Travis Kalanick

A serial entrepreneur with little fear of taking on industry Goliaths and regulators, Kalanick has created a one company regulatory-busting machine that is shaking up taxi markets world wide.

Early Saturday morning in Paris, hundreds of tired partygoers line Grands Boulevards, a major thoroughfare on the city’s Right Bank. With their thumbs extended anxiously awaiting a taxi, many have been lingering for over an hour. The rare taxi drivers, whose numbers are closely regulated by the city, have their pick of their potential passengers, refusing clients going to out-of-the-way corners of the suburbs and imposing illegal surcharges.

Scenes like this are not unusual in the city of light, but things are starting to change with the introduction of chauffeured car services such as Uber, which can bypass the city’s strict regulations on the number of taxis, just over 17,000 this year. Tech-savvy Parisians are increasingly pulling out their smart phones to order a car rather than queue for hours at taxi stands in the wee hours of the morning.

Known as chauffeured tourist cars in French law, the number of car service companies competing with traditional taxis has exploded over the past two years. The most recent estimates put their numbers at around 9,000. Some, such as the New York-styled Voitures Jaunesi, have their own fleet of luxury taxis and salaried drivers, while others, such as the market innovator Uber, rely on a sleek smart phone application an a network of independent drivers.

Taxi drivers are among the fiercest unions in France. Buying the coveted licenses for upwards of $500,000 in some cities, drivers expect exclusive revenue streams and, above all, the prospect of reselling the license (for a decent profit) at the end of their career. Dozens of French governments have failed to reform the industry, falling victim to infamous ‘snail operations’, in which thousands of taxis paralyze the country’s motorways. In the end, it was a Silicon Valley start up that would answer Parisians early morning prayers for mercy.

It was in 2007 at the Le Web, a well-known technology conference, in Paris that Travis Kalanick and friend Garrett Camp first began to develop their idea for an innovative on-demand car service, Uber. “We were jammin’ on ideas,” Kalanick recalls in an interview with the Wall Street Journal, when Camp said suddenly, “I just want to push a button and get a ride.” Three years later, Uber launched as an iPhone app in Kalanick’s native San Francisco where taxis were about as hard to come by as in Paris.

When the company launched, about half the drivers worked for local limousine companies that had partnered with Uber, while the other half were private drivers vetted by Kalanick himself. When a client summons a car through the Uber app, the closest driver responds to the call. Passengers are then prompted to provide feedback after each trip in order to help the company control the quality of its drivers.

The idea seemed to work, so well in fact that the authorities quickly began to worry. Just like in Paris two years later, San Francisco tried to quickly erect legal obstacles to stymie the company’s growth. Four months after the service launched, Uber was served with a “cease and desist” order from the California Public Utility Commission and the San Francisco Municipal Transportation Agency (SMTA).

Rather than cease or desist, Kalanick and his associates decided to ignore the warning (after consulting their lawyers). The young serial entrepreneur had already been sued for $250 billion by a group of 30 media companies over, a peer-to-peer content search engine not dissimilar to Napster and Kalanick’s first big venture. This time, he got off relatively easy. “She was fire and brimstone, deep anger, screaming,” he remembers of an SMTA official he met with. She was ultimately powerless to do anything to stop Kalanick from shaking up the Bay area taxi market.

In Paris too, the taxi drivers’ unions did not let Uber and its home-grown rivals grab their hallowed and expensively acquired market share without a fight. After massive protests earlier this year and intensive lobbying from industry heavy-weights such as G7, the French government finally made concessions to the taxi lobby, but ones that are not likely to alter the profound revolution underway in the capital region’s 12 million customer taxi market.

Kalanick has certainly not shied away from attacking industries with deep-seated and powerful interests, although it is pent up industries like music and taxis that offer the biggest rewards for entrepreneurs. “There’s been so much corruption and so much cronyism in the taxi industry and so much regulatory capture,” Kalanick said. He stresses, though, that Uber is completely legal and owes its success to providing a superior quality and transparent service to clients, for only a few dollars more than they would pay a taxi.

Uber has morphed into something of a one company regulatory-busting machine, currently implanted in over 20 markets world wide. In Washington D.C. in 2010 and again last year in Rahm Emanuel’s Chicago, Uber unveiled its deadly ‘Rolling Thunder’ PR weapon, which consists of emailing the company’s clients asking them to send tweets and emails to city hall. In Chicago and D.C., where both cities’ authorities were threatening legal action, Uber prevailed after its army of satisfied clients barraged officials with tens of thousands of emails and tweets.


Comments are closed.