Thanks to an essay from former Uber employee Susan Fowler Rigetti, it’s clear that the company—which is run by a 40-year old man-child who has, no joke, referred to the company as “Boober” for its ability to score him mad chicks, bro—isn’t exactly great for women. This “bombshell” came after an optics-blind move to capitalize on airport protests of President Trump’s Muslim ban, which, when added to a viral video of CEO Travis Kalanick berating a driver who was complaining about his slashed pay, details of software within the Uber app designed to evade regulatory agents in cities where Uber wasn’t approved, and a lawsuit alleging that Uber’s driverless technology was stolen from Google’s self-driving project…well, let’s just say it’s been a disastrous year so far. It’s been so disastrous that Kalanick, whose impatience and headstrong attitude forged the company, recently had to take a leave of absence, before late last night he announced his resignation as Uber’s chief executive.
But really, it’s been bad for Uber the past few years. They’ve made various hand-wavings with regards to not being a taxi company but a ride-sharing company, and not being a transportation company but a technology company, all in the goal of avoiding standard municipal fees. And even under these favorable ordinance-skirting circumstances, their revenues haven’t come close to their costs; in the first half of 2016, the company lost well over a billion dollars. The rates for their (contracted) drivers are already obscenely—many would argue illegally—low. These rates are only kept down because Uber can subsidize the price of each ride: passengers get a discounted deal because much of the cost (59%) is borne, indirectly, by the company’s investors. As such, Uber has been able to get away with so much in the way of questionable and suboptimal business practices, essentially, because of the faith that the company generates in its most devout following.
In fact, Uber’s existence has been defined by a chameleonic pattern of restless innovation. Hubert Horan’s Naked Capitalism series on Uber—written in November, before any of the recent hullabaloo—is worth a read in its entirety, but the final post ends with a damning critique. It’s from Tom Slee, author of What’s Yours is Mine: Against the Sharing Economy, and it touches on the business’ nominal growth and development in the absence of tangible returns:
– Uber has a nice business as a status product (Uber Black Car ~ 2010)
– Uber Black may not be profitable, but Uber will displace taxis and be hugely profitable because of technology-driven efficiencies (UberX: 2014-2015)
– UberX may not be profitable, but UberPool will lead to new efficiencies in mass transit (2015-2016)
– UberX may not be profitable, but Uber is a logistics company and will rewrite the rules of delivery (UberEats, various speculative stories, 2013-2015)
– UberPool may not be profitable, but when Uber displaces car ownership the scale of the market will make it profitable (2016)
– Uber with drivers may not be profitable, but driverless cars will make Uber profitable (2014-)
– Driverless cars may not be profitable, but Uber is looking into flying vehicles (2016)
The Uber makes losses while maintaining credibility for bringing “the future” in some form or other.
Why are we critiquing Uber on a sports blog? As sports fans, we understand the false promise of a better tomorrow; after two or three decades of rooting for a sad-sack franchise, we become desensitized to hype. When we see frauds on the field, we boo them. When we note a fraudulent scent in the front office, we demand its removal. As such, we are well-suited to reach out to the emotionally trapped investors of Uber and help them walk away—we’ve seen this case study before. It doesn’t end well.
Former Philadelphia 76ers general manager Sam Hinkie is Travis Kalanick. Or, more accurately, “The Process”—the teardown of the roster and its interminable rebuild—is Uber’s life cycle. These ideas are pitched as disruptive paradigms but, ultimately, are ineffective. Most of all, these men are not visionaries, as that requires a tangible vision.
Let’s consider the parallels between the individuals: they’re both outsiders in name only. They’re middle-aged white men—Hinkie, 39; Kalanick, 40—taking control in spaces where the labor force typically doesn’t look like them yet the management almost certainly does; they are sheep in sheep’s clothing claiming to be wolves. Their ideas fundamentally aren’t novel: taxis have been trying to improve service and basketball teams have been tanking (subtly or otherwise) for years. Their impact stemmed from slick packaging sans any result—a minimalist app; the TED Talk-ification of “The Process”—that wooed a spineless, unaccountable press corp. Both faced substantial pushback from entrenched interests, pushback that is painted as provincial and corrupt but is, on second glance, quite valid: Uber is a threat because it weakens its labor force and its surge pricing that reduces the total welfare in the economy; “The Process” is a threat because it harms the entertainment product of the NBA by reducing its competitiveness. (And ultimately, both men got pushed out due to unyielding corporate pressure: The NBA’s nudging of the Sixers to seek additional front office management forced Hinkie’s resignation last April, and it appears that an investor revolt forced Kalanick to step down last night.)
More importantly, though, neither of these systems work. Uber has proven itself capable of shepherding investors to worship at its altar, but the economics have always failed. The solution never “is”; rather, for roughly eight years now, the solution has been forthcoming—just there on the horizon. A CEO or general manager who needs more time than expected to implement a plan has—either through a lack of willpower or foresight—failed to execute. More likely, he has no plan to begin with. He is an overwhelmed juggler yearning for praise for his ambitious six-pin trick, when he should focus on a perfect one-pin flip. The flurry of aimless activity is a distraction, a tool to gain undeserved slack for inevitable meandering decisions in the future.
This behavior—shell-shuffling as stall tactic—is perhaps the most pervasive of Hinkie’s time in Philadelphia. The ethos of “The Process,” if such a thing existed, was sacrificing the present for a brighter future. It’s worth noting that the branding of the rebuild as “The Process” is brilliant, as the phrase implies an idyllic future vision yet evades the hard deadlines of when that future should arrive.
Hinkie swapped players for picks, and then swapped the players those picks turned into for more picks. The approach was of a Craigslister steadily trying to trade a paperclip into a new car or house. Sometimes it worked: Jrue Holiday became, essentially Nerlens Noel and Dario Saric and a first round pick. Mostly, though, trades were something for nothing but potential. Evan Turner became a second round pick. Spencer Hawes became two second round picks. During the 2015 draft—his last in Philadelphia—Hinkie pulled the coup of turning a second round pick into two future second round picks.
He filled out the roster with no-names and castoffs on 10-day contracts to provide maximum flexibility, skirting below the salary floor until an opportunity presented itself. Uber, similarly, has enough investor buy-in that going public—and, thus, trying to make money—isn’t necessary. The time to strike isn’t right yet; the idea (hope) is that Kalanick and Uber will know what to do when it comes.
You can use hope to inspire, but you cannot use hope to lead. Hope does not guarantee the ability to distinguish a good idea from a bad one. Kalanick squandered funds on UberEats; Hinkie drafted three straight centers and spent the #3 draft pick on Jahlil Okafor, a no-defense, low-post vestige of an NBA era that never existed. Uber wasted time and billions trying to make inroads in China, only recently giving that up; the 76ers took Michael Carter-Williams for a spin and, after a year and a half, decided to hit the reset button, kicking the can down the road for a future first-round pick. Uber is now investing in driverless technology and unrealistic home run shots like flying cars; the 76ers’ prized possessions are Joel Embiid (drafted by Hinkie in 2014), Ben Simmons (the #1 pick in 2016, earned by Hinkie’s tank commanding), and a player that they haven’t even yet drafted (almost certainly University of Washington guard Markelle Fultz). In sum, they’ve played 31 NBA games. There’s no way to predict if they’ll actually mesh as a unit, but it’s a tantalizing prospect for fans to have three “potential stars” waiting in the wings. They could be the future, and that’s the key to remember: In Hinkie’s world, if you search long enough, the solution can always be found on the horizon.
The theme here is that someone or something can’t be successful until they’re successful. Tangible assets, not potential ones, must be the unit of measure.
Much like Uber, “The Process” was only valuable when considering its aura rather than its returns. Hinkie had sixteen draft picks as general manager, an honest-to-God bounty; his best selection remains a seven-foot-tall man who has played 31 games in his career and has missed significant time due to back, foot, and knee injuries. Here’s an incomplete list of players he passed up: C.J. McCollum, Steven Adams, Giannis Antetokounmpo, Dennis Shröder in 2013; Aaron Gordon, Zach LaVine, and Rodney Hood in 2014; and Kristaps Porzingis, Justise Winslow, and Devin Booker in 2015.
By contrast, in a span of merely eight draft picks spread over four years, the Golden State Warriors drafted 80% of their (now-retired) historically great “death lineup”—Steph Curry, Klay Thompson, Draymond Green, and Harrison Barnes. Only Barnes, the worst of the four, was selected following a season in which the Warriors tanked. The Spurs built their recent dynasty after tanking just once to land Tim Duncan. Their other key pieces were Tony Parker (selected at #28) and Manu Ginobili (#59), drafted just two years apart; of the core four Warriors, none was selected higher than #7.
The fallacy is believing basketball talent only exists in the upper echelons of the lottery; no matter how low they’re choosing, good GMs draft well and, especially in San Antonio’s case, develop better. Hinkie’s strategy was a revolution only in that it repainted the draft—a game of at least some skill—as Russian roulette, martyring himself as the shmuck forced to pull the trigger and hope for the best.
It’s simple: Creating success isn’t a question of purely cultivating assets so much as having the ability to harvest them. Hinkie showed no competency in that realm. Maybe, at some point, he would have, just like perhaps Uber will maybe eventually become legal, viable, and profitable. However, I can only think of what Silicon Valley titan Steve Jobs once said about how ideas are nice but delivering outcomes are what matters: “Real artists ship.” It’s powerful and logical. And if we believe it, then consider the obverse statement: the only conclusion is that Hinkie’s a fraud—and that Kalanick’s not too far behind.
Lucas Hubbard is a writer and editor based in Durham, N.C., who dominates franchise mode in most sports video games.