Uber might be crashing back to Earth

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Last Friday Uber decided to start operating in Portland. I know, it’s a little surprising that Uber or any of the other rideshare Taxi apps aren’t already in the city. Portland had told Uber they could not operate in the city, but Uber decided to thumb their nose at that similarly to what they have done in other cities. Even though Uber was recently valued at $40 Billion they have had some serious issues lately, like rape of a woman in Delhi while illegally operating in the city. Furthermore, as I mentioned in my last article, they have smeared women journalists with the data Uber collects.

Portland has decided to sue Uber over their illegal operation within the city. The city is following Nevada in suing the company rather than trying to fine their drivers. Uber has since ceased operations in the state due to an injunction against the company operating in the state. This appears to be the only route that will work effectively as Uber is still operating in Delhi despite the citywide ban of the service. Uber has also been banned in Spain, Thailand, and parts of the Netherlands. I think the biggest blow, however, is the fact that both San Francisco and LA are suing the company for false advertising related to their fees and background check.

These responses should not come as much of a surprise to anyone that has been watching the company over the past few years. The company is part of the Silicon Valley culture of going fast and trying to break things. The problem is that, incumbents are incumbents for a reason and they do have the ear of government. It’s not to say that they should be incumbents or that it makes them something worthy of respect, but you need to understand the cards are stacked against you. In cases where you want to go in and intentionally ruffle feathers, you must have strong safe guards in place to protect your customers and be public about how you protect them. Uber should welcome background check audits, privacy audits, and driver safety audits whenever they go into a new market. These should all be huge features that they brag about and let people under the hood to actually see.

I think it’s time that companies like Uber start treating our data as if it’s Personal Health Information, which is protected by Health Information Portability and Accountability Act (aka that HIPAA agreement you sign at the doctors’ office). The default is to not share personal information about a patient, that if someone is caught looking at the data without just cause, it typically results in a firing and a fine for the organization. Similar action must be taken at Uber to show they are a steward of our data. Now the government won’t be taking that money, but instead they should be donating the funds to a good cause at a similar rate to a HIPAA violation.

In some respect Uber is exhibiting the effects of a company that is growing too large too fast without designing processes to enable their business activities properly. For Uber to be a successful long term company they need to figure out how to both appease city governments through over protecting their users and breaking existing rules. If the company can be trusted then governments will be more willing to accept pushing boundaries.

When we buy something do we control anything?

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In new routers Comcast has decided to enable another WiFi signal that is public, but separate from your network, but still using your data. Initially, you were able to fairly easily turn off the the second network, however, Comcast has started to make it much more difficult. This raises the question in my mind, around if you’re paying for a service, shouldn’t you be able to control what is happening with that service within your house? It also raises the concern in my mind that the second network will use your data cap in the areas that have data caps – and Comcast plans to expand those caps even though we hate them.

Similarly, Uber, has done some pretty horrible things around data privacy of their users. Similarly, Facebook has conducted experiments on their users and what they display. In Uber’s case you buy the service, in Facebook, you pay for it through seeing ads. In each case you do not control anything done with your data once you enter the agreement to use their services.

Apple has been accused, and admitted to, deleting songs added to an iPod by a non-iTunes service. This is even more problematic in my mind than Amazon deleting something from your Kindle, because the iPod is a physical object that you own that was only updated whenever you connected the iPod to your computer. Furthermore, Apple was deleting things you owned without your consent from a product that you own because they didn’t want their competitors content on a product in their ecosystem. It is likely many people didn’t notice because you can have so many songs on the device, but I’m sure some people were confused.

Then there is the “licensing” that happens whenever you buy software, even whenever you buy a physical copy, companies like Autodesk have sued over the right to sell that “license” again. They sued and won over someone selling their physical disks, which is pretty insane, but they wanted to protect their product and claimed that it violate’s their licenses.

In all of these cases, a company is doing something related to a service you purchased without your consent or input into how they use it. Effectively, you don’t really control the stuff you buy. Even though we all feel like we own everything we buy, we really don’t. We don’t have control over the services we purchase and this is going to get worse over time. It will get worse, because software is eating the world, and is now in many more traditional industries like mining equipment manufacturer Joy Mining. Michael Porter wrote a really lengthy article about how software is having serious impact on the future of competition he argues that software will be everywhere and in fact companies need to build the internal capability to create software. As users of these new technologies we need to understand how companies use our data and what control we actually have on the services and products we buy.

Is Uber really worth $40 Billion? What is value?

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Today it was discovered that Uber raised about $1.2 Billion in its latest round of VC funding. This puts Uber at the stratospheric valuation of $40 billion. This valuation makes Uber worth more than companies like Haliburton, CBS, Yum! Brand (Pepsi, Pizza Hut, Taco Bell, KFC), Northrup Grumman Corp, Kraft Foods, and basically 72% of the Fortune 500, according to this Fortune article, that means there are only 140 companies in the world valued more than Uber. On the other hand, its revenue is only $400 million which is one fifth the revenue of the smallest company on the Fortune 500.

Clearly this means that investors expect a massive IPO and that the company will continue to double revenue every 6 months. This is one of the major reasons for this round of funding as well – Uber needs to be able to expand in Asia and this money will allow them to do so. They’ll have to hire staff, fight law suits, bribe people, and who knows what else. It begs the question, are we going to see Uber Rickshaws?

With this astronomical valuation of the company, it makes you ask what is value, who is receiving this value, and how long can this valuation truly be valid? There are only two stakeholders that are truly receiving $40 billion in value, that’s the startup founders and the early investors. With the bad press that the company has been receiving, it’s clear that it’s not Uber’s customers, whom expect privacy and discretion on the part of Uber, whenever they are not receiving it. Ok, maybe that’s not completely fair, as a large number of people use Uber today, it’s clearly filling a void that aging regulations wasn’t really filling. However, it’s clear that this benefit is coming at great cost to the “employees” of Uber where aribitrary rate cuts in some areas prevents it from being possible to make a true living wage. Furthermore, this valuation will only last as long as Uber is able to continually grow, as soon as the company fails to show that they are continuing to grow, their stock prices (as they will be public by then) will eventually fall back to much more realistic prices. This is similar to what initially happened with Facebook and more recently with prices falling for Twitter. The major difference being that Uber has a much clearer revenue model than either of those companies that does not rely on ads, simply drivers and riders. Furthermore, we only know what the revenue for Uber is, we do not know what the profit margins on that revenue are, clearly they are looking good, because for a given city the overhead for Uber can’t be more than half a million dollars, which means they are likely doing rather well.

Compare this to companies that actually make things that drive the economy through providing many jobs, like Kraft, it makes you wonder where these valuations come from and what it is that investors truly see in companies like Uber. To me, it’s an interesting company that has an aggressive approach to business, but that isn’t worth that kind of money. Maybe I’ll see things differently if it comes to Portland.

Passions

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During Thanksgiving it’s a time for food, family, and watching copious amounts of TV and movies. This year those movies included “Somm” which is a movie about 4 guys trying to take the Master Sommelier test. Which apparently only about 12% pass each year. Not a super low amount, but also not an easy exam in any way shape or form. It got me thinking about if I could become a Somm (as they are called in the business according to the movie). I think that I do have the right kind of mind for the job, remember flavors of wines the history of region of wine and all of that is right up my alley. I know that, because that’s what I used to do with beer. I used to be able to rattle of several types of beers that if you liked one kind or style that might push your boundaries and give some of the reasoning behind it. I was able to explain why a beer tasted the way it did, etc… That was something I loved and was really passionate about. However, wine just doesn’t hold the same level of interest to me. I don’t know if it’s because beer feels much more close to home, my friends drank beer and avoided wine or what it is. Even now that I cannot drink beer I still haven’t really replaced it with a beverage I’m passionate about. I drink both wine and cider, but I don’t feel a deep down passion for them. Likewise I don’t think I could do that with whiskey, even though I really enjoy drinking whiskey, it just hasn’t captured my imagination as a GREAT drink that I want to learn everything about.

More broadly, the movie has had me thinking about what I’m truly passionate about. I know that a great deal of my interests are reflections of what my friends are interested in. If I’m surrounded by people that love watching football, I’ll watch a lot more football, similarly for college basketball or hockey. I enjoy the games when I watch them, but I rarely will seek them out on my own. I think this is something that is driving my wife crazy, I simply don’t have a lot of things that I’m passionate about that I’ll invest a huge amount of time into. It’s frustrating for me too. I think that is probably the hardest thing about me being Gluten Free I’ve really lost a great passion of mine.

I think many people will agree that I’m passionate about certain things in our political system. I’m all about free speech, investing in science and technology to grow and enable our economy. But I’m also not 100% all in. I’ve been thinking about how to get involved and in what way I’d do this. Ideally, I’d work at a think tank, but there aren’t many around Portland and many of them are either left wing or right wing. I think on many topics I’m a moderate, so neither party truly inspires much confidence.

I’m also passionate about making people’s lives better at work, but I’m not really getting much support at my organization and I’m getting beaten down. It’s one of the most frustrating things you can deal with on a daily basis, knowing there’s a better way to do things, walking your leaders to the kool-aid, but seeing them spit it out and start drinking from the mud instead.

So this leaves in an odd position. The things I’m passionate for I can’t really follow through, which makes me ask What do I have passion for, what should I try to be doing to find things I could become passionate about, how should I act on the topics I do have passion for? I know that there’s something more out there that I could or should be doing, but i have no idea how to get there.

I’m surrounded by @ssh*les!

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Everywhere I look I see bad managers these days. Which is surprising considering that there are articles being published every day with headlines like “People don’t quit companies they quit bad managers” or “Bad Managers are the no 1 reason why people leave their job.” This is a problem specific to one company or one industry, but rather it’s across industries and sectors. I’ve worked in Semiconductor manufacturing, semiconductor design, and now health insurance all of them have had their share of bad managers. It’s not even just home grown managers that make poor decisions, it’s managers that are specifically hired to come in to effect change that don’t have the right skills to do the job that needs to be done.

It is whenever managers are put into a position where they do not have the information they need or the right skills to do the job that they become assholes. This is especially problematic in complex environments and this complexity isn’t linear from person to person, which is to say that a given person might find one level of complexity manageable, while another person may be unable to handle it. So for one manager that could be managing the line at a fast food restaurant, while another it might be managing a project that has 5 internal stakeholders and 5 government regulatory agencies as stakeholders.

In large organizations complexity is only going to increase. In this way complexity is like entropy, it only increases. We implement new policies and likely never eliminate historic policies. This is especially true with government regulations. We rarely sunset those provisions. The only way to manage this complexity is to plan. Like all plans, they are pretty much worthless after you build the plan, but going through the process is invaluable.

For instance, my preferred strategic planning approach is to pull in three types of data, Voice of the Customer, Voice of the Business, and Voice of the Team. Voice of the customer is what your customers are telling you about your existing services and offerings. They can tell you how much you’ve screwed up and where you’ve screwed up. They might not be able to help you identify the next iPhone, but they can tell you not to build the next Blackberry device. Voice of the business is typically the loudest voice at any organization. This is what the C-Suite is telling everyone to do, this is the competitive landscape and the regulatory environment that you operate within. Together these voices are powerful and loud. Finally, the voice of the team is almost always ignored, mostly because the team won’t speak up. This needs to be a true analysis of the capability of the team using Capability Analysis of Business Architects or doing a SWOT. Using these three voices to have a frank conversation, you can build a three to five year road map. Then you can build out your strategy to enable your team to meet your customer needs as well as your business requirements.

Managers become less of an asshole whenever they have clear management processes in place. Clear reasons why they are doing what they are doing. Employees aren’t the only ones that need processes. Managers and leaders need them too. They prevent churn and waste if they stick to them.