Dec 2, 2016 · 11 minutes

“Well, which is it?”

“You can’t have it both ways!”

“Wait! That’s not what you said just a few days ago…”

Long before these were things I found myself screaming at our President Elect’s Twitter stream (Hillary Clinton is a brilliant Secretary of State! Hillary is a terrible Secretary of State! Carelessness with classified emails is jail-worthy! Carelessness with classified emails qualifies you for my cabinet! The New York Times is failing! The New York Times is a crown jewel!) they were things I found myself screaming at Uber.

Uber who both said the infamous dinner conversation where Emil Michael threatened journalists  A) Didn’t happen and B) Was off the record.

“Well, which is it?”

Uber who insisted they were CRUSHING it in China-- tripling their market share-- up until they sold their China business to arch Rival Didi Chuxing.

“You can’t have it both ways!”

Uber who hates business as usual in the government with all those fat cats and backroom deals… until it became a fan of backroom deals, hired some of the most senior political operatives, hired the oppo-research agency staffed by the ex-CIA, and employed more lobbyists in Nevada than the entire gaming industry combined.

“Wait… That’s not what you just … Argh!”

Uber struggles most when it tries to recast its image. Early on, it reveled in the fact that it was spoiling for a fight, with CEO Travis Kalanick bragging to credulous journalists about the hundreds of billions of dollars he’d been sued for in his career. Before it later claimed the Taxi companies brought the fight to Uber-- they were just standing there!

Uber’s investors and apologists have long excused the company’s hard charging tactics by saying it took that kind of DNA to challenge the corrupt, brass-knuckled, entrenched Taxi lobby in America.

Until, well, the company became just generally hated. Forget drivers. Forget journalists. Uber is not even among the most respected or desirable companies to work for in Silicon Valley. We’ve written about this in multiple, multiple surveys, and yesterday First Round published another one. In its “State of Startups”, the firm asked respondents to write in the name of the tech leader they admire most. Elon Musk was the clear winner with 23%, followed by Jeff Bezos at 10%, Mark Zuckerberg at 6%, and Steve Jobs at 5%.

Survey-after-survey shows this is simply not an admired company within the tech industry. I can’t think of a time in my career where I can remember saying that about the most highly valued private company of an era. This could be why its head of HR quit last summer to go to… Twitter. Twitter! A company with such recruiting problems its heads of product have been compared to Spinal Tap Drummers and Defense Against the Dark Arts teachers.

Think of how much of an asshole you have to be for people in the Valley to worry you are too much of an asshole?

Uber has tried at least four or five times to rehabilitate its image with journalists. One of those times, resulted in that dinner where Michael threatened the press. That’s how good Uber senior management is at sticking to the “WE’RE NOT NASTY!” message.

This is pretty much Kalanick on a press tour, his suit just fits better:

All of this might explain why Uber-- which has long argued it is a hardcore technology company-- hired a marketing guy from Target as its no. 2 executive in September, reporting only to Kalanick. The origin story from that hire -- when Jeff Jones told Kalanick after a TED talk that his company needed to stand for something not just against everything-- hinted the “story” of Uber was set to change again.

And Jones delivered on LinkedIn after taking his spot, expressing… let’s just say a different attitude towards drivers than Uber has in the past:

Experiencing firsthand how we communicate with drivers today … well, it’s not a proud moment for Uber. Our messages are too frequent, too disconnected and too off-putting. So we’re conducting a top-to-bottom audit of driver communications to make sure that when we reach out to drivers, we do it right…

...So starting two weeks ago in Minneapolis and last week in Oakland, I’m personally meeting with drivers in different cities to hear what’s on their mind. I can’t guarantee to address everything, but I can promise that Uber will do a much better job listening to drivers and serving their needs.

...Demonstrating that we have ears as well as a mouth will be crucial to Uber’s long-term success.

That was November 14. On November 28, Uber started deleting driver accounts if they had anything in their cars promoting tiny New York upstart Juno. Lyft seems to have finally hired an ad agency with some skills, and has piled in on Uber’s reputation with its new ad campaign.

That’s right, Lyft and Uber are essentially trying to swap places: Lyft is “throwing mud,” and Uber pretending to be the brand that cares about drivers.

And all of these “stories” matter greatly, because this is a commodity products: Both companies have the same drivers, charge roughly the same amount of money, continually match each other feature-for-feature, and the app works pretty much the same. Up until now the only way either ever succeeded in grabbing market share against the other was by spending billions of dollars in subsidies and driver bonuses. For both companies: When they spend, they gain market share.

But Lyft has capped spending and even Uber can’t keep that game up for ever if it hopes to show positive unit economics before an IPO. And it will have to go public at some point: Even having cut money-losing China, Uber is still burning billions and is running out of oppressive regimes to take money from. The VC money and the “tourist” money have long since tapped out, and even a few major Wall Street banks refused to offer Uber shares to their users… all but destroying their chance to take Uber public in the process.  

So if you can’t endlessly throw off cash, what can you use to distinguish a commodity product? Marketing. Look at Coke and Pepsi. We don’t need any reminders these products exist. We have all tasted them. We know everything about Coke and Pepsi. But they are continually marketed to us for massive sums of money with huge, celebrity-laden campaigns because Coke and Pepsi want us to “feel” that their commodity product stands for something the other doesn’t. World peace, a new generation, you name it.

In a recent interview with Founders Fund’s Brian Singerman he explained that he was still bullish on perennial number two, Lyft, because of this dynamic. Others have said the same, off the record. As long as you can spend more money and immediately gain more marketshare, you are still in the race. There is no network effect so strong at Uber that it precludes people from also driving for or using Lyft.

Be clear: If you own shares in these companies or are thinking of buying them at the IPO, you aren’t investing in a tech company they way you may have with Google or Facebook. You own a modern Coke and Pepsi. In a few years, we’ll have an Uber Super Bowl Halftime show, should the company continue to thrive.

Don’t believe me? As always with Uber, look at what companies do, not what they say. Deeds, not words. Can you think of another major tech company, whose number two executive is a marketer? They aren’t all product people. Monetization whizzes like Sheryl Sandberg? Sure. Operating geniuses like Tim Cook? Sure. But pure marketers for a high-growth, pre-IPO tech startup?

Back to him.

The press reports said that Jones was “poached” by Uber, but more in depth reports told the story of a guy pitching himself to Uber, because he wanted a newer job amid a Target executive exodus.

Right about now, Jones might be rethinking that move. It must be dawning on him, that he’s in for a thankless task: Changing the perception that Uber excels because of what it’s against into a company that’s suddenly “for” something would be hard enough. Particularly when that reputation has come after Uber has constantly lied to the media, engaged in arguable unethical schemes to hurt competitors’ fundraising and driver recruitment, tried to discredit and intimidate critics with tactic a judge has described as possibly “criminal,” has slut-shamed and victim shamed women who’ve said they were assaulted in Uber cars, and has enraged most of its driver base with continual fare cuts and a refusal to allow tipping on the app.

It reminds me of the vice presidential debate when Mike Pence repeatedly denied Trump had said and done a series of awful things… and then Trump continued to say and do them.

Even if Uber were to dramatically start to change its behavior-- and stop pulling stunts like using its dominant market position to bully smaller rivals-- it would be almost impossible to change Uber’s reputation.

Why hire a marketing guy and make him the #2 of the company, if you are going to make him look like a disconnected shill just weeks after his first effort? If this is Uber’s new edge on differentiation, you gotta live it. Your drivers and users clearly are willing to forgive a lot of bad behavior, but that doesn’t make them stupid.

This is more than simply more “business as usual” in Uber’s inability to follow through on the latest promise to “change its ways.” Countless insiders and others close to the company have told us Uber motivates its team with an “us v. them” mentality. This has worked incredibly well for the company.

But increasingly cracks are showing of an “us v. us” mentality at Uber. There have been reports of continually demoted co-founder Ryan Graves’s new everything-but-ridesharing division clashing with the ride sharing business, and clearly there is a disagreement between Jones “newer, more driver-friendly Uber” and a company willing to strong arm drivers into loyalty.

This will get worse as Uber starts to come under pressure to get its financial house in order before and IPO. Cracks are already showing in its “sure, why not?” expansion plans that have dominated the company. Europe is a mess; China is done; and South East Asia is a difficult, fragmented market with strong local competitors. At some point Uber will have to grow profitably.

There’s excitement about self driving modified Volvos and self driving truck delivering beer, but these publicity stunts are far from actual businesses. And given the strife between Uber Eats and ridesharing within the company, more divisions might created more “us vs. them” silos within what used to be one whole united “us” versus “thems” like the press, competitors, and drivers.

This all comes as the pressure is still on for Uber to come up with a dramatic growth story for its IPO, which may come as early as the second half or end of 2017.

Here’s one prediction: The story in the short term will increasingly focus on India. There are reports that local rival Ola doesn’t have quite as big of a market share lead on Uber as many had thought. Ola is said to be seeking money at a lower valuation, and Indian startups generally-- even the big ones like Ola and Flipkart-- have been struggling in this market.  

We predicted before that Ola would be far more challenged than Grab by in the new world where Didi and Uber carve up the ridesharing globe. But part of that is because India is a harder market to dominate than China. And Ola doesn’t have as many committed, deep pocketed backers as Didi did. (Presumably since Didi itself was a backer of Ola before the Uber tie up…)

Sure, Uber could use an international win. And eventually, India will be a big market. But this is not like winning China, or even being allowed to operate in most major European cities. India is still an incredibly divided country, a country lacking in a lot of basic infrastructure, and has a lot of very real challenges.

It will require local expertise to get the market right. That means either buying Ola outright and letting them run it, or Uber getting a lot more serious than it was in China about a local team. In China, Uber it didn’t even have a local CEO. More than anything it means continuing to throw a billion a year at the opportunity.

But, hey, Uber has spun less as a reason it should be worth more. This is after all a company that values a “storyteller in chief” over a technologist or a operations executive with a laser focus on unit economics. Even if that storyteller is trying to rewrite the single thing that Kalanick’s fans say make him effective: Everything he fights against, not for.

Uber has never matched words and deeds. Expecting that to change is as foolhardy as drivers expecting the company is going to start looking out for them.