Harry here. A lot of drivers were dismayed at the news of Gett’s acquisition of Juno, but what will it mean for the future? Stay tuned as we’ll have a full analysis out on Monday, but in the mean time, RSG senior contributor John Ince takes a look at that Juno/Gett acquisition, another Uber lawsuit and the tragic story of an Uber engineer whose widow blames job stress and the culture at Uber.
On-demand ride service Gett confirms acquisition of Juno for $200M [TechCrunch]
Sum and Substance: The competitive landscape for transportation apps has become a little smaller today. Gett has announced that it has acquired Juno, a rival in the New York market. Separately, Gett’s CEO and founder Dave Waiser has told TechCrunch in an interview that the price of the deal was $200 million, although the companies are not disclosing other terms such as whether the deal was in cash, shares or a combination of the two. The news confirms our report from yesterday that the two companies were in advanced discussions for an acquisition, which we reported at the time could be for as much as $250 million. Now we can give you more details:
The deal will bring on all of Juno’s existing business, from its network of licensed drivers through to its employees and founding team of Talmon Marco, Igor Magazinik, Ofer Samocha and Sunny Marueli. The four of them will remain based in New York to lead the combined companies’ operations in the U.S., which for now are in New York only but with plans to expand to other markets, to complement Gett’s footprint in Europe covering 100 cities. As we mentioned yesterday, combining the two companies will catapult Gett into a strong position to step up competition with Lyft to be the second-largest rides-on-demand service in the city after Uber.
This will also likely mean that Gett — which raised $300 million from Volkswagen last year — will be raising another large round this year to fuel that growth…. All in all, this is an interesting development, and for those who might have called game-over in transport-on-demand, the recent news around Uber’s trials and tribulations definitely points to windows of opportunity for those who can present something different and compelling to the two sides of this marketplace: drivers and passengers. It could turn out that scale is just one measure of success.
My Take: The ride-hailing industry just got a whole lot more complicated. Now it’s no longer Uber (Goliath) vs Lyft (David). A third and very credible player is suddenly in the picture. Gett has the support and a $300 million investment from the world’s largest automaker, Volkswagen. Gett already has a presence in 100 cities in Europe. This move positions them to establish a competitive United States presence beyond their current footprint in New York City.
The big question hovering over the deal is what about those Restricted Stock Units (RSUs) that Juno promised its drivers? Apparently they’re now null and void – to be replaced by cash account balances for all qualifying drivers. How much will drivers Gett? Apparently each share is now worth a few pennies. Here’s a more detailed look at what drivers get: Juno Drivers ‘Gett’ Only Pennies Following $200M Acquisition.
The deal has all the markings of a sellout. Talman Marco has surely made a big bundle for a couple years’ work and now he and his team are remaining on the Gett management team in New York. Given all that he’s said about treating drivers well, I wouldn’t expect a complete abandonment of principles – more like “compromised” principles – which, after all, is what makes most businesses what they are.
Marco is now talking about “long term value sharing” package is in the works for drivers. All in all I see this as a mixed development – enabling Juno / Gett to compete more effectively with both Uber and Lyft – but leaving a lot of drivers feeling it’s just more of the same old BS.
Uber’s C.E.O. Plays With Fire [New York Times]
Sum and Substance: Travis Kalanick, the chief executive of Uber, visited Apple’s headquarters in early 2015 to meet with Timothy D. Cook, who runs the iPhone maker. It was a session that Mr. Kalanick was dreading. For months, Mr. Kalanick had pulled a fast one on Apple by directing his employees to help camouflage the ride-hailing app from Apple’s engineers. The reason? So Apple would not find out that Uber had been secretly identifying and tagging iPhones even after its app had been deleted and the devices erased — a fraud detection maneuver that violated Apple’s privacy guidelines.
But Apple was onto the deception, and when Mr. Kalanick arrived at the midafternoon meeting sporting his favorite pair of bright red sneakers and hot-pink socks, Mr. Cook was prepared. “So, I’ve heard you’ve been breaking some of our rules,” Mr. Cook said in his calm, Southern tone. Stop the trickery, Mr. Cook then demanded, or Uber’s app would be kicked out of Apple’s App Store. For Mr. Kalanick, the moment was fraught with tension. If Uber’s app was yanked from the App Store, it would lose access to millions of iPhone customers — essentially destroying the ride-hailing company’s business. So Mr. Kalanick acceded.
In a quest to build Uber into the world’s dominant ride-hailing entity, Mr. Kalanick has openly disregarded many rules and norms, backing down only when caught or cornered. He has flouted transportation and safety regulations, bucked against entrenched competitors and capitalized on legal loopholes and gray areas to gain a business advantage. In the process, Mr. Kalanick has helped create a new transportation industry, with Uber spreading to more than 70 countries and gaining a valuation of nearly $70 billion, and its business continues to grow.
But the previously unreported encounter with Mr. Cook showed how Mr. Kalanick was also responsible for risk-taking that pushed Uber beyond the pale, sometimes to the very brink of implosion. Crossing that line was not a one-off for Mr. Kalanick. According to interviews with more than 50 current and former Uber employees, investors and others with whom the executive had personal relationships, Mr. Kalanick, 40, is driven to the point that he must win at whatever he puts his mind to and at whatever cost — a trait that has now plunged Uber into its most sustained set of crises since its founding in 2009.
My Take: With this extensive, well researched New York Times expose, Travis Kalanick has now hit the big time – and not in a way he should be proud of. This is a thoroughly disturbing portrait of a guy who is characterized as a “serial prevaricator.” In plain English, TK can’t be trusted.
From our perspective behind the steering wheel, we’ve seen numerous instances where Uber’s explanations for things just don’t add up – but seldom can we present hard evidence of wrongdoing. That’s the way TK wants it. He pushes the boundaries of business and exploits the grey areas of the law. But this article (and follow up) seem to have the goods on TK.
Here’s one small example – the article cites an off repeated anecdote about TK – that he claimed to be the second best “Wii Tennis” player in the world but wait, check this out: Was Uber CEO Travis Kalanick Really the 2nd Best ‘Wii Tennis’ Player in the World? An Investigation. With this article and with numerous other revelations about TK and his team, we can now be pretty sure that – in the case of Uber – where there is smoke, there’s also fire.
Uber gets sued over alleged ‘Hell’ program to track Lyft drivers [TechCrunch]
Sum and Substance: Uber has another lawsuit on its hands. This time, it’s about Uber’s alleged use of a program called “Hell.” The plaintiff, Michael Gonzales, drove for Lyft during the time Uber allegedly used the software. He’s seeking $5 million in a class action lawsuit. As the story goes, Uber allegedly tracked Lyft drivers using a secret software program internally referred to as “Hell.” It allegedly let Uber see how many Lyft drivers were available to give rides, and what their prices were. Hell could allegedly also determine if people were driving for both Uber and Lyft.
The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges Uber broadly invaded the privacy of the Lyft drivers, specifically violated the California Invasion of Privacy Act and Federal Wiretap Act and engaged in unfair competition. Uber denied the part in The Information’s original story about “privileged dispatch” and “dual-epping,” which would give preference to drivers on both Lyft and Uber. Uber did not, however, confirm or deny the existence Hell as a whole. But given the nature of the lawsuit, plaintiffs can request information during the discovery period that could prove whether or not Uber had such a program.
My Take: Another week, another lawsuit against Uber. I stopped keeping track about six months ago when there were over 90 lawsuits pending vs TK and team. Why are so many suing Uber? Part of this is Uber’s deep pockets. With over $7 billion in the bank, Uber can afford to settle for big bucks and that’s what lawyers want to know before they invest their time and money building a case.
But there’s another reason Uber has become a huge legal target. The New York Times article above gives a good picture of why so many are suing. Uber has become a $69 billion company by exploiting those grey areas of the law. But those same grey areas are legal minefields – and you never know when a legal grenade is going to explode. In this case, the suit alleges that Uber used “spyware” for 2 years to remotely monitor driver’s personal information. The case is based upon a famous Supreme Court case from 2012, United States v. Jones. In that case the high court ruled that even with a suspected drug dealer, such targeting was unconstitutional. Looks to me like Uber now has yet one more big problem to worry about – another problem of its own making.
Suicide of an Uber engineer: Widow blames job stress [San Francisco Chronicle]
Sum and Substance: Joseph Thomas thought he had it made when he landed a $170,000 job as a software engineer at Uber’s San Francisco headquarters last year. He and his wife, Zecole, had just bought a Spanish-style house in Pittsburg, where they were living the American dream with their two young sons. A handsome and accomplished man, Thomas reminded some people of Tiger Woods for both his good looks and his drive to succeed. But his time at Uber turned into a personal tragedy, one that will compel the ride-hailing company to answer questions before a judge about its aggressive work culture.
Always adept with computers, Joseph Thomas worked his way up the ladder at tech jobs in his native Atlanta, then at LinkedIn in Mountain View, where he was a senior site reliability engineer. He turned down an offer from Apple to go to Uber, because he felt he could grow more with the younger company and was excited about the chance to profit from stock options when it went public. But at Uber, Thomas struggled in a way he’d never experienced in over a decade in technology.
He worked long hours. He told his father and his wife that he felt immense pressure and stress at work, and was scared he’d lose his job. They urged him to see a psychiatrist. He told the doctor he was having panic attacks, trouble concentrating and near-constant anxiety. All suggested that he leave his job, but he was adamant that he could not. … “He was always the smartest guy in the room,” said his father, Joe Thomas. But while working at Uber, “he went down the tubes. He became someone with very little confidence in himself. The guy just fell apart.”
“It’s hard to explain, but he wasn’t himself at all,” said Zecole Thomas. “He’d say things like, ‘My boss doesn’t like me.’ His personality changed totally; he was horribly concerned about his work, to the point it was almost unbelievable. He was saying he couldn’t do anything right.” One day in late August, Zecole came home from dropping their boys off at school. Joseph was sitting in his car in the garage. She got into the passenger seat to talk to him. Then she saw the blood.
My Take: I find this story much more disturbing than some of the other recent revelations regarding Uber. Here we’ve got a tragic episode where a life was destroyed. No one will ever know exactly how much of this can be laid at the feet of Uber and their corporate culture, but we do know that this engineer is gone. I suspect many more will be leaving the company too, hopefully before they reach the breaking point Joseph Thomas reached.
A few weeks ago at a tech conference in San Francisco, I just happened to be sitting next to a guy who said his fiancee works for Uber. He also spoke of Uber’s toxic culture and said it has destroyed his relationship with his fiancee. He described many of the same symptoms in his fiancee as the article describes with Joseph Thomas: unbelievable stress, unable to sleep, low self esteem. It’s gotten so bad that he and his fiancee are no longer speaking. “When was the last time you spoke?” I asked. “Christmas” he replied. Wow. I’m wondering if any drivers out there feel that working for Uber has affected their health or relationships.
Drivers, what do you think of this week’s round up?
-John @ RSG