Benchmark sues Travis Kalanick, Airbnb bans neo-Nazis, Uber warns drivers about long trips

LXXI

Benched.

Remember the good old days when Uber and its investors all got along? YouTube does. Here is a 2013 video where Benchmark Capital investing guru Bill Gurley positively gushes about Travis Kalanick:

He got so many things right. PR. He’s been extremely effective at the regulatory world… there’s no reason to expect anybody in Silicon Valley to be good at that. And he’s just used social media in such a way that it’s probably like no one’s ever done it before. So I’ve just been really impressed and continue to be impressed. In addition to what everyone sees externally, he’s remarkably focused on operating controls, continuous improvement internally. The playbooks that we have for launching new cities are just amazing, and the metrics all get better… He’s also remarkably audacious and ambitious and wants to do big great things.

Also:

Look, one thing about Travis I’ll tell you that for me is just super exciting is that he loves business. He loves products too but he loves business. And I think we’ve had a few high-profile entrepreneurs who love product but could probably take it without business if they didn’t have to. And I think they’re not going to get as far as a result. Because look, business strategy is an art. And there’s competition, and you have to go out and win, and you have to think about offense and defense and moats and all these types of things. And he’s great at it. I wouldn’t want to bet against him. I’m glad I’m not.

I wonder what 2013 Bill Gurley would say to 2017 Bill Gurley, who is now very much betting against Travis Kalanick. On Aug. 10 Benchmark sued Kalanick and Uber in Delaware Chancery Court, alleging that he concealed “gross mismanagement and other misconduct” while procuring three additional seats on the board in 2016 to consolidate control of the company. The complaint runs through the greatest hits of Uber’s 2017 scandals: its ongoing litigation with self-driving carmaker Waymo, its mishandling of a rape incident in India, its “pervasive culture of sexism, discrimination, and harassment,” and its “Greyball” program designed to deceive regulatory authorities worldwide. “Kalanick fraudulently obtained control of three newly created seats on Uber’s Board by his material misstatements and fraudulent concealment from Benchmark of material information that would have led Benchmark to reject the creation of the seats,” the complaint alleges.

Oh but would it have? It’s not as though Uber were so straight-laced in 2013 or Kalanick’s regulatory playbook so clean. Here is a 2012 article about all the legal trouble Uber was in at the time, including a ban in New York City, lawsuits in San Francisco and Chicago, a cease-and-desist letter from the Massachusetts Division of Standards, and a $20,000 fine from California’s Public Utilities Commission. Here is the quote from Kalanick: “If you put yourself in the position to ask for something that is already legal, you'll find you'll never be able to roll out.”

Uber has never bothered with asking permission or even begging forgiveness—it simply does what it wants. That was just fine with investors when Uber was growing faster than they’d ever thought possible and pairing fiery regulatory skirmishes with PR-friendly deliveries of kittens and ice cream. It is apparently less OK with them now that the company is the poster child for startup scandal and losing ground to competitors like Lyft.

Anyway, Benchmark is just one player in this drama. A day after the venture-capital firm filed its lawsuit, another group of Uber investors led by Sherpa Capital co-founder and Travis Kalanick party buddy Shervin Pishevar petitioned to have Benchmark sell enough of its shares to step down from Uber’s board (Pishevar’s group is offering to buy those shares). And then Benchmark followed that up with an open letter to Uber employees saying the firm only regrets not taking action against Kalanick sooner.

Meanwhile Uber’s board is also reportedly entertaining bids from Japanese tech conglomerate SoftBank and an investment coalition led by Dragoneer to buy out current Uber shareholders at a discount to the company’s last valuation of $68.5 billion, with one small exception. Both SoftBank and Dragoneer have reportedly proposed buying “a small amount of new shares at Uber’s current valuation to keep the company’s value propped up on paper,” a proposal Bloomberg View’s Matt Levine calls “monumentally dumb”:

Obviously it would not occur to a public company to even try a ruse like this: If you sell stock at $68.50, and it trades down to $50 on the stock exchange, then selling one share to an investor at $68.50 will not convince anyone that your price is "actually" $68.50. The price is the price where shares trade. But if you are private, I guess you can convince yourself that this trick might work.

Benchmark, of course, remains confident that Uber “could comfortably be worth over $100B in just two years.” But maybe not confident enough to hang onto its shares.

No vacancy.

Airbnb took a strong stance against the white supremacist rally in Charlottesville, Virginia, over the weekend. After the company learned of people planning to stay in Airbnbs for the event and even hold after parties at local listings, it cancelled their bookings and banned them from its home-sharing platform.

“The violence, racism and hatred demonstrated by Neo-Nazis, the alt-right, and white supremacists should have no place in this world,” Airbnb CEO Brian Cheksy said in a statement. “We require those who are members of the Airbnb community to accept people regardless of their race, religion, national origin, ethnicity, disability, sex, gender identity, sexual orientation, or age. When we see people pursuing behavior on the platform that would be antithetical to the Airbnb Community Commitment, we take appropriate action. In this case, last week, we removed these people from Airbnb.”

Battle lines are being drawn in Silicon Valley over the deeper cultural rifts in the US, and Airbnb is no exception. Google, which last week fired engineer James Damore over his viral anti-diversity memo, yesterday dropped a neo-Nazi site from its domain registrar like a hot potato. Uber banned a white supremacist rider on Saturday. Airbnb would understandably be hyper-sensitive to anything that might associate it with discrimination, especially after its own blow ups over racism last year.

The central tension of Airbnb has always been how to create a hospitality service where hosts and guests feel liberated from the conventions of hotels while also imposing just enough rules and standards that everyone feels safe in a relatively unregulated marketplace. The more ideology gets caught up in that business proposition, the trickier maintaining a balance becomes.

Long trips.

Uber is testing a feature that alerts drivers to "long trips" of 60 minutes or more:

The feature was spotted by Harry Campbell, author of the popular driver blog The Rideshare Guy, as well as on Reddit, where one driver recently shared a screenshot of the alert. “Long: This trip likely to take 60+ minutes,” it reads. A spokesman for Uber confirmed to Quartz the company is testing this feature. He declined to say whether refusing a long trip would count toward a driver’s overall ride acceptance rate.

I stumbled on this story while looking into a trip from Detroit to Cincinnati taken by Uber driver Steve Fleck earlier this month. Fleck drove 265 miles, a little over four hours, to deliver his passenger, for which he earned about $260. Uber charged the rider $593.82, of which it kept $333.72, or 56%. Suffice it to say, Fleck was not pleased.

Long trips have always been a gamble for Uber drivers. Kevin Jones hit the jackpot when he drove a woman 550 miles from Omaha to Denver last October. Jones made $702.09 for the seven-and-a-half hour trip, 80% of the total $877.61 fare. Others, like Janis Rogers, do less well. Rogers earned $294.09 in December taking a woman 400 miles from Virginia to New York City. That trip lasted just under eight hours in one direction. There and back, Rogers estimated she made just over $9 an hour after expenses. “This was not lucrative,” Rogers, 64, told the New York Post at the time. “I did it because it was an adventure.”

Road pricing.

Here is an interesting piece from the Economist on “road pricing,” a sort of demand-based tax on driving that is popular with economists, less so with the average person:

Such schemes will doubtless infuriate motorists. But there are reasons to believe that a shift toward road-pricing is not just increasingly urgent, but also more plausible. London’s CCZ was brought in against stiff opposition. Today just one-fifth of Londoners oppose the idea of a more sophisticated road-pricing scheme, according to the London Assembly. After a seven-month trial in 2006, Stockholm residents voted narrowly by 53% to 47% to make the city’s congestion zone permanent. But by 2011 polls showed that about 70% of residents backed the scheme.

Car owners may become less of a political force, at least in cities, as people opt against getting behind the wheel. In many rich countries the share of 20-somethings with driving licences is falling. The number of car-less households in America declined from 1960, when the US Census began tracking it, until 2010, since when the tally has begun to tick up. McKinsey, a consultancy, estimates that one in ten vehicles sold by 2030 will be for ride-sharing.

As more people switch from car ownership to car-sharing or ride-hailing, they might care less how cars are taxed on the road. On the other hand, the Uber drivers and owners of our eventual fleets of self-driving cars might care very much if they wind up being responsible for those fees, or passing them along to consumers.

Other stuff.

How One Hot Sauce Seller Hauled Uber Into Small-Claims Court and Won $4,000. Uber adds in-app messaging for riders and drivers. Uber India still growing fast. Lyft acquires two growth-focused startups. WeWork acquires Unomy to boost enterprise sales. SoftBank CEO Eager for a Piece of Uber or Lyft. Uber rival 99 goes on hiring spree in Brazil. Outdoor Access raises $2 million. FlySpaces raises $2.1 million. Cruise runs autonomous ride-hailing service for SF employees. Instacart partners with Aldi. London taxi drivers make Uber-like app to save black cabs. Airbnb lobbies Portland to stop inspecting its rentals. Philippines suspends Uber. Writer pays $35/hour to outsource his life for a week. America’s buses are losing riders. Airbnb rentals in Idaho spike 450% for solar eclipse. In a Job Market This Good, Who Needs to Work in the Gig Economy? Botched update breaks popular Airbnb smart lock. Shake Shack chatbot answers 300 questions. Uber’s New Payment System Lets Drivers Reject Cash Trips. Hotel Association Hires Ex-Cop to Track Illegal Activity on Airbnb. Trump’s childhood home on Airbnb. Bling bikes. Uber-branded drug bust. Treat Uber like a stock exchange.