The Critical Need to Integrate The Humanities With Deep Technology

After watching “The Great Hack” on Netflix I am appalled by the absence of any moral compass at Cambridge Analytica, which transformed Big Data into a political weapon. Other disturbing examples are Uber’s former corporate culture and Facebook’s collusion with CA in abusing our privacy. These cases are prima facie evidence of the crucial need and the opportunity to integrate the Humanities and ethics with deep technology development. I began my career as a Humanities graduate at Intel Corporation working closely with Ivy League MBA’s and senior engineers. We shared our knowledge and learned together to enable the company to excel. The best companies are those grounded in an appreciation of human values, companies that seek out Humanities graduates with a passion for technology to balance out their teams.

Human Oversight of Deep Technology Development Is Playing Catch-up

Systems Similar To Those In Place for Medical Science Are Urgently Required

Uber And The False Hopes Of A Sharing Economy

At its inception, Uber touted itself as a shining example of the “sharing economy” described by Jeremy Rifkin, in this now famous book, The Third Industrial Revolution. As time has passed the reality has been radically at odds with a sharing economy. Among the many issues that have emerged has been the legacy of Uber’s ugly corporate culture, secret apps used to confound regulators, and to intimidate journalists, a Justice Department investigation of illegal practices, including 200 Uber employees conspiring together to attack Lyft’s operations. The proverbial chickens have come home to roost, as municipalities around the world have begun to regain control of transportation policy within their jurisdictions, and the inflated valuations of these unicorns begin to deflate.

Regulating Ride-Sharing: New York May Be The Model For The Future

Writing On The Wall: London and Vancouver Moving In A Similar Direction

At its inception, Uber touted itself as a shining example of the “sharing economy” described by Jeremy Rifkin, in this now famous book, The Third Industrial Revolution. As time has passed the reality has been radically at odds with a sharing economy. Among the many issues that have emerged has been the legacy of Uber’s ugly corporate culture, secret apps used to confound regulators, and to intimidate journalists, a Justice Department investigation of illegal practices, including 200 Uber employees conspiring together to attack Lyft’s operations. The proverbial chickens have come home to roost, as municipalities around the world have begun to regain control of transportation policy within their jurisdictions, and the inflated valuations of these unicorns begin to deflate.

From the Wharton Newsletter/Podcast, August 14, 2018

The largest market for Uber, Lyft and other ride-hailing app companies — New York City — last week had its first successful attempt at regulating the growth of the nascent industry. On Wednesday, the New York City Council passed a series of bills, notably one that places a one-year moratorium on the issue of new for-hire vehicle (FHV) licenses. Other bills establish minimum wage levels for ride-hailing service drivers; require FHVs to submit data on ridership with penalties for failure to do so; and create driver-assistance centers to provide counseling services.

New York City had little option to act, especially after a similar move by Mayor Bill de Blasio fell apart following intense lobbying by Uber. Increasing road congestion by cars was the biggest contributing factor to the passage of the bill capping new licenses, corroborated by a decline in subway ridership. The number of FHVs in the city had grown from 65,000 in 2015 to about 130,000 currently. Uber is the biggest gainer, as shown by its almost hockey-stick growth in ridership.

New York City took the right steps to regulate the FHV industry, according to Wharton professor of operations, information and decisions Senthil Veeraraghavan. “This is the right way to go,” he said. “This is a great experiment that we’re [witnessing].”

“They had to do something,” noted Wharton management professor John R. Kimberly. “This is part of an obviously much deeper story … and the timing seems to be right.”

The move to ensure that drivers receive a minimum pay of $15 an hour after they cover expenses is also significant, said James Parrott, director of economic and fiscal policies at the New School’s Center for New York City Affairs. He had worked on an extensive study for the city’s Taxi and Limousine Commission that looked at the ride-hailing sector and its growth, and in particular its impact on driver earnings.

Kimberly, Veeraraghavan and Parrott discussed the implications of the legislative actions governing New York City’s for-hire vehicle industry on the Knowledge@Wharton radio show on SiriusXM. (Listen to the podcast at the top of this page.)

“This is the right way to go. This is a great experiment that we’re [witnessing].”–Senthil Veeraraghavan

Incentive to Improve

The establishment of a minimum pay for drivers is an important incentive for ride-hailing app companies to increase the utilization of drivers’ time, said Parrott. Drivers currently have a passenger in the car for only about 36 minutes of every hour, which means they don’t have a paying passenger for 42% of their time, he added.

Up to now, Uber’s business model has been “to flood the streets with cars,” since the firm gets a commission based on every fare, Parrott said. “There’s been no incentive for them to better utilize the drivers’ capital,” he added. “Keep in mind; this is an industry where the capital investment in the rolling stock – the cars – is entirely put up by the drivers. The pay standard gives them an incentive by allowing them to pay a little bit less if they make better utilization of the drivers’ time.”

The city will use the year ahead to study congestion levels in the city and find ways to redress that, including through congestion pricing mechanisms. Last week’s actions took a step in that direction with a surcharge on cabs below 96^th Street ($2 per ride for medallion trips and $2.75 for ride-hailing app cabs). It will also allow the city to monitor how the pay standard works out, and how the ride-hailing app companies make better utilization of drivers’ time, Parrott said.

“Even if you increase utilization by 10 percentage points – from 58% to 68% – you would only increase average wait times across the city about 20 to 30 seconds,” said Parrott, citing his study’s findings. “We sense that most people can live with that.”

According to Parrott, the number of Uber trips in the city increased 100% in 2016 and 70% in 2017. Going forward, he said that figure could probably grow another 40% over the next year, “even without any additional cars on the street – just from increased efficiency.” Those increased efficiencies could come from a variety of quarters, including urging part-time drivers to go full-time and recruiting some of the drivers from the non-app services, such as the traditional livery car segment that has no minimum pay standards.

“Uber and the drivers are on both sides of the story,” noted Veeraraghavan. Riders want low waiting times, which can be achieved with more vehicles. But drivers want fewer drivers, because that would allow them to get better pricing, he said.

“Granted it might have been done a lot sooner, but it seems to me that at least in the city of New York there’s a real, serious effort to get their arms around the problem.”–John Kimberly

Worsening Congestion

Parrott said New York City had first started talking about capping Uber and Lyft cars in 2015, drawing “heavy pushback” from the ride-hailing industry at that point. Between then and now, the number of trips using ride-hailing apps has skyrocketed to 600,000 a day, which is more than five times the level in 2015, he noted. A 2016 study by the mayor’s office proposed several remedial measures including those to reduce congestion, improve air quality, protect drivers’ interests and enhance passenger experiences.

Parrott said that while the city bears some responsibility for not acting sooner on the unbridled growth of the FHV industry, it faced a different climate when it attempted that in mid-2015. Uber at the time controlled 90% of the market in the city as opposed to 66% now, he pointed out. Suicides by six cab driversalso highlighted the “economic crisis” and changed public opinion in favor of the changes, he said.

“Theoretically speaking, there’s always a gap between what firms will want to optimize and what society wants to optimize,” said Veeraraghavan. “And it’s hard for individuals to see what’s optimal for this society.” However, as city residents have begun seeing the impact of the FHV industry’s growth — including on public transportation ridership numbers — they now have had a better understanding. “So we have a redo from 2015 to 2017 … and we’re seeing better support for this.”

“Granted, it might have been done a lot sooner, but it seems to me that at least in the city of New York there’s a real, serious effort to get their arms around the problem and to figure out how to solve it,” said Kimberly.

Congestion in New York City has worsened in recent years with not just the influx of cabs, but also other vehicles “providing instant service for a variety of needs that people believe they have,” including delivery vehicles, said Kimberly. “The density of tourists on the sidewalks is so great it spills over into the street – that slows down traffic and makes it hard for cars,” he added. The option of levying congestion pricing is being seriously considered also at the state headquarters in Albany, he noted.

At the same time, “the growth of FHVs has meant that there’s much better transportation access in the outer boroughs, so the city doesn’t want to diminish that newly available service,” said Kimberly. “And yet the city also has a great interest in making sure that the drivers are able to remain economically viable to meet their expenses and to earn a decent living.” Higher wages would also enable drivers to work fewer than the 10-12 hours a day they now put in, he added, and that would have safety benefits as well.

“If they can show that they have stability and regulatory certainty in their largest market in the U.S., that will give investors a lot more certainty….”–James Parrott

Congestion pricing will also help fund investments in maintaining and upgrading the city’s aging subway and public bus system, Parrott said. The decline in mass transit ridership is not just because of the growth of the FHV industry, he noted; commuters are turning away because of “under-investment and under attention to adequately maintaining the mass transit system.”

Uber’s Leadership Challenge

The changes also highlight a “leadership challenge” for Uber, said Kimberly. “They have hundreds of markets around the globe, and each market has its own political configuration, and its own way of doing business,” he noted. “When you think about the challenges of operating an enterprise like Uber on a global basis with all the local idiosyncrasies that need to be taken into account both economically and politically, it’s a really interesting [problem].”

Uber, which is currently valued at about $62 billion, is said to be preparing for an initial public offering of its stock next year. “If they can show that they have stability and regulatory certainty in their largest market in the U.S., that will give investors a lot more certainty about the potential prospects for the company,” said Parrott.

Uber’s impact on employment is also large, Parrott noted. Uber drivers are not legally considered employees, but if they were to be treated as full-time equivalent (FTE) employees, Uber would be the largest private-sector employer in New York City, with about 35,000 FTEs, he said. “[Ride sharing] has become a huge enterprise in New York City, and it and it’s not what people usually think of as gig work where you are doing this to supplement other income. We found that 80% of the drivers bought their cars mainly for the purpose of providing transportation services, and two thirds of the drivers are full-time drivers.”

Parrott noted that both Uber and Lyft embraced the pay standard proposal. But Kimberly thought they had little option in the matter. “I don’t think it’s by accident that they’re embracing the pay standard,” he said. “Left to their own devices, they probably would not have done that. But there’s been so much social criticism – and valid criticism – of their models that they’ve really had no choice.”

Another Silicon Valley Reckoning Is Coming: “Star Entrepreneurs” and Way Too Much Money

Another Silicon Valley reckoning is on the horizon. We have seen cyclical events like this before, the 2001 bubble burst being the most recent memorable reckoning. The talk in 2001 was about too much “dumb money.” The coming reckoning, however, is on a massive, unprecedented scale, fueled by the same excess of global capital that has fueled the bubbles in housing markets in attractive locations around the World. The problems with Uber, Travis Kalanick, and the now obvious difficulty of the Uber Board of Directors to exercise meaningful governance should have been the “canary in the coal mine.” CNBC’s reporting on the excessive Silicon Valley “unicorn” valuations and media reports that New Enterprise Associates would divest $1 Billion in startup investments that cannot be made liquid have made the situation blatantly obvious. After a long silence, the Wall Street Journal has finally joined the reporting on the crisis. What more does one need to take to the exit?

Another Silicon Valley reckoning is on the horizon. We have seen cyclical events like this before, the 2001 bubble burst being the most recent memorable reckoning. The talk in 2001 was about too much “dumb money.” The coming reckoning, however, is on a massive, unprecedented scale, fueled by the same excess of global capital that has fueled the bubbles in housing markets in attractive locations around the World. The problems with Uber, Travis Kalanick, and the now obvious difficulty of the Uber Board of Directors to exercise meaningful governance should have been the “canary in the coal mine.” CNBC’s reporting on the excessive Silicon Valley “unicorn” valuations and media reports that New Enterprise Associates would divest $1 Billion in startup investments that cannot be made liquid has now made the situation blatantly obvious. After a long silence, the Wall Street Journal has finally joined the reporting on the crisis. What more does one need to take to the exit?

Source: In ‘Founder Friendly’ Era, Star Tech Entrepreneurs Grab Power, Huge Pay – WSJ

In ‘Founder Friendly’ Era, Star Tech Entrepreneurs Grab Power, Huge Pay

Silicon Valley financiers are losing leverage to star entrepreneurs

The Wall Street Journal

By Rolfe Winkler and Maureen Farrell

May 28, 2018 4:25 p.m. ET

Founders of highflying startups are increasingly wresting control of their companies from venture-capital backers and extracting huge pay packages tied to going public.

Venture capitalists had long called the shots in startup boardrooms and continue to be the primary backers of private companies. But in recent years they have had to compete against new classes of investors including mutual funds, sovereign-wealth funds and now Japan’s SoftBank Group Corp. , which has a $92 billion Vision Fund investing in startups.

That has reduced their leverage, shifting power toward star entrepreneurs and adding pressure on VCs to cultivate “founder friendly” reputations that will help them get a piece of the next hot startup. The flood of capital also gives entrepreneurs the ability to pick not just their investors but also when and whether to go public. An initial public offering is the primary way in which VCs cash in on their gains from startup investments.

VCs say empowering founders—through special voting shares, governance rights and other tools—frees them to follow ambitious long-term strategies once their companies go public without having to worry that poor performance will bring pressure from activist investors that scoop up stock. They point to founder-controlled tech companies such as FacebookInc., where founder Mark Zuckerberg had power to make bold moves and resist early pressure to sell the company. Facebook, which went public at around $100 billion, is now valued at roughly five times that.

Venture-capital backers of Stripe Inc., whose software is used by businesses to accept and track digital payments, recently gave the company founders an incentive to go public: special supervoting shares. The move was meant partly to assuage the founders, brothers Patrick and John Collison, that they would keep significant control of the company they founded in 2010 if it went public, people familiar with the matter said.

Many of Stripe’s investors say the founders have earned the right to control the company because it has performed so well. It was valued at $9 billion in its last fundraising round. Until March, when Stripe added its first independent director, the Collison brothers’ only fellow director was Michael Moritz, a partner at Sequoia Capital, one of the company’s earliest investors. Stripe and Sequoia representatives declined to comment.

Glenn Kelman, the longtime chief executive of online real-estate brokerage Redfin Corp.that went public last July, said that in the run-up to the IPO he was pushed to be more disciplined with expenses by two big investors who traditionally buy public-company stocks but also back later-stage private companies. Redfin’s shares are up about 50% since the IPO.

“There is a new world of VCs who really can’t perform their governance functions on boards because they want to preserve their relationship with you,” Mr. Kelman said of the venture-capital industry.

Star founders of private companies often get to pick their own investors, but as public-company CEOs they can’t. Supervoting shares—typically a second class of stock held by insiders that have 10 votes per share—give founders more power to elect directors and approve other items up for shareholder vote and protect them from investors who may have different priorities.

Last year, 67% of U.S. venture-backed tech companies that staged IPOs had supervoting shares for insiders, according to Dealogic, up from 13% in 2010. The proportion of non-tech U.S. venture-backed IPOs with supervoting shares has stayed between 10% to 15% every year over that period.

The proportion rises as tech companies get larger: 72% of founders of U.S. tech startups valued over $1 billion that had IPOs over the past 24 months have supervoting shares, according to a Wall Street Journal analysis.

Empowering a founder has risks. Uber Technologies Inc. co-founder and former CEO Travis Kalanick built a ride-hailing juggernaut valued at $68 billion with a pugnacious leadership style, but that approach ultimately contributed to a series of scandals. His supervoting shares and de facto control of the board made it more difficult for investors to push him out.

They did so last year, and then abolished supervoting rights and adopted a “one share, one vote” policy ahead of a planned 2019 IPO, something Mr. Kalanick ultimately voted in favor of.

Spotify Technology SA’s shareholders issued special “beneficiary certificates” to its founders in February, in part because co-founder and Chief Executive Daniel Ek wanted to maintain control, a person familiar with the arrangement said. The certificates boosted Mr. Ek’s and his co-founder’s voting control to a combined 80.5%, double their economic ownership. Spotify listed its shares in April. A Spotify spokesman declined to comment.

Snap Inc., whose two co-founders control about 90% of its voting power, sold shares with no voting rights in its 2017 IPO, meaning public-market investors don’t have any say on corporate matters.

Evan Spiegel, co-founder and CEO of the Snapchat parent, received a $625 million stock package that vested with the IPO as an incentive to get it done, people familiar with the deal said.

Drew Houston, co-founder and CEO of online-storage company Dropbox Inc., in December got his own stock package worth potentially $590 million partly tied to his company’s March IPO, according to offering documents. The stock vests based on Dropbox’s share price, among other milestones, and he can earn the full amount only if shares reach $90, triple their current value. Mr. Houston already holds nearly $3 billion of Dropbox’s shares.

Bankers and lawyers who work on IPO deals say there is little precedent for big stock packages offered to founders ahead of public offerings, a reflection of venture-capital firms’ decreasing leverage. Snap and Dropbox representatives declined to comment.

Some star founders may even be emboldened to overstep boardroom norms.

WeWork Cos. co-founder and Chief Executive Adam Neumann, who has 65% voting control, is one of two members of his board’s compensation committee, along with longtime company investor Benchmark, according to WeWork’s recent bond-offering documents. Public companies aren’t usually allowed to have their executives on compensation committees—which set executive pay—to avoid conflicts.

A WeWork spokesman said Mr. Neumann takes $1 a year in salary and declined to comment on whether he receives stock compensation or recuses himself from committee discussions of his pay. It is unclear when WeWork will tap the public markets, but the company’s $4.4 billion investment from SoftBank in 2017 was seen as pushing out its need for a public offering potentially for years.

WeWork bond documents show that in 2016 and 2017, the company paid more than 1.3 million shares of class B stock compensation, worth more than $50 million at the company’s current valuation. Mr. Neumann controls 78% of class B shares, which come with supervoting rights.

—Eliot Brown contributed to this article.

Write to Rolfe Winkler at rolfe.winkler@wsj.com and Maureen Farrell at maureen.farrell@wsj.com

Silicon Valley Is Suffering From A Lack of Humanity

The genius of Steve Jobs lies in his hippie period and with his time at Reed College, the pre-eminent Liberal Arts college in North America. To his understanding of technology, Jobs brought an immersion in popular culture. In his 20s, he dated Joan Baez; Ella Fitzgerald sang at his 30th birthday party. His worldview was shaped by the ’60s counterculture in the San Francisco Bay Area, where he had grown up, the adopted son of a Silicon Valley machinist. When he graduated from high school in Cupertino in 1972, he said, “the very strong scent of the 1960s was still there. After dropping out of Reed College, a stronghold of liberal thought in Portland, Ore., in 1972, Mr. Jobs led a countercultural lifestyle himself. He told a reporter that taking LSD was one of the two or three most important things he had done in his life. He said there were things about him that people who had not tried psychedelics — even people who knew him well, including his wife — could never understand.

Deep Down We All Know Silicon Valley Needs The Humanitarian Vision of Steve Jobs

The genius of Steve Jobs lies in his hippie period and with his time at Reed College. With the deep ethical problems facing technology now, we need Jobs vision more than ever.

To his understanding of technology, Jobs brought an immersion in popular culture. In his 20s, he dated Joan Baez; Ella Fitzgerald sang at his 30th birthday party. His worldview was shaped by the ’60s counterculture in the San Francisco Bay Area, where he had grown up, the adopted son of a Silicon Valley machinist. When he graduated from high school in Cupertino in 1972, he said, “the very strong scent of the 1960s was still there. After dropping out of Reed College, a stronghold of liberal thought in Portland, Ore., in 1972, Mr. Jobs led a countercultural lifestyle himself. He told a reporter that taking LSD was one of the two or three most important things he had done in his life. He said there were things about him that people who had not tried psychedelics — even people who knew him well, including his wife — could never understand.

Decades later Jobs flew around the world in his own corporate jet, but he maintained emotional ties to the period in which he grew up. He often felt like an outsider in the corporate world, he said. When discussing Silicon Valley’s lasting contributions to humanity, he mentioned in the same breath the invention of the microchip and “The Whole Earth Catalog,” a 1960s counterculture publication. Jobs’ experience rings with my own experience in the Santa Clara Valley at that time. Jobs and I were both deeply affected by Stewart Brand, the visionary behind The Whole Earth Catalog. Stanford professor Fred Turner has documented this period in his book “From the Counterculture to Cyberculture, Stewart Brand, the Whole Earth Network, and the Rise of Digital Utopianism.

For me this journey also began with the extraordinary vision of Marshall McLuhan, the Canadian professor of communications, who literally predicted the emergence of the World Wide Web and “The Global Village,” like some kind of modern day Nostradamus.

Stewart Brand is also featured in Tom Wolfe‘s book, “The Electric Kool-Aid Acid Test,” along with Ken Kesey’s Merry Pranksters and The Grateful Dead. I had the great good fortune to formally meet Brand at a COMDEX Microsoft event in a hangar at McCarren Airport in Las Vegas and was immediately impressed by him, as was Jobs. Not surprisingly, Brand was an invited guest at the Microsoft event, having already seized on the importance of the personal computer and the prospect of a networked World. Recently, in another anecdote on that time, Tim Bajarin shared a wonderful story about Job’s counterculture friend and organic gardener who remains the manager of the landscape at the new Apple campus, retaining the feeling of the original Santa Clara Valley orchard economy, that some of us can still remember.

It is important to think back to that time in the Bay Area and the euphoria of the vision of “digital utopianism.” It grounds me and helps me to understand where we have gone so terribly wrong.

Digital utopianism is now dead. I have written about its sad demise on this blog. The wonderful vision of digital utopianism and the Web has been perverted by numerous authoritarian governments, now including our own, resulting in a Balkanized Web and a dark Web pandering all kinds of evil. This is the problem we face and the urgent need for greater emphasis on ethics. What about human life, culture, and values? So many areas of technology are on the verge of deep philosophical questions. Uber has become the poster child for everything that is wrong with Silicon Valley. I ask myself, “What would Steve Jobs have said about Travis Kalanick and Uber?” I think we know the answer. Ironically, Silicon Valley has a center for research and study in ethics, the Markkula Center for Applied Ethics at Santa Clara University. Mike Markkula was an Intel marketing guy who quit Intel to join with two crazy long-haired guys in Cupertino.

I am a Liberal Arts & Humanities graduate myself, including graduate study at Oxford University. When I returned from England I asked the obvious question: Now how do I make a living? As it happened, I very improbably landed my first real job at Intel Corporation. When I asked why I was hired, the answer was that I was judged to have the requisite talent and aptitude if not the technical knowledge. I later developed a reputation for being very “technical” by the process of “osmosis,” by simply living in a highly rarified technical culture and receiving whiteboard tutorials from friendly engineers. I was thrown into a group of Ivy League MBA’s. We wistfully shared a desire to have the others’ educations, but simply working together made us all more effective. Amazingly my career grew almost exponentially and I attribute my success to that cross-fertilization.

While with Intel in Hillsboro Oregon, someone approached me to represent Intel at a talk with Reed students. I was cautioned that few if any Reed students would be interested in working for Intel, but they would be very intellectually engaging. That proved to be a significant understatement. In the end, I believe that perhaps two dozen “Reedies,” as they are known, joined Intel, one of whom went on to a stellar career as a Silicon Valley venture capitalist. A significant part of my later career has been devoted to using my Humanities education background to assess and translate deep technology in human terms for the benefit of both management and potential customers.

Today, nothing of my story would ever happen, but the influence of the Humanities and Arts in business seems more sorely needed than ever.

Uber is Enron Deja Vu: Culture Trumps Strategy

For over a year now I have blogged here about the red flags flying about Travis Kalanick and Uber. Many investigative articles have been published over this time, in the New York Times and other publications, which have raised disturbing questions about Uber, Kalanick and some members of his team. The Board of Directors has finally taken action but it feels like its a day late and a dollar short. Why did it take so long? I have bluntly used the epithet that “Uber is Trump,” but now on reflection, it is more apt to describe Uber as Enron the sequel, and “deja vu all over again.” Remember the audio of two Enron electricity traders laughing about “screwing grandma?” That is Uber.

A Silicon Valley Tragedy

Remember Enron’s “Smartest Guys in the Room?”

An early photo of Uber’s management team

Why did Uber spin so wildly out of control?

Culture Trumps Strategy

So as the current management adage says, culture trumps strategy. This is not simply about the bad behavior of a few individuals and that eliminating them will solve Uber’s problems. The aggressive, confrontational business strategy is itself an integral and inextricable part of the problem. Some have said that Uber has a good business model and deserves to succeed. I dispute that. Jeremy Rifkin’s Third Industrial Revolution describes his vision for a new sharing economy. The book has been read by world leaders and praised for its insights into a bright new evolving economy. Uber and other companies like it have morphed the sharing economy into something ugly.

Uber morphed the sharing economy into “the gig economy,” epitomized by jobs without security or benefits, and the now viral video of Kalanick berating an Uber driver who was going bankrupt. SFGate also exposed the Uber operating strategy of psychologically manipulating drivers to work more hours than intended. The central principle of Kalanick’s business strategy is what he euphemistically describes as “principled confrontation.” Uber enters a market without following any existing rules or regulations, simultaneously entering into negotiations with municipalities which are typified by stalling tactics from Uber, and no intention to conclude an agreement. Uber’s goal is to take over the market by force, making any agreements with municipalities unnecessary. While pursuing its strong-arm goal, Uber has used a software tool, Greyball, to evade law enforcement. Uber is now under criminal investigation for the use of Greyball. Even the notion that Uber somehow improves traffic congestion has been debunked by a Northwestern University study commissioned by the San Francisco Transportation Authority which found that ride sharing has a heavy negative impact on San Francisco’s traffic congestion. See www.sfcta.org/TNCsToday

Uber is also facing a major lawsuit from Google for expropriating Google driverless car technology by hiring one of Google’s engineers. Uber has now fired the engineer in question, but the firing itself may be a circumstantial admission that its intent was to steal Google IP. In another case, nearly 200 Uber employees were encouraged to use fake ID, burner phones and credit cards to sabotage Lyft, by booking and then quickly canceling more than 5000 rides with Lyft. Then there is the matter of what can now only be described as pervasive sexual harassment within Uber. Adding to all of these issues, local communities have begun to resist Uber much more aggressively. In one example, a protest movement in Oakland is opposing Uber’s plan to open offices in Oakland. There are other examples dotted around the World. Finally, there is the unresolved matter of the status of Uber’s drivers as “independent contractors or employees” which is nearing a final decision in California state and federal courts.

Clearly, Uber’s business strategy is driven by its ugly corporate culture. Stepping back to consider the complete picture, Uber’s business strategy looks to me like a house of cards.

Uber’s Leadership Conundrum

Those who know me and my blogs here know that I am a student of Harvard Business School professor John Kotter and his philosophy of leadership with humility at its core. Uber presents a leadership conundrum for me. I was interested to hear BackChannel journalist Jessi Hempel express the same point tonight on PBS Newshour. Uber obviously urgently needs to change its culture, yet without the wild aggressive culture defined by Kalanick, the question remains whether Uber can survive? It is not clear to me that humility could turn the Uber cultural battleship. There have also been a number of business articles suggesting that changing a corporate culture is far more challenging than changing a corporate strategy. So I am left to ponder Peter Drucker’s Four Quadrants of Managerial Behavior, and Quadrant Four’s “high task, low relationship” model for Uber. I learned this in Intel’s M Series management courses years ago. The course used the case study of the film “12 O’Clock High,” a demoralized B-17 bomber unit as its example. Gregory Peck arrives as the new unit commander and begins by “kicking ass and taking names.” A similar case would be George Patton’s arrival in North Africa to take command of a demoralized tank unit. My sense at the moment is the only best hope is that somehow an interim leader at Uber will have the latitude to take whatever actions he deems necessary to right the ship. Such a solution seems doubtful at the moment.

Business Ethics Missing in Action

This morning on NPR’s Morning Edition, Nina Kim interviewed the Director of the Markulla Center for Applied Ethics at Santa Clara University, Kirk Hansen. The Center is named for early Intel and Apple executive, Mike Markkula. Mr. Hansen said that “Uber will undoubtedly become one of the most important business case studies” to emerge from Silicon Valley. Hansen went on to point out that founders of startups are often not capable of taking the company to a mature large company, and that it may be necessary to remove or reassign the founder. In the case of Uber, this is impossible because Kalanick and his founder group have the majority of shares. This contrasts with most startups legal framework, where the investors or Board may hold the right to remove the founder in specific circumstances.

The Smartest Guys in the Room

As a grey-haired Silicon Valley alumni, I am personally offended and outraged by what has happened at Uber. I am deeply ashamed. Over the years I have worked for some well-known SV companies, startups, VC firms, and my own consultancy. I have personal knowledge of things that happened that were not kosher, and I have been present in situations where the ethics were not the best, but nothing in my Silicon Valley experience rises to the level of Uber. Something has gone wildly out of control since my time with how we conduct ourselves in business, and it is now tarnishing the history and reputation of fifty years of Silicon Valley achievements. From my own personal experience working at one wildly successful company years ago, and after rewatching the Enron documentary video, “The Smartest Guys in the Room,” the answer is simple: too much money.

Source: Uber CEO Kalanick likely to take leave, SVP Michael out: source | Reuters

TECHNOLOGY NEWS | Mon Jun 12, 2017 | 4:22pm ED

By Heather Somerville and Joseph Menn | SAN FRANCISCO | Reuters

Uber Technologies Inc [UBER.UL] Chief Executive Travis Kalanick is likely to take a leave of absence from the troubled ride-hailing company, but no final decision has yet been made, according to a source familiar with the outcome of a Sunday board meeting.

Emil Michael, senior vice president, and a close Kalanick ally has left the company, the source said.

At the Sunday meeting, the company’s board adopted a series of recommendations from the law firm of former U.S Attorney General Eric Holder following a sprawling, multi-month investigation into Uber’s culture and practices, according to a board representative.

Uber will tell employees about the recommendations on Tuesday, said the representative, who declined to be identified.

The company is also adding a new independent director, Nestle executive, and Alibaba board member Wan Ling Martello, a company spokesman said.

Holder and his law firm were retained by Uber in February to investigate company practices after former Uber engineer Susan Fowler published a blog post detailing what she described as sexual harassment and a lack of a suitable response by senior managers.

The recommendations in Holder’s firm’s report place greater controls on spending, human resources and other areas where executives led by Kalanick have had a surprising amount of autonomy for a company with more than 12,000 employees, sources familiar with the matter said.

Kalanick and two allies on the board have voting control of the company. Kalanick’s forceful personality and enormous success with Uber to date, as well as his super-voting shares, have won him broad deference in the boardroom, according to the people familiar with the deliberations.

Any decision to take a leave of absence will ultimately be Kalanick’s, one source said.

The world’s most valuable venture-backed private company has found itself at a crossroads as its rough-and-tumble approach to local regulations and handling employees and drivers has led to a series of problems.

It is facing a criminal probe by the U.S. Department of Justice over its use of a software tool that helped its drivers evade local transportation regulators, sources have told Reuters.

Last week, Uber said it fired 20 staff after another law firm looked into 215 cases encompassing complaints of sexual harassment, discrimination, unprofessional behavior, bullying and other employee claims.

SILICON VALLEY SHOCK

Even a temporary departure by Kalanick would be a shock for the Silicon Valley startup world, where company founders in recent years have enjoyed more autonomy and often become synonymous with their firms.

Uber’s image, culture, and practices have been largely defined by Kalanick’s brash approach, company insiders and investors previously told Reuters.

Uber board member Arianna Huffington said in March that Kalanick needed to change his leadership style from that of a “scrappy entrepreneur” to be more like a “leader of a major global company.” The board has been looking for a chief operating officer to help Kalanick run the company since March.

The debate over Kalanick’s future comes as he is also facing a personal trauma: His mother died last month in a boating accident, in which his father was also badly injured.

Michael, described by employees as Kalanick’s closest deputy, has been a recurring flashpoint for controversy at the company.

He once discussed hiring private investigators to probe the personal lives of reporters writing stories faulting the company. Kalanick disavowed and publicly criticized the comments.

Michael will be replaced as the company’s top business development executive by David Richter, currently an Uber vice president, the company spokesman said.

Alongside Uber’s management crisis, its self-driving car program is in jeopardy after a lawsuit from Alphabet Inc alleging trade secrets theft, and the company has suffered an exodus of top executives.

One Uber investor called the board’s decisions on Sunday a step in the right direction, giving Uber an “opportunity to reboot.”

Jerks And The Start-ups They Ruin

Perhaps the premiere of Season 4 of “Silicon Valley” twigged me to share this post. but despite the title, the HBO series only connection may be the now viral “mean jerk time algorithm.” The real “Silicon Valley jerk” has been around for decades, buried with all the other dirty laundry. Uber’s Travis Kalanick has only brought it front and center at this moment. It is something of a conundrum as some of the jerks are also the most successful. We all now know about the “bad” Steve Jobs. Oracle for years had a very bad reputation that came directly from Larry Ellison himself. Microsoft was long known as a “sweatshop” with a highly negative culture led by Steve Ballmer. Even venture capitalists themselves have caught the disease as evidenced by Reid Hoffman and the late Tom Perkins of KPCB. The best assessment I have heard is that these aggressive unrestrained corporate cultures destroy their own goals. Or better yet, the saying that “culture trumps strategy.”

Perhaps the premiere of Season 4 of “Silicon Valley” twigged me to share this post. but despite the title, the HBO series only connection may be the now viral “mean jerk time algorithm.” The real “Silicon Valley jerk” has been around for decades, buried with all the other dirty laundry. Uber’s Travis Kalanick has only brought it front and center at this moment. It is something of a conundrum as some of the jerks are also the most successful. We all now know about the “bad” Steve Jobs. Oracle for years had a very bad reputation that came directly from Larry Ellison himself. Microsoft was long known as a “sweatshop” with a highly negative culture led by Steve Ballmer. Even venture capitalists themselves have caught the disease as evidenced by Reid Hoffman and the late Tom Perkins of KPCB. The best assessment I have heard is that these aggressive unrestrained corporate cultures destroy their own goals. Or better yet, the saying that “culture trumps strategy.”

Reblogged from the New York Times

SundayReview | OPINION

Jerks and the Start-Ups They Ruin

By DAN LYONS, APRIL 1, 2017

Credit: Tim Enthoven

The tech industry has a problem with “bro culture.” People have been complaining about it for years. Yet nobody has done much to fix it.

That may finally change if the people in charge of Silicon Valley — venture capitalists, who control the money — start to realize that the real problem with tech bros is not just that they’re boorish jerks. It’s that they’re boorish jerks who don’t know how to run companies.

Look at Uber, the ride-hailing start-up. It’s the biggest tech unicorn in the world, with a valuation of $69 billion. Not long ago Uber seemed invincible. Now it’s in free fall, and top executives have fled. The company’s woes spring entirely from its toxic bro culture, created by its chief executive, Travis Kalanick.

What is bro culture? Basically, a world that favors young men at the expense of everyone else. A “bro co.” has a “bro” C.E.O., or C.E.-Bro, usually a young man who has little work experience but is good-looking, cocky and slightly amoral — a hustler. Instead of being forced by investors to surround himself with seasoned executives, he is left to make decisions on his own.

The bro C.E.O. does what you’d expect an immature young man to do when you give him lots of money and surround him with fawning admirers — he creates a culture built on reckless spending and excessive partying, where bad behavior is not just tolerated but even encouraged. He creates the kind of company in which going to an escort bar with your colleagues, as Mr. Kalanick did in South Korea in 2014, according to recent reports, seems like a good idea. (The visit led, understandably, to a complaint to the personnel department.)

Bro cos. become corporate frat houses, where employees are chosen like pledges, based on “culture fit.” Women get hired, but they rarely get promoted and sometimes complain of being harassed. Minorities and older workers are excluded.

Bro culture also values speedy growth over sustainable profits, and encourages cutting corners, ignoring regulations and doing whatever it takes to win.

Sometimes it works. But often the whole thing just flames out. The bros blow through the money and find they have no viable business. For example, Quirky, founded in 2009 by the 20-something Ben Kaufman. It raised $185 million to build a “social product development platform” that sold kooky gadgets but filed for bankruptcy basically because the “brash” and “unorthodox” chief executive had no business being a chief executive. One indication that Mr. Kaufman is a bro? Well, the first reference he lists on his LinkedIn page is: “He’s a dick … but hilarious.”

Zenefits, a human-resources start-up, and another bro co., raised $583 million, at a peak valuation of $4.5 billion, then crashed after reports that it had used software to cheat on licensing courses for insurance brokers, and operated a hard-partying workplace where cups of beer and used condoms were left in stairwells. Zenefits limps on, but its C.E.-Bro co-founder has left the company, and nearly half the staff has been laid off.

Uber’s public downfall began in February, when Susan Fowler, a former engineer at the company, wrote about enduring sexual harassment and discrimination there. Other employees came forward with stories. One involved a manager groping employees’ breasts. Mr. Kalanick’s own bro-hood became part of the story when a video surfaced showing him berating a Uber driver who complained that Uber’s price cuts had driven him into bankruptcy. Mr. Kalanick said the driver needed to take responsibility for his own life.

As this was happening, Google’s self-driving car unit sued Uber, alleging it had stolen its ideas. Then word leaked that Uber had been using a sneaky software tool to deceive regulators in cities around the world. All this is as much a part of “bro culture” as the poor treatment of women; the point is to get away with as much as you can.

Hoping to right the ship, Uber appointed one of its board members, Arianna Huffington, to join former attorney general Eric Holder and others to investigate the sexual harassment claims. Mr. Kalanick has apologized and vowed to “grow up.” (He’s 40.) Most important, Uber has announced that it is planning to hire a chief operating officer, ideally a steady hand like Sheryl Sandberg, the chief operating officer of Facebook. It’s a great idea, but it should have happened years ago. Now it may be too late.

Ms. Huffington insists the board has full confidence in Mr. Kalanick. But should it? He’s a college dropout with a spotty track record and a reputation for pugnacity. His record at Uber includes racking up enormous losses — reportedly $5 billion over the last two years. Despite this, the bluest blue-chip investors (including Goldman Sachs and Morgan Stanley) have invested a total of $16 billion in Uber.

Bro C.E.O.s are better at raising money than making money. So why do venture capitalists keep investing in them? It may be because many of the venture capitalists are bros as well.

Venture capitalists used to be tech engineers who had made a bundle, retired early and took up investing in start-ups as a kind of white-shoe hobby. The new breed are competitive alpha males who previously might have gone to work as bond traders. At the same time, there are fewer women. In 1999, 10 percent of investing partners at venture capital companies were women. By 2014 the number had declined to 6 percent, according to the Diana Project at Babson College. This is probably one reason that, despite many studies showing that women run companies better than men, none of the 15 biggest American tech companies valued over $1 billion has a female chief executive.

Uber’s collapse should not come as a surprise but it does offer a lesson: Toxic workplace culture and rotten financial performance go hand-in-hand. It’s possible for a boorish jerk to run a successful company, but jerks do best when surrounded by non-jerks, and bros do best when they hire seasoned executives to help them. Without “adult supervision” and institutional restraints, the C.E.-Bro’s vices end up infecting the culture of the workplaces they control.

This poisonous state of affairs will get fixed only when investors start getting hurt. A crash at Uber, the most high-profile tech start-up in the world, could provide the jolt that finally brings the tech industry back to its senses.

Uber’s Aggressive, Unrestrained Culture Destroys It’s Own Goals

UPDATE: KALANICK VIDEO SURFACES. Suffice to say, people are angry with Uber, and things aren’t getting better. This is actually deja vu all over again. We have seen this before in Silicon Valley. The hubris of a company founders or founders creates an ugly overly aggressive and unrestrained culture in its employees and before long things begin to unravel. This has been quietly observed at Uber for some time, and can be gleaned by its own actions as reported in the press. Now, new self-inflicted cracks are appearing. More than 200,000 people have deleted the UBER app off their smart phones in the past month. After former employee Susan Fowler Rigetti published a detailed blog post about the sexual harassment and discrimination she allegedly experienced at the company, people began deleting the ride sharing-app again. As more and more employees have spoken out about the alleged poor working conditions, Uber’s customer base is dwindling … and the company is getting desperate.

How Corporate Culture Can Trump Strategy For the Worse

As Uber suffers blow after blow to its reputation, users are deleting the app.

UPDATE: As if to underscore the point of this post, only days after the New York Times published the story below, Uber CEO Travis Kalanick was captured on an Uber driver’s dash cam, engaging in a heated argument with the Uber driver over lower pay that has driven the driver into bankruptcy. Kalanick has today issued a formal apology to all Uber employee’s saying that he needs to “grow up” and get “leadership” help.

See the video here: Kalanick Loses It With Uber Driver

Suffice to say, people are angry with Uber, and things aren’t getting better. This is actually deja vu all over again. We have seen this before in Silicon Valley. The hubris of a company founders or founders creates an ugly overly aggressive and unrestrained culture in its employees and before long things begin to unravel. This has been quietly observed at Uber for some time, and can be gleaned by its own actions as reported in the press. Now, new self-inflicted cracks are appearing. More than 200,000 people have deleted the UBER app off their smart phones in the past month. After former employee Susan Fowler Rigetti published a detailed blog post about the sexual harassment and discrimination she allegedly experienced at the company, people began deleting the ride sharing-app again. As more and more employees have spoken out about the alleged poor working conditions, Uber’s customer base is dwindling … and the company is getting desperate.

A few weeks ago, people boycotted the company after Uber provided rides at New York’s JFK airport during a taxi strike over President Donald Trump’s immigration ban. More than 200,000 people got rid of the Uber app and the #DeleteUber hashtag began trending on Twitter. Then, anger boiled again over Uber CEO Travis Kalanick’s position on Trump’s advisory board. He eventually quit the board.

SAN FRANCISCO — When new employees join Uber, they are asked to subscribe to 14 core company values, including making bold bets, being “obsessed” with the customer, and “always be hustlin’.” The ride-hailing service particularly emphasizes “meritocracy,” the idea that the best and brightest will rise to the top based on their efforts, even if it means stepping on toes to get there.

Those values have helped propel Uber to one of Silicon Valley’s biggest success stories. The company is valued at close to $70 billion by private investors and now operates in more than 70 countries.

Yet the focus on pushing for the best result has also fueled what current and former Uber employees describe as a Hobbesian environment at the company, in which workers are sometimes pitted against one another and where a blind eye is turned to infractions from top performers.

Interviews with more than 30 current and former Uber employees, as well as reviews of internal emails, chat logs and tape-recorded meetings, paint a picture of an often unrestrained workplace culture. Among the most egregious accusations from employees, who either witnessed or were subject to incidents and who asked to remain anonymous because of confidentiality agreements and fear of retaliation: One Uber manager groped female co-workers’ breasts at a company retreat in Las Vegas. A director shouted a homophobic slur at a subordinate during a heated confrontation in a meeting. Another manager threatened to beat an underperforming employee’s head in with a baseball bat.

Until this week, this culture was only whispered about in Silicon Valley. Then on Sunday, Susan Fowler, an engineer who left Uber in December, published a blog post about her time at the company. She detailed a history of discrimination and sexual harassment by her managers, which she said was shrugged off by Uber’s human resources department. Ms. Fowler said the culture was stoked — and even fostered — by those at the top of the company.

“It seemed like every manager was fighting their peers and attempting to undermine their direct supervisor so that they could have their direct supervisor’s job,” Ms. Fowler wrote. “No attempts were made by these managers to hide what they were doing: They boasted about it in meetings, told their direct reports about it, and the like.”

Travis Kalanick, Uber’s chief executive, has taken several steps since a former employee’s accusations of discrimination and sexual harassment by managers. CreditMarlene Awaad/Bloomberg

Her revelations have spurred hand-wringing over how unfriendly Silicon Valley workplaces can be to women and provoked an internal crisis at Uber. The company’s chief executive, Travis Kalanick, has opened an internal investigation into the accusations and has brought in the board member Arianna Huffington and the former attorney general Eric H. Holder Jr. to look into harassment issues and the human resources department.

To contain the fallout, Mr. Kalanick also began more disclosure. On Monday, he said that 15.1 percent of Uber’s engineering, product management and scientist roles were filled by women, and that those numbers had not changed substantively over the past year.

Mr. Kalanick also held a 90-minute all-hands meeting on Tuesday, during which he and other executives were besieged with dozens of questions and pleas from employees who were aghast at — or strongly identified with — Ms. Fowler’s story and demanded change.

In what was described by five attendees as an emotional moment, and according to a video of the meeting reviewed by The New York Times, Mr. Kalanick apologized to employees for leading the company and the culture to this point. “What I can promise you is that I will get better every day,” he said. “I can tell you that I am authentically and fully dedicated to getting to the bottom of this.”

Some Uber employees said Mr. Kalanick’s speedy efforts were positive. “I am pleased with how quickly Travis has responded to this,” Aimee Lucido, an Uber software engineer, wrote in a blog post. “We are better situated to handle this sort of problem than we have ever been in the past.”

As chief executive, Mr. Kalanick has long set the tone for Uber. Under him, Uber has taken a pugnacious approach to business, flouting local laws and criticizing competitors in a race to expand as quickly as possible. Mr. Kalanick, 40, has made pointed displays of ego: In a GQ article in 2014, he referred to Uber as “Boob-er” because of how the company helped him attract women.

That tone has been echoed in Uber’s workplace. At least two former Uber workers said they had notified Thuan Pham, the company’s chief technical officer, of workplace harassment at the hands of managers and colleagues in 2016. One also emailed Mr. Kalanick.

Uber also faces at least three lawsuits in at least two countries from former employees alleging sexual harassment or verbal abuse at the hands of managers, according to legal documents reviewed by The Times. Other current and former employees said they were considering legal action against the company.

Liane Hornsey, Uber’s chief human resources officer, said in a statement, “We are totally committed to healing wounds of the past and building a better workplace culture for everyone.”

While Uber is now the dominant ride-hailing company in the United States, and is rapidly growing in South America, India and other countries, its explosive growth has come at a cost internally. As Uber hired more employees, its internal politics became more convoluted. Getting ahead, employees said, often involved undermining departmental leaders or colleagues.

Arianna Huffington, an Uber board member, was brought in to look into harassment issues and the human resources department.

Workers like Ms. Fowler who went to human resources with their problems said they were often left stranded. She and a half-dozen others said human resources often made excuses for top performers because of their ability to improve the health of the business. Occasionally, problematic managers who were the subject of numerous complaints were shuffled around different regions; firings were less common.

One group appeared immune to internal scrutiny, the current and former employees said. Members of the group, called the A-Team and composed of executives who were personally close to Mr. Kalanick, were shielded from much accountability over their actions.

One member of the A-Team was Emil Michael, senior vice president for business, who was caught up in a public scandal over comments he made in 2014 about digging into the private lives of journalists who opposed the company. Mr. Kalanick defended Mr. Michael, saying he believed Mr. Michael could learn from his mistakes.

Uber’s aggressive workplace culture spilled out at a global all-hands meeting in late 2015 in Las Vegas, where the company hired Beyoncé to perform at the rooftop bar of the Palms Hotel. Between bouts of drinking and gambling, Uber employees used cocaine in the bathrooms at private parties, said three attendees, and a manager groped several female employees. (The manager was terminated within 12 hours.) One employee hijacked a private shuttle bus, filled it with friends and took it for a joy ride, the attendees said.

At the Las Vegas outing, Mr. Kalanick also held a companywide lecture reviewing Uber’s 14 core values, the attendees said. During the lecture, Mr. Kalanick pulled onstage employees who he believed exemplified each of the values. One of those was Mr. Michael.

Since Ms. Fowler’s blog post, several Uber employees have said they are considering leaving the company. Some are waiting until their equity compensation from Uber, which is restricted stock units, is vested. Others said they had started sending résumés to competitors.

Still other employees said they were hopeful that Uber could change. Mr. Kalanick has promised to deliver a diversity report to better detail the number of women and minorities who work at Uber, and the company is holding listening sessions with employees.

At the Tuesday all-hands meeting, Ms. Huffington, the Uber board member, also vowed that the company would make another change. According to attendees and video of the meeting, Ms. Huffington said there would no longer be hiring of “brilliant jerks.”

Uber Is Still Trump

UPDATE: This February 3, 2016 post on Uber deserves an update. This week Uber announced that it lost $800 Million in its 3rd quarter. That’s correct, $800 Million in only three months. The Uber announcement tries to spin the loss as good news for Uber as ” increased by only 25% over the third quarter last year. An $800 Million quarterly loss is right up there in the same league with Trump lost money. I guess we need to remember Trump’s admonition that debt is good, and it’s ok to lose other people’s money. Uber’s announcement goes on to project continuing losses projected to be greater than $3 Billion next year, as Uber continues its plans for an apparent IPO for brain dead investors.

Permits? We don’t need no stinkin’ permits!

UPDATE: This February 3, 2016 post on Uber deserves an update. This week Uber announced that it lost $800 Million in its 3rd quarter. That’s correct, $800 Million in only three months. The Uber announcement tries to spin the loss as good news for Uber as ” increased by only 25% over the third quarter last year. An $800 Million quarterly loss is right up there in the same league with Trump lost money. I guess we need to remember Trump’s admonition that debt is good, and it’s ok to lose other people’s money. Uber’s announcement goes on to project continuing losses projected to be greater than $3 Billion next year, as Uber continues its plans for an apparent IPO for brain dead investors.

Then we have Uber’s new dispute with the California Department of Motor Vehicles and Attorney General’s office. Uber has begun operating self-driving vehicles in San Francisco without obtaining the necessary permits. Uber is claiming that they are exempt and don’t need permits to operate driverless cars. They “don’t need no stinkin’ permits,” though video posted on SFGate shows an Uber driverless vehicle running a red light on 3rd Street, right in front of SFMOMA. Why do I feel like Uber and Trump are the same thing?

The Problem With Uber Has Absolutely Nothing To Do With Ride Sharing

Donald Trump, Travis Kalanick, and Uber

So Trump is Uber and conversely, Uber is Trump. This comparison has been made by both supporters and opponents, so as they say, there must be some truth in it. Both Uber and Trump have based their strategies on disrupting the status quo and the establishment with politically incorrect behavior. My argument here is simply that while the disruption fostered by both Trump and Uber may appear attractive at first glance, and desirable to many, in both cases, there are much deeper ethical issues that are only now coming to the forefront.

Uber’s origins date back to a cold winter night in Paris in 2008, when founders Travis Kalanick and Garrett Camp were stranded without a cab. Having personally also been stranded in Paris without a taxi on a cold and rainy night, I can commiserate. But the real strategy behind the founding of Uber was to disrupt what they perceived to be an overregulated industry ripe for the picking, managed by municipalities and regional agencies ill-equipped to handle the kind of corporate pressure brought to bear by Uber. The Uber strategy involves massive PR, faux negotiations with slow-moving regulatory bureaucracies, followed by defiantly ignoring the law, which Uber euphemistically describes as “principled confrontation.” It is nothing less than blitzkrieg. Similarly, Donald Trump has crafted his strategy to disrupt politics as usual, with political incorrectness, bluster, and bombast. Both Travis Kalanick of Uber and Donald Trump share the same odd appeal for their disruption, but both also have armies of critics who perceive much deeper and disturbing issues. It all has an air faintly of Fredrick Nietzche’s Man and Superman and Ayn Rand’s philosophy of total self-interest.

Ayn Rand

I also ask rhetorically why and how Uber has managed to attract such a massive unprecedented pile of investment capital. Uber is the current global symbol of defiant confrontation with any and all regulation of industries. Some are arguing convincingly that the huge pile of cash may have to do with sheer plutocratic greed, driven by Wall Street lobbyists, keen to roll back all regulation of capitalism everywhere. There is no shortage of circumstantial evidence that this may be correct, from the ongoing global banking scandals to corporate tax evasion.

Both Trump and Uber also now appear to be hitting serious bumps in their strategies. Trump ignominiously lost the Iowa Caucus and is facing a serious threat from a Republican establishment determined to stop his candidacy one way or another. Uber is facing its own disruption, a federal lawsuit by the California Public Utilities Commission, challenging Uber’s definition of their drivers as “contractors.” The California PUC lawsuit has spawned numerous other similar actions against Uber and is being closely watched by legal experts around the World, particularly in the European Union countries and India. A decision against Uber could have major global consequences for Uber’s business model. Meanwhile, organized protests against Uber’s practices, policies, and contractor pay have also evolved and escalated. The early protests were particularly unsuccessful and counter-productive, and which served only to aggravate the public. However, more recent protest strategies have been much more effective. For whatever reason, Uber elected to announce its intent to reduce contract driver pay recently, which has provided a strategic opportunity for organized protests in many cities.

The core issue for me is the glaring distortion of Jeremy Rifkin’s Third Industrial Revolution into an unabashed corporate takeover of the sharing economy. The capital feeding frenzy around Uber is disturbing, and still a potential bubble if things don’t go as planned. It also betrays myopia for Big Ideas in favor of the quick buck.

ANALYSIS

Uber discussions need to go beyond the fact it offers a cheaper ride

‘This isn’t just an Uber problem. If they get away with it, every company will do this.’

By Paul Haavardsrud, CBC News Posted: Jan 24, 2016 5:00 AM ET Last Updated: Jan 24, 2016 9:30 AM ET

A man rides his bicycle between taxis parked on the street during a protest against Uber in Rio de Janeiro, Brazil on July 24, 2015. A number of protests have cropped up the world over as the ride-hailing app grows in popularity.

This is part three of a three-part series on Uber. Read parts one and two.

Outraged taxi drivers the world over telling anyone who will listen that Uber is the devil in corporate form makes it tough, even for those so inclined, to blithely accept at face value the company’s argument that it’s just a technology firm disrupting a sheltered industry.

It would be nice if that were the case. Easier.

But nothing is ever that easy, is it? And neither is Uber.

In fairness, you could say there’s much to like about a company that can deliver a prompt ride at the push of a button, often at a cheaper price than cabs. So far, so good.

But that’s only the beginning of the Uber discussion. A closer look at the company’s particular brand of disobedience could quickly become unsettling.

Uber may like to cast itself as a harmless scofflaw that’s willing to bend a few rules for the greater good, but legal experts say its practices are hardly benign.

Uber taxi ottawa protest

Uber’s confrontational approach to changing regulation is taking direct aim at the taxi industry. (Alistair Steele/CBC)

Working for its own narrow self-interest, the company’s systemic disregard for regulations — a stratagem termed “corporate nullification” — can undermine the laws of the land that everyone else follows.

“This isn’t just an Uber problem. If they get away with it, every company will do this; every company will become a platform and just say ‘oh, the laws don’t apply to us.’ If we enter into that stage, then it’s game over for vast swathes of business regulation: environmental, insurance, civil rights, worker protection, consumer protection, that’s all gone,” said Frank Pasquale, a law professor at the University of Maryland.

“People don’t see the stakes of it, they think ‘oh well, you know, we have to disrupt taxi cabs and we have to get this stuff done,’ but it doesn’t have to be done on Uber’s terms. The stakes couldn’t be higher in terms of the ability of these platforms to just get out of regulation.”

Gig economy

In the here and now, of course, warnings about the consequences of corporations flouting the rule of law can feel abstract compared to the immediate gratification of getting a cheaper ride to the airport.

That may soon change. While researchers haven’t yet reached a consensus on the number of workers participating in the so-called gig economy, most agree that new forms of contract employment made possible by companies like Airbnb, TaskRabbit and Uber are on the rise.

In the U.S., a recent poll suggests more than one in five Americans have participated in this type of on-demand contract employment. Part of the conversation now taking place there, which is beginning to migrate to Canada, involves asking what responsibilities 21st-century companies will have to workers, as well as the rest of society.

As it stands, employers and employees both pay to fund programs such as health care, employment insurance, Old Age Security and other parts of the social safety net. The question of who will cover those costs if the nature of work changes to include fewer traditional full-time positions — not to mention the fate of worker protections such as overtime and minimum wage — is still in search of an answer.

Indeed, the recent popularization of the term “gig economy” reflects thisevolution of the work world to include more part-time and contract employment and fewer of the full-time jobs that have traditionally been the bedrock of the middle class.

As for the more well-known term, “sharing economy,” it’s losing ground amidst a growing recognition that sharing isn’t really part of the equation. A transaction in which a passenger pays a driver wouldn’t seem to be any different from what happens with a taxi. Yet taking a cab isn’t known as sharing a ride.

Play Media

Angry taxi driver confronts Uber driver1:13

Wrapping itself in the language of the sharing economy, however, allows Uber to align itself with values like co-operation, sustainability and community. It’s a smart play, if disingenuous, particularly insofar as it helps to bathe a business model that’s so nakedly commercial in a kinder, gentler light. Uber, as is often pointed out, is libertarian to its core, whether it’s the company’s attempts to dismantle regulation or its belief in the righteousness of the unfettered free market.

What happens to cabbies?

None of this, of course, makes Uber an evil corporation. At the same time, the speed at which the company, among the fastest-growing startups in the history of Silicon Valley, is crashing through the world puts it at the centre of any number of questions.

On the front lines of those looking for answers is the taxi industry. The existing system may be flawed, overregulated, and too costly, but that doesn’t mean cabbies should just be written off as collateral damage — the result of rule changes inspired by the financial ambitions of a single company.

Toronto Taxi Anti-Uber protest

Many taxi drivers say they can’t compete with a company that isn’t governed by the same strict, and costly, regulations. (John Rieti/CBC)

By pushing cities into making immediate changes, though, Uber is manufacturing a binary choice. To limit the decision to Uber or the current flawed system, however, is a false construct. The taxi system doesn’t need to be overhauled tomorrow and changes could come in many different ways that allow for ride-hailing services while also protecting existing taxi drivers.

“The main problem is it’s not an empty space,” said Mariana Valverde, a professor at the University of Toronto and an urban law expert. “Uber is coming in and they’re combining the power of a big, U.S.-based corporation with lots of lobbyists and lots of money, on the one hand, with a total disregard for regulations and rules. Taxi drivers have played by the rules and they’ve often followed really strict, often quite picky and annoying rules, and they’re seeing their livelihoods vanish.”

Big issues

The back-and-forth between Uber and the taxi industry opens up any number of considerations, ranging from practical to theoretical to troubling.

If Uber’s continued success pushes existing taxi fleets out of business, it’s worth wondering what happens to fares. The company’s introduction of surge pricing, which allows the price of rides to float when demand outstrips supply, points in a direction that may have customers yearning for the regulated days of yore. A market monopoly may never come to pass, but Uber’s success to date, combined with the controversies that surge pricing have already inspired, doesn’t make it a comforting thought.

Uber Surge Pricing 20160112

Uber’s introduction of surge pricing, which allows the price of rides to float when demand outstrips supply, may one day have customers yearning for the regulated days of yore if a market monopoly is ever reached. (The Canadian Press)

The us-versus-them dynamic that’s developed between Uber and cab companies is also too often accompanied by an ugly undercurrent of racism that targets the ethnic makeup of the taxi industry. To be clear, this isn’t Uber’s fault per se, but it is an element of the ongoing confrontation that needs to be better recognized, understood and defused.

The many issues surrounding Uber can also become an issue in itself. As tales of Uber’s unsavoury tactics continue to circulate, how does someone who just wants to take an Uber across town reconcile the tension between wanting to be a good citizen, yet also a savvy consumer at the same time.

One theory, put forward by Robert Reich, suggests that no one can be blamed for seeking out a cheaper ride, regardless of how conflicted they may feel about the company offering the service. Our consumer selves, he says, are wired to look for the best deal possible and, on some level, we’ve made peace with what that entails. At the same time, he continues, serious thought must also be given to the responsibilities of citizenship.

As Uber inspires changes to the existing system, the idea of what our citizen selves might contribute to the discussion is worth considering. Yes, change is going to happen and outdated regulations need to be updated. How those changes happen, though, also matters a great deal. And not just to cabbies.

Apocalypse now: has the next giant financial crash already begun?

This is one of the better mainstream media analyses on the growing concern regarding Global Financial Contagion. Reblogged from The Guardian (UK) The author, Paul Mason is economics editor of Channel 4 News. @paulmasonnews.
‘The biggest risk is not deflation of a bubble. It is the risk of that becoming intertwined with geopolitics.’

This is one of the better mainstream media analyses on the growing concern regarding Global Financial Contagion.

Reblogged from The Guardian (UK) The author, Paul Mason is economics editor of Channel 4 News. @paulmasonnews

Apocalypse now: has the next giant financial crash already begun?

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‘The biggest risk is not deflation of a bubble. It is the risk of that becoming intertwined with geopolitics.’ — ‘The biggest risk is not deflation of a bubble. It is the risk of that becoming intertwined with geopolitics

The 1st of October came and went without financial armageddon. Veteran forecaster Martin Armstrong, who accurately predicted the 1987 crash, used the same model to suggest that 1 October would be a major turning point for global markets. Some investors even put bets on it. But the passing of the predicted global crash is only good news to a point. Many indicators in global finance are pointing downwards – and some even think the crash has begun.

Let’s assemble the evidence. First, the unsustainable debt. Since 2007, the pile of debt in the world has grown by $57tn (£37tn). That’s a compound annual growth rate of 5.3%, significantly beating GDP. Debts have doubled in the so-called emerging markets, while rising by just over a third in the developed world.

John Maynard Keynes once wrote that money is a “link to the future” – meaning that what we do with money is a signal of what we think is going to happen in the future. What we’ve done with credit since the global crisis of 2008 is expand it faster than the economy – which can only be done rationally if we think the future is going to be much richer than the present.

This summer, the Bank for International Settlements (BIS) pointed out that certain major economies were seeing a sharp rise in debt-to-GDP ratios, which were well outside historic norms. In China, the rest of Asia and Brazil, private-sector borrowing has risen so quickly that BIS’s dashboard of risk is flashing red. In two-thirds of all cases, red warnings such as this are followed by a major banking crisis within three years.

The underlying cause of this debt glut is the $12tn of free or cheap money created by central banks since 2009, combined with near-zero interest rates. When the real price of money is close to zero, people borrow and worry about the consequences later.

Next, let’s look at the price of real things. Oil collapsed first, in mid-2014, falling from $110 a barrel to $49 now, despite a slight rebound in the interim. Next came commodities. Copper cost $4.50 a pound in 2011, but was half that in September. Inflation across the entire G7 is barely above zero, and deflation stalks the southern eurozone. World trade volumes have contracted tangibly since December 2014, according to the Dutch government index, while the value of global trade in primary commodities, which scored 150 on the same index a year ago, now stands at 114.

In these circumstances, the only way in which the expanding credit mountain can be an accurate signal about the future is if we are about to go through a spectacular productivity boom. The technology is there to do that, but the social arrangements are not. The market rewards companies that create labour exchanges for minicab drivers with multibillion-dollar valuations. Hot money chases after computing graduates with good ideas, but that is – at this phase of the cycle – as much an indicator of the stupidity of the money as the brightness of the ideas.

China – the engine of the post-2009 global recovery – is slowing markedly. Japan just revised its growth projections down, despite being in the middle of a massive money-printing programme. The euro zone is stagnant. In the US, growth, which recovered well under QE, has faltered after the withdrawal of QE.

In short, as the BIS economists put it, this is “ a world in which debt levels are too high, productivity growth too weak and financial risks too threatening”. It’s impossible to extrapolate from all this the date the crash will happen, or the form it will take. All we know is there is a mismatch between rising credit, falling growth, trade and prices, and a febrile financial market, which, at present, keeps switchback riding as money flows from one sector, or geographic region, to another.

A better exercise is to image what archetypes a dramatist might use if they tried to write a farce describing the state of society on the eve of yet another disaster. There would be a character obsessed with property: London is fizzing with young professionals trying to clinch property deals right now. The riverbanks of the Thames are forested with cranes, show apartments and half-occupied speculative developments that will, after the crash, make great social housing.

Then there would have to be a hapless central banker, optimistically “looking through” the figures for low growth, stagnant prices and collapsing trade in order to justify doing nothing.

But the protagonist would have to be a politician. The Kingston University economist Steve Keen points out that, in the run up to 2008, the flawed ideology of neoliberal economics made a dangerous situation worse. Economists put their professional imprimatur on the idea that risky investments were safe. Today, the stable door of economics is firmly shut. Even mainstream bank economists are calling for radical measures to revive growth: Nick Kounis, ABN Amro’s macro-economics chief, called on central banks to raise their inflation targets to 4% and flood the world with money in a coordinated survival strategy.

Instead, it is in the world of geopolitics that the danger of elite groupthink is clearest. The economic danger becomes clear if you understand that printing $12tn incentivises every country to dump the final cost of anti-crisis measures on someone else. But there is now also a clear geopolitical risk.

The oil price collapsed because the Saudis wanted to stymie the US fracking industry. Right now, although Russian and American diplomats are capable of sitting together in Vienna, their strike-attack pilots do not communicate as they attack their variously selected enemies on the ground in Syria. Europe, weakened by the Greek crisis, its cross-border institutions thrown into chaos by the refugee crisis, looks incapable of doing anything to anybody.

So, the biggest risk to the world, despite its growing seriousness, is not the deflation of a bubble. It is the risk of that becoming intertwined with geopolitics. Any politician who minimises or ignores this risk is doing what the purblind economists did in the run up to 2008.

Paul Mason is economics editor of Channel 4 News. @paulmasonnews

Uber Is Trump

The Problem With Uber Has Absolutely Nothing To Do With Ride Sharing

Donald Trump, Travis Kalanick, and Uber

Ayn Rand

ANALYSIS

Uber discussions need to go beyond the fact it offers a cheaper ride

‘This isn’t just an Uber problem. If they get away with it, every company will do this.’

By Paul Haavardsrud, CBC News Posted: Jan 24, 2016 5:00 AM ET Last Updated: Jan 24, 2016 9:30 AM ET

This is part three of a three-part series on Uber. Read parts one and two.

It would be nice if that were the case. Easier.

But nothing is ever that easy, is it? And neither is Uber.

In fairness, you could say there’s much to like about a company that can deliver a prompt ride at the push of a button, often at a cheaper price than cabs. So far, so good.

But that’s only the beginning of the Uber discussion. A closer look at the company’s particular brand of disobedience could quickly become unsettling.

Uber may like to cast itself as a harmless scofflaw that’s willing to bend a few rules for the greater good, but legal experts say its practices are hardly benign.

Uber taxi ottawa protest

Uber’s confrontational approach to changing regulation is taking direct aim at the taxi industry. (Alistair Steele/CBC)

Gig economy

Play Media

Angry taxi driver confronts Uber driver1:13

What happens to cabbies?

Toronto Taxi Anti-Uber protest

Many taxi drivers say they can’t compete with a company that isn’t governed by the same strict, and costly, regulations. (John Rieti/CBC)

Big issues

The back-and-forth between Uber and the taxi industry opens up any number of considerations, ranging from practical to theoretical to troubling.

Uber Surge Pricing 20160112

Human Oversight of Deep Technology Development Is Playing Catch-up

Systems Similar To Those In Place for Medical Science Are Urgently Required

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Regulating Ride-Sharing: New York May Be The Model For The Future

Writing On The Wall: London and Vancouver Moving In A Similar Direction

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Deep Down We All Know Silicon Valley Needs The Humanitarian Vision of Steve Jobs

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A Silicon Valley Tragedy

Remember Enron’s “Smartest Guys in the Room?”

An early photo of Uber’s management team

Why did Uber spin so wildly out of control?

Culture Trumps Strategy

Uber’s Leadership Conundrum

Business Ethics Missing in Action

The Smartest Guys in the Room

SILICON VALLEY SHOCK

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How Corporate Culture Can Trump Strategy For the Worse

As Uber suffers blow after blow to its reputation, users are deleting the app.

Document: Internal Memo From Uber’s Chief, Travis Kalanick

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Permits? We don’t need no stinkin’ permits!

The Problem With Uber Has Absolutely Nothing To Do With Ride Sharing

Donald Trump, Travis Kalanick, and Uber

Uber discussions need to go beyond the fact it offers a cheaper ride

‘This isn’t just an Uber problem. If they get away with it, every company will do this.’

Gig economy

What happens to cabbies?

Big issues

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The Problem With Uber Has Absolutely Nothing To Do With Ride Sharing

Donald Trump, Travis Kalanick, and Uber

Uber discussions need to go beyond the fact it offers a cheaper ride

‘This isn’t just an Uber problem. If they get away with it, every company will do this.’

Gig economy

What happens to cabbies?

Big issues

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