Having a lot of time on my hands during bus and train rides to Chicago and back, I decided to read this book. It turned out to be a really interesting and good book about Uber’s history and the list of events that led to where it is now. The growth at all cost mentality and the toxic culture both catapulted Uber into the stratosphere of startup valuation and cost the ride sharing company millions of dollars and a litany of problems. Uber was drowned in so many scandals that it was mind-blowing to see how the governance allowed that to happen. The part in which Benchmark and its allies did everything they could to oust Kalanick was fascinating. If you are interested in one of the most interesting startups of recent times, then I highly recommend it
At the end of the week, Uber’s finance team added it all up. The entire “X to the x” celebration cost Uber more than $25 million in cash – more than twice the amount of Uber’s Series A round of venture capital funding.
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 case. 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 sizeable new line of income. After the money was collected, it was never earmarked specifically for improving safety.
When Uber cut rates in 2015, rather than worry about the effects lower income would have on drivers, Kalanick was giddy. To Travis, lowering prices meant raising demand. Growth would explode again, and growth – not the concerns of his drivers – was Travis’ top priority.
It didn’t matter to Kalanick that drivers were logging more trips and picking up more people – basically doing twice the work – to make the same amount of money. It didn’t matter that drivers were commuting absurd distances to busy cities like San Francisco – often from places two hours away, but occasionally as many as six hours away – sleeping in their cars overnight on side streets and empty parking lots for the chance at more rides per hour. It didn’t matter than San Francisco lacked sufficient public bathrooms for drivers, forcing them to find coffee shop bathrooms, or, more often make do elsewhere. And it certainly didn’t matter that drivers pulling dayslong shifts were overworked and under-slept.
Most importantly for Son, SoftBank would purchase those shares at a steep discount from Uber’s valuation earlier in the year. Son and Khosrowshahi settled on a purchase price of $33 per share, pegging Uber’s valuation at about $48 billion – a steal for SoftBank. That meant that the scandals of the previous twelve months had knocked about $20 billion off Uber’s private market value.
To keep the price propped up on paper, the investors did some sleight-of-hand maneuvering. SoftBank would purchase $1.25 billion in additional, newly issued shares at Uber’s previous existing valuation of $68.5 billion. The premise was absurd; the secondary market clearly valued Uber’s shares at far lower than they were before Uber’s 2017 from hell. Yet in the eyes of the market, the maneuver worked; Uber’s valuation would remain at $68.5 billion.
One particularly raucous evening, a bunch of Uber Thailand employees, were up late drinking and snorting coke, a semiregular occurrence at that office. One female Uber employee with the group had decided she didn’t want to do drugs with her colleagues, and tried to abstain. Before she could leave, her manager grabbed the woman and shook her, bruising her. Then he grabbed the back of her head and shoved her face-first into the pile of cocaine on the table, forcing her to snort the drugs in front of them.
The New York office was largely defined by its machismo, sexism and aggression. Sao Paolo saw angry managers throwing coffee cups across the room or screaming at employees when they weren’t happy with results.