TECH APRIL 29, 2013
On a sunny, freezing cold January at the main entrance to Washington, D.C.'s Union Station, with cabs jostling for position to drop passengers off, Travis Kalanick searched his pockets and black backpack for his iPhone—the same one that he, the CEO of sedan-hailing app Uber, had used to summon the black SUV that just dropped us off. Phone located, we forged past a scrum of people waiting for people to be paired with taxis. When we reached the relative peace of the station's east hall, he said about the taxis, with a dry laugh, "No, you've got to understand. It's funny but, when I see that, I'm like, Wow, those things exist." I asked how the entrance to Union Station should function differently, and Kalanick looked surprised: The answer is obvious. "You should just push a button to get a ride," he said.
It's with the same blithe certitude that Kalanick has rolled Uber out in 20 cities around the country and 10 overseas, performing a quick check to make sure his technology is by-the-book legal before hiring staff, recruiting drivers, and announcing to the world that Uber's open for business. That's enraged local regulators, who've fought to protect entrenched taxi interests against competition; Uber had tough fights in D.C. and New York and even San Francisco, and is still locked out of places like Miami, Portland, and Las Vegas.
In many of those battles, Uber's secret weapon has been its customers: The kind of well-heeled, tech-savvy urbanites willing to pay a hefty markup to avoid the annoyance of hailing a cab. They may never before have shown an interest in any other aspect of local governance. But when some taxi commissioner or city councilor tries to take away their newfound convenience, they'll rally to its defense with calls, e-mails, and indignant tweets. Kalanick, having wooed the city's trendsetters through swanky launch events and cheeky stunts—like running an "Ubercade" down Pennsylvania Avenue in D.C.—plays upon their sense of moral outrage, crusading against the two-bit officials who try to stifle innovation and competition. It's a model that Kalanick anticipates other startups will seek to emulate.
"We are building a playbook for how to do this," he told a Washington, D.C., audience of policy wonks in January. "Other companies are going to follow suit in all kinds of industries that each is affecting. And I think folks in D.C. and cities across the country, you're going to be in the middle of it."
Which is why it was surprising, a few weeks ago, to see Kalanick complaining about other companies doing just that.
On-demand limo service isn't the new new thing in urban transportation anymore. That title belongs to more affordable ride-sharing services like SideCar and Lyft—now in nine and three cities, respectively—which operate not unlike Uber, except that its drivers are regular car owners rather than professionals with livery licenses. These younger companies, like Uber before them, have rolled out in cities where ride-sharing is at least legally defensible. To sidestep laws around pricing and driver certification, SideCar and Lyft commonly argue that they're not renting any vehicles, just licensing a technological platform that allows car owners to transport passengers; and because charging for a ride would constitute a taxi fare in most jurisdictions, the apps instead calculate a "suggested donation." Cities and states largely haven't had a problem with—or perhaps haven’t noticed—this creative workaround, with a few exceptions: Lyft was slapped with a cease-and-desist letter last fall before reaching an agreement with the California Public Utility Commission this spring. SideCar is still fighting with Philadelphia and Austin, even going so far as to sue the latter city for the right to operate.
Kalanick, who’s already rolled out a feature for e-hailing regular taxis and the lower-cost UberX, has been planning to enter the ride-sharing market at least since last fall, when he brashly put Lyft and SideCar on notice. But he's been slow to actually do so, and in a "white paper" published on April 12, complained that the two companies—which he calls "clones"—had taken advantage of regulatory ambiguity to gain traction, forcing Uber to play catch-up. Kalanick appears frustrated that cities haven't thrown the book at Uber’s competitors in the same way that they have at Uber, sounding a whole lot like the taxi industry incumbents he's been battling from the start.
"Over the last year we’ve stayed out of the ridesharing fray due to perceived regulatory risk and watched two competitors roll out in a few cities in which we already operate, without nearly the same level of constraints or costs, offering a far cheaper product," Kalanick writes. “Without clear guidance or enforcement, this ambiguity has led to one-sided competition in which Uber has not engaged to its own disadvantage."
That's pretty rich, considering Uber's own pattern of soldiering through rocky legal landscapes. Kalanick’s got no one but himself to blame for missing the ride-sharing boat, and shouldn’t be surprised that others have been using his own tactics to get a head start.
To his credit, rather than throwing regulatory bombs at Lyft and Sidecar, Kalanick has decided to compete with them. The prospects are decent: Consumers of a certain socioeconomic strata now know and trust the Uber name, and might be more receptive to an Uber-branded ride-sharing platform than some random car with a pink mustache on it. Kalanick wants Uber to be your go-to option for getting anywhere, from date night to a ride to the airport. Kind of like the Apple of urban transportation: An integrated ecosystem that makes it inconvenient to go anywhere else.
For Kalanick, that raises an interesting question: How to behave when you're not the underdog anymore, but rather the dominant player to beat? His blitzkrieg school of entering urban markets isn't just a strategic choice, after all. It's also just how Kalanick operates—as an ubermensch, struggling against the bureaucratic power of the state, or the thuggery of jackbooted incumbents. His typical spiel before admiring audiences includes his tale of dropping out of college to focus on a startup, going four years without a salary ("Blood, sweat, and ramen," he likes to call it), and spending one of those years living with his mother in Los Angeles ("Not a lot of ladies.") It then proceeds to his first war, in 1998, with an entrenched industry: Hollywood. His business was a peer-to-peer file sharing service called Scour that a few dozen movie studios wanted gone.
"We got sued for a quarter of a trillion dollars in the process," Kalanick told a packed theater in D.C. last November. Cheers erupted from the audience, and Kalanick let them die down.
"The GDP of Sweden," he noted.
It's an animating impulse for Kalanick, who's described himself as a "freedom fighter" with a ferocity that's drawn accusations of Ayn Randian sympathies. He’s not registered to vote in his home state of California, and avoids identifying with any political ideology, but his Twitter avatar is pulled from cover of Ayn Rand's Atlas Shrugged, which he says he read a couple years ago. Why keep that avatar, I wondered, if it makes him such an easy target? "Once someone says, take down your Twitter avatar because it could be painted in the wrong way, that's exactly when I'm saying 'no,'" Kalanick told me in January. "I like the book. Do you have a problem with that? … I just think it's a great story of somebody who stood up for what they believe in."
Eventually, the regulatory fights will dissipate, as local jurisdictions cave to citizen pressure and taxi drivers realize they can earn more with Uber than without it. At that point, Uber will be more establishment than upstart, prompting Kalanick to move on to the next new industry ripe for disruption. He says he gets new ideas “constantly”—mostly those that solve the problems of well-off city dwellers like himself. An Uber for food, for example, which would send you all the ingredients for a recipe at the push of a button. It sounded expensive. "Maybe," Kalanick admitted. "But wouldn't it be awesome? if you could afford it, wouldn't it be amazing?" Then there's this idea for improving online dating: "So I was talking to a friend the other day, and I was like, there should be a dating site for really smart people," he said. "Solving my own problem."
Lately, Kalanick's reading habits are less ideologically tinged: He's been working through books about each of the founding fathers. Alexander Hamilton is his favorite ("he was probably America's first capitalist") while Teddy Roosevelt wins for best president ("adventurous, bold"). But personally, Kalanick himself says he has no real role models. Except himself.
"The entrepreneur community, there's a certain kind of founder, they call them a 'lone wolf,'" Kalanick told me in January. "I probably fit in that category."
"Who else fits in that category?" I asked. "It can't be a category of one."
"It could be. I made it up," Kalanick said, chuckling to himself. "I made up the category."