tipping feature in its app, allowing writers to add a tip to their payments, something that Uber would not offer until John Zimmer, the chief operating officer for Left,

told All Things d that quote. I'm sure people will get upset about more competition, but our understanding is that when it's ride sharing, you can use your personal insurance policy. As for regulation, a lot of state laws are supportive of car pooling and ride sharing and want to make that work. End quote. Now, again, that seems like people were playing a little fast and loose with definitions in

order to turn them to their advantage. Of course, a lot of areas want to encourage car pooling in order to alleviate traffic congestion. But that suggests that you are having a group of people who are all going to the same place anyway, and you just consolidate them into a single vehicle, as opposed to each taking their own cars. I would argue that Uber and Lift don't do that because you have the drivers on the road already, But it can help alleviate traffic if otherwise the people who

are taking Lift or Uber would be driving themselves. Still, that's neither here nor there. Lift and Uber would engage in a really bitter rivalry over the years. That's still going on today, obviously, and that rivalry has had a few scandals associated with it. In two thousand fourteen, news outlets began to cover the ways that the two companies were waging war against each other. Forbes reported that Uber was offering Lift drivers big bonuses to jump ship and

work for Uber instead of Lift. Lift reportedly was following suit shortly thereafter, creating something of a bidding war for drivers, and both sides were accused of setting up rides with their rivals in order to try and recruit drivers, or worse, to arrange a ride and then cancel it after a driver had already accepted the assignment, which would end up jamming the system for both companies, with reportedly thousands of bogus car requests hitting Both drivers were in the middle

of this, both as pawns and as victims. Uber and Lift, in an attempt to hurt the other competitor, would lower their fare prices on their services so they would attract more customers, saying, hey, our prices are lower than Ubers, or our prices are lower than Lifts, which was great if you're a customer, but terrible if you're a driver, because it meant that the drivers were taking home less money on every ride, and the drivers were worrying that

customers would get used to those lower fares, meaning that if one company were to win out over the other one, there still would be an incentive to keep the fares really low, because otherwise you could upset your customers. And so they were worried that they were setting a precedent that was ultimately going to hurt drivers in the long run and make it less uh less, make less economic sense actually drive for the companies. Now back to Uber's

timeline and back to two thousand twelve. Starting that summer, Uber began to stretch beyond partnering with driver was of town cars and limousines. The company introduced a news service called Uber X, and this service included the option to be picked up in a hybrid car like the Toyota Prius, or in an suv or a couple of other options. The fairs for those vehicles, on average were thirty lower than if you were to try and get a town

car or a limo. So it was to kind of open up the platform to both more drivers and more riders to be more attractive for folks who you know, didn't necessarily need to roll up in a town car or a limo. Also, at that time, it was already pretty clear that they were going to have to make some adjustments because Lincoln was no longer making the town car, so they had to figure something out otherwise their fleet of vehicles would get progressively older and there will be

no replacement for them now. Kala Nick was quick to dismiss claims that this turned Uber into a taxi service. He actually told tech Crunch, the difference is that you can also hail a taxi with an Uber you have a prearranged situation, you have the driver's name and phone number, end quote, and that distinction seems pretty flimsy to me. But I'm not an expert in this area by any

stretch of the imagination. It is true that when you hail a taxi, you typically have no idea which driver is going to arrive, what is or her name is, or how to contact them directly, because you're generally working through the taxi company. If you haven't just hailed them on the street and you've called a taxi cab company, it's the dispatcher that's doing all of this for you, and the company ends up taking care of all that

communication and you just stay out of the loop. But I'm not sure that that difference is significant enough to dismiss the argument that Uber was operating pretty much like a taxi service. Now, in September, California would become the first state to regulate services like Uber and Lift. According to those regulations, drivers would first have to obtain a permit from the cpu CE the California Public Utilities Commission before being allowed to work for a ride hailing company.

The regulations also standardized criminal background checks and required the companies to offer insurance coverage for their drivers. The CPUC would also collect a third of a percent of total revenues in fees as a result of all this. Meanwhile, Uber was forming partnerships with several auto manufacturers to create a program that would reduce car ownership costs for Uber drivers, to try and create another incentive to work for Uber as opposed to lift or some other service. Now, two

thousand fourteen began with a real horrible tragedy. And there are a couple of these in this story and uh or in this podcast, and it's gonna be tough for me, but I'll try and get through it. So an Uber driver hit a family that was crossing an intersection crosswalk, and in the process, a six year old girl died

from her injuries. The family of that girl sued Uber for damages, but the company fought back and said that it wasn't their fault, their insurance shouldn't be held accountable, they shouldn't have to cover it because the driver was

not actively in the process of completing a trip. And whilst true he had his app open, his Uber app open to look for the next fair, he had not yet accepted a new job request at the time of the accident, and so Uber was claiming that because this was in between picking up and dropping off someone else and taking the next job, they were not really responsible for this. And they shouldn't be held accountable, and the terrible experience led to more serious discussions about corporate liability

in the wake of accidents. Uber would eventually change his policy to say it would cover accidents involving drivers who had the app open, even if they were not actively transporting someone or had not yet accepted a fair and as for that lawsuit, Uber would eventually settle with the girl his family out of court for an undisclosed amount. In April, Uber branched out from the ride hailing business and dipped its toes in bike messenger services, starting in Manhattan.

This service is called Uber Rush, and the fees begin at three dollars as a flat fee, plus four dollars per mile traveled by the courier, so a minimum of seven dollars for one job. The service would eventually expand to Chicago and to San Francisco, and at one point it was a really popular option that restaurants were using in order to send deliveries to people, but in seventeen Uber said that restaurants would no longer be eligible to use Uber Rush, and instead they would need to switch

over to a different program Uber was running. That Uber had launched in twenty fifteen called Uber Eats, which is an on demand food delivery service. Um It's in several cities now, not just the three, not just New York, San Francisco, and Chicago. In fact, Atlanta has it as well. Rush also still exists still in New York, San Francisco, and Chicago, but it's meant for other types of jobs,

not food delivery. Also was the year that Uber really made its first serious steps into China, which ultimately would become a quagmire for the company. The temptation to get into China was huge because there was enormous potential to do incredible amounts of business there. In fact, early reports were suggesting that Uber's business in China was going to outpace all other markets in the company by a crazy amount.

Like if you looked at the charts, you would see all the figures for China were rocketing skyward while everything else was kind of in a steady climb, which was, you know, the steady climb is good, but the the China numbers were out of this world. But while those

numbers look great, other issues told a different story. So China already had a righte hailing service that was dominating the market called d D Shu Shing and like Lift, d D competed against Uber by offering bonuses to drivers to work on d D service rather than its competitor, and both de D and Uber were operating in a market that had not yet caught up to this business.

This is what courts media called a legal gray zone, meaning that most cities in China weren't really equipped to handle this yet, and no one had quite figured out how to regulate or legalize the sort of service, and so there were a lot of questions about whether or not what d D and Uber were doing would actually be legal, and this would continue until when Chinese cities began to actually create legislation and regulations for the industry.

Not long after that happened, d D, Shu Shing and Uber would merge in a thirty five billion dollar deal, so the new company was evaluated at a thirty five billion dollars. D D ended up making a billion dollar investment in Uber Global and Uber China's investors, the people who had backed Uber's move into China in the first place, would receive a ownership of the new company, which all sounds pretty great, but really it marked an exit strategy

for Uber. The company had bet big on getting into China and had burned a huge amount of cash competing against d D without gaining enough of a foothold for the effort to really be profitable. D D had been dominating Uber with an eight percent hold on the market share for ride haling services in the country, so Uber was effectively defeated and dragging itself out of China. In fact, if you here, if you read up on the the stories of how much money Uber burned through over those years,

it is an astronomical amount of money. Now, Uber is not a publicly traded company and as such it is not required to report its earnings to the public. It's not like a public filing where you can actually see how much a company claims it made versus the expenses. But there are a lot of phone calls that have to happen with investors, and most of the time that information ends up getting communicated to the outside world in some way. And because of that, we know that Uber

was burning through billions of dollars per year. It was not making a profit. Some of the cities were said to be profitable, but overall, as a company, Uber was spending more than it was making. Now. In August, Uber announced Uberpool, and this is the service that lets you share a ride with someone else going in the same general location or direction of travel that you need to take. The two parties in the car will split the fair,

so it ends up being cheaper. And if there aren't any other passengers who need to go where you're going or go in the same direction that you're going, you would still get an Uber ride at a reduced fair. Now, when it launched, Uber published a blog post that said, quote on average, uber x already costs less than a taxi. Imagine reducing that cost by up to another end quote.

So again, Uber's really playing to the customer there. Now, for drivers, it's a different story because you know, you're you're talking about cutting into the potential take home pay as long as enough people are in the car where you know, even though they're each splitting the fair, if you add it up, it ends up amounting to a decent fee for the trip. It's not that big a deal, but it's one of those things that's a delicate balance.

How do you balance out the needs of the people driving for you versus your customer base In two thousand fifteen, Uber unveiled Uber Cargo in Hong Kong. Now this was really Uber's foray into creating a logistics service. It just happened to be a logistics service in the form of a rent a van kind of business, but it really meant the at Uber was starting to see the potential of moving into logistics in general, and not just booking a trip from point A to point B. According to

a blog post, Uber Cargo works like this. With Uber Cargo, a van arrives wherever you want it to be in minutes. You can load your items in the back of the van yourself, or request the driver's assistants if you need an extra hand. Deliveries can easily be tracked in real time through the app. The item's location can be shared with the recipient, and you can even ride along with your goods, so you'll have ease of mind that your

items are safe. A couple of years later, Uber would extend that branch of its business and create Uber Freight, which connects truck drivers with people who need to uh ship stuff a good distance away, So that would be

an extension of this logistics element of Uber's business. Also in Uber was moving to make its first acquisition kind of surprising that it took that long in some ways, just because a lot of companies that's kind of how they would grow early on, instead of just trying to increase business, which I say dismissively, but it is actually a really really hard thing to do. Some companies gobble up other smaller companies and they are able to grow

that way. In this case, it was Uber's attempt to build out its own capabilities and reduce its reliance on third parties. The acquisition was Dakarta, which was a mapping

tech and company. It was a startup company that was all about localized data, map applications, turned by turn directions, that kind of stuff, and Uber executive said this was to streamline operations behind the scenes, but a lot of analysts pointed out that it also probably had something to do with Uber wanting to decrease its reliance on Google and Google Maps. Now, two other big things happened in that I really really need to talk about. But first

let's take a quick break to thank our sponsor. All Right, those two other things in that I mentioned before the break. The first was that Uber snipe about forty people away from Carnegie Mellon University in an effort to establish a new robotics research facility. This was when the world learned that the Calais vision of Uber's future was one in

which all those pesky drivers weren't part of the problem anymore. Instead, a fleet of autonomous vehicles that would be owned and operated by Uber would whisk across cities to pick up and drop off people, and best of all, every single scent earned would go to the company. There be no need to pay a robot a wage, so you didn't have to, you know, share the fair with the robots. Tipping wouldn't be a consideration either. Now that could mean that Uber could slash fair prices too, which would pass

savings on to the customers. But the focus was mostly on how a company that depended upon a population of contractors is now actively pursuing a strategy that could ultimately render that population moot. Uber had been one of the more aggressive companies pursuing an autonomous car future. Many in the field give conservative estimates as to win will have a truly autonomous vehicle fleet, something that is able to

handle virtually any scenario that could happen on the roads. Meanwhile, Uber has launched pilot programs or maybe I should say pilotless programs in a few cities to provide driverless car service to test out the feasibility of the strategy. When we get to seventeen and a little bit later in this episode, i'll talk more about this program and some of the concerns people had about it. The other major news story happening to Uber in had to do with

a driver named Barbara and Berwick. Now. Berwick had started driving for Uber in the summer, and that fall she filed a claim with the California Public Utilities Commission arguing that her status as contractor wasn't accurate and that she should instead be considered an Uber employee. Being an employee meant she would receive more benefits, such as reimbursements to the tune of about four thousand dollars of owed expenses.

The CPUC eventually ruled in her favor, saying she was in fact an employee, since that set a precedent at Uber and completely would turn their business model topsy turvy. The company immediately filed an appeal. Now, Berwick's case did not mean that all other Uber drivers in California magically

transformed into employees. They would have to take their cases individually to the cpu C to argue for that designation, but a group of them did get together to file a class action lawsuit against Uber to make it a more broad, sweeping change. And Uber has been fighting that court case and it kind of stagnated in the court system. The plaintiffs filed a new, updated lawsuit in summer of seventeen,

and that has yet to be resolved. Alright, so we're up to seen and then after that we'll get to look at what I'd argue has been Uber's most important years so far. But big stuff also happened in sixteen. At the beginning of the year, Travis Kalanik addressed investors and talked about the expense Uber shouldered as part of the battle in China. Analysts estimated that Uber would lose about two point eight billion dollars over the course of ten even as its valuation would top sixty billion dollars.

So here's a company that is considered to be worth more and more while it's still losing billions of dollars of cash, which I know I work for how stuff works. But y'all I don't know how that works, all right. Uber was battling one class action lawsuit with drivers in California, but it also saw a second class action lawsuit come to a close. Now, this time it was with passengers. This revolved around Uber using certain phrases in their advertising

language that may have stretched the truth a bit. Phrases like referring to its background check process as quote industry leading end quote, for example, and passengers were saying there were numerous examples of the background checks failing to bring out the criminal past of various drivers, or Uber was ignoring it. In any case, Saying it was industry leading was misleading, and the cost of that mistake was twenty

eight and a half million dollars. Now that amount was divided up among the twenty five million people represented in the class action lawsuit minus lawyer fees, so you know, people got like a nickel per rider or something. Sixteen was also the year that Uber pulled out of Austin, Texas. So did Lift for that matter. I mentioned this in Part one of the Uber story, but this was in response to a voter referendum that ruled rid hailing services would need to require drivers to submit to a fingerprint

based background check. Uber and Lift didn't want to do that, largely because it could be seen as a quote unquote control move. Now, that could mean that drivers would be able to make the argument that they are more employees than contractors, because one of the defining elements of employees, at least in California is the amount of control a

company has over that employees day to day duties. And again that would mean both Uber and Lift would have to change how they compensate and reimburse drivers, changing up their business strategy. So if they make this exception in Texas and say, yeah, well, fingerprint background check these folks, that could have a ripple effect throughout other states, which then could end up making them have to change the designation of contractor to employee and that would affect their

bottom line. And ultimately that is the real reason why they pulled out of Austin, Texas, mostly in the hope that at the state level, the state government would end up changing rules that would benefit them and allow them to come back and work in those places. Toyota and Uber entered into what they called a strategic partnership in two thousand and sixteen. As part of that agreement, Uber drivers could lease vehicles from Toyota and cover their vehicle

payments through their earnings as Uber drivers. Over on the corporate side, it also meant that Uber and Toyota would start looking into countries that did not yet have rides sharing markets and look into introducing services there. Toyota also agreed to invest money in Uber, but they were a little shy when it came to how much money that was. They didn't they didn't say. But in July two thou sixteen, another big setback for Uber. They pulled up stakes in Hungary.

The country's government had passed legislation that Uber executive said would make it impossible for Uber to operate there. The followed This followed months of strife in Hungary. There were taxi drivers who were protesting across the country. This follow to other protests that had happened in places like England and France. And France it got really violent, actually, uh and so they were saying Uber was coming in and they were being an unfair competitor against the taxi industry.

So Hungary passes this law and it gave the Department of National Communications the authority to block internet access to what we're considered quote illegal dispatcher services end quote, and Uber says, well, we can't really do anything here, so peace out, y'all and they left. Also in July, a judge had harsh words for Uber executives who apparently decided to go all cloak and dagger on perceived threats. So

what exactly happened? Well, back in December two thousand fifteen, there was a lawyer named Andrew Schmidt who took up the case that was filed by his client, Spencer Meyer, and that case was against Uber. The claim stated that Uber was violating anti trust laws through coordinated surge pricing. Now, left alone, that case probably have just fizzled out or been quietly settled. But instead, someone at Uber decided to

go a touch nuclear in their attack. According to the proceedings in court, top executives at Uber reached out to an investigative firm staff with former c i A and National Security Council employees in an effort to dig up

dirt on Schmidt and his client. Schmidt got wise when he found out some of his colleagues and friends were getting these weird phone calls about him, so he confronted Uber in a letter, and he was assured by Uber that they weren't responsible for all those calls, and then a little later he got another call from Uber that said, well, hang on, maybe we're a little responsible. The judge said that Uber's actions created quote a reasonable basis to suspect

the perpetration of fraud end quote. This would not be the last time that Uber would employ or executives at Uber, I guess I should say, would employ these sort of tactics that get real super dodgy. So what exactly happened behind the scenes. Well, according to The Verge, which has an excellent piece about this story, Uber's general counsel Sally You, sent an email to Uber's chief security officer, Joe Sullivan,

and she asked for more information on Schmidt. That request was routed to Matthew Henley, who was the head of Uber's Global Threat Intelligence, which, wow, it's a heck of a name for a department. Surely thereafter, Henley engaged a research firm called Global Precision Research LLC, also known as ERGO, and Ergo's job was to dig up the dirt. And as I said, that wasn't the only time Uber was

said to engage in such tactics. There was a journalist named Sarah Lacey who had criticized the company multiple times. On her website Pando Daily. Lacy published stories detailing accounts of Uber passengers who said they had been attacked or harassed by their drivers, and she referred to Uber as the most misogynistic startup in Silicon Valley, according to BuzzFeed editor Ben Smith, and Uber executive named Emil Michael voiced how he'd like to employ researchers to dig up dirt

on Lacey's background, her friends, and her family. So Smith calls up Lacy and says, Hey, I was at a dinner thing and this Uber guy was saying this stuff about you, saying that you know, you were worth like a million dollars worth of expenses to to shut you up. Do you have a quote for me? Do you have a response to that? And she debated on whether or not she wanted to get into this fight, and ultimately

decided she did, and so she gave a statement. And after he told her about this conversation, and then since that point, she said she was perpetually hounded by Uber and its investors for speaking out. In seventeen, her accusations against Uber would find some validation because of the actions of another woman who had awful story to tell, and that woman was Susan Fowler. Now, I have a story I want to talk about from January seen, but I'm going to come back to that in just a minute.

It's an important story in Uber's year of tumultuous chaos. But I think we really first should continue this threat about Susan Fowler. Her story would really unveil in February seventeen. She had worked for Uber as an engineer, and on February nineteen seventeen, she published a blog post that laid out a really ugly picture of Uber's corporate culture. The post is titled reflecting on one very very strange year

at Uber. Now, Fowler had left Uber in December, and she had started work at another company called Stripe at the beginning of twenty seventeen. She said a reason for writing the blog post was because she had repeatedly been asked by people what it was like working for Uber and why did she leave, and so she thought, rather than go through it over and over again, she would lay out the entire story and everyone could just read it. She had begun at Uber in November two thousand fifteen,

as part of the site reliability engineering team. She had the opportunity to choose the team she'd work with, and she made the decision to work with some fellow engineers that were focusing on a project she felt she was really well suited for, and immediately it seems trouble began. She wrote that on her first day of working with the team, she received a string of messages from her

manager that we're implying he wanted to have sex with her. Uh. This is obviously beyond problematic when a boss is intimating that he wants to have sex or she, for that matter, wants to have sex with an employee. Even if you wanted to be generous, which by the way, I do not want to be generous, you'd have to say these messages were wildly inappropriate for the workplace. Fowler took screenshots of the chat messages she was receiving from her manager,

and she reported his behavior to Human Resources. Now. The response she got from HR and upper management was not what she expected. She was told her manager was a quote high performer end quote in the company and that this marked his first offense with those qualifiers in mind, the company's response would be a warning to the guy

to say, hey, knock that off, don't do that. As for Fowler, she was told she could either go work for another team and remove herself from the situation, or she could stay on the team that she had picked. But it was almost certain that her manager would give her a poor performance review no matter how well she did her job, and there just wasn't anything management could

do about that. So, in case you weren't aware, this is a classic case of victim blaming, a classic and brazen case, and it is really awful Fowler chose to leave her team despite the fact that she had really wanted to work on this project and go and find a different group to work with. She would meet with other women in Uber, and she found out that a lot of them had similar experiences. Them even had experiences with that same manager, and they had said they also

filed complaints. This contradicted HRS claim that it was the manager's first offense. According to Fowler, another engineer complained about the same manager later on after Fowler's complaint, and that lady was told it was the manager's first offense. So apparently every offense he committed was his first one. Fowler also said that management at Uber was incredibly cut throat. Sometimes managers were actively working against other departments in an

effort to advance their own personal careers. Projects would get started and abandoned because of this sort of action, and a lot of progress was lost as a result of it, and a lot of people were kind of tossed aside in the in the whole process. She recounted stories about how her own advancement was being blocked because her manager wanted to keep her in place because her work made his team look good, so rather than lose a star performer, he worked very hard to make sure any request she

had to transfer into another department was blocked. She also said that her organization's demographic was originally women when she started, but that number had dropped to less than six percent at this point. She said that the misogynistic culture and the office politics were the two main contributing factors driving women out of her part of Uber, and she said that on the day she left the company, the number was down to three percent. Now, Fowler's blog post didn't

just fade away. Uber executives couldn't sweep it under the rug. It started a much more critical analysis of Uber's culture. Fowler's account also became one of the critical pieces of information to get the hashtag me too movement going, and will likely see more of that as time goes on and more women step forward to speak out about behaviors that for decades were ignored or sometimes even encouraged in

male dominated businesses. Fowler's essay demanded a response from Uber, and the company would go on to hire two law firms to launch investigations into our allegations. I'll talk more about what they found in a little bit, but first let's take another quick break to thank our sponsor. I mentioned that Uber had a different pr problem before Fowler's

essay was published earlier in seventeen. Something had happened in January. Well, that was when many people felt Uber was taking advantage of a politically charged situation, particularly after the company made the decision to disabled searge pricing for JFK Airport see Donald Trump had placed an immigration ban and New York City's JFK Airport in particular, and in reaction to this,

taxi drivers called for a strike in protest. Uber at first committed to continuing service to JFK with the elimination of searge pricing, and that seemed to undermine the protest. It seemed to be saying, hey, if you can't get a cab, at least you can get an Uber and hey, there's no searge pricing. So a lot of people, including celebrities, began to promote a new hashtag, hashtag delete Uber, and it went viral. Now here's an ironic part. What is

it ironic? I don't know. I need to ask Atlantis Morisset. But anyway, here's the thing. It's possible that Uber was viewing this as a way to support the protest, not to undermine it. Let me explain. By removing searge pricing from JFK Airport fairs, Uber was removing an incentive for drivers to actually go to JFK Airport because they wouldn't make as much money off of regular priced fares from

the airport without that searge pricing. In effect, other areas of New York City might still have searge pricing, so drivers would more likely be lured elsewhere in New York City away from JFK Airport until the matter was resolved. But the percept sin was that Uber was trying to take advantage of this situation, and that became the narrative, and Uber never managed to get out in front and say no, let me explain how our model works and what our thinking was behind this. Lift, on the other hand,

got in front of it right away. They did not touch their surge pricing during the strike. They still serve JFK Airport as well. However, the company donated a million dollars to the a c l U, and they publicly denounced Trump's immigration ban, which made Lift seem like the much more woke company and it worked. People began to leading their Uber apps and for the first time, Lift

app downloads outnumbered Uber downloads. Also in January, Uber had to pay twenty million dollars to the United States government in order to resolve an FTC complaint that the company had misled drivers about potential earnings. Essentially, the argument stated that Uber's claims were at best wildly optimistic and based off an unreasonable number of hours driven per week in order to make the amount of money they were claiming a driver can make working for Uber back in February.

To get back to February twenty seventeen, Uber was scrambling to respond to Fowler's blog post, so the company hired former U S Attorney General Eric Holder to investigate the matter, as well as a second law firm to look into it. Holder would eventually file a report with thirteen pages of recommendations to make big, big changes at Uber. This would happen later on, like in June of twenty seventeen, but

among those recommendations were to reallocate Travis Kalini's responsibilities. The CEO was getting a lot of heat for the culture at the company, and while many people, including Klinis eventual successor, would say it would be unfair to lay all the blame on any single person, many also acknowledged that as CEO, kalin Nick had to assume responsibility for many of the problems the company found its health in his report also urged the company to adopt a zero tolerance policy for

any substantiated complaints to HR, regardless of whether or not the focus of the complaint was on the previously bulletproof high Performers list. He recommended that Uber create an employee Diversity Advisory Board to help address problems with the lack of diversity in the company's management, and the company would should agree rather to publish diversity statistics on a regular basis to see how things are going in order to

kind of take a metric of this. He also recommended that the company restructure the board of directors to create new independent seats that could be occupied by people who are not employed by Uber to provide some more oversight

to the company. And he said that Uber should launch some training programs for all levels of employees, particularly leadership on appropriate workplace behavior, leadership behavior, that kind of thing, and that they should review their pay practices to verify that they were actually complying with state and federal equal

pay laws. Oh, and he should say that the company needed to target some really rich, diverse sources of talent and perhaps employ some good practices like blind resume reviews, meaning you're not looking at anything that would identify a person the UH for a to a specific ethnicity or culture or anything like that. You're looking specifically at their qualifications. And he presented his report in an epic six hour long meeting at Uber, at the end of which the

board voted unanimously to adopt all of his recommendations. That thirteen page report is available to read if you search for it. On Google. On top of those recommendations, UH, the other law firm had investigated Uber and as a result of that investigation, more than twenty people were fired during that whole rigamar role. Reasons for the terminations ranged from allegations of sexual harassment to using retaliatory tactics. Again, employees and a few high ranking Uber executives left the

company or were fired as part of that fallout. Some of them left because they were being wrapped up in this, some of them left because they were disgusted by it, and a few of them didn't leave on their own account, they were fired by the company. It was an incredibly disrupt a few months for Uber, and based upon the report, this was a shakedown that was long overdue. And while that story would be a big one throughout, it's really just part of the overall chaos Uber waited through that year.

Let's get back to the calendar. I'm gonna skip over any stories that had to do with the investigation because we pretty much covered that and enough to tail with maybe one or two tiny exceptions. February was when Google made allegations against Uber, and this was another huge story in twenty seventeen. They were claiming that Uber had possession

of stolen proprietary information courtesy of Anthony Lewandowski. Lewandowski had worked for Google's self driving car division later known as Weymo, but he had left Google and first he created his own company called Auto O T t O that was consulting for Uber, and later he ended up joining Uber itself. Now, this in particular is an ongoing story and not all the details are out, but Lewandowski has since gone on to found a religion that plans to worship an artificially

intelligent godhead. I'm gonna have to do an episode about that, or get stuff they don't want you to know to do an episode about that. Anyway. Lewandowski first said he was moved to Uber projects that were unrelated to his work at Google, and then later still he was fired by Uber. Uber stated the reason for firing Lewandowski was his refusal to hand over thousands of documents as requested by a judge in the Google Uber case. In late

February early March, Kalinek suffered some public embarrassment. Bloomberg published a record warding of Klani swearing at an Uber driver who had been complaining about fair prices. Now, this did not make Klink sound like a leader, and he would eventually apologize for this outburst, but it didn't do his

reputation any favors. Following hot on the heels of that recording was news that California had forced Uber to agree to file for a testing permit for self driving cars after the company had run a test program in San Francisco without going to the trouble of getting permission first. Uber's defense was that there was always a driver in the driver's seat during these tests, but the state was firm and said that any test involving autonomous cars would

first require a permit. Uber would later move much of its autonomous car tests to Arizona as a result of this. A couple of weeks after Uber's capitulation to the California government, a report concluded that Uber's self driving cars weren't doing so well without human intervention. According to the report, the drivers had to step in on average once per mile. Compare that with Google's tests, which said their testers had to intervene once every five thousand miles, and that doesn't

sound like Uber was doing really well. Also in March, the New York Times published a piece about a tool that Uber was using called gray Ball. Now. Grey Ball's apparent purpose was to confound law enforcement officials in various places that either resisted or outright banned Uber's operation. It would collect information about specific individuals using the Uber app and other methods, identify them as law enforcement, and then

steer drivers away from them. In other words, gray Ball was a tool that helped Uber evade law enforcement and regulatory enforcement. Gray Balls origins were arguably from a legitimate use of this technology. It was part of Uber's response to v toss vt o S that stands for violation of terms of service. Uber wanted to create a tool that made it easy for the system to identify problem individuals,

such as people who were abusing the system to cause trouble. So, for example, I mentioned in those battles between Uber and Lift, sometimes the employees of one company were accused of arranging and then canceling a trip that with the other company, and this was all on an effort to tie drivers up on wild goose chases across the city. And the v t o S tool was meant to identify accounts that engaged in that kind of behavior and then effectively

ignore them boot them from the system. Gray Ball, however, was really meant to help Uber sidestep investigations. A video recorded in showed it in use. There was a code enforcement inspector named Eric England out of Portland, Oregon, and he was part of a sting operation who was trying

to hail an Uber ride in downtown Portland. Now, the city had deemed Uber illegal within the city limits, but Uber was being Uber then operating within the city anyway, and essentially just waiting for legislation to catch up and make it legal for them to do what they were already doing. England was essentially just trying to catch out Uber by hailing a ride, but Uber had used gray

ball to identify England as a problem. So when he opened up his Uber app, it would show cars in the area, drivers in the area that could potentially come and pick him up. But those were fake. They were just icons on a map. They weren't representative of actual real cars. This was gray ball in action, giving a false sense of where things were going for the investigator, and meanwhile, all of his requests were being canceled behind

the scenes. The Justice Department would later launch a criminal probe to investigate this issue, and we're still kind of waiting to hear more about that as of the recording of this podcast. At the end of March, the Uber president Jeff Jones announced he was going to leave the company because he felt his own personal values did not

mesh with the corporate culture at Uber. Specifically, he said in a statement to Recode, the beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber, and I can no longer continue as president of the ride sharing business. So this was another blow in that series of detailed accounts of what was going on behind the scenes at Uber and seemed to give a lot of legitimacy to the

claims and allegations. In April, the Mayor of Pittsburgh, Bill Paduto, said in an interview with The Wall Street Journal that Uber was falling short on the promises the company had made to the city with regards to their self driving cartest program. They had said that they were going to do a lot of contributions to the city of Pittsburgh and seemed to be falling short on that, and so the shine was wearing off on the self driving program

within the city of Pittsburgh. Also in April, the Information A Journal filed a story that said Uber had a top secret internal program code named Hell, which identified lift drivers and also set out processes to create incentives for drivers who worked both for Lift and for Uber, with the goal of getting those drivers to commit to Uber over Lift, and some said that process marked an unfair

business practice and could be legally actionable. Back in California, Uber was alerted that it might have to pay more than a million dollars in fines after a report showed that Uber had only investigated of passenger reports claiming their Uber driver was operating a vehicle while under the influence of alcohol, and Uber had promoted its service as a way to be responsible by avoiding drunk driving, so this was particularly problematic for a company that was claiming it

was trying to solve a problem while seemingly ignoring that problem. In June of seventeen, Uber fired an executive who had apparently obtained private medical records of an alleged rape victim in India who was pursuing a case against Uber after she had been assaulted by an Uber driver. Now, the Uber driver was found guilty of rape, and he was sentenced in fifteen to life in prison. The victim then sued Uber and the and he settled with her out

of court. But then she discovered that this particular executive had obtained her private medical records without her permission, so she filed a new lawsuit against Uber. Now eventually the company would settle that second lawsuit in December. Also in June, kala Nick announced he would take a leave of absence from the company. Not only was Uber weathering this PR storm, the series of PR storms these disasters, but Klinik had also suffered a personal tragedy. His parents were in a

boating accident in California. His mother tragically died from her injuries, and his father was badly hurt. So he said he needed to have some time to grieve, as well as time to care for his father. One of Uber's board of directors, a guy by the name of David Bonderman, resigned in June after making a tasteless joke about women at Uber during an all hands meeting, which definitely didn't sound like a good use of d jgment and in fact seemed indicative of the very cultural problems Uber had

been accused of. Uber then launched a PR program a little late, but they did it to try and turn things around. It started on June twenty and it was called on eighty Days of Change. The following day, that change took on real meaning because Kalenik, who was pressured by major Uber investors, resigned as CEO. It was pretty clear that Kalinnick didn't do this of his own choice.

He was kind of forced to by the investors. He was still on the board, however, and he tried to convince the board to bring on Jeffrey Immelt, who was the former chief of General Electric and someone that Kalinnik was buddies with. The directors disagreed, and instead they hired on Dara kasro Shah, He the CEO of Expedia Incorporated. Now.

According to Bloomberg, kasro Shah he told friends that it still felt like Kalenik was calling the shots when he first came over to Uber, and he's a very different person. Casro Shah he is uh from Kalinnik. He's known as

a listener and for being diplomatic. Kala Nick is known for being very uh to the point and not really much of a listener very aggressive and direct, and in September, news broke that the City of London had decided not to renew Uber's license to operate within the city at the end of the month for a host of reasons, including the use of gray ball, among them kausro Shaw. He wrote an open letter saying that Uber would appeal this decision, but also acknowledged that Uber had to change

the way it did business. And he also said we don't have a PR problem, we have an US problem, stating that Uber's culture was the heart of the problem, not public relations. Uber's leadership was owning up to a systemic cultural problem within the company. This is a positive change in my view, but obviously just the beginning of change.

In August, Ryan Graves, the quote unquote first employee at Google, although not really he had followed a couple of engineers, announced that he was leaving his position as s VP, but he would stay on as Uber's on Uber's board of directors and help with the transition of c e O. S oh, and there was one more disaster to cover before we conclude. Actually, there are quite a few others I could cover, but this episode is running along, so

we'll just focus on one. In November, several magazines and journals reported that Joe Sullivan, Uber's chief security officer, had tried to cover up a data breach by paying hackers one hundred thousand dollars in return for which they would delete the stolen data they had taken. Stolen data the represented personal information of fifty seven million Uber drivers and customers, so Sullivan wanted the hackers to sign a non disclosure agreement, and according to The New York Times, he had Klini's

approval to do all of this. Uber ultimately fired Sullivan. He had earned a reputation for clandestine and frankly kind of shady dealings, including ordering surveillance on potential problematic people.

I mentioned some of that before UH. He had himself designated as Deputy General Counsel, presumably in order to grant his communications secrecy under attorney client privilege and other somewhat suspicious kind of policies, like he wanted everyone to use apps that would allow people to send messages, but those messages would be deleted after a certain amount of time, so there would be no trail left in case there was a following investigation. Kind of black ops sort of

stuff if you ask me. Now. Kalink recently announced that he plans to sell about of his stake in Uber. That wouldn't let him about one point four billion dollars. So he's not exactly hurting for cash in the wake of all this, but he might find it could take a while for some people to view him in a positive light given the way things unfolded at Uber. And by the way, Bloomberg states that at Uber operated at a loss of four billion dollars in seen and yet

investors are still optimistic. They point to Amazon and they say, look over here, there's a company that operated in the red for years before it ever turned a profit. And that's true. Amazon did not operate at a profit for many years. They took losses for quite some time, but nowhere near on the same level as Uber. Like, the losses didn't come in the form of a billions of dollars. So Uber has a lot of challenges. They've got tough

competition with Lift and other competitors. They've got a huge hurdle to overcome along with a with a public perception. They have to shed a tarnished reputation that seems like it was really well earned. They have to demonstrate that it's a new company with new values that it's absolutely

committed to support. And they need to make sure that they are not just catering to their customers, who definitely need to be thought about, but also their drivers, whether that's to acknowledge that drivers are employees and thus change their business model or treat them well as contractors. They have to do all of these things, and none of them are easy. They're they're easy to say, but they're not easy to enact. But if they can do all of that, then Uber might just emerge as that powerhouse

that the investors believe it is going to be. And if they can't, they might just continue on until the investment money starts to dry up and the company ends up spending itself out of business. UH. Personally, I really hope they're able to turn things around for the sake of the people working for Uber and the people who depend upon Uber. I really hope the company can can fix things, because Uh, I don't want to see anyone fail.

At the same time, I am hopeful that the trend we're seeing where they're accepting accountability for some pretty questionable and in some cases potentially illegal decisions that have been made by various executives throughout the years can be corrected. That's my hope. Now that concludes the Uber story for now. Anyway, Hopefully we'll have more to talk about in a couple of years, maybe some great success stories. I would love to do an episode that talks about how they rose

from the ashes and and really blossomed. But until then, I'm going to have to start looking at other topics. But you guys can help me out. You could suggest topics I should cover for tech Stuff. You can get in touch with the via email. The addresses tech Stuff at how stuff works dot com, or you can drop me a message on Twitter or Facebook. The handle I use for the show is text stuff h s W. Follow us on Instagram. You can see all sorts of

cool stuff over there. And remember on Wednesdays and Fridays, I record this show, and I typically recorded live on twitch dot tv slash tech Stuff, so you can actually tune in and watch me record the show live if you like. We have a chat room there. You can talk with me in the chat room. Every time I haven't a break, I chat with everybody who's there, and you can see when I mess up, and believe me, if you could have seen this recording session, you would

have noticed it on multiple occasions. Also, yeah, I know I've pronounced Kala Nick's name in two totally different ways in two different episodes. I know that. Uh if you wrote to me to explain how stupid I am for pronouncing it one way and then pronouncing it the other way, ha ha, I knew already and you probably didn't even listen to this, So that shows who's the stupid one now, stupid face, But now you you guys, I love. I love all of you, the ones who actually listened. It's

the stupid faces who stopped. I should probably go and get some COYE and I'll tell to you guys again really soon. For more on this and thousands of other topics because it has to have works dot com who