Culture Is What You Pay For

The Core Insight

Uber added one dollar to every trip in the United States in 2014 and called it a Safe Rides Fee. The marketing said background checks and safety. Inside the company it was one dollar of pure margin, added as insurance costs rose. Drivers got none of it.

Mike Isaac published Super Pumped in 2019, after covering Uber through its collapse year for the New York Times. The book works best as an incentive audit. Every behavior that made Uber notorious came out of a structure someone designed and funded.

Most founders read a scandal like Greyball as a hiring failure, repaired with a values document and a stronger head of people. Isaac's reporting argues that the values document produced Greyball. Employees named a company value when they justified the tool.

The hard part is that the machine worked. At an average of 2.7 rides a customer became a customer for life, and Uber ran negative churn. The take rate started at 20 to 30 percent of each fare.

The Framework

Three systems produced the behavior, and they stack.

• The scoreboard measured growth, and growth was the only argument that won an internal fight.
• The fourteen values told autonomous teams what winning looked like and left the method open.
• The share structure removed every person with the standing to say no.

Kalanick introduced the fourteen values at Planet Hollywood in October 2015, wearing a lab coat, modeled on Amazon's fourteen leadership principles. The outputs were Greyball, God View, the Fowler memo, and a war in China that burned 40 to 50 million dollars a week.

One control survived every attempt to strip it. Shareholders holding more than 26 percent of the economic stock and over 39 percent of the votes removed him in a single day.

Key Ideas

The Growth Machine Worked Before Anything Broke

Austin Geidt joined as an intern in 2010, after a barista job turned her down. She became Uber's first city launcher and wrote the playbook onto the internal wiki. A launch team arrived, hired a local general manager, and flooded Craigslist with driver ads. Free iPhones went to limo operators, free-ride coupons went to riders, and the general manager ran the city as a quasi-CEO.

Field operations hired for ambition, twelve to fourteen hour days, and willingness to evade rules, laws included. Ads promised drivers 500 dollars cash for a first UberX ride, and riders got fares discounted 20 to 50 percent. General managers held seven-figure incentive budgets and approved campaigns with no sign-off from headquarters. By 2015 the worldwide incentive burn passed 2 billion dollars a year.

Politics was a growth input. Uber ran nearly 400 lobbyists across 44 states, more than the staffs of Amazon, Microsoft and Walmart combined. Fines were cost of goods sold. Philadelphia levied 12 million dollars for 120,000 transit code violations and settled for 3.5 million.

The ledger has an outside column. Manhattan medallions sold for 1 million dollars apiece in 2011, and a 2017 Queens fire-sale of 46 averaged 186,000 dollars. Doug Schifter shot himself outside City Hall in February 2018, and more than a dozen drivers did the same.

Fourteen Values Are Fourteen Instructions

Always Be Hustlin' set the review floor, and the word was not sometimes. The company served dinner at 8:15 in the evening, so leaving at six cost a free meal and staying cost an extra 3.25 hours.

Principled Confrontation was the value employees named when they justified Greyball. If the law was corrupt, breaking it broke nothing. Meritocracy and Toe-Stepping was glossed as the best idea winning and the fiercest truth-seekers rising. It produced backstabbing that was endorsed and encouraged. The same value justified denying six women leather jackets, because a bulk discount existed for 120 men's jackets and not for six.

Super Pumped itself was the strongest single review signal, and one employee defined it as a do-whatever-it-takes attitude. Champions Mindset was zero-sum by construction, because Kalanick believed there was no room for both Uber and Lyft. That belief bought Shave the Stache billboards and fundraising sabotage that repeatedly cost Lyft rounds.

Customer Obsession came from Bezos and produced the real wins. Payment vanished and the car crawled across the map. It is also why tipping stayed blocked for years, because a tip put friction back in. Drivers were not the customer.

The Review Form Outranks the Values Document

T3 B3 was the transmission mechanism. Three positives, three negatives, then a number set privately with no explanation, and the number set bonus, raise and trajectory. Scores tracked closeness to the grader and, above all, growth.

Fowler's harasser survived his first reported offense because HR called him a high performer. A Rio manager threw coffee mugs, threatened staff with baseball bats and dated a direct report. His complaints stayed unresolved for years, because Rio was a top market. Isaac's summary of the rule: nothing mattered as long as you made your numbers.

Ryan Graves ran operations and HR at the same time, and nobody built manager training. Headcount ran about 500 at the start of 2014 and reached about 15,000 by 2017. Engineering was 85 percent male.

Free iPhones went out before background checks cleared, because sign-up numbers looked better. Sign-up in cash-based Brazil needed an email and no verified identity. At least sixteen drivers were murdered there before Uber hardened identity checks.

Greyball Lived on the Internal Wiki

Greyball started in Philadelphia in autumn 2014, where the Parking Authority made fake accounts, hailed UberX cars and impounded them. The tool already existed and did something benign, controlling which cars a rider saw. Repurposed, it served suspected officials a fake map of ghost cars.

The load-bearing detail is where the method lived. Uber wrote it up as the VTOS playbook on the internal wiki and held a global general manager summit on how to run it. The New York Times exposed it on 3 March 2017, and a Department of Justice probe followed.

God View was a live map of every rider in a city, demonstrated as a party trick at Uber's 2011 Chicago launch. Hell ran fake Lyft rider accounts, so Uber outbid Lyft for the drivers running both. The Strategic Services Group hired ex-CIA and FBI staff, then ran physical surveillance of DiDi, Lyft and Grab.

Apple killed third-party access to device identifiers in 2012, so Uber fingerprinted devices anyway and geofenced Cupertino to hide the code. A reviewer outside California found it, and Tim Cook drew the line in person.

Anthony Levandowski left Google in January 2016 and moved 9.7 gigabytes of confidential files to a personal drive. Uber bought his company Otto that August for 680 million dollars. Waymo sued, and Uber settled for 245 million dollars in equity. Otto engineers put Safety Third on their stickers.

Susan Fowler joined in November 2015, and her manager propositioned her over chat on her first day with the team. HR called it a first offense by a high performer and offered a choice. Stay and expect a bad review, or move teams. Her post ran more than 3,000 words in February 2017. After the December 2014 rape of a passenger in New Delhi, an Uber president obtained the victim's medical file.

Zero-Sum Framing Cost Billions and Bought Paranoia

China burned 40 to 50 million dollars a week, and in many cities more than half of trips were fake. Uber launched credit-card-only in a mobile-wallet economy and navigated on Google Maps, which is blind in China. Tencent periodically blocked Uber's WeChat account, and DiDi planted moles in Uber engineering. Meg Whitman had given Kalanick the ceiling early, at 30 percent of that market.

On 1 August 2016 DiDi absorbed Uber China and Uber took 17.7 percent of DiDi. Southeast Asia cost nearly 1 billion dollars against Grab, and the business sold for a 27.5 percent stake in Grab. The durable cost was psychological. After DiDi's infiltration Kalanick's suspicion became permanent, and that suspicion funded the surveillance unit.

Founder Control Buys Speed, and the Bill Arrives in One Day

At Scour, Michael Ovitz took more than half the company for 4 million dollars with a no-shop clause and a lawsuit. Kalanick told founders for years that it is in a venture capitalist's nature to kill a founding CEO.

He took the CEO seat only after Camp and Graves signed over enough shares to give him majority control. Dual-class stock gave the three of them ten votes per share. Google Ventures wrote its largest ever check at 258 million dollars and got an observer seat. Told the arrangement was legally indefensible, Kalanick invited the lawsuit.

A Series B amendment stripped Rob Hayes of his voting seat. Employees cashing out internally sold to Kalanick, so his voting power grew with every departure. Brent Callinicos, the first and only CFO, was pushed out and not replaced for over two years. Kalanick did not want anyone watching how he spent.

The 3.5 billion dollar Saudi round closed in June 2016 with unanimous approval, and one term let Kalanick appoint three more directors at will. Five of the eight directors followed him. Gurley had traded governance rights for allocation, so the coup had to be assembled outside the boardroom.

The bill arrived in 2017. Uber turned surge off at JFK during the taxi strike against the Muslim ban, and more than 500,000 accounts were deleted in a week. Holder and Tammy Albarran interviewed more than 200 people and reviewed more than three million documents. Uber fired twenty people on 6 June, and the board accepted the recommendations unanimously.

On 20 June 2017 Gurley assembled Benchmark, First Round, Lowercase, Menlo and Fidelity. Together they held more than 26 percent of the economic stock and over 39 percent of the voting shares. Two partners flew to a Chicago hotel with a letter and a six in the evening deadline. It carried four demands.

• Resign immediately and permanently.
• Fill two of his three controlled board seats with real independents.
• Run a board-led CEO search with an independent chair and a driver representative.
• Hire an experienced CFO, after more than two years without one.

Kalanick spent the day calling allies. Shawn Carolan told him he wanted to trust him and did not. The SoftBank tender closed it that December and installed one share and one vote. Dara Khosrowshahi shipped tipping, cut the fourteen values to eight, and hired the first CFO and independent chair in Uber's nine-year history.

Practical Applications

Print your review form and your values page side by side. The form is the culture. Whatever the form scores is what the company pays for.

Name every person on your team who is protected by their numbers. One protected performer teaches everyone else what the company rewards, and that lesson travels faster than any policy. Uber lost a year to one of them.

Price the autonomy you delegate. Uber general managers held seven-figure budgets with no sign-off from headquarters. Set the spend level that needs a second signature before the first campaign runs.

Check who is allowed to say no to you. Uber ran more than two years without a qualified CFO, and that vacancy left nobody to question a 2 billion dollar annual incentive burn. Name the person whose job is to challenge your spend, and give them the numbers.

Treat a win-at-all-costs mandate as a specific instruction. Kalanick never told an engineer to blind the Portland police or deceive Apple reviewers. The mandate went to autonomous teams, and the teams picked the methods.

Who This Is For

Founders about to write a values document get the most from it, and so does anyone signing a term sheet with control provisions.

Skip it if you want an operating manual. Isaac wrote narrative journalism, and the mechanisms have to be pulled out rather than read off the page.

Read the sourcing for what it is. This is journalism built substantially on anonymous sources, reconstructing private rooms from people with reasons to shape the record. Kalanick disputes parts of the account. The harder problem for a reader is that the machine built a real company. It listed in 2019. An incentive system that produced both a good marketplace and that medical file does not sort into a clean lesson.

The Decision

Run the audit on your own company this week. Write down your stated values in one column. In the second column, write the behavior your review form, your bonus formula and your promotion record paid for last quarter.

Where the two columns match, the value is real. Where they diverge, the second column is your culture and the first column is a poster.

Then run the same test on your cap table. Name the person who can remove you, and the information they hold. If nobody holds both, you have the speed Uber had, along with the exposure that came with it.

Uber got the behavior it paid for. So will you.