February 16, 2016 5:06pm
In downtown Vancouver’s Launch Academy hub for a “fireside chat” moderated by SheTalks’ Barinder Rasode and Launch Academy’s Ray Walia, Uber CEO Travis Kalanick shared his thoughts on how his tech company is adapting to the needs of its customers, facing off against competition, and dealing with regulation as its sharing-economy vision becomes reality worldwide.
A select audience of more than 50 entrepreneurs, technology experts, founders and funders listened intently and got a chance to ask the witty and enthusiastic CEO some questions of their own.
On obstacles faced along the entrepreneur’s journey
“I’ve seen what might be considered failure far more often than success,” Kalanick said. “With Scour (an earlier startup dealing with file sharing) we got sued for $250 billion by the world’s biggest entertainment companies (that’s the GDP of Sweden, I keep telling people). The rules around distribution of files — we just didn’t have a way to defend ourselves (though iTunes did it right later on).”
At one point, after taking zero salary as a CEO, Kalanick had to move back into his parents’ house. “You have to be open to hard times,” he said. “What we think in general of risk is not what an entrepreneur sees at risk. I’ve run out of money more times than you can imagine. At the end of the day, I had parents who would always let me come back and friends who would be there for me.”
Kalanick argued that the entrepreneur mentality is very different from that of an employee. “At Uber, we’re big and now we have funds to hire people. People still say it’s a risk to come over. We say, ‘you’re smart, we can pay the bills – what kind of risk are you talking about?’ We need to redefine risk. If an entrepreneur is smart and just keeps getting back up after they get knocked down, they’re going to succeed.”
On regulation, and being in a city where Uber is outlawed
“Vancouver is a really good place to talk about this,” Kalanick said. “I usually ask, who came here in an Uber? That question doesn’t work out so well here.”
“The old rules we have today were once new and controversial rules. Every old rule has the right to become a new rule – one that hopefully bends towards progress. It’s about making sure that in systems we develop, people and progress comes first. We ended up in 68 countries because that did happen. I believe Vancouver will eventually make that leap.”
“Fuck you taxi mafia!” one attendee spontaneously erupted, as Kalanick explained the local regulation around a $75 floor price for calling a car to go even one block in the city.
“I’ll let the audience speak for itself,” Kalanick replied with a chuckle, before going on to the reasons many cities had already decided Uber’s benefits outweighed possible problems for entrenched interests. “If you can do this for the lowest possible price, no one needs to buy cars. Thirty percent of our cities are parking for vehicles that we’re only sitting in for 4 percent of the day. There’s just hunks of cement storing hunks of steel instead of being allocated to schools, daycares, and other things we want in our cities. We’re creating jobs.”
“If you don’t like pollution, parking lots, and traffic congestion, you like Uber,” he added. “If you like only expensive black car service that ordinary people can’t afford, Uber is bad for you.”
On maintaining the pace of innovation through data
Kalanick said that the Uber business model depends on data. “You have to look at things at the city level. For transportation, we’re looking at what kinds of cars are in supply. What can the economy support? What are the pain points for transportation? What’s the right price point? It’s so much about getting people and cars around the city as fast as possible. There are tweaks you do elsewhere.”
“We use data to predict demand. But then we ask, how do we use that data to provide more information about supply or set the set price point? We’re not an advertising company, so don’t have the same concerns as a company like Google.”
Kalanick also said that dealing with more data requires more and more specialized talent. “What you see is more and more science, scientists and machine learning experts. That work is becoming mainstream, at least in tech companies. Everything from how to price, market to customers, serve them, is becoming a machine learning problem. We thought we were so revolutionary to have a neuroscientist on a logistics team, but in the Valley, that’s old hat.”
As they learn more about how to make use of the data, private companies will be in a position to partner with public institutions, Kalanick argued.
“There are a lot of ways cities can be planning better and benefiting from this kind of data. The burden is on us to see how we can partner with cities. This will be an offshoot and something I expect to see a lot more of that in 2016.”
On ending the gender imbalance in tech
Uber and its CEO have faced criticism and accusations of sexism over the past several years, perhaps stemming from (one might very generously suppose) a tone-deaf sense of humor at the top. That said, Kalanick came out strongly in favor of correcting the current gender imbalance in tech.
“Once we succeed in the city, we look at opportunities for ways to give back. We see a vacuum of female talent in engineering specifically, where we’re missing out on half the great minds that exist out there,” Kalanick said. “We have to find ways for younger women and girls to know that coding is not a geeky thing, but a healthy, productive thing to do. There are female role models who can show the way.”
While progress is already evident, there’s still more way to go, Kalanick noted. “You talk (about these social paradigms) to a high school girl who is already coding and they’re like ‘what are you talking about?’ So we need more of that, going to the source, providing a space for more creative minds to participate and make the world a better place.”
On Uber, the sharing economy, and safety
Certainly, one of the criticisms from taxi drivers and riders is whether Uber’s model can provide real safety for customers, which Kalanick addressed head on.
“The first part is we have to be able to say that Uber is the safest way to get from point A to B,” he said. “Safety happens before, during and after the ride. The first part comes with filtering bad drivers out of it. In the middle, it’s about monitoring the driver (and making sure the driver knows they’re being monitored – and there is monitoring for every foot of that trip). And of course during the trip you could have telematics that could tell us in real time if the driver was driving safely; you have after-trip feedback that can tell us further how to weed out bad drivers.”
Kalanick asked if taxi companies provide these tools right now, before acknowledging that no system is going to be perfect (indeed, Uber was just ordered to pay $28.5 million for false safety advertising and fees based upon claims of driver background checks). Still, Kalanick seemed confident of improving perception around what they could offer. “There is crime in every city. How can we be a part of making every city safer? Every day, we just keep getting better at it.”
On adapting to the future: the self-driving car
Uber is already on the record as supporting the move to self-driving cars – even if that move could radically shake up its business model. Kalanick said that it comes from asking the question: “do we want to be part of the future or resist it, the way the taxi companies do? We want to be part of the future. The world of self-driving cars is going to happen.”
The more interesting question is how Uber will be part of that change. Kalanick indicated that Uber would be willing to partner to make that happen.
“Since 2007, Google’s been working on autonomous vehicles because millions of people die every year in vehicle accidents,” Kalanick said. “Also, there’s pollution, traffic – we understand why they’ve been investing and trying to push that forward. Can there be a partnership for the transition period? That transition period is going to last quite a long time. We can partner with cities through that transition to help make it happen in a human way.”
On dealing with regulators and critics who remain skeptical of Uber
“I talked earlier about the city at large and all the good things that happen because of Uber – so who’s against that?” Kalanick asked. “That segment becomes very narrow. Institutions that prevent progress have to change.”
Kalanick said that taxi drivers are not bad people, “they’re just treated badly. In monopolistic systems like in NYC, taxi licenses are tradeable licenses… A taxi driver has to spend $40,000 a year to be impoverished. That’s the system you support when you support a monopolistic system like the taxi industry. It screws over choice for the consumer as well as for the driver. There’s a very narrow segment of people that would think that’s a good system.”
At least, according to Kalanick. It’s only fair to point out that in the recent past, Uber has been accused of using cutthroat business practices, including sending fake travel requests to keep its competitor Lyft’s drivers off the road. Uber is also currently involved in a legal dispute as to whether its drivers should be considered independent contractors or employees. In New York specifically, Uber drivers have penned an open letter to Uber criticizing a culture of “expendable drivers” (via Pando, and a time-unlocked article which should be read quickly). The segment that objects to Uber may be a big larger than Kalanick is willing to publicly acknowledge.
On advice for entrepreneurs who want to raise funding
Looking back on his mixed record of success with startups in his past, Kalanick noted that “when you have no money and people think your idea is terrible, you get very good at raising money.”
Kalanick cautioned against what he called “irrational funding going on” (Uber has raised just under $9 billion to date). “You can get your butt kicked by others who are raising more money and buying market share,” he said. “So you have to find a way to contain the irrational when it’s happening.”
Having just raised another $200 million to compete in emerging markets, perhaps the starkest example can be seen in one of Uber’s largest international marketplaces. “We’re profitable in the USA, but we’re losing over $1 billion a year in China. We have a fierce competitor that’s unprofitable in every city they exist in, but they’re buying up market share. I wish the world wasn’t that way. I prefer building rather than fundraising. But if I don’t participate in the fundraising bonanza, I’ll get squeezed out by others buying market share.”
Feature image courtesy Barinder Rasode.
This story was originally published on Betakit.