Let’s talk about ride-sharing.
At an abstract level, ride-sharing is the idea that people who have cars and a little extra time can provide a service to people who need rides and are willing to pay for them. At an abstract level, it takes an underused resource and puts it to use. It benefits both sides of the equation. The driver gets to make a little extra cash, the passenger gets the ride they need. Sounds okay so far. In fact ride-sharing even has the potential to reduce the number of cars on the road. Win-win. All you have to do is figure out how to get the two sides to connect.
It turns out that’s not so hard. In 2009, Travis Kalanick figured out how to do it. (You can argue about his role in inventing this all you want, I really don’t care. It’s not important to the story and truth is, he made the most noise at the table, so he’s the one who gets the bill.) Travis and his small team of white boys (an important detail, wait for it) developed an app that connected the drivers with the riders. That app was, of course, Uber.
At an abstract level, this was great. Every party involved in the equation did well, including Travis and his team, which is fair. They did the job of connecting everyone. At this point in our story, we have total balance. The drivers are making a little cash, the rider is getting where they need to get for a fair amount, and Uber and the team are skimming a little off the top for making the connection. Theoretically, this story could continue like this for a while, with the incremental improvement here and there, the occasional hurdle to jump (gotta deal with those taxi unions, Travis!), and eventual attempts at slow and steady growth. At some point, conditions in the marketplace would change and Uber would either collapse (think Blockbuster) or adapt (think Netflix).
If that were the beginning and end of the Uber story, I wouldn’t be writing about it. Small successes built incrementally over time don’t make for dramatic stories or good ethical lessons. So it’s time to introduce a villain. Oh! You thought Travis was the villain and that’s fair, but we hadn’t fully fleshed him out yet. He’s like James Franco at the beginning of Spider-Man. You know he’s eventually gonna fuck someone over, but he hasn’t gotten his motivation yet. He’s about to. Let’s give this story a location.
Welcome to Silicon Valley. A libertarian stronghold at the very end of America. (Literally.) Silicon Valley, and specifically the venture capital firms of Silicon Valley, are mostly run by old white men who read Ayn Rand in high school, thought it was great, and never changed their minds. (This is where I need to be fair and let you know that not all venture capitalists are monsters. In fact, I’m friends with a few who are lovely people. They are very much the exceptions. Also, every VC who reads this book will think this parenthetical is about them.) In the words of the late great Ann Richards, they were, “born on third base and think they hit a triple.”
For those of you not familiar with Ayn Rand, she wrote crappy books about the power of individual achievement while she collected social security and started some pseudo-philosophy called “objectivism”, which can be summed up in five words: I got mine, fuck you. The old white men of Silicon Valley all have giant Ayn Rand back tattoos. (Look, it’s a chapter about venture capitalism inside an ethics book. I gotta tell a joke once in a while, for all our benefit.)
Venture capital firms invest in new companies. Like Uber. In fact, it’s not unheard of that they’d invest in Uber and also a company that Uber considers a competitor. They’re not loyal. They’re placing bets. They invest a small amount in exchange for a percentage of the company and if that company does well, they’ll invest more in exchange for another percentage of the company. If the company doesn’t do well, well, that’s fine. Venture capitalists place a lot of bets and they don’t expect the majority of them to pan out. But when those bets do pan out, the goal becomes what venture capitalists call a liquidity event. The exit involves taking the startup public, or more likely, selling it to a bigger company for a ton more money than initially invested (10x being the rule of thumb). The companies that don’t make it are sold off for parts.
Again, in the abstract, like ride sharing, the venture capital model isn’t unethical. New companies are risky. New companies need capital. It’s how people behave within these models that’s messed up.
Let’s go back to Uber. Once a company gets funding, it’s goal changes from building a successful business to reaching a liquidation event. Because once you get funding, your investors are pushing you to grow faster and faster, and to get there you’re going to need another round or two or three of funding. Venture capital is like startup cocaine. Once you get a taste, your job changes from connecting drivers and riders to getting another hit.
All of a sudden, your tiny little startup needs to hire 5000 drivers a week, so background checks get a little streamlined. You need to hire 500 engineers a week and no way those are all top-notch. You need to hire 300 designers a month, so you just start strip-mining design schools and picking up a lot of inexperienced people. You need to expand into more cities, so you skip the delicate political negotiations that it takes to ensure there’s an ecological balance there. Keep in mind these decisions are often being made by young people who, while possibly being extremely skilled, have little-to-no management experience. It’s at this point the quality that once made you good enough to attract attention in the first place takes a nosedive. Now the company’s job isn’t to show quality, it’s to show growth.
It’s at this point where Uber started charging riders higher fares, including notoriously implementing surge pricing during disasters, such as during the 2015 terrorist attack in Paris. They also started skimming more off the top from their drivers, leading up to an infamous incident where a driver asked Travis Kalanick why this was happening, and Travis proceeded to dress down a person attempting to make a living off his service. (The driver was good enough to record it for all of us.) It’s also at this point where complaints about drivers being abusive to riders started to rise, for which Uber had an interesting solution: they implemented a harassment campaign against Sarah Lacy, the journalist bringing these stories to the public’s attention. (Uber Senior Vice President Emil Michael, told Buzzfeed reporter Ben Smith the company was contemplating doing opposition research into Sarah Lacy’s private life. He later apologized.)
Hold on, we’re not done. Somewhere in 2017, Uber designed a tool called Greyball, which they used to flag riders they believed were associated with cities officials or regulatory bodies Uber had labeled as enemies. (NY Times reporter Mike Isaac did an excellent job exposing this. He’s currently writing a book about Uber. Read it when it comes out.) Greyball tracked phone numbers associated with those “enemies”, who were then told there were no cars available when they used the app. This was fraud. Everyone involved in the conception, design, execution, and maintenance of that tool acted unethically.
Once Uber’s goal moved from providing a car-sharing service to using a car-sharing service to make themselves and their investors rich, the delicate balance between drivers, riders, and Uber was destroyed. Only one of those parties was going to benefit from Uber’s future success. There’s nothing wrong with making money, but there is something inherently wrong with profiting from the labor of others without giving them a piece of the success they’ve earned.
Uber set out to build a tool that democratized access to cars. It ended up building a tool that further impoverished the poor. The service model was fine, but the financial model it used for growth could only ever be as ethical as the people who strove to benefit the most.
Sadly, Uber is not an exception, but the rule and aspiration in Silicon Valley. Take a bunch of entitled white boys, give them a ton of money, fill them with the fear of the money running out, and you’ve created a perfect recipe for inexperienced people making really bad short-term decisions that have a tendency to fuck everything up. (To be fair, in Travis’ defense, he did have the experience. He’s just a dick.)
Short-term decisions are all Silicon Valley seems to care about. We don’t build businesses for the long haul anymore, at least not the venture-backed ones. Those only need to last long enough to make it to their liquidity event so the investors can get their payday. So if Uber can show growth by squeezing drivers and riders, and Twitter can increase their engagement numbers by relying on white supremacists and outrage, and Facebook can rake in some extra cash from Russian fake news sites — they will do it. And we know they’ll do it, because they did it. Silicon Valley has exhibited total comfort with destroying the social fabric of humanity to make a profit.
I got mine. Fuck you.