Startup culture at heart of trial
Jurors to decide if Uber stole Waymo’s technology
Toe-stepping. Move fast and break things. Always be hustlin’. Think different.
In an explosive trial starting Monday in federal court in San Francisco, jurors will be asked to decide whether Uber stole crucial technology from Waymo, the Google self-driving car spinoff. Hanging in the air is a far larger question: Has Silicon Valley’s outlaw culture, celebrated in corporate slogans painted on walls and printed on T-shirts from San Francisco to San Jose, finally gone out of bounds?
The lawsuit centers on robot cars, and could critically affect their future development. But much of the evidence presented so far deals more with the disruptive culture of Silicon Valley, one where moving fast, breaking things and relying on venture capitalists’ money to
clean it up is exemplified by Uber, the world’s most valuable startup.
Behaviors taken for granted in tech — frenetic job hopping, buying companies for the knowledge in engineers’ brains, and covertly gathering information on rivals through high tech and low artifice — will be laid bare during the trial, which could last four weeks.
“This case really is a measure of Silicon Valley and its particular kind of ‘masters of the universe’ attitude,” said Paul Saffo, a longtime tech observer and futurist. “The level of arrogance in the current generation is growing faster than the curve of Moore’s law.”
The trial is also about the Silicon Valley mantra of firstmover advantage. “Everyone wants to be the first, both for the money and to get credit,” said Karl Brauer, executive publisher of Kelley Blue Book and Autotrade. “There’s a certain amount of chest-beating; Silicon Valley companies want to say, ‘We did this first’ or ‘We did it best.’ ”
One of Waymo’s lawyers said as much during a final pretrial hearing Tuesday. “Both sides believed they were competing for a pie ... and the race was critical,” Melissa Baily said. “Whoever got the pie was going to get all or most of it.”
The lawsuit has already spotlighted Uber’s take-noprisoners ethos. Bombshell revelations about sending self-destructing emails, impeding legal investigations and spying on rivals emerged in November, causing the trial to be postponed a second time so Waymo could investigate the claims. (Uber’s late production of evidence had led to a previous postponement.)
Still, the judge has made clear that Uber’s shenanigans aren’t on trial — and some won’t even be mentioned in the courtroom.
“The central issue in this case remains whether or not Uber misappropriated Waymo’s trade secrets, not whether or not Uber is an evil corporation,” U.S. District Judge William Alsup wrote in an order last week, excluding “salacious and inflammatory details about Uber that have no discernible relevance to the claims in this case.”
Waymo will be allowed to mention that Uber surveilled Waymo’s self-driving cars and used self-destructing messages, but Uber in turn will be allowed to point out that Waymo did the same things.
The fact that both companies — as well as, presumably, many of their cohorts in the tech world — used ephemeral messages and snooped on competitors is illuminating. For that matter, as Uber has taken pains to point out in court, Waymo’s sister company Google — both are now part of a holding company, Alphabet — makes several widely used products that can send self-destructing, encrypted messages.
“Giant tech companies are fully aware of the level of documentation that’s possible with all communications,” Brauer said. “It’s not surprising that they would overtly and purposefully use communications systems that don’t last forever and aren’t trackable. They want to be able to have conversations without having them on the record.”
The case has already prompted new Uber CEO Dara Khosrowshahi to swear off such subterfuges. As a hearing was under way, he tweeted in November that he’d already banned their use for Uber business.
Travis Kalanick, Uber’s former CEO, is expected to take the stand this week. While he’s unlikely to be questioned about sexual harassment and other bad behavior alleged at the company during his tenure — among the missteps that led to his forced resignation in June — Waymo lawyers may question whether his aggressive management style extended to a cavalier attitude toward intellectual property — or even outright theft of rivals’ technology.
In an almost seven-hour deposition in July, Kalanick steadfastly denied having stolen anything from Waymo. He recounted asking Google co-founder Larry Page, another likely witness, to join forces on robot cars, combining Google’s self-driving expertise with Uber’s ride-hailing prowess. But that talk devolved into Page accusing Uber of going too far by scooping up a raft of former Google self-driving engineers. (Expect a who’swho of self-driving car pioneers.)
Kalanick’s deposition also delved into the art of the “acqui-hire,” a Silicon Valley practice of buying an entire startup purely to get its staff. Uber paid some $680 million for Otto, a self-driving truck startup founded by former star Google engineer Anthony Levandowski, whose alleged theft of 14,000 confidential Waymo files is at the heart of the lawsuit. (The Google self-driving car project was spun out as Waymo in late 2016.)
Humorously enough, Kalanick made it clear he would have preferred a morefrugal approach than essentially shelling out $27 million a head for the 25-person company. “So I would have loved to have hired (Levandowski) for $100,000 a year — that would have been amazing — and been able to recruit lots of wonderful engineers as well,” he said. “But it’s a two-way street. Right? The other side, of course, has to be excited about what they’re doing. You know, they have to feel like they’re being valued at what they’re worth.”
Job hopping is a way of life in Silicon Valley; studies have found that Bay Area tech workers change jobs more frequently than employees almost anywhere else. The trial will examine that practice and its consequences. California law forbids noncompete agreements, but trade secrets are another matter, and companies sometimes use them to strike back at departing employees and competitors. Hewlett-Packard, for example, sued former CEO Mark Hurd in 2010 in an attempt to prevent him from joining Oracle; the parties settled.
The question jurors may be asked to decide: All the knowledge a worker gains at one job stays in her head — so how can she avoid spilling the beans when she takes a new position elsewhere?
“Is an engineer supposed to get a frontal lobotomy before they go to the next job?” Alsup asked rhetorically during a November pretrial hearing. “The answer’s gotta be ‘no,’ but say they know the recipe for Coca-Cola. They have to forget that before their next job.”
If anything, job-hopping has accelerated as startups form and grow into companies worth billions of dollars before they even go public. The average tenure at Facebook is just over two years, which is on the high side for large tech companies, according to an analysis by Paysa, a startup that studies salary and career data; at Uber, it’s a low 1.23 years. Uber has grown practically overnight to more than 16,000 employees; by necessity, it has had to tap into the brainpower of other firms.
“This sends a warning signal to companies to do more due diligence and digging when they hire employees, and to workers to be careful not to rip off their ex-employers’ ” intellectual property, said Pat Moorhead, an analyst at Moor Insights & Strategy.
For all those reasons, this won’t be a trial to forget.
“The central issue ... remains whether or not Uber misappropriated Waymo’s trade secrets, not whether or not Uber is an evil corporation.”
U.S. District Judge William Alsup