Uber and the Troubling Ethics of Silicon Valley

Image credit Forbes

Travis Kalanick, CEO of Uber (Image credit: Forbes)

That Uber is a brilliant innovation and has brought about much needed disruption into the taxi and transportation industry is not in question. But how their CEO runs the company, the culture he has created and the business practices he promotes are an issue that investors, customers and the press have turned a blind eye to for far too long.

For years, it has been an open secret in Silicon Valley that Travis Kalanick, the CEO of Uber, is a completely unethical man who also lacks integrity and leadership skills. That he runs Uber like a misogynistic frat house is a well-documented fact. Kalanick has boasted to GQ magazine about how Uber helped increase his sex appeal; he deflects with a wisecrack about women on demand: Yeah, we call that Boob-er.

Now, I am a whole hearted capitalist pig and an ardent advocate of being competitive and winning by all means but not at any cost. It should be done through innovation, improving your products and services to beat your competitors fair and square; but we should never condone winning by cheating or using unethical and underhand tactics like Uber has also done to try and derail their competitors.

Uber employees ordered and cancelled more than 5,000 rides from rival Lyft since last October. This was done in an effort to reduce availability of Lyft cars, and thus push their users towards Uber. There have been reports of abuse of rider location information through a technology called God View, which allows Uber to track the movements of every single vehicle and the passenger. Former employees have confirmed that God View was easily accessible to staff across the company.

In 2011, venture capitalist Peter Sims penned a blog post about being tracked and sent text messages from someone he barely knew; all this was done without his knowledge or consent. When Sims expressed his outrage, he was told by an Uber employee “to calm down, and that it was all a ‘cool’ event and as if I should be honoured to have been one of the chosen. Turns out his movements were being projected on a large screen at an Uber event and nobody at the company thought this was wrong.

However, while all this information has been in the public domain for many years, it has done nothing to slow down the company’s growth or attract investors. Investments have continued to pour in from the biggest names in venture capital to investment banks and even governments all over the world. Everyone seems happy to turn a blind eye to the company culture and willing to dismiss unethical practices, blatant violations of privacy and misuse of personal information; as long as it helps Uber’s commoditized offering stay ahead of its competitors. Even the tech press has remained silent or looked the other way as the company became the darling of Silicon Valley and a unicorn, a start-up valued at more than one billion dollars. Uber’s current valuation stands at around $66 billion.

For me the last straw came when Uber personally threatened a female journalist who had been writing about the consistent pattern of misogynist behaviour at the company and their unfair and possibly illegal business tactics. Her revelations followed a dinner party where a senior executive at Uber was caught on the record, boasting to his guests that the company should consider hiring a team of opposition researchers to dig up dirt on its critics in the media — and specifically to spread details of the personal life of a female journalist who has criticized the company.

Ironically, the first time Uber faced any backlash from customers was for something Travis Kalanick did, which I actually applauded – being part of Trump’s advisory council. I believe the best way to safeguard democracy is by having diverse and opposing viewpoints around the President, but that is a conversation for another blog. What is ironic and tragic is that, irrespective of people’s polarising views about President Trump, prior to this point nobody seems to have had any moral, ethical or principled objections to all the things that have been openly transpiring at Uber for years.

Nobody cared about the sexist and misogynist culture Kalanick has routinely boasted about. Nobody cared about the silencing of a female journalist and others in the media. Nobody cared about violating every code of competitive ethics or unfairly hurting the income of drivers. Nobody cared about Uber’s repeated violations of privacy, and abuse of personal information to stalk and intimidate people the company did not like.

It seems that now, only when it is no longer conscionable to look the other way that people are finally expressing some shock and outrage. This follows a perfect storm of events, from seeing a video of Kalanick berating an Uber driver, to a NY Times story about Uber using a tool, called Greyball, to identify, track and evade law enforcement officials, and a compelling blog post by a former female engineer. She writes about her harrowing experiences of constantly being berated and sexually harassed by senior managers, and Uber HR and senior management’s reluctance to take action despite her repeated complaints.

It seems perfectly clear that everyone was aware, and has been complicit in encouraging this culture by doing nothing to object to it; despite the repeated and many lines crossed. The bottom line is that they were all protecting their investment and hoping that these things could be ‘handled or contained’ until an IPO happened and they were free and clear, having made hay on their initial investment.

In response to the video’s release, Uber’s CEO has said he needs leadership help, and Uber has hired former attorney general, Eric Holder, to investigate the claims of sexual harassment by the former female engineer. As of last week, only one investor publicly penned an open letter, saying that the company needs to change its ‘toxic’ culture.

The problem is that all this is too little, too late. The fact that nobody felt the need to act before, despite being aware of all these issues indicates that what is happening now is nothing more than a PR exercise to do damage control on a prized unicorn investment; now that they have absolutely no choice due to the growing negative PR.

If Travis Kalanick, or his investors, had genuinely felt the need for him to grow up, it would have happened after he called his company boob-er. If investors had truly wanted to clean up the company’s act, surely the last straw would have been Uber threatening a female journalist.

At this stage, promising to fight to change Uber’s culture and all other talk that results in no real consequences for the CEO and others in management with whom the buck stops, are totally meaningless. It is akin to letting a murderer go scot-free because he apologises and promises never to murder anyone else in cold blood.

I will only be convinced that Uber’s investors are serious when they ask Travis Kalanick to resign or they fire him. In my book, this is the only way to send a strong and clear message that this type of behaviour will no longer be tolerated by Silicon Valley.

Business success devoid of integrity and ethics is a failure for all of society.

Why Facebook, Twitter, Netflix and Others Have Personalisation Wrong.

Today, it is hard to escape digital technology’s great promise of personalisation and customisation. Every company under the sun is touting tailored customer experiences. One based on learning about individual habits, preferences and interests; driven by our past behaviours, choices and actions.

Every advertiser and marketer swears the new ‘holy grail’ of connecting more intimately with customers, and they are racing to build algorithms and artificial intelligence that gets better, as it learns, at predicting future decisions based on past behaviours. They learn about our interests, hobbies and consumption habits in a bid to sell us more of what we ‘want’.

Amazon recommends products based on our purchase and browsing history. Netflix suggest movies based on our viewing history. Delta sends us special deals based on our travel history. The Wall Street Journal recommends news articles based on our reading history. Facebook shows us posts in our news feed based on our ‘likes’, and even the screensaver image on my PC asks me to like the pictures I want to see more of – well, you get the picture.

However, I believe every one of these companies has got it wrong. There exists a fundamental flaw in the way they are approaching personalisation, one that does not truly deliver on the greatest promise of the internet and digital technology.

The internet, beyond connecting the world, allowing us to share, engage, collaborate – is about discovery. The ability to discover new peoples, cultures, places and even points of view. It has the ability to open our minds, widen our worldview and expand our horizons through discovery; so why show us more of what we already know, like, see and do?

It is great that technology has allowed companies to peek into our daily lives (for those who opt-in), and digital tools in turn allows them to deliver experiences and messages uniquely tailored to us. But here is what I want them to do with this power – use it to deliver on the greater promise – one that opens each of us up to new ideas, enables us to experience new things, and even challenges conventional beliefs and viewpoints. Let’s use it to experiment with broadening our worldview; rather than limiting it based on what we already see and do.

Only by doing this can we begin to unlock the potential of the human mind and deliver what I believe to be the holy grail of technology.

Today, Facebook’s feed algorithm works to show us more of what we already like. The same holds true for Twitter or CNN’s article suggestions and the principles behind every other personalisation algorithms – they are designed to show us more of what find most agreeable.

As a result there is little debate and no authentic discussion because we are in essence talking to ourselves. More importantly we learn nothing new, if we don’t have the opportunity to experience views, ideas and thoughts that are very different from our own.

Currently, technology is only perpetuating our natural human instincts to find and then quickly form safe, secure and comfortable tribes and online havens. Yet, societies only make progress through discord, based on debating conflicting ideas and diametrically opposed views, before the majority can find common ground and reach consensus to move forward on the most contentious issues.

My challenge to every company is to start applying a different set of principles their algorithms and in doing so redefine the idea of ‘personalisation’ along the following lines:

40% what I already like
+ 40% things that are new and different (stretch my worldview)
+ 20% that I will dislike/disagree with (challenge my thinking)

Now imagine what your Facebook and Twitter feed, Netflix recommendations, Open Table picks and Fox News or CNN article suggestions will begin to look like. I guarantee they will be richer, more rewarding and in time will also help us bring back civil dialogue and respectful debate on both the most divisive political and social issues; not to mention that our minds and society will be richer for it.

Facebook: Not $$$ocial Enough?

Earlier this week General Motors decided to stop advertising on Facebook. GM made this announcement “after deciding that paid ads on the site have little impact on consumers’ car purchases” according to the Wall Street Journal (“GM Says Facebook Ads Don’t Pay Off”). Albeit, the total amount, $10 million, is but a tiny fraction of Facebook’s whopping $3.15 billion in reported 2011 ad revenues, the timing was not great. It was less than one week before Facebook’s much vaunted IPO.

So while the revenue loss is paltry, there are two larger concerns for Facebook. One, GM is the third largest advertiser in the US and their announcement might lead other advertisers to re-evaluate their advertising spend on Facebook. The second more worrying thing is that it is a major blow for a young company trying to convince the world that “social advertising” is not only effective but provides Return on Investment (ROI). In the short-term the impact may not be that great simply because Facebook is about to reach 1 billion active users (approximately 14% of the world’s population); and this number alone is hard for most advertisers to ignore. But as a public company, with shareholders, they will soon need to prove that they are worth their high valuation, in revenue terms.

Every company feels compelled to have a social advertising budget, even though there is scant evidence that these dollars generate any sales, or return on investment. The advertising and social marketing industry will have you believe they are effective sales drivers but the reality is that there are few independent studies or evidence to support this hypothesis. If you think about the number of times you have clicked on a Facebook ad or decided to make a purchase based on seeing someone’s status update (or wall post), you will likely reach the same conclusion. Facebook’s ad revenue actually fell in the first quarter of 2012 from the fourth quarter of 2011.

Here is something to ponder about Facebook’s current IPO valuation. According to Anant Sundaram (of Tuck School of Business at Dartmouth) the average price to earnings ratio for the majority of US companies, over the last one hundred years, has been around 15. Apple is at 15 and Google is apparently a little bit higher. However, Facebook’s price-to-earnings ratio is 100.

He goes on to say that “at current levels, it would take Facebook 100 years to generate enough profits to pay for itself. That number is so high because investors are betting Facebook’s profits are going to explode. Sundaram says, judging from this price these investors seem to believe that the company’s profits will double, and then double again, and then double again — all within the next few years. For that to happen, Facebook will need to attract 10 percent of all advertising dollars spent on the planet “across all media – print, billboards, radio, television, Internet.”  To put this in perspective he adds that “Facebook had just over $3 billion in global ad sales. TV ad sales in the U.S. alone last year were $68 billion.” (NPR: “Is Facebook Worth $100 Billion?”).

Facebook recently tried a new revenue generation experiment in New Zealand by charging people two New Zealand dollars (US$1.53) a post to ensure that their own friends see what they write (Wall Street Journal: “Facebook Gets Religion for Revenue”). Are your status updates and posts on Facebook valuable enough to start paying to share it with your friends? I know mine are not and never will be.

Let’s just say I am holding off buying Facebook shares because I don’t believe they have a real revenue model, yet. That is not say that they will not find a Google like search cash cow but let’s just say ad banners on the site are not the Holy Grail that Mark Zuckerberg wants us to believe.

Will the #Apple fall far from the tree?

First, I want to wish Steve Jobs the best and hope his health improves.

I guess we all knew this day would come. The board, the shareholders, the employees, the analysts and the evangelists; it’s just that we had all hoped it would be much, much later.

Whether you are a fan of Steve Jobs or not, what nobody can dispute is the fact that he single-handedly turned a fledgling company and tired brand into the world’s most envied and admired; one that is now on a path to become the world’s first trillion dollar company. However, what is most fascinating about the Apple story is how he achieved this. His vision, passion and workaholic nature are well-known but Jobs took this to another level entirely. It is said that he was involved in every decision right down to determining the type of wire that will secure MacBook’s in the Apple stores – that is both incredible and insane. Jobs’ is the only CEO I can think of who seems to go against conventional wisdom in every sense and still come out on top, every time. He is a classic example of someone who zigs, when everyone else is zagging.

Most CEO’s will tell you that the key to successfully growing your company, after you become a certain size, is to hire really smart people and then give them latitude to operate and a wide berth to do their jobs – and get out of the way. Not, like Jobs, remain involved in every minute decision; like what glass to use on the staircases of your retail stores. We know Job’s remained involved in every decision, even as Apple blew past Microsoft and Oracle to become the most valuable technology company on the planet.

Even more amazing is the fact that while the whole tech world seemed to acknowledge that the old Microsoft “proprietary” technology model was a failure and no longer sustainable in our new global ecosystem; filled with consumer demand and a need to constantly adapt and innovate in an open source way. So “open” has become the new buzzword for software development and management philosophies. Even companies like Procter & Gamble are now embracing this for rapid product prototyping, development and go-to-market strategies. On the other hand we have Apple who have created a completely closed and proprietary ecosystem for their products – and have been more successful than any other company. It is almost as if Steve Jobs’ philosophy and management style are completely counter-intuitive. This applies right down to the bets Jobs has made over the years. Like launching a tablet when everyone said that there was never going to be a market for a device that was not quite as small as a cellphone and not quite as powerful as a laptop; and we all know how that turned out.

We have been told that Apple has a very deep management bench and that may well be true but when a larger than life CEO like Steve Jobs vacates his position, he leaves a very rare and large hole in a company that few other leaders do.

So the 337 billion dollar question with Tim Cook is; how far will the Apple fall from the tree?