Uber's Bumpy Ride to the Top
Scandals, lawsuits, revenge and billions of dollars: everything you wanted to know about Uber in 5 minutes.
Need a ride? You can swipe open your phone, tap on an app, and have an Uber driver at your doorstep in minutes (well, most of the time).
Uber—and its drivers—are everywhere. But how did this small-time Silicon Valley startup turn into the billion-dollar colossus it is today? And just how many times has it screwed up?
Here are 21 things you’ve always wanted to know about Uber.
How It Started
In 1998, future Uber founder and now former-CEO Travis Kalanick dropped out of college to work on a peer-to-peer search engine called Scour which, well, scoured the web for movie and music files. Later, Scour offered a file-sharing service for pirates to trade videos back and forth, much like Napster.
Also much like Napster, it didn’t go well.
Scour Goes Under
By late 2000, Scour filed for bankruptcy amid a costly lawsuit — a ludicrous $250 billion — from Hollywood and music industries.
The ordeal left a chip on Kalanick’s shoulder, which would fuel his work on his next company.
Kalanick's Desire for Revenge Made Him a Millionaire
In 2001, Kalanick founded Red Swoosh as “a revenge business,” specifically by creating a bandwidth-efficient peer-to-peer software which would allow big files to be sent over the internet, cheaper.
The target consumer? The same companies that sued Kalanick at Scour.
"The idea was to take those 33 litigants that sued me and turn them into customers. So now those dudes who are suing me are paying me,," Kalanick once told Fast Company.
Kalanick Worked Really Hard for That Money
Kalanick worked on Red Swoosh for six years, and at the company’s lowest point, he moved back into his parent’s house and worked on the product alone after his entire team left the company.
But somehow he nabbed an investor — Mark Cuban of all people — and built Red Swoosh back. He sold it to Akamai for $18.7 million in 2007.
Uber Was Founded in 2009
Now loaded with some hefty capital funds, Kalanick co-founded Uber, then called UberCab, with Garrett Camp, who helped found StumbleUpon. Kalanick credits Camp with the idea for Uber.
As reported by Business Insider, Kalanick said: "When you open up that app and you get that experience of like, 'I am living in the future. I pushed a button and a car rolled up and now I'm a frickin’ pimp,' Garrett is the guy who invented that s***."
Uber Launched in 2010, in Only One City
UberCab was originally available only in San Francisco and the service cost approximately 1.5 times the amount of a normal cab when it launched in June of 2010.
However, techies in the area loved the overall convenience of the service and spread the word.
UberCab dropped the "cab" part and became Uber shortly thereafter.
Uber Rolled into New York in 2011
The next place Uber targeted, successfully, was New York City, where it launched around May of 2011.
Despite the popularity of the app, not everyone was happy. In fact, the more popular Uber gets, the more problems it faces.
Its Valuation Skyrocketed, Fast
By February of 2011, Uber was valued at $60 million. Later that year, in November, was valued at 330 million.
By 2013, as it expanded throughout the country and overseas in cities like Paris, the company nabbed a valuation at $3.5 billion.
The Lawsuits Began in 2013
You’re probably familiar with Uber’s tendency to get sued for various reasons in various parts of the world.
The first lawsuits against the company were filed in 2013. One lawsuit was a class-action suit filed by a group of Uber drivers who argued they should qualify as official employees, and not independent contractors.
A second filing occurred after an Uber driver plowed into a family walking in a crosswalk, killing a 6 year old child.
Uber argued since the driver did not have a passenger in the car, and did not yet have a ride booked, he wasn’t technically working for them. Uber settled that lawsuit in 2015 for an undisclosed sum.
Uber drivers from the class action suit are still in a legal battle: In 2016, a judge rejected Uber’s $100 million settlement offer which would have been portioned out among the 385,000 drivers involved.
Uber Used Shady Tactics to Crush Its Competitors
When rival companies Lyft and Gett entered NYC in 2013, Uber hardly took a ‘the best man win’ approach to its competition.
Instead, top level employees at Uber set up thousands of dummy accounts on Lyft and Gett so they could call for a driver and then cancel the request —effectively keeping those company’s available drivers tied up (and broke) so pedestrians would hail a ride from Uber.
Paris Cabbies Really Hate Uber
A few years after Uber hit Paris, cabbies staged a mass protest against the company. Cab drivers blocked major roads with barricades, burned tires and overturned cars in mid-2015.
While the city shut down one of Uber’s low-cost cab-hailing services, UperPop, Uber is still operating in the City of Lights, with at least 12,000 drivers and 1.4 million users as of 2016.
Top Execs Wanted to Run a Smear Campaign on Uber’s Critics
In late 2014, then-senior vice president Emil Michael suggested that researchers should dig up dirt on journalists critical of Uber’s business as a smear campaign.
BuzzFeed broke the news, which occurred during remarks at a dinner between Uber execs and industry journalists. For some reason, Michael thought this would be a good place to start talking about how spending a bunch of money to launch a smear campaign against journalists was a really good idea.
“Over dinner, he outlined the notion of spending ‘a million dollars’ to hire four top opposition researchers and four journalists," BuzzFeed reported. "That team could, he said, help Uber fight back against the press — they'd look into ‘your personal lives, your families,’ and give the media a taste of its own medicine.”
Uber Once Claimed Its Drivers Make $100,000 a Year (They Don't)
In 2013, Uber apparently told the Wall Street Journal that the typical Uber driver brings in $100,000 in gross pay per year.
In a revelation that shocked no one, that turned out to be false.
The Typical Uber Driver Makes Less Than $13.25 an Hour
In June 2015, BuzzFeed researchers analyzed Uber drivers in three markets — Denver, Houston and Detroit — to see if they could figure out how much these drivers actually made per hour.
The results were $13.17, $10.75 and $8.77, respectively, after accounting for expenses like gas.
At $10.75 an hour (or $22,360 per year) it would take over almost five years to make $100,000.
Uber Was Fined for Making Misleading Claims About Compensation
In early 2017, the Federal Trade Commission fined Uber $20 million for misleading drivers about how much money they would make.
According to the FTC, Uber claimed its uberX drivers made a median salary of over $90,000 in New York City and over $74,000 in San Francisco. In reality, the FTC found the median salary was $61,000 in New York City and $53,000 in San Francisco.
The FTC also found that less than 10 percent of drivers in San Francisco and New York City made the salary Uber originally claimed.
Uber Is Banned in Several Areas
Not all cities, states and countries are welcoming of the ride-hailing app. According to Conde Nast Traveler, Uber is banned in:
The state of Alaska
All of Oregon except Portland
Vancouver, British Columbia
Taiwan (limited service)
The Northern Territory of Australia
Kalanick Was Caught Berating an Uber Driver on Video
In early 2017, Kalanick grabbed an Uber Black, Uber’s high-end service which costs $3.33 per mile. The driver questioned Kalanick’s tactics of cutting prices which hurt Uber Black driver fares.
When the driver accused Kalanick of costing him almost $100,000, Kalanick snapped and let loose with this: “Some people don't like to take responsibility for their own shit. They blame everything in their life on somebody else. Good luck!”
A dash cam caught the whole thing on tape and Kalanick faced a good amount of media backlash, which further sullied the company’s reputation. You can watch the video on YouTube.
Uber Faces Potential, Big Legal Problems
According to CNBC, Uber currently faces six significant possible legal battles in court. They are:
1. After an extensive internal investigation of 215 incidents in the work place which included “54 of discrimination, 47 of sexual harassment, 45 of unprofessional behavior, 33 of bullying, 19 of other harassment, 13 of retaliation, 3 of physical security and 1 wrongful termination claim,” it’s theorized that more employees, emboldened by the lawsuits, might also sue.
2. A lawsuit from a woman who claimed she was raped by an Uber driver in India in 2014. The woman claims Uber obtained her medical records and attempted to defame her.
3. In New York, three Uber drivers sued the company and were recently granted employee benefits by a judge, which could open up more lawsuits from more drivers looking to seek full-time employment benefits. Uber depends on its drivers as contract workers for its business model to succeed.
4. Alphabet, which owns Google, is suing Uber over an intellectual property battle involving self-driving car tech, which Alphabet claims Uber stole.
5. The U.S. Department of Justice is investigating Uber for evading transportation authority regulations.
6. The FTC is probing Uber over its privacy practices, which could lead to a full-blown lawsuit.
Kalanick Resigned as CEO
After a “shareholder revolt,” Kalanick resigned as CEO in June 2017, The New York Times reported.
Pressure came from the company’s biggest investors after a series of workplace sexual harassment and discrimination lawsuits, terrible press and federal investigations rocked the company. Kalanick remains on the company’s board.
Uber hired Dara Khosrowshahi, previously the CEO of Expedia, to take the helm of the company and stabilize it.
It’s Still the World’s Most Valued Startup (On Paper)
By 2015, Uber was worth $51 billion and was crowned king of all startups, valuation wise.
But even more impressive is despite all the controversy and lawsuits, the company is still the most valued startup to this day with a $68 billion valuation, according to Business Insider. That’s more than twice the valuation of second place, which is held by Airbnb at a $31 billion valuation.
If those numbers are correct, of course…
But Its Valuation Is Questionable
After all those scandals, Uber’s stock on the secondary market took a big hit, and was valued at $50 billion in April 2017, according to The Information.
In August, well-known tech investor Roger McNamee told CNBC that “‘the company is not worth anything like’” its last valuation.
Uber still shows no signs of slowing down, but it’ll be more than just a bumpy ride if the company repeats its past mistakes.