Uber’s day of reckoning is here

LXII

Outrageous fortune.

To be or not to be chief executive of Uber, that is the question. It is a question that Travis Kalanick and Uber’s board were weighing as recently as yesterday, as reports circulated that he might take a leave of absence. Were Kalanick to step aside it would give Uber a much-needed chance to hit the reset button and repair its tattered reputation. The company has already begun cleaning house: It fired 20 employees last week, the result of an investigation by law firm Perkins Coie into all sorts of misconduct, and forced out senior vice president of business and close Kalanick confidant Emil Michael. Uber also recently dismissed Eric Alexander, the former president of business in the Asia Pacific region, who Recode reported last week had once obtained the medical records of a woman who was raped by her Uber driver in India.

Don’t tell Hamlet, but suffering the slings and arrows of outrageous fortune is par for the course for Uber. Its outrageous fortunes have caught up not from the recent past, but from 2014, the year of Uber’s miscreant youth. It was in 2014 that Michael suggested digging up dirt on journalists; that Michael, Kalanick, and several other Uber employees visited an escort-karaoke bar; that Uber piloted its Greyball program to evade regulatory authorities; and that Alexander obtained and “carried around” the medical records of a rape victim like a weird comfort object. It was also in 2014 that Uber touted its $90,000 income claim to drivers and aggressively sabotaged its competitors.

Why 2014? Perhaps because that was the first year that rapid expansion and decentralized management took its toll. From June 2013 to November 2014 Uber launched in nearly 200 cities and dozens of countries. It managed this by tapping general managers for each city, mid-level executives who had free reign over their markets so long as they produced results. Uber wasn’t “evil” in 2014; it didn’t have some master plan. But sprawling growth established a free-wheeling corporate culture, and the small scandals that were overlooked that year because they helped Uber get ahead set the stage for worse behavior in the future.

Alas, conscience does make cowards of us all, even Uber. Conscience met with Uber’s board on Sunday (June 11) in the form of Eric Holder, the former US attorney general, whom Uber hired in late February to investigate its troubled corporate culture. The board voted unanimously on Sunday to adopt all the recommendations in his report, which included cutting ties with Emil Michael. The rest of the findings are set to be shared with Uber’s employees today. Conscience is also supposedly coming to Uber via Frances Frei, a Harvard Business School professor hired to the newly created position of SVP of leadership and strategy, who told Recode, “My goal is to make this a world-class company that can be proud of itself in the end, rather than embarrassed.” Meanwhile, Travis Kalanick is meditating in the lactation room, and can you blame him? As the Prince of Denmark said, “Be all my sins rememb’red.”

Uber on.

Of course for every point there is a counterpoint, so here is mine: For all that Uber’s corporate affairs are high drama, out in the real world, a lot of people are still taking Uber.

Uber’s US sales are up more than 30% since the start of the year, according to data from Second Measure, a research firm that analyzes anonymized credit card purchases from millions of US consumers. User growth is basically a nice straight line since 2015. The scandals of this year and #deleteUber campaign are a blip. Even Uber’s average transaction value is up since the start of the year (maybe the influence of route-based pricing?), meaning people aren’t only still taking Uber, but also spending more on it.

I am equally fascinated by what information has filtered through to the typical Uber customer. The other night, for instance, I was in a Lyft Line and my co-rider started talking about how she had stopped taking Uber. When I asked why, she explained that she couldn’t use the company because its CEO had openly supported Trump. I suggested that this wasn’t true and she doubled down. She was sure, Uber’s CEO had supported Trump until people got so mad that he stopped talking about it publicly. If 2017 has taught us anything, it’s that people are rarely more convinced that they are right than when they are misinformed.

The bigger point is that Uber has barely left the news these last few months and yet the one thing that seems to have stuck with everyday customers is the thing that wasn’t even really true! Lyft Line girl was far from the only person I’d heard make this case recently. The rest of it—the sexual harassment and escort-karaoke bars and corrupt executives and callous remarks made by Travis Kalanick—have all blurred together into the vague notion that Uber Is Bad. But, for the majority of consumers, not bad enough stop using a service that’s so convenient.

Elsewhere, an Uber driver in Little Rock, Arkansas, has turned his car into a karaoke venue.

Chary said the karaoke machine, bottled water, car charges, and cologne spray help him stand out from other drivers. With hundreds of thousands of songs to choose from, Chary said his tricked-out Uber leaves riders wanting to come back for an encore.

"They want to keep being in the same car again and again," he said.

Popular selections include “Say My Name” and “Uptown Funk.” The driver, who gave his name only as Chary, has also installed lights that flash teal, blue, and red in his backseat. Do you think he’s getting all this on dash-cam?

Mindfulness.

Ok, time for something else. Here is Four Seasons CEO Allen Smith talking about “being mindful of the Airbnb effect”:

“Will they match us head to head in terms of service quality? Probably not,” Smith said. “That’s pretty hard for people to do, but I wouldn’t underestimate their ability to get pretty close. I think that they will be a meaningful force that we have to reckon with.”

This is a big admission from Smith, since luxury hotel execs usually insist that Airbnb doesn’t compete with their offerings. Then again, hotels used to think they would be insulated by the business travelers who constitute their most important customers, and now Airbnb is building out a line of business listings. Meanwhile Airbnb in February acquired Luxury Retreats for about $300 million in cash and stock, in an early step toward offering premium home listings. Other home-rental sites are also focusing on luxury, such as aptly named OneFineStay (now under AccorHotels). Smith isn’t taking it lightly.

“They are a distributor of inventory, however you want to describe it. Whether it’s in someone’s home or it’s within a hotel it’s all the same in many respects,” Smith said. “I don’t underestimate at all the impact they’ll continue to have on the marketplace, whether it’s at the more mid-market or the higher end of the market.”

Groceries.

Online grocery is heating up. Amazon is testing offline grocery pickup with AmazonFresh. Employee-owned supermarket chain Publix is planning a dramatic expansion with Instacart in the US. Instacart competitor Shipt has raised $40 millionand plans to be in 60 markets by the end of the year.

Webvan made a bad name for online grocery services but the second-round competitors all insist that, this time, things are different. “The market has changed so much,” Shipt CEO Bill Smith told me the other day. “We’re not building all these capital-intensive assets.”

Yes, assetlessness is still a hot buzzword, but there’s another big difference in the market: Amazon. “A lot of the retailers are now feeling the impact of Amazon,” Instacart CEO Apoorva Mehta, who used to work at Amazon, told me over coffee a few months ago. “Amazon Go, for example, that’s a very big lead gen for us, because all the retailers give us a call and say hey, how can we be more innovative? How can we come online? How can we provide a service that Amazon will not be able to match?”

Instacart and Shipt aren’t just selling this digital savvy to brick-and-mortar stores, but to big brands. Both startups are building out significant revenue lines from consumer packaged goods companies, which pay them to advertise their products in the app, the online equivalent of an endcap display. On Instacart, for example, a search for Coke also brings up a selection of Pepsi. “When I add this to cart, and I buy it, Pepsi pays Instacart,” Mehta says. “This level of tracking, this level of customer data is not something Pepsi’s ever had.”

Other stuff.

Delivery Hero preps for IPO. Uber in talks to acquihire most of Luxe. Jaguar Land Rover invests $25 million in Lyft. Uber finance chief heads to Opendoor. Bozoma Saint John Heads to Uber From Apple. Tim Cook says Apple is focusing on autonomous systems. Uber adds Nestle’s Wan Ling Martello to board. Japan legalizes Airbnb. Lyft to launch in upstate New York. Airbnb adds check-in tool for hosts and guests. Postmates acquihires former Secret CEO. Hong Kong innovation bureau angers public with Uber comments. Uber Driver Gets $300 Tip From NFL Player for Long Drive. Uber a “flawed solution” to women’s rights in Saudi Arabia. Judge Denies Uber’s Request for Stay in Waymo Suit. Uber fined for forgetting to report $6.3 million in lobbying. Couple who ordered pizza got moldy sandwich from UberEats. Uber mistake costs $150,000 in Maryland. Uber tests 24-hour phone support for drivers. Airbnb for cars still hasn’t taken off. Grab plans next funding round. US plans update to driverless car rules. Elaine Chao wants self-driving car makers to explain themselves. Self-driving cars head to Washington. Uber of energy. Uber for kids. URGENT, URGENT - READ THIS NOW OR ELSE!!!!!. All-night rave at million-pound Airbnb flat. There Is No Free Lunch.