# “Story” and truth: The Uber snake now has two sniping heads



## Ca$h4 (Aug 12, 2015)

Uber can't raise Private Money from Private Equity, Venture Capitalists or Private Bank Clients, and Uber can't raise Public Money in the Public IPO market because the Uber Model is unprofitable (Giving rides at 41% of cost), so what is Uber to do? Make up another growth story, of course.

*"Story" and truth: The Uber snake now has two sniping heads*

  By Sarah Lacy *, written on* December 2, 20*16*

_"Well, which is it?"_

_"You can't have it both ways!" _

_"Wait! That's not what you said just a few days ago&#8230;"_

Long before these were things I found myself screaming at our President Elect's Twitter stream (_Hillary Clinton is a brilliant Secretary of State! Hillary is a terrible Secretary of State! Carelessness with classified emails is jail-worthy! Carelessness with classified emails qualifies you for my cabinet! The New York Times is failing! The New York Times is a crown jewel!_) they were things I found myself screaming at Uber.

Uber who both said the infamous dinner conversation where Emil Michael threatened journalists A) Didn't happen and B) Was off the record.

_"Well, which is it?"_

Uber who insisted they were CRUSHING it in China-- tripling their market share-- up until they sold their China business to arch Rival Didi Chuxing.

_"You can't have it both ways!"_

Uber who hates business as usual in the government with all those fat cats and backroom deals&#8230; until it became a fan of backroom deals, hired some of the most senior political operatives, hired the oppo-research agency staffed by the ex-CIA, and employed more lobbyists in Nevada than the _entire gaming industry combined_. 

_"Wait&#8230; That's not what you just &#8230; Argh!"_

Uber struggles most when it tries to recast its image. Early on, it reveled in the fact that it was spoiling for a fight, with CEO Travis Kalanick bragging to credulous journalists about the hundreds of billions of dollars he'd been sued for in his career. Before it later claimed the Taxi companies brought the fight to Uber-- _they were just standing there! _

Uber's investors and apologists have long excused the company's hard charging tactics by saying it took that kind of DNA to challenge the corrupt, brass-knuckled, entrenched Taxi lobby in America.

Until, well, the company became just generally hated. Forget drivers. Forget journalists. Uber is not even among the most respected or desirable companies to work for in Silicon Valley. We've written about this in multiple, multiple surveys, and yesterday First Round published another one. In its "State of Startups", the firm asked respondents to write in the name of the tech leader they admire most. Elon Musk was the clear winner with 23%, followed by Jeff Bezos at 10%, Mark Zuckerberg at 6%, and Steve Jobs at 5%.

Survey-after-survey shows this is simply not an admired company within the tech industry. I can't think of a time in my career where I can remember saying that about the most highly valued private company of an era. This could be why its head of HR quit last summer to go to&#8230; Twitter. Twitter! A company with such recruiting problems its heads of product have been compared to Spinal Tap Drummers and Defense Against the Dark Arts teachers.

Think of how much of an asshole you have to be for people in the Valley to worry you are too much of an asshole?

Uber has tried at least four or five times to rehabilitate its image with journalists. One of those times, resulted in that dinner where Michael threatened the press. That's how good Uber senior management is at sticking to the "WE'RE NOT NASTY!" message.

This is pretty much Kalanick on a press tour, his suit just fits better:

All of this might explain why Uber-- which has long argued it is a hardcore technology company-- hired a marketing guy from Target as its no. 2 executive in September, reporting only to Kalanick. The origin story from that hire -- when Jeff Jones told Kalanick after a TED talk that his company needed to stand for something not just against everything-- hinted the "story" of Uber was set to change again.

And Jones delivered on LinkedIn after taking his spot, expressing&#8230; let's just say a different attitude towards drivers than Uber has in the past:

Experiencing firsthand how we communicate with drivers today &#8230; well, it's not a proud moment for Uber. Our messages are too frequent, too disconnected and too off-putting. So we're conducting a top-to-bottom audit of driver communications to make sure that when we reach out to drivers, we do it right&#8230;

...So starting two weeks ago in Minneapolis and last week in Oakland, I'm personally meeting with drivers in different cities to hear what's on their mind. I can't guarantee to address everything, but I can promise that Uber will do a much better job listening to drivers and serving their needs.

...Demonstrating that we have ears as well as a mouth will be crucial to Uber's long-term success.

That was November 14. On November 28, Uber started deleting driver accounts if they had anything in their cars promoting tiny New York upstart Juno. Lyft seems to have finally hired an ad agency with some skills, and has piled in on Uber's reputation with its new ad campaign.

That's right, Lyft and Uber are essentially trying to swap places: Lyft is "throwing mud," and Uber pretending to be the brand that cares about drivers.

continue at next post


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## Ca$h4 (Aug 12, 2015)

And all of these "stories" matter greatly, because this is a commodity products: Both companies have the same drivers, charge roughly the same amount of money, continually match each other feature-for-feature, and the app works pretty much the same. Up until now the only way either ever succeeded in grabbing market share against the other was by spending billions of dollars in subsidies and driver bonuses. For both companies: When they spend, they gain market share.

But Lyft has capped spending and even Uber can't keep that game up for ever if it hopes to show positive unit economics before an IPO. And it will have to go public at some point: Even having cut money-losing China, Uber is still burning billions and is running out of oppressive regimes to take money from. The VC money and the "tourist" money have long since tapped out, and even a few major Wall Street banks refused to offer Uber shares to their users&#8230; all but destroying their chance to take Uber public in the process.

So if you can't endlessly throw off cash, what can you use to distinguish a commodity product? Marketing. Look at Coke and Pepsi. We don't need any reminders these products exist. We have all tasted them. We know everything about Coke and Pepsi. But they are continually marketed to us for massive sums of money with huge, celebrity-laden campaigns because Coke and Pepsi want us to "feel" that their commodity product stands for something the other doesn't. World peace, a new generation, you name it.

In a recent interview with Founders Fund's Brian Singerman he explained that he was still bullish on perennial number two, Lyft, because of this dynamic. Others have said the same, off the record. As long as you can spend more money and immediately gain more marketshare, you are still in the race. There is no network effect so strong at Uber that it precludes people from also driving for or using Lyft.

Be clear: If you own shares in these companies or are thinking of buying them at the IPO, you aren't investing in a tech company they way you may have with Google or Facebook. You own a modern Coke and Pepsi. In a few years, we'll have an Uber Super Bowl Halftime show, should the company continue to thrive.

Don't believe me? As always with Uber, look at what companies do, not what they say. Deeds, not words. Can you think of another major tech company, whose number two executive is a marketer? They aren't all product people. Monetization whizzes like Sheryl Sandberg? Sure. Operating geniuses like Tim Cook? Sure. But pure marketers for a high-growth, pre-IPO tech startup?

Back to him.

The press reports said that Jones was "poached" by Uber, but more in depth reports told the story of a guy pitching himself to Uber, because he wanted a newer job amid a Target executive exodus.

Right about now, Jones might be rethinking that move. It must be dawning on him, that he's in for a thankless task: Changing the perception that Uber excels because of what it's against into a company that's suddenly "for" something would be hard enough. Particularly when that reputation has come after Uber has constantly lied to the media, engaged in arguable unethical schemes to hurt competitors' fundraising and driver recruitment, tried to discredit and intimidate critics with tactic a judge has described as possibly "criminal," has ****-shamed and victim shamed women who've said they were assaulted in Uber cars, and has enraged most of its driver base with continual fare cuts and a refusal to allow tipping on the app.

It reminds me of the vice presidential debate when Mike Pence repeatedly denied Trump had said and done a series of awful things&#8230; and then Trump continued to say and do them.

Even if Uber were to dramatically start to change its behavior-- and stop pulling stunts like using its dominant market position to bully smaller rivals-- it would be almost impossible to change Uber's reputation.

Why hire a marketing guy and make him the #2 of the company, if you are going to make him look like a disconnected shill just weeks after his first effort? If this is Uber's new edge on differentiation, you gotta live it. Your drivers and users clearly are willing to forgive a lot of bad behavior, but that doesn't make them stupid.

This is more than simply more "business as usual" in Uber's inability to follow through on the latest promise to "change its ways." Countless insiders and others close to the company have told us Uber motivates its team with an "us v. them" mentality. This has worked incredibly well for the company.

But increasingly cracks are showing of an "us v. us" mentality at Uber. There have been reports of continually demoted co-founder Ryan Graves's new everything-but-ridesharing division clashing with the ride sharing business, and clearly there is a disagreement between Jones "newer, more driver-friendly Uber" and a company willing to strong arm drivers into loyalty.

This will get worse as Uber starts to come under pressure to get its financial house in order before and IPO. Cracks are already showing in its "sure, why not?" expansion plans that have dominated the company. Europe is a mess; China is done; and South East Asia is a difficult, fragmented market with strong local competitors. At some point Uber will have to grow profitably.

There's excitement about self driving modified Volvos and self driving truck delivering beer, but these publicity stunts are far from actual businesses. And given the strife between Uber Eats and ridesharing within the company, more divisions might created more "us vs. them" silos within what used to be one whole united "us" versus "thems" like the press, competitors, and drivers.

This all comes as the pressure is still on for Uber to come up with a dramatic growth story for its IPO, which may come as early as the second half or end of 2017.

continue on next post


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## Ca$h4 (Aug 12, 2015)

Here's one prediction: The story in the short term will increasingly focus on India. There are reports that local rival Ola doesn't have quite as big of a market share lead on Uber as many had thought. Ola is said to be seeking money at a lower valuation, and Indian startups generally-- even the big ones like Ola and Flipkart-- have been struggling in this market.

We predicted before that Ola would be far more challenged than Grab by in the new world where Didi and Uber carve up the ridesharing globe. But part of that is because India is a harder market to dominate than China. And Ola doesn't have as many committed, deep pocketed backers as Didi did. (Presumably since Didi itself was a backer of Ola before the Uber tie up&#8230

Sure, Uber could use an international win. And eventually, India will be a big market. But this is not like winning China, or even being allowed to operate in most major European cities. India is still an incredibly divided country, a country lacking in a lot of basic infrastructure, and has a lot of very real challenges.

It will require local expertise to get the market right. That means either buying Ola outright and letting them run it, or Uber getting a lot more serious than it was in China about a local team. In China, Uber it didn't even have a local CEO. More than anything it means continuing to throw a billion a year at the opportunity.

But, hey, Uber has spun less as a reason it should be worth more. This is after all a company that values a "storyteller in chief" over a technologist or a operations executive with a laser focus on unit economics. Even if that storyteller is trying to rewrite the single thing that Kalanick's fans say make him effective: Everything he fights _against_, not _for_.

Uber has never matched words and deeds. Expecting that to change is as foolhardy as drivers expecting the company is going to start looking out for them. END


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## TwoFiddyMile (Mar 13, 2015)

Finally, the press are coming around.


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## Ca$h4 (Aug 12, 2015)

TwoFiddyMile said:


> Finally, the press are coming around.


Was it Lincoln? You can fool some people *all* of the time, and all people *some* of the time, but .....


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## uberdriverfornow (Jan 10, 2016)

Incredible article ! We need more of these to get the investors spooked enough to stop investing so Uber finally has to raise rates.


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## Driving and Driven (Jul 4, 2016)

uberdriverfornow said:


> Incredible article ! We need more of these to get the investors spooked enough to stop investing so Uber finally has to raise rates.


Uber is, essentially across the board, half the price of a cab in whatever market you look. If Uber simply raised their rates to 75% of the cost of a cab...

1. The cheapest of the cheap passengers would stop using it. Less issues to handle.

2. Uber would make more from their percentage and drivers would make more from theirs.

3. The value perception of the slightly higher cost (still cheaper than a cab) would actually bring in a few of the people who think Uber is too "cheap" to be any good. (This is a psychological perception that affects pricing in all industries and markets around the globe. I once worked for a lady who owned four sandwich shops in various neighboring towns. All of her shops basically had the same pricing for each product across all four stores. Her one high-end store suffered from losses and a financial expert and friend advised she actually raise her prices in that shop. That's all she did and that shop became financially viable because the perceived value of the sandwich increased...simply because the price increased. No s**t.)

4. Uber could cut their new driver promotions drastically and save a ton of advertising money because they would have plenty of people happy to drive for a fifty-percent increase (still cheaper than a cab).

5. Existing drivers could drive more if they wanted but wouldn't need to drive as much to make the same amount as they did before. Morale would increase among drivers and they would, generally, be better rested.

Oh, and, I almost forgot, the value of the overall company would increase on several fronts including driver satisfaction, passenger satisfaction, investor return and ipo's shouldn't be an issue.


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## TwoFiddyMile (Mar 13, 2015)

Driving and Driven said:


> Uber is, essentially across the board, half the price of a cab in whatever market you look. If Uber simply raised their rates to 75% of the cost of a cab...
> 
> 1. The cheapest of the cheap passengers would stop using it. Less issues to handle.
> 
> ...


This assumes Uber isn't run by idiot children, which it is.


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## Strange Fruit (Aug 10, 2016)

Driving and Driven said:


> Uber is, essentially across the board, half the price of a cab in whatever market you look. If Uber simply raised their rates to 75% of the cost of a cab...
> 
> 1. The cheapest of the cheap passengers would stop using it. Less issues to handle.
> 
> ...


#3 is like a business 101 thing. I belive Grey Pupon mustard learned this in the 80s. It wasn't until they marketed it as a boutique mustard and charged more for it that it took off. I think I got that from a Malcolm Gladwell book, or Dan Ariely or somewhere. One of those irrational human truths. Experiments show people unwittingly taste testing the exact same unlabeled product sincerely enjoy it more when they are told it resales at a higher price.

The hubris of trying to dominate brutishly rather than creating something quality seems the major mistake.


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## Blackout 702 (Oct 18, 2016)

Sarah Lacy looks like a naughty Snow White.


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## Buckiemohawk (Jun 23, 2015)

She's written quite extensively of her disdain for Uber's treatment of everyone from investors, to drivers, to customers.


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## NachonCheeze (Sep 8, 2015)

Buckiemohawk said:


> She's written quite extensively of her disdain for Uber's treatment of everyone from investors, to drivers, to customers.


Now I'm in love.


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## tohunt4me (Nov 23, 2015)

Ca$h4 said:


> Uber can't raise Private Money from Private Equity, Venture Capitalists or Private Bank Clients, and Uber can't raise Public Money in the Public IPO market because the Uber Model is unprofitable (Giving rides at 41% of cost), so what is Uber to do? Make up another growth story, of course.
> 
> *"Story" and truth: The Uber snake now has two sniping heads*
> 
> ...


PAY ME !
SHOW ME THE MONEY SEYMOUR !


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## tohunt4me (Nov 23, 2015)

Buckiemohawk said:


> She's written quite extensively of her disdain for Uber's treatment of everyone from investors, to drivers, to customers.


Smart writer.


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## tohunt4me (Nov 23, 2015)

Strange Fruit said:


> #3 is like a business 101 thing. I belive Grey Pupon mustard learned this in the 80s. It wasn't until they marketed it as a boutique mustard and charged more for it that it took off. I think I got that from a Malcolm Gladwell book, or Dan Ariely or somewhere. One of those irrational human truths. Experiments show people unwittingly taste testing the exact same unlabeled product sincerely enjoy it more when they are told it resales at a higher price.
> 
> The hubris of trying to dominate brutishly rather than creating something quality seems the major mistake.


Uber had quality.
Then they went factory 2nd volume discount.
That where their problems began
If DeBeers marketed Diamonds like Uber markets product,my driveway would be paved with Diamonds instead of gravel !


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## TwoFiddyMile (Mar 13, 2015)

tohunt4me said:


> Uber had quality.
> Then they went factory 2nd volume discount.
> That where their problems began
> If DeBeers marketed Diamonds like Uber markets product,my driveway would be paved with Diamonds instead of gravel !


But they'd be plastic diamonds.


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## tohunt4me (Nov 23, 2015)

TwoFiddyMile said:


> But they'd be plastic diamonds.


If you flood the market with gold ,even the price of gold will become 1/2. Uber exhibits self destructive strategy that ruins drivers.


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## TwoFiddyMile (Mar 13, 2015)

tohunt4me said:


> If you flood the market with gold ,even the price of gold will become 1/2. Uber exhibits self destructive strategy that ruins drivers.


Gold and diamonds are finite tangibles.
Even if we flood the market with gold, the implied finite disparity of limited gold veins in the crust of the earth will maintain that metals value somewhat.

Uber, on the otherhand, is a Fiat commodity.
Any idiot can scrape up a 10 year old car and get approved regardless of their felony record for having knocked up their first cousin in west Virginia.


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