-- BUILDING CHARACTER --> AS CEO DARA KHOSROWSHAHI __ REMAKES UBER WITH _ AN EYE TOWARD AN IPO, HIS IRANIAN CHILDHOOD AND _____ ____HERITAGE ARE ESSENTIAL TO __ UNDERSTANDING HOW HE LEADS.>>
>>>>> WHEN DARA KHOSROWSHAHI_ _ WAS A CHILD, ___HE LIVED IN A SPRAWLING__ __FAMILY COMPOUND >>
P.84 NOVEMBER 2018
in Farmanieh, a hilly enclave in northern Tehran. His great-grandfather, grandfather, and great-uncles had started a pharmaceutical business in the 1950s that had grown to become a massive conglomerate. The family was one of Iran’s wealthiest, one of the few whose fortunes weren’t tied to oil or the monarchy. Their compound had multiple houses, where Khosrowshahi’s extended family resided. It also had a soccer field, tennis courts, and multiple swimming pools, including a double-decker one where he, his two brothers, and many cousins liked to leap from the upper, shallower pool to the lower, deeper one.
In 1979, when Khosrowshahi was 9, violent protests had forced the country’s autocratic ruler, Mohammad Reza Shah, to flee, and ushered in a new, Islamic regime. The Khosrowshahi family had generally steered clear of politics, although one of Khosrowshahi’s great-uncles did serve as the shah’s Minister of Commerce between 1977 and 1978. Revolutionary Guard members patrolled the neighborhood. Khosrowshahi remembers a friendly guardsman letting him hold his AK-47, and being struck by the sheer weight of it. One day, the Revolutionary Guard stormed a house across the street, where the shah’s cousin lived. When they scaled a wall, one soldier’s gun discharged, spraying bullets through the Khosrowshahi family’s living room window. “We were all on the ground, terrified,” Khosrowshahi tells me. “That was when my mom said, ‘We’re leaving.’ I’ve never been back.”
Forty years later, on a sunny, breezy Thursday in mid-june, Khosrowshahi, now the CEO of Uber, is riding a bright-red bicycle through downtown San Francisco. He is wearing a gray sweater, blue-checked shirt, jeans, and black shoes. His shirtsleeves are perfectly cuffed, midway up his forearms. His jeans look like they’ve been ironed. His sweater is entirely lint-free.
He’s clearly enjoying himself, but he’s on this bike for a reason. In April, Uber acquired Jump, a dockless bike-sharing startup that’s a key part of an operational evolution for the company, from ride-hailing giant to multimodal transportation platform. If all goes according to Khosrowshahi’s plan, soon we’ll no longer think of an Uber as merely the ondemand car that ferries you across town. Uber will become, as he puts it, “your indispensable travel tool. Any way you want to get around, open our app and we get you there.” After touring Jump’s warehouse earlier in the day, Khosrowshahi and I chose to bike the mile and a half back to Uber HQ on Jump’s motorized e-bikes rather than ride with the company’s communications team in a black SUV. These sorts of short trips are exactly the type Uber hopes to begin encouraging its users to take by bike rather than car, insisting it’ll be more cost-efficient, eco-friendly, and congestion alleviating. When we arrive at Uber’s offices five minutes before the communications team, Khosrowshahi is positively gleeful.
“A mile and a half, and it’s faster by bike!” he says, smiling, as he strides into a bustling reception area. “That’s proof of concept!”
Rebranding Uber as a transportation platform to route people through cities via bikes, cars, scooters, buses, trains—and, yes, perhaps one day, flying cars—may be the easiest part of the transformation Khosrowshahi is leading. The bigger challenges could be dismantling the company’s notoriously bro-ish culture and revamping its reputation, earned under Uber cofounder Travis Kalanick, Silicon Valley’s incorrigible bête noire. Uber’s catalog of Kalanick-era problems is long (and still emerging). It includes gender discrimination, a hostile workplace environment, intellectualproperty theft, driver exploitation, a massive data breach, and a general yen for sidestepping regulators and intimidating critics.
Whether Khosrowshahi can accomplish this feat may rest on what he learned 7,000 miles away from the fourth-floor conference room in Uber’s headquarters where we chat. He is the most visible example of a wave of Iranian-american entrepreneurs, financiers, and executives who’ve reached the highest ranks in Silicon Valley over the past two decades, founding or holding senior leadership positions at, among others, Google (and Youtube), Twitter (and Periscope), Yahoo, Nokia, Oracle, Dropbox, Tinder, ebay, Genius, and Expedia. That their rise has coincided with 40 years of constant enmity between Iran and the U.S. makes it all the more notable. The current administration’s nativist stance has Khosrowshahi concerned that the next wave of immigrant entrepreneurs might never make it past the border. “The reactionary politics and policies may satisfy certain people’s emotional states,” he says, “but from an economic standpoint, from a spiritual standpoint of who we are,
it’s a mistake. Being an immigrant in the States, there’s this underdog feeling of, ‘Can we build back what our family lost?’ ”
Before the Islamic Revolution, Khosrow-
shahi assumed he’d join his family’s business one day. The Khosrowshahi Brothers Company (KBC) was already a multifaceted operation by the time he was born, in 1969. KBC flourished amid the shah’s embrace of Western-style capitalism, expanding from importing pharmaceuticals to manufacturing them within Iran, then to producing cosmetics, household goods, and packaged foods. Eventually, KBC bought its own bank. When the shah fell, the new Islamic government seized the company.
Nearly the entire family left Iran. Most landed in Westchester County, north of New York City, where one of Khosrowshahi’s greatuncles, Nasrollah, had been living since the 1960s. Khosrowshahi, his parents, and two older brothers moved in with Nasrollah and his family, before eventually finding their own place—a three-bedroom condominium in Tarrytown. “My father felt that he wanted to keep our wealth in [Iran], so my parents lost the vast majority of what they had,” he says. The family devoted much of their remaining assets to sending Dara, his brothers, and many of their cousins to the Hackley School, a prestigious prep academy nearby.
Soccer helped Khosrowshahi integrate with his American classmates. His two older brothers were captains on the Hackley team; Khosrowshahi was a central defender and later became goalkeeper. “They are positions that don’t get the glory but have ultimate accountability,” he says. “Every goal that was scored when I was a goalkeeper—and there were plenty—was a goal that if I’d been in the right spot and reacted the right way, I could’ve avoided. I loved that.”
Khosrowshahi was an exceptional student. He could open a textbook on his lap in front of the TV, tune out the noise, and focus on exactly what he needed to absorb. He and his brothers and cousins who also settled in Westchester pushed each other hard. “It was competition only in the best sense of the word,” he says.
Within a few years, Khosrowshahi’s dad returned to Iran to take care of his own aging father. Once he arrived, the Iranian government—then mired in the bloodiest days of the Iran-iraq War—wouldn’t let him leave for almost six years. Khosrowshahi worried about nightly bombing runs on Tehran by Iraqi fighter jets. But his father’s absence clarified some things. “There was a sense of responsibility,” he says. “My brothers and I knew we weren’t here to screw around. We were expected to get great grades, not get into trouble. [We] were lucky to be here.”
When Khosrowshahi needed spending money one summer during high school, he applied for work at a Mobil station on the same road as his elite private school. He’d check oil levels in customers’ cars. He’d clean their windshields. He and a coworker challenged each other to see who could earn the best tip. “We were constantly trying to read our customers,” Khosrowshahi says. “I won because I got a silver pen, which was the slam dunk of gas station tips.”
His cousin Hadi Partovi, who is currently CEO of the education nonprofit Code.org, didn’t know Khosrowshahi was working there until he pulled up to the station for gas one day. “The CEO of Uber started as a gas station attendant,” he says. “I love that.”
Iranians were the largest group of for-
eign students in America in the mid-1970s. And “Americans were everywhere in Iran,” says Faraj Aalaei, who lived in the country
until 1978 and would go on to become CEO of the semiconductor manufacturer Aquantia and take it public in November 2017. “There were American-iranian clubs. On TV, every weekend, I’d watch the Oakland Raiders, the Boston Celtics.”
The bond between Iranians and Americans was ruptured in 1979, when Iranian students took 52 Americans hostage at the U.S. embassy in Tehran for 444 days. “The public attitude was pretty negative during the hostage crisis,” Khosrowshahi recalls. “That was a very difficult situation, but kids are resilient.”
Others are less politic about the experience. “It was terrible,” says Aalaei, who was a student at Wentworth Institute of Technology, in Boston, when the hostage crisis started. “It was hard for us to rent an apartment. There was a banner hanging from the campus library telling us to go home. Professors were picking on you. Fistfights broke out in the civil engineering department.”
Farhad Mohit, who left Iran in 1978 when he was 9 and went on to help found the internet companies Bizrate, Shopzilla, and Flipagram, says that his classmates “blamed me for coordinating everything.” They weren’t completely serious but weren’t totally kidding, either. “People were blaming me for something I was running from.”
The effect can be lasting. “When you’re young and thrown into that situation, it does form your character,” Aalaei says. “Think about it: There’s no hostage crisis anymore, but every single day as an Iranian American, you’re told by the media you’re no good, you’re a terrorist, that Iranians are causing problems.”
Iranians, though—unlike some immigrant groups, who tend to create insular communities in America—seem hardwired for assimilation, thanks to centuries of being invaded and having to live and work alongside people from different backgrounds. “It’s a xenophilic culture,” says Mohit. “That’s a very good trait when you’re trying to establish yourself someplace, trying to be entrepreneurial.”
In the ’70s and ’80s, computers offered a welcome respite. “They were my friends!” jokes Mohit, whose early alienation pushed him toward tech. The relative meritocracy of Silicon Valley was similarly inviting. “People I know have started so many companies, and there’s never been prejudice toward ‘Where’s your family from?’ ” says Twitter executive chairman Omid Kordestani, who left Iran in 1978. “It was always about your talent.”
Iran’s academic system was particularly well geared to enabling future Silicon Valley success. In Iranian schools, students picked one of three academic paths after middle school: a math and physics track, for those who wanted to be engineers; a science track, for aspiring doctors; and a liberal arts track for everybody else. “[My school] didn’t even have a liberal arts path,” says Bobby Yazdani, who left Iran in 1980 and went on to found Saba Software, eventually taking it public and later becoming a prolific investor. Liberal arts, to Iranians of his generation, wasn’t for serious students. “People looked down on it. They’d say, ‘This is not a path.’ ”
For Khosrowshahi and his extended family, these factors have translated into success. Khosrowshahi’s brother Kaveh is managing director at the investment firm Allen & Company, which runs the Sun Valley Conference (the annual Davos-like gathering of media and tech bigwigs). His oldest brother, Mehrad, is president at the consulting firm Confida. His uncle Hassan founded the Canadian electronics chain Future Shop, which Best Buy acquired in 2001 for $580 million Canadian. Among his cousins: Twins Hadi and Ali Partovi were key early investors in Facebook, Airbnb, and Dropbox; Amir Khosrowshahi cofounded the AI startup Nervana, then sold it to Intel, reportedly for $400 million; Farzad Khosrowshahi created Google Sheets; Darian Shirazi was Facebook’s first intern and the cofounder and CEO of Radius, a marketing software company; and Avid Larizadeh Duggan, who was named one of the World Economic Forum’s Young Global Leaders in 2016, joined the digital-music startup Kobalt as its chief strategy and business officer in February, after being a VC for one of Google’s investment arms.
“If there’s a special sauce in terms of
Iranian entrepreneurs,” says Khosrowshahi, “it’s this expectation of high achievement, a worship of education, the immigrant’s chip on the shoulder, and this deep bazaari entrepreneurial instinct (Continued on page 104)
that you don’t necessarily associate with other immigrant cultures.”
Bazaari entrepreneurialism—loosely defined as an aptitude for marketplace businesses with many buyers and sellers—has echoed throughout Khosrowshahi’s career. After earning a degree in electrical and electronics engineering from Brown University, he started his career as an analyst at an investment bank. Then Barry Diller hired him, first to work as a strategic planning executive at USA Networks and later at Diller’s tech conglomerate IAC. He held various positions under Diller—including president and Cfo—but one of his main responsibilities throughout was negotiating deals and acquiring new businesses.
He was good at it. “He saw that online travel was going to be super interesting as the web inevitably ate the planet,” says Expedia founder Rich Barton, who got to know Khosrowshahi when IAC moved to acquire the travel-booking giant. “He imagined something even bigger than I did, and I was the founder.”
IAC signed the Expedia deal in mid-2001 but hadn’t yet closed on it when the September 11 attacks suddenly made the idea of buying an online travel hub seem dicey. The deal contained a “material adverse change” clause that gave the purchasers the right to renege; the 9/11 attacks almost certainly qualified. Khosrowshahi, though, stayed the course.
“He didn’t get anybody panicked and came to the right strategic conclusion,” says Barton. “If the travel industry didn’t recover very quickly from this and carry on its normal upward trajectory, then [we’d] have bigger problems as humans and [the loss wouldn’t] matter much anyway.”
As Khosrowshahi sees it, “Usually, great deals are ones that aren’t obvious to the greater marketplace. This kind of bazaari instinct has created a comfort for me to go against the grain. It’s allowed me to be confident and independent-minded, to push to find value where sometimes others haven’t been able to explore. I’m comfortable with volatility.”
At Uber, when Khosrowshahi sought to purchase Jump, the e-bikes startup he acquired for a reported $200 million earlier this year, Ryan Rzepecki, Jump’s founder, says he found Khosrowshahi “charismatic,” but “not very aggressive.” Negotiation, for Khosrowshahi, wasn’t a zero-sum game. “It was more like, ‘Come do this with me. We know you have options, but we think we have the best option for you.’ ”
Former Expedia CEO Barton, who is now a partner at the VC firm Benchmark, which was an early investor in Uber but took the extraordinary step last year of suing then CEO Kalanick over control of the company’s board of directors, calls Khosrowshahi a Jedi. “He has this calming, beguiling way of getting people to think what he wants them to think,” he says. “It’s not Machiavellian. He’s a good listener.”
Khosrowshahi’s great-grandfather Hadj
Hassan Khosrowshahi was a prominent trader in the bazaar in the northwestern city of Tabriz before forming the Khosrowshahi Brothers Company with his sons. By 1957, Hadj Hassan had ceded operational control but remained a deeply principled figurehead. In a letter to his sons, he outlined his business philosophy in six points that were quite progressive for the time (“[Be conscious] of our responsibilities . . . Be kind to fellow employees . . .”). Hadi Partovi, whose grandfather was also one of KBC’S founders, says the family took tremendous pride that its business treated workers well, building houses and schools for them. “Those are values [we] grew up with,” he says. “That’s become part of who I am, and who Dara is.”
When Khosrowshahi took over at both Expedia and Uber, he unveiled a list of cultural norms he hoped to refashion the companies around. In the case of Uber, these were things like, “We celebrate differences,” and “We persevere.” (These replaced Kalanick’s values, which celebrated “toe stepping” and “always be hustlin’.”) Khosrowshahi had known his great-grandfather but was too young to absorb his business philosophy directly. “I really saw the values of my great-grandfather play out with my father,” he says. Khosrowshahi’s dad had managed KBC’S factories in Iran. As a boy, Khosrowshahi often visited these factories with his dad. “I remember the way the workers respected him, the way he talked to them. He knew them all by name. He’d ask about their families. He wasn’t some distant figure.”
When Khosrowshahi makes his first visit to the Jump warehouse in San Francisco, only the warehouse manager and a few mechanics are there. He does more listening than talking. He asks targeted questions, learning how the Jump staff locates bikes around the city, services them, and repositions them every morning. When he rewrote Expedia’s values, recalls Neha Parikh, whom Khosrowshahi eventually promoted to be president of the discount travel site Hotwire, “they were so reflective of his own,” she says. “‘We lead humbly.’ ‘We’re actively interested in the success of others.’ He’s relentless about those things.”
His mission is ongoing at Uber. In his first six months as CEO, he traveled widely— to Europe, Asia, South America—on what amounted to an epic apology tour. He settled an intellectual-property lawsuit from Google’s self-driving unit, Waymo, and then began musing about the possibility of incorporating Waymo’s vehicles into Uber’s network. He’s held forums to hear concerns from Uber drivers. He announced that the company would support a fee on Uber trips that would go toward a “hardship fund” for New York taxi-medallion owners whose financial security has been imperiled due to Uber’s rise. This past May, he appeared in a commercial, saying that “one of our core values . . . is to always do the right thing. And if there are times when we fall short, we commit to being open, taking responsibility for the problem, and fixing it.”
Uber has fallen short, even on his watch. News broke in July that Uber COO Barney Harford was the subject of formal complaints regarding the way he talked about women and people of color. That same month, the company’s human resources chief, Liane Hornsey, resigned amid allegations that she’d ignored discrimination complaints. Hornsey was a Kalanick-era holdover, but Harford had been Khosrowshahi’s most significant early hire. Harford released a contrite statement, vowing to improve, and remains in the job. Much of Khosrowshahi’s first year was spent cleaning up other people’s messes. Now the company’s problems are his to own.
In 2015, New York City threatened to
cap the number of ride-hailing vehicles allowed in the city. Kalanick responded with an aggressive campaign that included adding a “De Blasio view” feature in Uber’s app, offering a dystopian vision of the city with fewer available Uber rides. The city backed down. When the issue resurfaced this year, Khosrowshahi met with local politicians and pushed the hashtag #Dontstrandnyc. But his campaign was measured, focusing on the need for ride-hailing services in the outer boroughs. The city council approved the cap in August, a significant blow for Uber in its largest U.S. market. The political climate is different from what it was three years ago, to be sure. But there’s no getting around the fact that it will take more than humility and diplomacy to succeed as Uber’s CEO.
After the decision, Bradley Tusk, a political strategist who advised Kalanick and Uber during the 2015 campaign, criticized
Khosrowshahi for, essentially, carrying a knife to a gunfight. “Dara’s long-term ambition for Uber—a less turbulent reputation heading into a 2019 Ipo—may make sense in the aggregate,” Tusk told Fast Company, “but in every city across the world, it also leaves the company highly vulnerable. Passivity may turn out to be just as risky as the previous regime’s aggressive approach.”
Perhaps, but there may be a different way of understanding Khosrowshahi’s approach. In Iranian culture, there is a practice called ta’arouf, which is hard to translate but basically amounts to an elaborate display of etiquette. It involves not only extreme deference toward a guest or even an adversary but also a significant amount of self-deprecation, bordering on self-abnegation. Ta’arouf is “a cultural imperative that is about manners, yes, but is also about gaining advantage, politically, socially, or economically, as much as anything else,” writes Iranian-american author Hooman Majd in The Ayatollah Begs to Differ. “American businesses and businessmen are known to succeed with brashness, determination, and sometimes even a certain amount of ruthlessness; Iranian businessmen succeed rather more quietly with a good dose of ta’arouf . . . in such a way that doors are opened before the ones opening the doors realize they have done so.”
In this light, Khosrowshahi’s more tempered response in New York—along with his “retreat” in Southeast Asia and Russia, where he pulled Uber out of large, potentially lucrative markets in favor of equity stakes in local rivals—looks more like a savvy long-term play. It gives him strategic advantage he might not have had if he’d pursued Kalanick’s style of ruthless capitalism. When I point out this ideological change to Khosrowshahi, he shifts a little in his conference room chair. Part of his balancing act is to reinvent Uber without alienating those who built it with Kalanick. “There are different styles for everybody,” he says, choosing his words carefully. “That ta’arouf, or that humility, has been a deep part of how I’ve grown up. Succeed, but succeed quietly.”
Although Uber is a for-profit company, in many ways Khosrowshahi sees it as a public utility, or at least a public good. Uber’s challenges in the coming years—not just changing the company’s culture but also persuading cities and countries around the world to trust it to be a vital part of urban life—demand more cooperative spirit, more reserve, more ta’arouf. “The next 5 or 10 years require a different way of growing,” he says. “As opposed to bursting through doors, it’s to open doors. It’s to have conversation.”