Taking on Apple
Uber’s CEO plays with fire
Travis Kalanick, the chief executive of Uber, visited Apple’s headquarters in early 2015 to meet with Tim Cook, who runs the iPhone maker.
For months, Kalanick had pulled a fast one on Apple by directing his employees to help camouflage the ride-hailing app from Apple’s engineers. The reason? So Apple would not find out that Uber had been secretly identifying and tagging iPhones even after its app had been deleted and the devices erased — a fraud detection manoeuvre that violated Apple’s privacy guidelines.
But Apple was on to the deception, and when Kalanick arrived at the midafternoon meeting, Cook was prepared.
“So, I’ve heard you’ve been breaking some of our rules,” Cook said. Stop the trickery, Cook then demanded, or Uber’s app would be kicked out of Apple’s App Store.
If Uber’s app was yanked from the App Store, it would lose access to millions of iPhone customers — essentially destroying the ride-hailing company’s business.
So Kalanick acceded.
In a quest to build Uber into the world’s dominant ride-hailing entity, Kalanick has openly disregarded many rules and norms, backing down only when caught or cornered. He has flouted transportation and safety regulations, bucked against entrenched competitors and capitalized on legal loopholes and grey areas to gain a business advantage. In the process, Kalanick has helped create a new transportation industry, with Uber spreading to more than 70 countries and gaining a valuation of nearly $70 billion, and its business continues to grow.
But the previously unreported encounter with Cook showed how Kalanick was also responsible for risk-taking that pushed Uber beyond the pale.
According to interviews with more than 50 current and former Uber employees, investors and others with whom the executive had personal relationships, Kalanick, 40, is driven to the point that he must win at whatever he puts his mind to and at whatever cost — a trait that has now plunged Uber into its most sustained set of crises since its founding in 2009.
“Travis’s biggest strength is that he will run through a wall to accomplish his goals,” said Mark Cuban, the Dallas Mavericks owner and billionaire investor who has mentored Kalanick. “Travis’s biggest weakness is that he will run through a wall to accomplish his goals. That’s the best way to describe him.”
A blindness to boundaries led Kalanick to a pattern of repeatedly going too far at Uber, sabotaging competitors and allowing the company to use a secret tool called Greyball to trick some law enforcement agencies.
That quality also extended to his personal life, where Kalanick mixes with celebrities like Jay Z and businessmen including President Donald Trump’s chief economic adviser, Gary Cohn.
For the past few months, Uber has been reeling from allegations of a machismo-fueled workplace where managers routinely overstepped verbally, physically and sometimes sexually with employees.
Uber’s detractors have started a grassroots campaign with the hashtag #deleteUber. Executives have streamed out. Some Uber investors have openly criticized the company.
Kalanick’s leadership is at a precarious
point. He has publicly apologized for some of his behaviour and is interviewing candidates for a chief operating officer. He has also been working with senior managers to reset some of the company’s stated values.
Through an Uber spokesperson, Kalanick declined an interview request. Apple declined to comment on the meeting with Cook. Many of the people interviewed for this article asked to remain anonymous because they had signed nondisclosure agreements with Uber or feared damaging their relationship with the chief executive.
Selling efficiency
After attending the University of California, Los Angeles, to major in computer engineering, Kalanick dropped out in 1998 to form a startup with several classmates. The company, Scour, became a peer-to-peer file exchange similar to Napster.
Scour, which was eventually sued for $250 billion for alleged copyright infringement, filed for bankruptcy in October 2000, a move that protected it from the suit. The failure did not stop Kalanick from helping to found another Los Angeles startup, Red Swoosh, four months later. Red Swoosh made a technology to efficiently transfer large files of digital data; one of its investors was Cuban.
With Red Swoosh, Kalanick started exhibiting his hallmark aggressiveness. When the company struggled, Kalanick and a partner took the tax dollars from employee paychecks — which are supposed to be withheld and sent to the IRS — and reinvested the money into the startup, even as friends and advisers warned him the action was potentially illegal.
In 2007, Kalanick sold Red Swoosh to Akamai, a cloud services company, for roughly $19 million. The deal turned the executive, who had headed north to San Francisco, into a millionaire.
Uber’s rise
The idea for Uber came in 2009 from Garrett Camp, a friend of Kalanick’s, who became fixated on hailing a private luxury car with a smartphone app after being unable to catch cabs in San Francisco.
UberCab, as it was called at the time, started its service in San Francisco in May 2010.
Kalanick quickly positioned the startup as an alternative to the taxi industry. City-by-city regulations required procedures like base stations for cabs, safety measures and other stipulations. Kalanick ignored those rules. The company typically sent a small strike team into a new city to aggressively recruit new drivers through Craigslist and other online listings. Then the team marketed UberCab’s app to increase ridership.
That drew attention from regulators. In October 2010, the company shortened its name to Uber after receiving a cease-and-desist letter from San Francisco officials for marketing itself as a taxi company without the proper licences and permits.
Uber plunged into China in 2013, and Kalanick spent billions of dollars to outgun the local incumbent, Didi Chuxing — only to have to retreat last year, partly because of heavy losses. Kalanick is now spending heavily in India to win there.
For the win
With Kalanick setting the tone at Uber, employees acted to ensure the ride-hailing service would win no matter what.
They spent much of their energy oneupping rivals like Lyft. Uber devoted teams to competitive intelligence, purchasing data from an analytics service called Slice Intelligence. Using an email digest service it owns named Unroll.me, Slice collected its customers’ emailed Lyft receipts from their inboxes and sold the anonymized data to Uber. Uber used the data as a proxy for the health of Lyft’s business.
Slice confirmed it sells anonymized data based on ride receipts from Uber and Lyft, but declined to disclose who buys the information.
The idea of fooling Apple, the main distributor of Uber’s app, began in 2014.
At the time, Uber was dealing with widespread account fraud in places like China, where tricksters bought stolen iPhones that were erased of their memory and resold. Some Uber drivers there would then create dozens of fake email addresses to sign up for new Uber rider accounts attached to each phone, and request rides from those phones, which they would then accept. Since Uber was handing out incentives to drivers to take more rides, the drivers could earn more money this way.
To halt the activity, Uber engineers assigned a persistent identity to iPhones with a small piece of code, a practice called “fingerprinting.” Uber could then identify an iPhone and prevent itself from being fooled even after the device was erased of its contents.
There was one problem: fingerprinting iPhones broke Apple’s rules. Cook believed that wiping an iPhone should ensure that no trace of the owner’s identity remained on the device.
So Kalanick told his engineers to “geofence” Apple’s headquarters in Cupertino, Calif., a way to digitally identify people reviewing Uber’s software in a specific location. Uber would then obfuscate its code for people within that geofenced area, essentially drawing a digital lasso around those it wanted to keep in the dark. Apple employees at its headquarters were unable to see Uber’s fingerprinting.
But Apple engineers outside of Cupertino caught on to Uber’s methods, prompting Cook to call Kalanick to his office.
Kalanick was shaken by Cook’s scolding, according to a person who saw him after the meeting.
But only momentarily. After all, Kalanick had faced off against Apple, and Uber had survived. He had lived to fight another day.