Why Uber Has Become the Company That People Love to Hate

This is as much about psychology as economics. When you impinge upon - or eliminate - someone's source of income or, in the case of regulatory types, their power - they don't like it.

Even if, in so doing, you are trying to create a more perfect society by more effectively marshaling and utilizing resources.

All the rhetoric about networking and shared economies and the rest of the utopian vocabulary that the tech world likes to employ when it attempts to justify picking someone else's pocket just doesnt cut it. If your income is one of those resources that has been marshaled out of existence, you're going to be pissed. 

And so Uber and the people who make cities run got off on the wrong foot in a lot of places. The Uber folks didnt see the need to pay much respect to the rules and the culture - and even the actual people who were running and benefitting from the existing system. They figured the brilliance and convenience of their scheme would serve as a financial Excalibur, slashing away any opposition by its mere presence.

And the people opposed to Uber did what threatened industries usually do in the face of new technology: resist. Cable, streaming, automobiles, electricity, whatever. If you were in the business that was going to take the hit, you called in favors, spread some cash around, rallied your troops and hoped to delay that which we now know is almost certainly the inevitable.

The reality is that both sides realize they have to coexist and may eventually need each other. It's spreading globally because convenience rules and Uber is all about convenience. So all those people who dont like what it is doing to their world had better follow or get out of the way. Cuz the numbers say Uber is going to win. JL

Nancy Scola reports in Next City:

The problem that the tech world hopes to crack right now is how to use networked technologies to make the best use of offline resources. Technology is rapidly reaching out into the spaces of life — transportation, health care, energy — that are both hugely consequential and heavily regulated. Add to the mix the growing, recession-fueled interest in the so-called “sharing economy,” with people exploring how to share expensive resources like cars and spare bedrooms.
Travis Kalanick, the 36-year-old CEO of the ride-on-demand company Uber, calls it the “palm to forehead” moment: That instant when you understand for yourself why a simple car hailing app has both captured people’s imaginations and churned up a queasy feeling in the stomachs of taxi industry power players. Here’s mine.
It was a rainy spring Friday in San Francisco, before five o’clock in the morning. Needing to catch a flight home to New York City, I’d asked my host the night before about the best way to get to SFO from Japantown. “Just go downstairs and Uber,” she’d said. Groggily I made my way to the cold and lonely lobby. Once there, I pressed a few buttons on the Uber app on my iPhone. Almost instantaneously, one of the tiny black car avatars on the live digital map on my phone screen swung around and started heading my way. I could hear it, even. A splashing sound.
Mesmerized, it took me a few beats to realize that it wasn’t the app making noise. It was my car itself, tracking through real puddles as I tracked it on screen. Before I knew it, Waqar, my driver, slid into view. I knew his name because Uber had texted it to me while I’d waited. Later, the company would email me the data on my trip. It had taken 19 minutes and 43 seconds. We had traveled precisely 14.35 miles. It had cost me $54.04, charged to the credit card whose details I’d inputted when I download the app months earlier in curiosity. But it was when said goodbye to Waqar and hopped out of the car at the terminal that I realized how deeply I had, in the past, hated taking a cab or black car to go anywhere. All that hailing or giving my address, giving directions, fumbling for money, calculating and recalculating the tip. Technology had taken care of all of it.
For less than 20 minutes, I’d had almost nothing to worry about. What else was I simply putting up with in life? What other broken systems could be fixed?
I’m hardly the first one to put my hand to my head and contemplate the universe upon taking Uber for the first time. The San Francisco-based company launched 4.5 years ago, introducing a select group to the patent-pending technology that allowed me to press the Uber button and experience the magic of a driver that seems to pop out of the ether. It is already up and running in 18 countries and counting around the globe. This summer, Google Ventures poured some $258 million into Uber, the most it had ever invested in a company.
But that explosive growth hasn’t come without friction. Americans have been hiring driven cars for more than a century. Laws have accumulated governing that exchange. But those laws never contemplated an Uber. And so the battle is on, all across the country, to determine whether Uber will remake the transportation market or whether the transportation market will remake Uber first. There’s no better place to understand that fight than where regulations are both business and sport: Washington, D.C.

An App for Being Baller

In the winter of 2008, Kalanick and fellow entrepreneur Garrett Camp were hanging around Paris for the tech conference LeWeb, dreaming up their next great idea. Kalanick had just finished a yearlong stint at Akamai, the Massachusetts-based tech company he’d sold a firm to, and Camp had just sold his firm StumbleUpon to eBay for $75 million. Kalanick would later recall that Camp’s big vision was to fix San Francisco’s broken taxi market: “Look, I just want to push a button and get a ride.” Kalanick is soft-spoken and solidly built with a thick mop of dark hair graying at the temples and narrow, deep-set eyes that suggest earnestness. But Camp likes the high life. He wants, Kalanick says, “to roll in style, comfort and convenience.”
And so Camp’s original vision was appropriately high-end: Buying up 10 Mercedes Benz S-Classes (sticker price: $95,000), hiring 20 drivers and purchasing a parking garage.
But Kalanick had little interest in bogging himself down with cars, garages or drivers. So the pair came up with a lighter-weight plan: An app, accessible only by private code handed to a hundred friends, that would instantly summon a black car. They’d simply be the cleverly engineered software layer between riders and existing black cars on the road. “It wasn’t about taking over the world,” Kalanick has said. “It wasn’t about taking on corruption in every city around the world. It was actually just about being baller in San Francisco.”
In March 2009, Uber was formally founded. January 2010 saw a three-car street test in New York City. There, Kalanick and Camp teamed up with Oscar Salazar, a software developer who’d gone to grad school with Camp at the University of Calgary. Service officially began in San Francisco in May 2010. It was then, Kalanick has written, that the “hair-on-fire craziness began.” It has not stopped. New York City came online in May 2011. The first government cease-and-desist letter came from California in October 2010. By December 2011, Uber had spread to Paris.

Uber uses the term “the God view” to describe the data-enabled perspective that enables drivers to know exactly where to find passengers.

If riding in prime style was Kalanick and Camp’s goal, Salazar grasped the social implications from the beginning. Salazar knew technology, but he knew little about the hired-ride market, so he went out to talk to drivers. He found that they didn’t like the way things were, either. They were beholden to dispatchers and fleet owners who had favorites — a non-Puerto Rican driver at a Puerto Rican-owned firm, Salazar says, “complained that the best trips were assigned to Puerto Ricans.” Cars on the road looked like a public resource to which everyone should have access, yet for both drivers and riders, “access to black cars wasn’t democratic at all.”
That bothered Salazar, who knew he could code a way to “avoid the centralized human element and reduce the friction in the system.”
Uber took hold, and eventually the tech world began looking at how to copy its success at a lower price point. If Uber works for black cars, might it work for taxis, too? “ Uber is going to be a low-cost Uber,” Kalanick told would-be competitors at a start-up conference at the time. Indeed, April 2012 saw the launch of Uber TAXI in Chicago. Then, in April 2013, Kalanick issued an “Uber Policy White Paper” arguing that if governments weren’t going to crack down on unlicensed ride sharing companies like Lyft and Sidecar, Uber would get into the business. UberX was born.
Today a fleet of services operates under the Uber banner. There’s UberBLACK, UberTAXI, the peer-to-peer service UberX and even UberSUV for when you need a bit more room. Uber couldn’t have existed 10 years ago, before the smartphone era. But it suddenly found itself a major player in a market that had been around for more than a hundred years — one that had been a heated, sometimes-violent space for just as long.
Driving people around for money was one of the few good jobs left during the Depression, points out Graham Hodges, a history professor at Colgate University and the author of Taxi!: A Social History of the New York City Cabdriver. Everyone, from independent drivers to car manufacturers like Checker, got into the game. There was money at stake, all the more so given that cabs were an easy way to ferry drugs, alcohol, prostitutes, gambling money and more. In the 1920s, Hodges says, “you had all these petty gangsters driving cabs.” There were few rules and much fighting. Owners of taxicab companies were known to firebomb each other’s homes.
Then, in 1937, New York City Mayor Fiorello LaGuardia signed the Haas Act, setting up the city’s medallion system. There are about as many yellow cabs on the road in New York right now — 13,000 or so — as there were in LaGuardia’s time, a regulated scarcity that makes medallions today worth about $1 million a piece. Kalanick looks at New York, which has resisted the company’s efforts to dispatch taxis, and says, “so you have $13 billion directed at keeping Uber from being successful.”
Still, today Uber looks at the heaps of data it accumulates every day and sees a public ready to jump into Uber-connected cars, despite the fact that its black car service regularly costs about 50 percent more than cabs. In August 2013 alone, Uber launched or soft-launched service in Taipei, Seoul, Mexico City, Johannesburg, Honolulu, Dubai, Cape Town and Bangalore. Along the way, it ramps up in each city with a city manager — “mini city CEOs,” Uber’s east coast manager Rachel Holt calls them — a distributed approach that allows the company to read each city’s nuances, figure out the major players, and launch a charm offensive in the local patois. Kalanick calls it being “in the trenches.”
“It’s a harbinger of a much larger set of mobility hacks to a transportation system that hasn’t changed all that much since the 1950s,” says Anthony Townsend, a research director at the Palo Alto-based Institute for the Future, and a frequent advisor to cities. “Rightly what the geeks are excited about is taking these very old systems and throwing them into crisis.” It can all leave regulators feeling like victims, robbed of the space to carefully make responsible regulations for what it saw as the public’s own good.
“When you do something successful,” Kalanick warned a crowd of burgeoning entrepreneurs in California last year, “not everyone is happy.”
(Through a spokesperson, Kalanick declined to be interviewed for this story.)

Fighting Over Uber in the District

Kalanick and his team write a new blog post on the occasion of Uber’s launch in each new city. When setting up shop in Washington, D.C. in late 2011, Kalanick’s post read, “Well D.C. this is going to be an interesting courtship.” Uber is all about style, efficiency, innovation. The nation’s capital is known for their absence. But Uber knew that Washingtonians could not wait to get its service in their city, because the company can track how often people open the Uber mobile phone app. And in D.C., Kalanick has said, users opened it “incessantly” before the company launched, more so than in any other city. It wasn’t surprising that when Uber did open in the District of Columbia, the response was off the charts.
But regulators had been waiting, too. Within a month of launch, Ron Linton, the 84-year-old head of the District of Columbia Taxicab Commission, ordered an Uber-dispatched car to the Mayflower Hotel and then had the driver ticketed and car impounded. Uber and Washington did not get off on the right foot.
But the truth is, two years later and fraught relationship or no, Uber and taxi regulators in the District actually agree on a critical point: Taxi service in Washington, D.C. is atrocious, when it’s possible to get a cab at all. Placing an order with a local dispatching service is no guarantee that a cab will show up. On a recent trip to Washington, I’d attempted to take a short cab ride from my hotel to a meeting several blocks away. When I asked the first driver I stopped if he took credit cards, he merely frowned. But the second actually hissed, “Just… get… in.” I declined, and then fired up the Uber app. In two minutes and eight seconds, a gleaming black town car arrived. The driver smiled in the rearview mirror and asked, “Are you Nancy?”
“That’s been maybe the $64 million issue,” admits Neville Waters, spokesperson for the D.C. Taxicab Commission, when I describe being hissed at. “It was a market in some disarray,” he says, and “there’s an acknowledgment by some in the industry that their own weaknesses allowed this phenomenon to occur.” For many years, Washington had an open, loosely governed cab market, and 116 different cab companies operate in the District of Columbia. “It’s bringing this industry, sometimes kicking and screaming,” Waters says, “into the 21st century.”

In August 2013 alone, Uber launched or soft-launched service in Taipei, Seoul, Mexico City, Johannesburg, Honolulu, Dubai, Cape Town and Bangalore.

Indeed, back in 2011, at the very moment that Uber was first taking hold in Washington, taxi regulators and local lawmakers were working together to figure out ways to push the taxi industry toward the future.
But now, with Uber on the scene, the need to push became even more urgent, says Councilmember Mary Cheh, the head of the D.C. city council’s transportation committee. The new rules had to contend with digital-dispatch services, so she drafted legislation that stated clearly that the District’s laws did indeed allow for sedans to calculate passenger fares using time and distance, the way Uber did. She thought the job was done. She was wrong.
Kalanick wasn’t happy with Cheh’s so-called Uber Amendment. It set a minimum price for black car services and, in his mind, that couldn’t be allowed, not when Uber hoped D.C.’s laws would serve as model legislation for the rest of the country. Kalanick rallied customers and fans against the rule. It was dropped.
The D.C. Council passed its taxicab modernization bill in July 2012, but Uber and its allies pressed for legislation that would specifically sign off on operating Uber in the District. So that December the council passed a smaller, stand-alone bill called the Public Vehicle-for-Hire Innovation Act. The law established more formally that there was a class of sedan-like cars allowed to operate in the District using a combination of time and distance to set its rates. As of 2013, the ball was passed to the D.C. Taxicab Commission. Its task: Craft the nuts-and-bolts rules that would actually modernize the industry, guided by the safety and consumer protections called for in Cheh’s bill.
“When somebody hails a cab,” Cheh says to explain her thinking in those days, “they have to have some confidence about the safety and the driver. They also have to have some set scheme for charging. You don’t want to be on your way to the airport, and you say, I’ll pay you $10. No, $20! It’d be ridiculous.” But Uber changes the dynamic. With the app, there’s no such thing as a blind street hail. “For me,” she says, “everything followed from that.”
So when, on August 19, the taxicab commission issued its “Determinations and Findings,” many in the city were flummoxed. The commission had passed rules that significantly limited the sedan market, going so far as to limit the colors, make and models that could serve as hired sedans in the District — a direct threat to UberX service. The commission was of the mind that Uber’s low-cost option had only just launched, and it didn’t make sense, at least not yet, to shape the city’s cab rules around it. 
Rachel Holt was serving as director of Uber’s D.C. operations at the time. As a kid growing up on the transit-obsessed Upper West Side of Manhattan, she thought about what transportation means for a city. To her, Uber opens up parts of Washington that had previously been cut off, and she found the commission’s rules simply illogical. What role do regulators have in saying which cars cabbies should drive? “If the rules were based on crash test ratings, I would understand it. But a Camry is plenty safe,” she says. “What I can’t understand is, how is banning a Prius protecting drivers?”
The taxicab commission’s far-reaching rules ensured that the debate over Uber in the District would continue. Three days after the commission issued its limits on sedan service, I meet Cheh in her office in the John A. Wilson Building. Holt and an Uber colleague are just leaving. Cheh is considering legislation saying, once and for all, that services like Uber and UberX are allowed in the District. Meanwhile, the Commission is standing up a panel to think over ride sharing and other new services. The rhetoric remains heated. Shortly after the commission unveiled draft rules, the Washington Post editorialized that its handling of Uber proved that the commission should just be gotten rid of. Linton, the chair of the taxi commission, said he felt “sadness” that editorial writers don’t know what they’re talking about.
But while the fight in D.C. has been particularly pitched and high profile — the Washington-based national press, it’s probably safe to say, loves Uber — it’s far from the only battle the company is staring down. In Dallas, for example, the city manager is under investigation for seemingly acting in cahoots with the taxi industry to stop Uber. In Colorado, state officials have fought over whether cars can set fees by anything “other than a clock,” with Gov. John Hickenlooper backing Uber. California’s public utilities commission is wrestling with signing off on “Transportation Network Companies” like UberX. Chicago has accused Uber of violating city and state laws on public safety, consumer protection and fair practices. The list goes on.
As passionate and wide-ranging as the fights are, though, they share a wonky central question: The distinction between cabs and black cars, and how heavily each should be regulated. Traditionally, taxis and limousines (or black cars) have functioned as two separate modes of transportation. Limos were nicer vehicles and available by advance request. Cabs were a little less nice and available on-demand, so that you grab the closest one and go. But if you hail a somewhat grubby cab the street, the thinking goes, you want more external checks on the transaction. Taxis, thus, tend to be heavily regulated by government, while limos or black cars are regulated by the market. Rules on minimum prices and wait times keep the two from competing.
But Uber thinks it can blend the two, marrying the on-demand nature of cabs with the flexibility of loosely governed limos. It hopes, in short, to be the best of everything.

Upgrading to Regulation 2.0

There’s logic in the fact that Uber faces a big fight in the District. The nation’s capital, after all, was the site of the technology policy fights that make up Uber’s intellectual history. Against a backdrop of a Congress that had, for decades, largely left writing laws over innovation in general and the Internet in particular to entrenched and practiced lobbying groups like the music industry and movie industry, came the rise of two controversial bills: The Stop Online Piracy Act (SOPA) in the House and the PROTECT IP Act (PIPA) in the Senate. The bills would have given some in government more control over the Internet. In the winter of 2011, technologists and a wide swath of the Internet-loving public rose up against them. This debate set the tone for the debate over Uber.
SOPA-PIPA, says Nick Grossman, an “activist in residence” at the New York City venture capital firm Union Square Ventures, “was one of the first issues that the Internet community felt threatened by and could do something about.” Opponents rose up under the rallying cry of “Internet freedom!” They blacked out websites, slammed Congress with petitions and emails and phone calls, and generally harnessed grassroots objections to a fairly esoteric and technical piece of legislation. Both SOPA and PIPA died.
These are nearly the same tactics Uber used to stop Cheh’s amendment, in a campaign branded “Life, Liberty, and the pursuit of Uberness.” At the height of the debate, Kalanick himself sent out an email to the company’s mailing list, calling for customers to stand up for Uber. “The nuclear option,” he has called it. Uber raised a hue and cry on social media, too. “By 11am the next day,” Kalanick said at a high-profile 2013 State of the Net conference in Washington, “that bill was rescinded.” It’s now the model for “flare-ups” in other cities.
The lesson for technologists? Distributed power, harnessed with tech savvy, can insert itself into deals once cut in backrooms. Reformers have tried for years to deregulate a taxi industry they see as protecting entrenched interests. But those fights have been local, and draining. Kalanick has the power to take them national. To some, what that says about how rules are written — rather than the outcome of the fights themselves — is what’s important.
Oscar Salazar, Uber’s founding CTO (he left the company in 2011 but still serves as an advisor, and his name is on the pending original patent for the Uber app), takes a non-partisan approach to the Uber question. “I don’t know if Uber is right,” he says. “I don’t know if the government is right. But I do think it’s time for government to think about how regulations are actually passed.”
Grossman spends his days pursuing that very question. He calls his beat “Regulation 2.0,” or the changes in laws that, as he sees it, need to happen to let modern innovation thrive.

For these “sharing” systems to work, you often need people living close together. This puts cities on the front lines of figuring out the right laws for the 21st century. And it’s not a question they’ll have years to ponder. Uber and others are moving now.

The company’s “math department,” as Kalanick calls it, features two nuclear physicists, a computational neuroscientist and a machine-learning expert.

Indeed, even when it comes to Uber, cities will have to contend with more than simple car rides. Kalanick dreams of engineering an “urban logistics fabric,” which translates into “on-demand anything”: ice cream during National Ice Cream month, Texas BBQ by pedicab during the SXSW festival, roses for Valentine’s Day, a randomly awarded presidential-style “Uber-cade” in Washington, and even, on one recent Friday night in San Francisco, tamales from “The Tamale Lady,” complete with adorable corn husk screen icon. Uber has partnered with the NFL Players Association to offer discreet rides to DUI-prone players and with HBO to offer on-demand Cadillacs to help promote Boardwalk Empire.
It’s quirky, but unsurprising. Technologists have long seen that the Internet is good at moving stuff around. That, in fact, was the context of another critical tech policy battle that gripped Washington for a time: The early 2000s fight over peer-to-peer file sharing. Congress cracked down at the behest of the movie and music industries. Kalanick’s company, Scour, was among those sued into oblivion in a $250 billion lawsuit. It’s why Rep. Bob Goodlatte, chairman of the House Judiciary Committee, talking up Kalanick for using the Internet to distribute cars — “much better,” “a great idea,” “transform the world” — during the 2013 State of the Net Conference looks like a second bite at the apple.
Only this time, Kalanick is moving cars, not digital bits. But technologists think they’ve figured something out since the last time their networked innovations caught the attention of Washington. Uber asks passengers to rate drivers, and vice versa, using that data as a check on bad actors – much like eBay, Wikipedia and Yelp. In a data-driven, information-soaked system, can those systems do what regulators had to do in the past?
Yes, Grossman says, and it’s part of a broader ongoing cultural shift. “For the last several centuries what we’ve done in the developed world is build institutions to help manage our trust and our safety,” he says. “That’s taken us a step away from connecting around people. What all these peer-to-peer platforms are doing, because of the systems that they develop internally to manage trust, is making it possible for us to do things that were never possible in an industrial regulatory model.” But the network will sometimes solve problems differently than how the legal system would. For some people, Grossman says, “that’s a little scary.”
Surprisingly, some of the strongest critics of Uber’s approach have come from within the tech world. Kalanick is a self-professed libertarian, and tech writer Paul Carr of PandoDaily has dismissed Uber’s philosophy as “all government intervention is bad, that the free market is the only protection the public needs, and that if weaker people get trampled underfoot in the process then, well, fuck ‘em.”

The lesson for technologists? Distributed power, harnessed with tech savvy, can insert itself into deals once cut in backrooms.

If Kalanick believes that all government intervention is bad, he hasn’t said it. (“It’s not that there’s no role for government,” argues Arun Sundararajan, a professor at New York University’s Stern School of Business and the Center for Urban Science and Progress. “If you get into a car and a crime occurs, whether it’s a taxi or a black car or a Lyft car, you’re always going to want to involve the police.”)
But if throwing all regulations in the trash isn’t the answer, just hanging onto existing rules isn’t much of an answer, either. Jennifer Bradley is a fellow at the Brookings Institution’s Metropolitan Policy Program in Washington, D.C. and co-author of the book, The Metropolitan Revolution. She spends a lot of time thinking about how governments can enable innovation without undermining important regulatory controls.
“There are challenges when these sexy new service delivery mechanisms meet an existing regulatory state,” Bradley says. She understands the temptation to attempt to apply the rules on the books to new tech: “Hey, wait a minute. You’re hiring a car to take you somewhere. We know what that is. You’re a cab, you’re a limo. We know how to regulate that.” But it’s not enough. Nor are localities seemingly receptive to the idea, advanced by Uber, that it’s just an app, with the limited legal and social responsibility a tiny piece of software carries. To Bradley, Uber is more like Airbnb, the room-rental platform – they both take what was once a service that was quasi-public and treat it as a private transaction. But, she asks, “What happens if on Airbnb there’s a person who won’t rent to someone who’s gay?”
Some cities have opted for a go-slow approach, neither cracking down on Uber nor letting it run wild. New York City has approved a one-year trial of e-hailing apps, Uber included. But NYU’s Sundarararjan argues for a different framing. Instead of rolling back restrictions bit by bit, cities should start by rethinking what the point of taxi regulations are in the first place — safe rides? A limited number of cabs on the road? — and work backward to new rules. The risk of the slow rollback approach is that you might smother new technologies like Uber when they’re still in their infancies. “What’s needed,” Sundararajan says, “is a safe harbor in which they can operate legally while we gather information about the right division of responsibilities between the marketplace and the regulators.”

Travis Bickle No More

Kalanick regularly slams the taxi industry and taxi regulators as “protectionist,” motivated only by their goal to ensure that today’s owners are tomorrow’s owners.
But it’s worth entertaining the notion that laws and rules are needed to prevent a return to the bad old days. “You’re in a heavy, dangerous machine,” says Hodges, the Colgate historian and former cabbie. “You’re in a confined space with a driver. The need for protection is significant.” It’s a semi-public space, yet a strangely intimate one, and the history of hacking in the United States is full of incidents where riders attacked cabbies and cabbies attacked riders. Such violence is one of the defining markers of life in New York City in the 1980s.
But there are less high-stakes worries, too. Fans of UberX celebrate that the ability to pull up a heat map and zero in on a passenger makes it possible to work fruitfully as a driver for an hour here, an hour there. There’s also the notion that the trusted-user features built into the app make hacking safer for women in particular. But if more people are attracted to the job, will there be a glut of cabs on the road? What does that mean for congestion? Pollution? And say that the fact that reducing scarcity means it’s less profitable to be a cab driver or fleet owner, and old hands get out of the business? Then, the parade of horribles goes, what happens when the economy in the U.S. gets better, and those people — “hipsters,” you hear — for whom hacking was a lark move on to better things? What does that do to one of the few decent, working-class job left? And one of the people, many of them immigrants, for whom driving a cab was a way into American life?
“Surge pricing” serves as a microcosm of the different ways Uber and regulators view the world. To Uber, raising prices when demand is high is the smart, data-driven way of ensuring that there are enough cabs on the road. They did it on New Year’s Eve in 2011 and during Hurricane Sandy in New York City in 2012. Sometimes the price creeps too high, Kalanick admits, that calls only for a formula tweak and better explaining the deal to customers. To some, it can look a lot like price gouging, just gussied up with talk of “math” and “transparency.” What happens if Uber decides to raise rates every time it rains? Or on Tuesdays, just because?
“You’ve got to understand, they’re not the only one,” says Neville Waters, the D.C. taxicab commission spokesperson. “If you give them an exception, every other digital service is going to utilize that exception.” Where does that leave you? A return, he says, to the days of “unscrupulous characters” ruling the road. Only this time they’ve got your credit card information, identity, travel records and more, because you plugged it into their app. When that happens, he predicts, “everybody’s looking around like, ‘Well, how did that happen?’ You let exceptions. You let this digital service through” — he avoids saying the name — “and they,” meaning the unsavory cab companies to follow, “exploited it.”

What all these peer-to-peer platforms are doing, because of the systems that they develop internally to manage trust, is making it possible for us to do things that were never possible in an industrial regulatory model.”

Uber fans say that the app helps reduce the bias and discrimination associated with taking a cab. Unlike a driver passing you on the street, the app doesn’t know your color. Pre-paid rides erase any worries about not collecting a fare, and then there’s the boon of the heat map. Cabbies are loathe to drive to out-of-the-way neighborhoods because of the trouble they have finding a paying fare back toward more happening places. Such “deadhead” time can be a killer. But the app makes it possible to identify the one or two paying rides lurking indoors that will take you back into downtown. Uber critics, meanwhile protest that Uber black car and UberX drivers, at least, are freed from the obligations to serve all parts of town that traditional cabs labor under.
What, too, of the people — the old, the under-resourced — who don’t have a smartphone or a credit card to pay with? “There’s always going to be the need for a street hail,” says Mary Cheh, the D.C. councilmember. Besides, adds Anthony Townsend, of the Institute for the Future, “Uber is a godsend for the elderly and disabled people who can’t street hail.”
The debate cries out for data, and it’s data that makes Uber different from any taxi or black car service of the past. The company’s “math department,” as Kalanick calls it, features two nuclear physicists, a computational neuroscientist and a machine-learning expert. Uber has data on where people are, right now, requesting rides. It also has data on where and when people wanted rides in the past. It mixes in predictions — sports results, weather, popular new neighborhoods — and produces heat maps that highlight hopping areas with color bursts. A driver can open up one of those heat maps on a smartphone, which Uber will provide if he doesn’t have one already, and see where, exactly, people are likely to want rides in the very near future. “Proper supply positioning lets us reduce pickup times,” says the company drily.
And it’s data that tell a city’s story. While interviewing to join Uber, Holt wrote up a plan on detailing her expectation that she’d see demand in the District’s well-off neighborhoods: Georgetown, Dupont Circle, that sort of thing. But the information on the screen she can fire up on her computer tells a different tale. For one thing, nearly a quarter of the company’s traffic comes from Northeast D.C., a gentrifying section of the city that public transportation hasn’t caught up to. She can see that Washingtonians hit different hot spots on Friday nights than they do on Saturdays. Uber can even see that while demand for black cars is higher in San Francisco when the Giants win, and that the opposite is true for the Red Sox in Boston. At Uber, they call that omniscient look at data “the God view.”

Uber’s office in San Francisco is growing at rapid pace, with service launching in new cities virtually every week.

A big part of the fight in Washington is that regulators are hungry for exactly that data. “Tell Mayor Gray,” Kalanick emailed customers and fans back in May, while the D.C. Taxicab Commission was wrapping up its rulemaking process, “there will be no snooping on Uber’s trip data!” Waters, the commission spokesperson, says that without Uber’s data, “we don’t have any way of monitoring or verifying” the notion that Uber is serving parts of D.C. where it’d been difficult to get a ride in the past. Moreover, the D.C. Taxicab Commission has been criticized for running on anecdote more than an expert agency should. Waters doesn’t necessarily disagree, but says that Uber’s data would help. So would the surcharge on rides that the commission would put, in part, to building a “technical back office” to mimic some of the practices of Uber. Uber, Waters says, “doesn’t want to play that game.”
Along the way, Uber has picked up a reputation for bullying. At the 2013 State of the Net conference in Washington, Kalanick dismissed laws in Miami — a city it wants to enter but can’t because of existing regulations — as a “protectionist scheme.” Uber riders have to “stare at that town car” if it arrives before the hour minimum required for black car service. Why? Kalanick sneered. Regulators “want to make sure that only rich people can take town cars.”
Uber employees deferentially repeat that the company doesn’t go into any city where it isn’t “white glove legal.” But the three-dozen city-specific blogs that the company maintains are sometimes used to mock local politicians and their silly rules. “Houston: We Have a Problem,” read one post this summer: “In order to meet your overwhelming demand for Uber in Houston, we need to brush the cobwebs off some old regulations.” Kalanick paints his life as “hardcore,” a near constant battle with “taxi guys” who “play dirty.”
Townsend likes what Uber is up to. Still, even he calls it a “very immature and unrealistic point of view of how this should be integrated into very complex transportation systems.” Cities are trying, he says, and the way Uber has interacted with local governments has been “incredibly unsophisticated.” Still, it works. Says Waters, some “spineless, weak-willed politicians get two thousand emails that say, ‘Ah! Ah! Ah!’ And they’re going to respond to that.” Rather than sit down in meetings, Uber sends emails. They’ve built themselves a reputation, Waters says, as “almost this Don Quixote-like company.”
That’s not just disruptive, Waters argues, it’s destabilizing. And a threat to cab drivers. In June, Dona Burney, a 30-year taxi driver, delivered written testimony before a public safety roundtable in which she mocked the notion that Uber is somehow the “little guy” in its fights with the taxi industry. “When Kalanick comes to town with $58 million of Wall Street money in his back pocket,” she wrote, “he can command a lot of attention.” Burney said Cheh, with the Uber Amendment, was the victim of “a cyber bully attack from out-of-town techies.”
Indeed, Uber has called itself the “populist limo movement,” though it has worn that mantle awkwardly. The company has made a habit of stepping in when public transportation breaks down, as it did in June 2011, when San Francisco taxi drivers prepared to go on strike. The company offered 50 percent discounts on rides. It was all a part, according to the company blog, of “stand[ing] in solidarity” with the people of the city while cabbies fought for a fair deal. It’s the language of the labor movement. No matter. Commenters called them scabs anyway.
To Waters, Uber is a glossy short-term fix to a gnarly long-term problem. The Commission mandated that all taxis take credit cards by September 30 and use signal roof lights by November 1. Waters says the Commission is pushing “vehicle modernization” standards to ensure newer models are on the streets, but, “it’s going to take a little while, perhaps three to four years, to convert the entire fleet.” Says Holt, Uber’s east coast manager, “the idea that we should go on pause for four years because they’re behind is absurd to me. I appreciate that there’s a four-year plan to get there. But we’re doing it today.” The change is happening fast and furiously, and the open question is how cities keep up.

New Bosses for a Networked Future

Today’s fights over not only Uber, but also Lyft, Sidecar, Airbnb and other disruptive businesses are, observers say, only the beginning as the online, networked world encroaches into the physical space. The issues at hand will only get more complex as entrepreneurs turn their gazes to more and more industries. For Jennifer Bradley of the Brookings Institution, now is exactly the time to start rethinking. “Okay, we have new models of how we live together,” she says. “What does that mean for the old rules?”
In fact, Uber’s disruption of the taxicab industry may look like nothing compared to what’s to come as the tech world expands its offline reach. After all, the taxi industry has, in truth, long been an unsettled one. “The history of taxis is cyclical,” says Hodges, the Colgate historian. “There was a time that brokers,” who manage the buying and selling of medallions, “were an innovation. Now you’ve got these guys.” What’s more, “there’s continual tugging over whether there needs to be more regulation or less regulation.” For all of Uber’s charm, Hodges warns that it is amassing near-unheard-of power. “There’s a new boss,” he says, “and they’ll exert that power eventually.”
It seems likely that soon enough the rules will shake out to allow Uber, and even UberX, into local taxi markets, with some places restricting it more than others but nearly all with more regulation that takes into account the new model. But that will be the beginning, not the end, of the tough questions that come as networked technology upends the physical, offline world.
Which means it’s also likely that we’ll be studying the Uber fight years from now. Kalanick, for one, has said that Uber is “building a playbook for how to do this” – that is, organizing the masses and engaging full throttle in public policy debates that affect innovation. “Other companies are going to follow suit in all kinds of industries that tech is affecting,” Kalanick told Congressman Goodlatte at the State of the Net Conference, “and folks in D.C., as well as cities across the country, are going to be in the middle of it.”