10 insights: Super Pumped (Origin story of Uber)


Mike Issac’s book “Super pumped” is a deep dive into the origin story of Uber and the rise and downfall of Travis Kalanick. Uber has been the “unicorn” of the last decade and I was already aware of a lot of things that were discussed in the book. However, it was still helpful to read about Uber’s journey in a single book format. Some insights/interesting stories for the book are as follows:


#1:


Uber’s original 14 values:

  1. Always Be Hustlin’

  2. Be An Owner, Not Renter

  3. Big Bold Bets

  4. Celebrate Cities

  5. Customer Obsession

  6. Inside Out

  7. Let Builders Build

  8. Make Magic

  9. Meritocracy & Toe-Stepping

  10. Optimistic Leadership

  11. Principled Confrontation

  12. Super Pumped

  13. Champions Mindset/ Winning

  14. Be Yourself


“Super pumped-ness is all about moving the team forward, working long hours—pretty much a do-whatever-it-takes attitude to move the company in the right direction,” as one Uber employee explained the term.

 

#2:


[On how the idea of Uber came to Garrett Camp, one of the co-founders of Uber]

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


The seeds of Uber first came to him during a Bond flick. Camp was relaxing at his new luxury apartment in South Park when he decided to watch a movie. Casino Royale…There was a moment when Bond was driving a Ford through the sunny streets of Nassau, approaching a beachfront resort on the sparkling blue Bahamian seaside. What caught his eye was a small flourish on Bond’s cell phone as he drove through the beach scape. The phone, a boxy, silver Ericsson antiquated by later standards (it still had a numerical push-button keypad!) displayed a GPS-based map on its tiny screen. Bond was watching himself—a small arrow icon gliding across a dark green bitmapped grid—as his car moved across the Nassau landscape, inching toward The Ocean Club.

Origin of Uber: How Casion Royale inspired Garrett Camp
 

#3:


[On how Travis Kalanick met Ryan Graves, the first CEO of Uber]


On January 5, 2010, Kalanick posted:

“Looking 4 entrepreneurial product mgr/biz-dev killer 4 a location based service. . pre-launch, BIG equity, big peeps involved–ANY TIPS??”

Just then, a twenty-six-year-old intern named Ryan Graves happened to be looking at Twitter, and spotted Kalanick’s request. He was interested, but didn’t want to come off as too desperate. Three minutes later, he tweeted back at Kalanick with a cheeky response:

“heres a tip. email me. 🙂 graves.ryan[at]gmail.com.”

Though Graves didn’t know it at the time, that tweet would eventually net him more than a billion dollars. It proved to be the luckiest decision he’d make in his life. Since neither Travis or Garret Camp wanted to do the job (of the CEO), Camp and Kalanick decided that Graves, young and full of hustle, should be the company’s first chief executive. Graves was ecstatic; he finally had his chance to prove he could make it at a startup.

 

#4:

“We knew that Lyft was going to raise a ton of money,” Kalanick once admitted on the record, bragging about his desire to cripple his competitor. Kalanick would make sure investors knew that, between the two companies, they could only invest in one. His primary concern was information sharing. He would tell potential investors, “Just so you know, we’re going to be fundraising 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.” The tactic worked. Zimmer would soon get a call from the investor, apologizing and backing out of Lyft’s latest series.


Uber found [other] ways to mess with Lyft. All around San Francisco, Uber bought street signs and billboards targeting Lyft. Each billboard showed a large, black disposable razor blade with “Uber” printed on the handle, poised above one of Lyft’s pink, cuddly trademark. In the text beside the graphic, Uber made its message clear: “Shave the ’Stache.”

 

#5:

Travis and Emil Michael developed their own method (for investor meetings), affectionately titled “the Homeshow.” There was enough interest in Uber that the two flipped the power dynamic, forcing investors to come to Uber’s San Francisco headquarters, fighting to get in on their dance card and waltzing to their tune. Kalanick and Michael created a system built around scarcity. Uber would hold only three meetings with bankers per day for the span of a week, and the investment firms would have to jockey for a time slot.


Kalanick offered them miserable terms. Private companies aren’t obligated to make their internal statistics public, but investors with a significant ownership stake are generally given insight into the company’s financials. Kalanick, however, over time stripped some major investors of all “information rights,” and limited the degree of detail offered to others. Moreover, investors had to agree that Kalanick would continue to hold his supervoting shares while newcomers only received shares with weaker voting power. Every supervoting share Kalanick held counted as ten votes in the company, whereas every common share only counted as one vote. Kalanick also had the allegiance of Garrett Camp and Ryan Graves—his two early co-founders and strong allies who also held their own cache of supervoting shares.

 

#6:

[On how Uber got around efforts of city authorities to stop/monitor Uber activities]

When Transit authorities began policing transportation laws, local managers would blast emails and text messages to their driver corps, telling them Uber had their back. Kalanick viewed fines and tickets as just another cost of doing business. Text messages, like the one below, often promised full restitution from Uber if you happened to, say, have your car impounded by the police:

UBERX: REMINDER: If you are ticketed by the PPA, CALL US at XXX-XXX-XXXX. You have 100% of our support anytime you are on the road using Uber—we are here for you, and we will get you home safe. All costs associated will be covered by us. Thank you for committing to providing safe, reliable rides to the citizens of Philadelphia. Uber-ON!

Uber treated each market less like a negotiation and more like a hostage situation. Kalanick had no problem pulling out of a market entirely—as it did in Austin—especially after they had been operating for a number of months beforehand. The company had leverage: people loved using the service. In nearly every major metropolitan area, the “product-market fit”—a tech industry term to describe how well a given service may do with the public—was near perfect. People hated taxis, and loved ordering a car with their phone. To have such a service taken away roused public anger.


In New York in 2015, when Mayor Bill de Blasio threatened to cap the number of cars on the road, Uber tweaked the software inside of its app for New York based riders to show what it called “De Blasio’s Uber.” That option showed fewer animated cars driving around on the mini-map inside the Uber app, with approximate wait times of up to a half hour—five to six times longer than people usually had to wait for a ride. “This is what Uber will look like in NYC if Mayor de Blasio’s Uber Cap Bill passes,” said the text inside a small, pop-up notification. Users were invited to “take action,” and were presented with a button inside the app that emailed the mayor and the city council directly with a form letter prewritten by Uber. By the end of the campaign, the mayor’s office had received thousands of letters from upset users protesting the potential ban. De Blasio ended up shelving the proposal.

Super pumped: DeBlasio Uber
 

#7:

Before the 2012 iOS update, if Uber saw someone using the same devices to create new accounts over and over again, they knew they had found a scam artist and could quickly ban them from the network. After 2012, however, Uber lost access to the serial numbers and went back to square one. But then, in 2014, Quentin’s team found a way around it. After Apple’s iOS software release, about a half dozen companies sprang up overnight that claimed they could detect the sacred IMEI. Quentin tested a few of them before landing on InAuth, Inc., a small firm based in Boston. With just a smattering of code inside Uber’s mobile app, InAuth could track down the device identification number of the iPhone used to install the app. InAuth used a technique known as “fingerprinting” in the security and fraud industry. Once a phone was “fingerprinted,” it was much easier for Uber to tell if it was being used for fraud. Just a few months after starting at Uber, Quentin signed a contract with InAuth.


It worked perfectly. Before Uber had started using InAuth, fraud in China and other major cities cost Uber tens of millions of dollars every week—and occasionally even more than that. After Uber built a new version of its app with the InAuth code installed, Quentin watched the fraud numbers fall off a cliff. When a scammer tried to create a new account on a device Uber had fingerprinted, Uber’s anti-fraud systems would kick in and the account would be banned automatically. Finally, after years of being ripped off, Uber had found a way to fight back. There was one problem: InAuth’s service blatantly violated Apple’s rules regarding user privacy. So everything between Uber and InAuth had to be kept secret. If Apple found out, both Uber and InAuth could be in serious trouble, and could even get Uber’s app banned from the iPhone.


In order to fingerprint devices, InAuth required far more data than the average smartphone app, which meant asking for all sort of extended permissions. InAuth created device profiles based on this data to triangulate the users’ IMEI numbers. It was a clever technique, and companies besides Uber paid millions to use it. But the practice upset consumers when they discovered how much information they had unknowingly given Uber.


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

 

#8:

[On how #deleteUber started; Context: In response to Trump’s Muslim ban, many protesters started congregating at airports like JFK in NYC]


A manager in San Francisco gave New York the all-clear to turn off surge pricing for Uber trips to JFK. Later that evening, @Uber_NYC sent a tweet:

“Surge pricing has been turned off at #JFK Airport. This may result in longer wait times. Please be patient.”

The tweet would end up costing Uber millions.


O’Sullivan and others interpreted Uber’s tweet as company trying to profit off the backs of striking cab workers, a cash grab during a vulnerable public moment. Even beyond the immediate circumstances, the tweet reminded him of his larger ideological grievances towards Uber, and the core of how its business operates. @Bro_Pair tweeted:

“congrats to @Uber_NYC on breaking a strike to profit off of refugees being consigned to Hell. eat shit and die.”

He quickly followed up with an idea for a hashtag, something people could add to their angry tweets about the company: “#deleteUber.”


Lyft, at that point running out of money and on the verge of surrender, benefitted enormously from the backlash. People began to ditch Uber and switch over to Lyft. (Protest felt good, but people still needed to be able to call a car sometimes.) Lyft’s executives then pulled a well-executed PR stunt, publicly donating $1 million to the American Civil Liberties Union over four years, making themselves look like white knights while Uber was groveling before Trump.

 

#9:

[On claims about stealing self-driving IP from Google]

Levandowski (a former Google engineer) revealed his new startup, Otto, in May of 2016, four months after leaving Google. Then, in August, just three months later, he sold the new company to Uber for over $600 million. Page was immediately alarmed; the company was already embroiled in arbitration with Levandowski, suing him months ago for allegedly using Google’s confidential salary information to lure employees over to Otto. Immediately turning around a sale to Uber raised Page’s hackles even further. He had some of his deputies begin forensic investigation on Levandowski’s old Google workplace accounts and the circumstances of the engineer’s departure. Something didn’t smell right.


Page’s hunch proved correct. After running forensics on Levandowski’s Google-issued work laptop, investigators discovered that in the weeks before he left, Levandowski downloaded more than 14,000 confidential files related to the self-driving program from Google’s servers directly to his personal laptop. Among the files were designs for Waymo’s proprietary lidar circuit boards, one of the crucial components necessary for most self-driving cars to function. After downloading the files, he copied and transferred all of the 9.7 gigabytes of Waymo data over to a personal, external hard drive. When he finished, Levandowski installed a new operating system, erasing the contents of his work laptop hard drive. “After Levandowski wiped this laptop,” Waymo’s attorneys would later say, “he only used it for a few minutes, and then inexplicably never used it again.”


The details were damning. But Page’s investigators may not have pieced all of it together were it not for a mistake from one of Waymo’s own lidar component suppliers. In February 2017, months after the Otto acquisition, the manufacturer accidentally included a Waymo employee on an email, an email which happened to include a schematic of a component from Uber’s most recent lidar design. The Waymo engineer noticed something peculiar; Uber’s lidar component looked like a carbon copy of Waymo’s hardware.

Super pumped: Uber vs. Waymo

 

#10:


[On Uber’s Greyball technology to prevent city authorities from taking Uber and impounding the cars and/or penalizing the drivers]


City managers would closely watch which customers within that perimeter were rapidly opening and closing the Uber app—a behavior engineers called “eyeballing,” or monitoring nearby drivers. City managers would also scan other details on new user accounts—personal information like credit cards, phone numbers, and home addresses—to check whether the data were tied directly to a police credit union or some other obvious giveaway. After Uber managers felt confident they had spotted police or parking enforcement, all it took was the addition of a short piece of code—the word “Greyball” and a string of numbers—to blind that account to Uber’s activities. It worked extremely well; the Philadelphia Parking Authority never noticed the deception and car impound rates plummeted.


The tool was nicknamed “Greyball,” the idea being engineers were tricking customers—or “greying” over their eyeballs—to obscure or highlight specific vehicles.


Greyball was consistent with one of Uber’s fourteen company values: Principled Confrontation. Uber was protecting its drivers while confronting what they saw as a “corrupt” taxi industry that had been protected by bureaucracy and outdated regulations. Concepts like “breaking the law” weren’t applicable, they believed, when the laws were bullshit in the first place.

 

Others:

Until 2014, that is, when one executive had the brilliant idea of introducing the “Safe Rides Fee,” a new charge that added $1 to the cost of each trip. At the time Uber billed it as necessary for passengers: “This Safe Rides Fee supports our continued efforts to ensure the safest possible platform for Uber riders and drivers, including an industry-leading background check process, regular motor vehicle checks, driver safety education, development of safety features in the app, and insurance,” went the company’s blog post. If riders noticed the fee, they rarely complained. Many assumed it would just make their rides safer somehow. The reality was much less noble. As Uber’s insurance costs grew exponentially, the “Safe Rides Fee” was devised to add $1 of pure margin to each trip, according to employees who worked on the addition. That meant for each trip taken in the United States, Uber took in an extra dollar in cash. The drivers, of course, got no share of the extra buck. That number added up to hundreds of millions of dollars over years of operation, a size-able new line of income. After the money was collected it was never earmarked specifically for improving safety.

 

To limit “friction” in the sign-up experience, Uber allowed riders to sign up without requiring them to provide identity beyond an email—easily faked—or a phone number. Further, Brazil was largely a cash-based economy where credit cards weren’t in common use, so there was no payment or identity data to gather on the individual riders. For thieves and angry taxi cartels, it was the perfect crime. A person could sign up for Uber anonymously with a faked email, then play a version of “Uber roulette”: They’d hail Ubers, then cause mayhem. Cars were stolen and burned, drivers assaulted, robbed, and occasionally murdered. The company stuck with Baker’s low-friction system, even as violence increased.

 

The emphasis on growth created unintended side effects, or “negative externalities,” in management-speak. Managers would pursue growth even if it led to staggering inefficiency in other parts of the business. For example: In Uber’s earliest days, the company sent free iPhone 4 devices to all new drivers. In order to get drivers on the road as quickly as possible, managers started sending out iPhone 4s as soon as someone signed up. But some eager managers began mailing phones out before drivers passed their background checks or completed other paperwork. Growth of new drivers exploded, which made the managers in charge look better. But so did a rash of iPhone thefts and fraudulent sign ups, costing the company dearly in what amounted to free iPhone giveaways to scammers.

 

While Uber had “Heaven,” Kalanick also held court over “Hell.” That was the nickname of one of Uber’s most highly guarded and extremely valuable internal programs; “Hell” was devised to monitor the locations of all Uber drivers who also drove for Lyft. Uber employees at headquarters would create fake Lyft accounts, which tracked nearby vehicles—up to eight per fake account. Information about those vehicles was then sent back to Uber and stored in a database. “Hell” created a way for Uber to monitor the real-time positions of Lyft drivers. And because many of those drivers worked for Uber as well, Uber could monitor the rates Lyft was offering for drivers and outbid them, thereby swaying drivers to work more regularly for Uber. “Hell,” as Sullivan saw it, was sneaky. It was also highly unethical and would be a public relations nightmare if it ever leaked.

 

In many ways, Kalanick’s approach was brilliant. A local employee in Miami would be better prepared to fit Uber to their own city than, say, a new hire from San Francisco who knew nothing about the people and institutions that make up a locale. There were drawbacks. Give too much autonomy to a legion of twenty-somethings, and you’ll occasionally empower a battalion of douchebags. In France, one local promotion boasted “free rides from incredibly hot chicks.” The New York office was infamous for its bro-culture. Helmed by Josh Mohrer, a former frat boy turned MBA graduate, the bravado and aggression of management led to resignations and allegations of harassment. Every city office had its own cultural microclimate, for better or worse.

 

In some major cities, taxi owners had paid hundreds of thousands of dollars to purchase “medallions,” taxi-service permits required by the local government. Medallions could be absurdly expensive, upwards of a million dollars in peak markets like New York City. Drivers and dispatchers took out huge mortgages to buy them. The limited number of medallions created an artificially constrained market, which meant cab drivers and taxi company owners could charge enough to earn a decent living (and pay for the medallion.)


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

Super pumped: Cost of a Taxi medallion due to Uber