As car service Uber continues its expansion across the U.S. and beyond — its business is growing 26% month-on-month right now — it has found itself on the wrong side of rules and regulations, and in the firing line of the Taxi Establishment. Today, the company’s founder and CEO, Travis Kalanick, came out swinging with fighting words for his competitors and the bodies that regulate all of them.
“Every city we go to eventually the regulators will make something up to keep us from rolling out or continuing our business,” he told an audience at TC Disrupt in San Francisco. Talking about the tos and fros that have followed Uber to Washington and Boston, he suggests that the struggle to grow its service may not be over. “Just because we have rolled out does not mean they like you.”
Delivering a message that is a poignant one for any other startup working in a disruptive space (Kalanick cited Airbnb as one company he talks to regularly), he also noted that one of the big issues for Uber has been that working in completely new areas of technology, it’s found that regulators put the brakes on in cases where it hasn’t actually established rules. Two examples for Uber have been the case of how to implement standards for in-car GPS services in Boston, or how to charge for trips that cost over $25 (a recent issue in NYC).
“A regulator is supposed to create and enforce a standard. If they don’t have a standard, that doesn’t make it illegal.”
He notes that this is the argument Uber has been using in cases like the recent one over GPS in Boston, where the company was issued with a cease-and-desist on its operation. “We said there’s no standard here, and 24 hours after that, the Governor of Masssachusetts rescinded the C&D.” That got a huge round of applause from the audience here in San Francisco.
In New York the solution has been even more disruptive: “We will roll this out for free and then talk about the credit card processing issue. Our view is that credit card processing is legal.”
He also pointed out how regulator intransigence has been behind some of Uber’s reputation as a premium service: “In DC they tried to set a floor on our pricing; they tried to say we could not charge less than 5 times a cab,” he said. That effectively meant that the regulator was saying: “We will only allow this quality service to exist only for rich people.”
Kalanick also waxed philosophical about what it is that drives regulators in his industry specifically. “I have been trying to understand the regulators,” he said, and he’d decided that they work on three levels — none too good.
“One is cronyism,” he said. “They get a Stockholm Syndrome with the folks they regulate… One even told me that they view themselves as customer support for the taxi and livery companies.”
Number two: “If they don’t have rules they feel it is illegal,” he said. This is the knee-jerk, err-on-the-side-of-caution approach that Uber has currently been fighting.
Number three will sound familiar to anyone who has covered regulation in many other areas, like technology: “They are incredibly sensitive to what’s the public view, the optics rather than the reality,” Kalanick said. This effectively means that decisions get slowed down, and regulators who are meant to sit above the organisations they cover are actually very susceptible to how they are then perceived in context with them. That has also worked to Uber’s advantage, however: in the case of Washington a number of public figures got on the side of the Uber in the “Uber amendment” and that actually helped get it shelved.
Uber is getting pressure from two sides of the competitive landscape: not only is it about doing battle to be able to operate alongside old-school taxis and other hire-car services; but there are the many, many other disruptive car companies that have come into the picture. In at least one case, Uber has been working with one of its competitors to help push through its agenda among regulators.
“In London, I partnered with Hailo for regulatory thing, but you have to take it on a city by city basis,” he said. “I’ve spent time with [CEO] Brian Chesky at Airbnb because they also have regulatory issues: it’s important for tech companies to band together and have a voice.”