Uber CEO talks regulatory disruption, maintaining startup culture

Travis Kalanick discusses his company’s success in face of regulators and competitors old and new

November 6, 2013

Uber CEO Travis Kalanick

Uber CEO Travis Kalanick

Customers rave about Uber. Investors flock to it. Others aren’t so enthusiastic.

The company, valued at $3.5 billion, faces a rude welcome from regulators and taxi companies nearly everywhere it goes. Add in mounting competition and CEO Travis Kalanick has his share of detractors.

But Kalanick considers that an inevitable by-product of his company’s highly disruptive entrance to the car service industry, he told MIT students Nov. 1 in a talk on campus.

Uber, an on-demand company that manages a network of independent car service drivers through a smartphone app, is expanding at a rapid rate. In August, Kalanick confirmed a $258 million funding round. First operating in San Francisco in 2010, the company today is in 29 U.S. cities and 29 cities elsewhere in the world. It is stirring up controversy as fast as it is growing.

By competing with the taxi industry, Uber has participated in a series of faceoffs with taxi companies, regulators, and local politicians. The heavily regulated industry, Kalanick said, is intent on protecting an entrenched order of artificial prices and supply that favors taxi and livery company owners. Since the company’s founding, Kalanick has become plenty familiar with the business end of lawsuits and cease-and-desist orders.

“It’s a regulatory disruption,” he said of Uber’s business model. “We don’t talk about that a lot in tech. But you can disrupt from all sorts of directions.”

When competitors entered the ridesharing market—which Kalanick differentiates from Uber’s car-for-hire model—with drivers who are not commercially licensed, Kalanick wrote a white paper calling for local governments to clarify regulatory ambiguities so that Uber and other companies could operate without fear of criminal prosecution for themselves or for drivers.

“I’m a computer science major writing policy papers,” he recalled at the MIT talk. “What is going on in my life? But that’s what an entrepreneur has to do.”

Because Uber relies on challenging and changing local and state regulations, the company has field offices in most of the cities it operates in. In Boston, for instance, an 11-member-and-growing team manages operations for the greater Boston and greater Providence, R.I. areas.

Kalanick said the localized approach helps Uber maintain the character and flexibility of a startup, despite its impressive growth worldwide. General manager Meghan Verena Joyce, who attended Kalanick’s talk and hailed Uber’s internal culture of transparency and local control, leads the Boston office.

“That’s a startup,” Kalanick said of Joyce’s office. “She’s the CEO of Uber Boston.”

With competitors including Lyft and Sidecar also launching in new cities at a rapid rate, Uber may experiment more with marketing, Kalanick said. Until now, the company has relied on its riders and its drivers for word-of-mouth and for support when challenging local rules and regulations, he said.

But as embattled as Uber may seem at times, Kalanick said he believes the company’s culture of innovation and disruption will carry it through.

“I think Uber's doing interesting enough stuff and capturing imaginations, and showing how you can actually change a city,” he said.

Kalanick spoke on campus as part of the Martin Trust Center for MIT Entrepreneurship Speaker Series. The talk was moderated by Kyle Judah, program director at the center. The series continues Wednesday, Nov. 13 with cloud video company Brightcove co-founder Bob Mason. Talks are open to MIT students only.