He has directed barbs—in speeches and videos, and on Twitter—especially fervently toward the taxi industry, but also toward city and local regulators across the country (and now the world), his rivals, and sometimes even his own customers when they dare to question his company’s practices.
But the real attention came in October, when the new company got a cease-and-desist order from the San Francisco Municipal Transportation Agency, as well as the California Public Utilities Commission. Both, among other issues, objected to the use of “cab” in UberCab’s name, since it was operating without a taxi license. As it turned out, such a setback was just what Kalanick wanted: an opportunity for a fight.
He still gets exercised when he talks about it: “We’re totally legal, like totally legal, and the government is telling us to shut down. And you can either do what they say or you can fight for what you believe,” says Kalanick, setting a pattern of what he called “principled confrontation” that still persists.
Instead, the start-up ignored most of the order and simply changed UberCab to Uber, buying the Uber.com domain name from Universal Music Group for what was then 2 percent of the company. (Later, Uber bought back the shares, which would now be worth hundreds of millions, for $1 million.)
From there, the money came pouring in, including $10 million in funding in February of 2011 from Benchmark, which valued Uber at $60 million. “I had this idea of looking at a smartphone as a remote control for real life, and this was the best example I had ever seen,” said venture capitalist Matt Cohler.
The next round, in October of 2011, attracted interest from the best-known venture capitalist in the tech world, Netscape co-founder Marc Andreessen, of Andreessen Horowitz. He was Kalanick’s preferred investor for the round, a situation Kalanick hoped to make even better by selling just over 12 percent of the company at a $375 million pre-money valuation. For that princely sum, he wanted Andreessen to join the board of Uber. This is where the accounts between the entrepreneur and the firm differ. Kalanick thought that Andreessen Horowitz had agreed to his terms and said he was surprised when he got an e-mail from Andreessen asking him to dinner. There, Andreessen told Kalanick that the valuation was too rich for the financials at the time—only 9,000 customers, a $9 million run rate (a measure of projected performance), and $1.8 million in revenue. He was then offered $220 million by Andreessen as the new valuation.
Kalanick countered, but the firm stuck to its lower price. There was another dinner days later with Andreessen, and, by then, Kalanick seemed to have folded, agreeing to accept that deal in an e-mail exchange. But he had not. Working now from the F.ounders conference in Ireland, the entrepreneur decided he could not accept the lower figure and asked for a larger one. Andreessen Horowitz refused to move higher. The deal was finally dead, but there seemed to be no hard feelings, with Kalanick and a firm partner having drinks at Dublin’s Shelbourne Hotel bar afterward.
While this kind of wrangling is not uncommon in Silicon Valley, it was devastating to Kalanick, he recalls. “It was a big momentum deal, so when the bottom comes out from under it, you have to go back to the well and start the whole thing,” he says. It’s clear now that Andreessen Horowitz missed a giant opportunity in its effort to get lower valuation from Kalanick. Not surprisingly perhaps, it would invest in May 2013 in the ride-sharing app’s main rival, Lyft, leading a $60 million round that valued it at $275 million.
As it happened, though, Shervin Pishevar, then of Menlo Ventures, had also been pursuing a stake in Uber and promptly invested $20 million. He then brought in millions more from a syndicate of Hollywood names that he socialized with, including Ari Emanuel, Ashton Kutcher, Jay Z, and others. Amazon’s Jeff Bezos invested as well.
Overall, the round totaled $37.5 million for a post-money valuation of $330 million. From there, the investing enthusiasm just picked up speed as subsequent rounds went higher and investors piled into what was a very fast car. By summer 2014, it had reached a pre-money valuation of $17 billion.
Whereas Silicon Valley start-ups tend to give their conference rooms whimsical, sweet names, like Twinkie and Pong, the main conference room in Uber’s swanky new offices on San Francisco’s Market Street is called War Room. It’s an appropriate lair for Kalanick and his ever growing team. He needs the help, because as Uber expands to cities across the U.S. and around the world Kalanick must continue to wage what has already become a very ugly and protracted battle with the taxi industry and the regulators that Uber claims are deep in its pocket. Kalanick doesn’t mask his disdain for his adversaries, either. “Some city-council people are really awesome, but most are uninspired,” he says. “I meet with them as little as possible.”
He justifies his unwillingness to negotiate as logical, not uncooperative. “If you don’t agree with the core principles, which are the premise of that compromise, then you have to have what I call principled confrontation,” he says. “And so that is the thing that we do that I think can rub some people the wrong way.” “I think of them as robber barons,” says Barry Korengold, president of the San Francisco Cab Drivers Association. “They started off by operating illegally, without following any of the regulations and unfairly competing. And that’s how they became big—they had enough money to ignore all the rules.” (Kalanick has been quick to point out via Twitter that Uber drivers in New York City who work at least 40 hours a week can make more than $90,000 in a year; by way of comparison, the median cabdriver’s salary is $38,000.)
You can still rev him up immediately just by asking about Uber’s “surge pricing” model, which refers to the practice of charging customers higher prices at peak times. It got a lot of attention during a snowstorm in New York in December of 2013, when rates were massively increased, up to eight times, attracting a flood of negative press and customer feedback. Kalanick declines to back down amid the criticism. “You want supply to always be full, and you use price to basically either bring more supply on or get more supply off, or get more demand in the system or get some demand out,” he lectures like a professor. “It’s classic Econ 101.”
Despite his generally unyielding attitude, Kalanick will admit that impressions do matter. “What we maybe should’ve realized sooner was that we are running a political campaign and the candidate is Uber,” he says. However, even as he explains this, he can’t help but slide away from his measured, politic tone and back toward absolutism: “And this political race is happening in every major city in the world. And because this isn’t about a democracy, this is about a product, you can’t win 51 to 49. You have to win 98 to 2.”
It was this line of thinking, combined with the flak the company was attracting, that led Kalanick to David Plouffe, the high-profile mastermind behind the 2008 Obama presidential campaign. In August, Kalanick hired Plouffe to lead Uber’s efforts in public policy and communications. Plouffe sees Uber’s scrutiny as a by-product of its inevitable march toward dominance. “I don’t subscribe to the idea that the company has an image problem,” says Plouffe. “I actually think when you are a disrupter you are going to have a lot of people throwing arrows.”
The most recent target that Kalanick has had in his crosshairs is rival ride-sharing app Lyft, which attaches giant pink mustaches to the grilles of its cars. Kalanick readily admits to trying to tamper with a recent fund-raising round that Lyft was doing.
“We knew that Lyft was going to raise a ton of money,” says Kalanick. “And we are going [to their investors], ‘Just so you know, we’re going to be fund-raising after this, so before you decide whether you want to invest in them, just make sure you know that we are going to be fund-raising immediately after.’ ” It’s part of what seems to be an unabashed effort to kneecap Lyft. In August, it was revealed that Uber was employing some dicey tactics by sending so-called brand ambassadors to order Lyft rides undercover and then persuade the drivers to defect to Uber.
Meanwhile, there are signs of discontent from within, as well. On October 22, there were coordinated protests, where some Uber drivers across the country picketed and also shut off the app and refused to serve customers. Their complaints center on many issues, including recent fare cuts (designed to compete with Lyft), which they say have significantly impacted their livelihoods. The mood has not been helped by Kalanick, who told me onstage in an interview I did in May that driverless cars would someday negate the need for drivers at all (he later tweeted that it would take until 2035, so chillax, but the damage was done).
Kalanick’s fighting instinct seems only to have been stoked by success. He says he will not stop until he has won every city across the globe. With international protest roiling—Parisian cabbies have gone as far as slashing Uber cars’ tires and smashing their windows—Kalanick has his work cut out for him, even as his ambitions are larger than ever.
“We want to get to the point that using Uber is cheaper than owning a car,” says Kalanick. “Transportation that’s as reliable as running water.” This is precisely what public transportation is supposed to do, which is why some assert that Uber’s continued success could hurt the effort to focus on civic solutions to the issue. Kalanick believes this is not what will happen, but that more cars means cheaper rides for all.
However, Kalanick’s vision is much more than a better taxi service or nifty town cars for the masses—after all, he never wanted to be in the limo business. He sees in Uber the potential for a smoothly functioning instant-gratification economy, powered by the smartphone as the remote control for life. “If we can get you a car in five minutes, we can get you anything in five minutes,” he says. But the desire to enter and dominate the “everything economy” echoes the ambitions of much bigger and more established companies such as Google, Amazon, eBay, and Walmart.
“They are much like Amazon in the early days of just selling books. As a bookseller, Amazon was good but replaceable. So Bezos pushed quickly to become indispensable,” says entrepreneur Mark Cuban, an investor in Kalanick’s Red Swoosh, who had an opportunity to invest in UberCab early on and passed. He explains his decision, which he now regrets, sounding a cautious note about the outsize ambitions that Kalanick has demonstrated. “From the outside looking in, Travis seems to want to fight wars instead of win battles. He doesn’t seem to be focused on making Uber indispensable. I hope that, combined with the relentlessness, doesn’t backfire on him.” Still, Cuban admits he is a huge admirer of both Uber and Kalanick.
For all his rough edges, Kalanick’s commitment to his company is almost tender at times. When he is asked if he will sell Uber to a bigger player, such as Google, he seems genuinely shocked. “You’re asking somebody who has a wife and is really happily married, ‘So, what’s your next wife going to be like?’ And I’m like, ‘What?’”
Originally posted:Man and Uber Man