‘I don’t want the F.T.C. calling me’
Ethics were not a hallmark of Uber’s first decade. Once, in a meeting with staff, Mr. Kalanick was presented with a delicious new secret weapon by a handful of engineers on “workation.” (A workation was an unofficial Uber tradition: Instead of taking time off to relax, employees would volunteer to spend a period working on any kind of project they wanted.) According to two people familiar with the matter, a group of employees pitched a prototype Uber feature that would repurpose certain parts of a driver’s smartphone — specifically, the accelerometer and gyroscope — to detect notifications that came from the app of Lyft, Uber’s biggest competitor. If Uber knew that a driver worked for its rival, Uber could market itself differently to the driver to entice them away.
In the meeting, the engineers described the project to managers, lawyers and Mr. Kalanick himself. The executives were excited but nervous. This could be a powerful new weapon in the war against Lyft. But detecting sounds in a driver’s car without permission was clearly invasive. After the presentation ended, Mr. Kalanick sat in silence. No one spoke.
“O.K.,” he said, breaking the tension and nodding his approval. “I think this should be a thing.” He stood up and looked the engineers in the eye: “I don’t want the F.T.C. calling me about this, either.” Mr. Kalanick thanked everyone for coming, turned toward the door and dismissed the meeting.
The feature, which would have outraged privacy hawks were it to become public, was never implemented. Other executives at the company later acknowledged the impracticality of building it, given simpler methods of tracking Uber’s competitors.
Other poorly conceived ideas were put into practice, only to be cut loose after failing spectacularly. Take Uber’s ill-fated Xchange leasing program. At one point in Uber’s history, someone had the idea that there might be thousands of potential drivers who didn’t have enough collateral or credit history to secure a car loan. But Uber could overlook that and lease the cars anyway, requiring only that the lessee work off their obligation immediately by driving for Uber. The company began leasing to high-risk individuals with poor or nonexistent credit ratings.
It worked — sort of. Growth surged as people who were never before eligible for loans suddenly had access to vehicles. Thousands of new drivers came onto the platform, and the managers in charge were given hefty rewards. But it was the ride-hailing equivalent of a subprime mortgage. And just like 2008, the negative consequences came soon after.
Uber noticed that accidents and traffic infractions spiked after the company began the Xchange leasing program. They later figured out that many of the new drivers were the ones responsible. The managers had created a moral hazard, driving up insurance costs and potentially triggering a public relations and legal nightmare.