As some Fast Company readers probably know, in August 2018, the New York City Council capped the total number of Uber and Lyft drivers allowed on the road. This was sweet revenge for New York City Mayor Bill de Blasio, who, three years earlier, suffered a humiliating defeat at the hands of Uber when he tried the very same thing. A lot has changed at Uber since 2015, most notably the replacement of founder and CEO Travis Kalanick with Dara Khosrowshahi, the former CEO of Expedia.
Khosrowshahi entered Uber at a time of turbulence and quickly set out to calm the waters. He did, settling a long-running dispute with Waymo, another with the City of London, and generally sought to avoid confrontation at all times and pretty much at all costs. That gave de Blasio an opening to try to impose caps again.
Unlike the 2015 fight, which is detailed below, Uber’s approach in 2018 didn’t work. The taxi cartel remained as vicious as they’ve always been. The recipients of their campaign largesse at City Hall and in the City Council were just as eager to do the bidding of their donors as they’ve always been. And the kind of bare-knuckled brawl Uber waged in 2015 was replaced by a kinder, gentler campaign that utterly failed.
Turns out, when it comes to breaking cartels, soft just doesn’t work. Khosrowshahi’s long-term ambition for Uber–a less turbulent reputation heading into a 2019 IPO–may make sense in the aggregate, but in every city across the world, it also leaves the company highly vulnerable to attacks from the entrenched interests, politicians, regulators, advocates, and competitors they’ve beaten consistently since day one. Passivity may turn out to be just as risky as the previous regime’s aggressive approach.
Maybe Uber’s loss in New York City will be a one-market aberration. Or it may be a turning point where the global balance of power shifts away from Uber and back to taxi. We’ll see.
The following chapter is an excerpt from Bradley Tusks’s new book, The Fixer: My Adventures Saving Startups from Death by Politics. This excerpt has been edited for length and clarity.
As we won the right to operate in city after city, the company took off. It turned out that people hated their local taxi system everywhere. And once Travis launched UberX, allowing anyone to use their own car to give someone else a ride, the business really exploded. It needed more than me and a few of my employees handling the political stuff. It was time to build a real, internal team. And once we did, around a year later, we stopped working directly for Uber. They had what they needed in-house. I still gave advice to Travis on a variety of issues (given the rapidly growing value of my equity, I was as economically and emotionally invested as anyone could be), but my involvement waned, and I wanted to replicate what we did for Uber with other startups.
But I couldn’t. Other startups weren’t Uber. Other founders weren’t Travis. I’d go talk to a founder, explain the regulatory problems coming at them, explain my background and expertise, say we’d work for equity and he’d typically respond along the lines of: “You don’t understand. I went to Stanford. I was in Y Combinator. Kleiner led our Series A. John Doerr is on our board. When those stupid regulators see how smart I am, they’ll just do whatever we want.”
I’d try to explain that politics didn’t really work that way, but they rarely listened. Because so many startup founders have engineering backgrounds, they’re incredibly logical in some ways, but very obtuse in others. They have inputs that matter in their world: fund-raising, user acquisition, growth, deployment of new features on the platform. Politicians have inputs that matter in their world: fund raising, poll numbers, press coverage. Founders, at least in theory, look at the world as capitalists. Dollars and cents are how they ultimately judge their success or failure. (Although some startups are allowed to lose money for so long, the notion of profitability gets away from them.) Politicians judge their success by elections.
So even if everything is logical and right to a startup and there’s no good reason why a politician should oppose them, the politician isn’t looking at it that way. He or she thinks, “How does this impact my donors? How does this play with the different interest groups whose support I need? How does this play in the press? How will this impact my favorability and approval rating?”
If you can think about and reframe your issue in that context—if a politician thinks that denying your right to operate will hurt him on election day—then you can convince most politicians to do just about anything.
The problem wasn’t that startups needed to take politics more seriously. And the problem wasn’t figuring out how to influence politicians and regulators so they’ll do what you want. (We knew how to do that.) The problem was convincing a typically very self-confident, often arrogant breed of founders that they had to invest time, money, and equity in preventing and solving political problems.
Maybe I’m just not a good salesman but I couldn’t get the point across to most of them. And then finally, we got lucky. Bill de Blasio did it for me.
In the four hours from when Travis first called to ask for help till my flight landed at LaGuardia, I’d put together a game plan. As I sat there on the plane, I realized that de Blasio’s perception of Uber and the reality of Uber were two very different things. Because de Blasio was so indifferent—even hostile—to tech, he only knew of Uber as the startup that raised a ton of money and had the black Suburbans lined up on Park Avenue. Sure, that was part of Uber’s business, but not everything. Our drivers, I thought, are almost all immigrants and minorities looking to make more money than they could driving a cab or working another job. Our customers numbered plenty of millennials, but also a lot of working people who lived in the boroughs and used UberX because it was cheaper and more convenient than taking a taxi, and for black and Latino customers (much of de Blasio’s base), the experience of being passed over by an empty taxi once the driver saw the color of their skin had created decades of deep-seated resentment. No one knows the color of your finger when you summon an Uber, so to many New Yorkers, taxis were the bad guys and Uber represented real, positive change.
By the time my flight reached cruising altitude, it hit me that the fight to kill de Blasio’s proposal of capping Uber’s growth at 1% a year would work a lot better if we ran the campaign from his left. He’d never faced that before. (No one had ever thought they could question his progressive bona fides.) Reacting to it would mean coming up with a new playbook on the fly. We could try to catch him by surprise, co-opt everyone who normally sided with him because they didn’t want to be seen as illiberal, and create enough chaos to at least put quick passage of the bill in question.
I headed over to Uber’s NYC headquarters first thing the next morning. When I started working with Uber, their New York office was basically a large closet in Long Island City, Queens. Things had changed. The new office employed around a hundred people, was in far West Chelsea, one of the hippest parts of Manhattan, and looked exactly like what you’d imagine the stereotypical startup-gone-very-rich space would look like.
Josh Mohrer, Uber’s longtime and extremely successful general manager of New York (and now one of my partners at Tusk Ventures), met me at the door. I wasn’t expecting the team assembled—high-level Uber execs from across the country were there, ready to take on the fight. Travis mentioned how problematic it’d be globally for Uber if the bill passed, but the presence of Rachel Holt, who ran operations for North America, Justin Kintz, who ran policy and politics across North America, Matt McKenna, who helped run the communications shop, and a bunch of others made it abundantly clear how worried they were about this.
“This isn’t just New York,” Rachel told me as we sat down. “The same idea has already popped up in London and Mexico City. If we stop it here, the idea probably dies everywhere. If it happens here, we could be fucked everywhere.”
When Travis said, “Whatever you need,” we took it seriously. Melissa Heuer from my team began drawing up paid media budgets—TV, radio, direct mail, digital—as well as what we’d need for phones, grassroots, polling, lobbying, legal, and everything else a well-funded campaign could possibly require.
At first blush, it seemed to me we had two paths: (1) surprise city hall by attacking from the left, and/or (2) take our argument to the U.S. attorney’s office that this was pure, pay-to-play corruption, and if they agreed and started looking into it, that might convince city hall to back off before they got themselves in serious trouble.
On the one hand, this was all really exciting. The stakes were high. The fight was going to be extremely public—covered by all the papers and all media, local, national, and global every day. We were on the side of the angels. We had as much money as we needed. Having a combination like that is very rare. On the other hand, the playing field couldn’t have been much worse. Why would 26 members of the council turn on the mayor to help a startup? Normally, they never would. So we had to make the political consequences of voting against Uber even more painful than voting against the mayor.
We assembled an all-star team of half a dozen local lobbying firms to focus on each individual member of the council. Our team wasn’t quite as extensive as Pharma’s legendary operation in D.C., which has more lobbyists than there are members of Congress, but it had to be a record for city government.
We met for the first time that week and went through the roll call. It was grim. Not only did we have less than half a dozen votes on our side lined up, the vote on the bill itself was scheduled to happen in just a few weeks. City hall was trying to railroad it through.
We split the strategy into two components: (1) generate massive public opposition to the bill through TV ads, radio ads, banner ads, rallies, newspaper support, pundit support, clergy support, community support, driver support, and support from elected officials (the outside game), and (2) conduct an intense lobbying campaign to somehow line up 26 No votes in the council, constituting a constant barrage of calls, emails, and tweets from constituents, direct mail in each district either praising the councilmember for opposing the bill or attacking him or her for supporting it, polling to show the bill was unpopular, and having our team of lobbyists suffocate each member and their staffs (the inside game).
The lobbyists took a lot of shit from both city hall (who tried to convince each lobbyist to drop Uber as a client by threatening harm to their other clients) and from the council (none of them liked suddenly being called out in a very public way for supporting the bill). But to their credit, they all hung in there, and as we held whip count calls multiple times each day, the number of No votes slowly started to increase. And the more that some members were willing to publicly oppose the bill, the easier it became for others to follow suit. None of them said to themselves, “This bill is wrong and stupid, I’m being called out in front of my constituents for supporting it, I’m getting called, emailed, and tweeted at constantly, every good lobbyist in the city is all over me to oppose the bill, and the newspapers are all against the bill, but I’m still going to take a beating for de Blasio anyway.” Truly great leaders can sometimes pull that off—but only if they’ve developed a lot of goodwill with the legislature and taken their share of hits for them. Most councilmembers considered de Blasio to be aloof, patronizing, condescending, and selfish, so none were all that eager to suffer for his sins.
The fight lasted a few weeks. We kept upping the stakes with more TV, more radio, more calls, more lobbying, more public pressure. City hall asked to meet but when they wouldn’t agree to first pull the bill, we said (and then announced publicly) we’d meet only if the meeting were livestreamed so the people could see what this was all about. (The meeting obviously never happened.) We announced we were buying TV time well into August so even if the bill passed, we were going to stay on the air attacking everyone anyway. (Otherwise, making the problem go away by passing the bill as quickly as possible was an ap- pealing option for the council.) Councilmembers kept jumping to our side. But until the speaker decided she too no longer wanted this problem, we knew she could always apply enough pressure to ram the votes through.
Then we got lucky. The mayor, as he is apt to do, deflected blame for the bill by putting it on [Melissa] Mark-Viverito instead. The speaker, of course, had nothing to do with it, and seeing the mayor throw her under the bus was the last straw. She’d had it. She was no longer interested in seeing her members take constant public hits to carry the mayor’s water. Then Cuomo came out publicly against the bill. Celebrities like Ashton Kutcher and Kate Upton started tweeting about it. City hall had nowhere to hide. The call came in.
“They want to meet,” Josh told me.
“Not if they’re still pushing the bill,” I said. “They want to make this go away.”
“We can do that—they just need to drop the bill.”
The whole team spent the next few hours preparing for the meeting. It was, presumably, a negotiation to drop the bill. They’d want concessions—they’d need cover to make a deal. We made a list. Josh, Rachel, and a few Uber officials and lobbyists went to the meeting. (We decided I was better off playing the bogeyman they could point to in the meeting and say that the deal wasn’t good enough and I’d just keep publicly kicking the shit out of the mayor and the council if we couldn’t reach the right resolution.) I anxiously waited by my phone for the results.
A text from Josh came in. “All good.”
But then nothing for 20 minutes. All good with what? What did that mean? The phone rang. Josh again.
“They pulled the bill.”
“What’d we have to give up?”
“What do you mean nothing?”
“We just promised to end the campaign—take down the TV ads, no more radio ads, no more mail, no more email or tweets.”
“That’s it. They just want it to go away.”
Turns out you can fight city hall.
We’d won. The coverage reflected that extensively, everywhere. And it showed: Rumors of similar legislative attacks in other cities went away. Mayors considering doing the bidding of their taxi donors thought twice. Travis was thrilled. My team was excited to win such a high-profile fight. And most important (for us), all of the attention around the fight helped other startups realize that they had to start taking politics seriously. Their newly realized challenge was our opportunity. And we took it.
Excerpted from The Fixer: My Adventures Saving Startups from Death by Politics by Bradley Tusk with permission of Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House LLC. Copyright © Bradley Tusk, 2018.