Can Uber afford to have this many enemies?
Uber, just five years into its existence, has morphed into $17 billion company with a growing list of enemies – one that now includes many journalists. Will investors still love Uber, even if the media, some passengers, and its own drivers don't?
It can be hard to remember this today, but from a public relations standpoint, Uber was a veritable darling just a year or so ago. Cab-weary urbanites raved about the app-based ridesharing service’s cost, convenience, and cleanliness compared to traditional taxis. Uber drivers, the story went, had more freedom to make money and build their own businesses than their cabbie-bound counterparts. Its loudest critic was the taxicab industry, which wasn't exactly well-loved in the first place.
Since then, however, Uber has grown into a $17 billion company with a long list of corporate backers and an enemies’ list that threatens to match. The latest dustup comes courtesy of Buzzfeed, which released a report late last night that Emil Michael, Uber’s senior vice president for business, made comments suggesting that Uber should hire a team to fight back against media members that were critical of the company. According to the report, written by editor-in-chief Ben Smith, Mr. Michael “outlined the notion of spending ‘a million dollars’ to hire four top opposition researchers and four journalists. That team could, he said, help Uber fight back against the press — they’d look into ‘your personal lives, your families,’ and give the media a taste of its own medicine.”
He reportedly then zeroed in on Sarah Lacy, a longtime tech reporter who has been sharply critical of Uber and its policies, saying that its dirt diggers could expose “a particular and very specific claim about her personal life,” according to Buzzfeed.
The comments were made at a dinner in New York over the weekend. Michael has since apologized, both through an Uber spokesperson and directly to Lacy, saying that he thought it was clear the dinner was off the record.
"We have not, do not and will not investigate journalists,” Uber spokeswoman Nairi Hourdajian said in a statement. "Those remarks have no basis in the reality of our approach."
The media response was (you guessed it) harsh. Gizmodo ran a story headlined “6 Uber alternatives because Uber is run by dirtbags.” Lacy issued her own scathing response, saying “Uber’s dangerous escalation of behavior has just had its whistleblower moment, and tellingly, the whistleblower wasn’t a staffer with a conscience, it was an executive boasting about the proposed plan. It’s gone so far, that there are those in the company who don’t even realize this is something you try to cover up.”
Uber CEO Travis Kalanick tweeted an apology Tuesday afternoon, calling Michael's comments "terrible," and showing "a lack of leadership, a lack of humanity, and a departure from our values and ideals."
Drawing the ire of the journalism community, despite the noise it creates, is by no means disaster for any company’s bottom line. But it’s just the latest in an ever-growing number of groups that Uber has managed to make an enemy. Last month, Uber drivers in several cities held protests over a wide range of concerns, including Uber’s price-cutting policies, a lack of bargaining power, and the company’s possible overstatement of how much money an Uber driver can earn.
Passengers have their own complaints, too, about the service’s surge pricing – fares can double or triple when demand is high – and concerns about safety. The Better Business Bureau gave Uber an “F” rating earlier this year based on customer complaints. Uber has also come under fire from women’s groups, for safety issues, and accusations of misogyny in its corporate ranks.
None of this, so far, has much affected Uber’s profitability, or its dominance of the young ridesharing industry. Valued at $17 billion, the five-year old company completed a $1 billion round of venture capital fundraising over the summer, and it may be looking to raise $1 billion more. Its revenue is an estimated 12 times that of Lyft, its closest competitor, and it is growing 10 times faster.
But it’s early, and as Slate points out, none of the players in the ridesharing game have been around long enough to engender any customer loyalty – people dissatisfied with Uber can just go elsewhere. Furthermore, Uber could be in danger of angering a group with the power to hurt it financially – investors. CEO Travis Kalanick has admitted to interfering with fundraising efforts of rivals like Lyft, SideCar, and Halio – interference that some, including venture capitalist Fred Wilson, have called “unethical.” Such tactics aren’t necessarily unheard of in the startup world, but, along with the growing chorus of voices against Uber, it could help sour the brand if and when the company decides to go public.
Editor's note: This story has been updated to include Kalanick's response.