I walk to the security desk in the lobby of what could be any of this city's downtown office buildings filled with lawyers, architects and finance firms. "I'm here to see Travis Kalanick at Uber."
"You'll have to email him, they're very secretive. And take a seat."
I sit down and send a note to say I have arrived for the interview. Nearby, several middle-aged men, all wearing black suits, white shirts and ties, listen to a young guy in jeans, orange socks and sneakers. He is consulting a MacBook as he talks to them. "Your account is no longer active, due to quality concerns from negative feedback," he says to one of the men. "You've had 105 trips and your quality scores are low."
These are Uber drivers, I surmise, and one of them is being given the heave-ho. The company is a hot San Francisco startup that already has 25 outposts around the world for its simple, seductive service: on-demand transportation. With an iPhone or Android app, you call up the Uber map, spot an available town car or taxi, and summon it with a click. The fare and tip for a town car, or limo, is maybe 50% higher than for a regular taxi ride and paid for through the service.
As the "no longer active" driver might attest, the company puts a premium on customer satisfaction. Uber has been successful enough that city bureaucrats across the country, eager to protect homegrown taxi and limousine services, have thrown up regulatory roadblocks left and right.
An Uber staffer fetches me and I am taken to meet Mr. Kalanick. The 36-year-old CEO isn't dressed in the usual geek-chic uniform. Instead, he wears a light-gray Italian suit with a pink shirt, no tie. But the Uber offices themselves have the usual Silicon Valley accouterments—as I walk with Mr. Kalanick to a cluttered conference room, we pass a game room with a Foosball table, a Pepsi-stocked fridge and two tapped beer kegs.
Started coding in sixth grade. Studied computer engineering at UCLA—"a great discipline on how to break down problems and put them back together," Mr. Kalanick says. Founded a company in 1999 during his senior year, left college without graduating.
The company, Scour.com, was like Napster, a peer-to-peer search engine to find music and other content on the Web. He was sued for $250 billion (yes, with a "b") by 30 or so media companies, filed for Chapter 11, started another company with the same P2P technology, but this time he was paid by media companies to move their content around cheaply. He ran out of money several times, moved back home with his parents near Los Angeles and worried about his sanity. Then the company, called Red Swoosh, finally started working, and in 2007 he sold it to Akamai for $15 million.
Two years later, Travis and a friend, Garrett Camp, who had made his fortune by selling the Web search tool StumbleUpon to eBay in 2007, were in Paris for the Le Web conference. "We were jammin' on ideas," Mr. Kalanick recalls. "What's next, what's the next thing, and Garrett said, 'I just want to push a button and get a ride.' And I'm like, 'That's pretty good.' He said 'Travis, let's go buy 10 Mercedes S-Classes, let's go hire 20 drivers, let's get parking garages and let's make it so us and a hundred friends could push a button and an S-Class would roll up, for only us, in the city of San Francisco, where you cannot get a ride.' This wasn't about building a huge company, this was about us and our hundred friends."
It took another year to get going as a real company, even a small one. At one point early in 2010, Mr. Kalanick says, he asked himself: "Do I really want to run a limo company?" He Googled "San Francisco limousine" and started calling existing companies to try out the idea. "Three of them hung up, four of them were 'maybe' and another three were super pumped."
That was good enough to suggest that he was onto something. Uber launched as an iPhone app in June 2010. The cars that iPhone users summon are typically town cars owned by a limousine company but not on a call. Instead of idly waiting for work, the nearest available driver answers the app call. Other cars are simply privately owned vehicles whose drivers have been vetted by Uber.
The idea worked. How could Mr. Kalanick tell? Four months after the launch in San Francisco, Uber was served with a "cease and desist" order from the California Public Utility Commission and the San Francisco Municipal Transportation Agency. "Given my background," Mr. Kalanick says, alluding to being sued at Scour.com, "this was like homecoming." He verified with his lawyers that what Uber was doing was indeed legal, then the company took its case to the public through Twitter and email.
"Did you ever cease?" I asked. "No." "Did you ever desist?" "No." "So you basically ignored them?"
As he talks, Mr. Kalanick paces around the conference room carrying a golf putter. The more wound up he becomes, the more he seems likely to break a window than practice his stroke. "The thing is, a cease and desist is something that says, 'Hey, I think you should stop,' and we're saying, 'We don't think we should.' The only way to deal with that is to be taken to court, and we never went to court."
But Uber did have to meet with the San Francisco Municipal Transportation Agency, where the woman in charge of taxis "was upset," Mr. Kalanick says. "Oh man, I've never. . . . She was fire and brimstone, deep anger, screaming. But here's the thing, SFMTA has no jurisdiction on what we do. They regulate taxis. Every single limo company we work with is licensed and regulated by the state of California."
Ultimately, he says, the question boiled down to this: "Are we American Airlines or are we Expedia? It became clear, we are Expedia."
When I suggest to Mr. Kalanick that Uber, in the fine startup tradition, was using the "don't ask for permission, beg for forgiveness" approach, he interrupts the question halfway through. "We don't have to beg for forgiveness because we are legal," he says. "But there's been so much corruption and so much cronyism in the taxi industry and so much regulatory capture that if you ask for permission upfront for something that's already legal, you'll never get it. There's no upside to them."
The crisis with the transportation agency lasted a few days and then faded. Meanwhile, Uber was trying to perfect its model, employing Ph.D.s to create algorithms to estimate demand and pricing to make the service efficient.
Breaking their own rules and not wanting to get screamed at, Uber met with the New York Taxi and Limousine Commission, briefing commissioners on the company's success in San Francisco. "They gave us their blessing," Mr. Kalanick says, and Uber started operating in New York in May 2011. Soon a prominent newspaper article appeared about the company, and "the minute it hit the public, the taxi industry and black-car industry sees it and then the lobbyists get working and then they try to shut us down." As he notes, in New York there are 13,000 taxis with medallions that trade for close to $1 million, implying a very profitable cash flow from fares. That's a lot of assets to protect.
Uber met with New York officials and ended up getting a memo saying they were legit, for limos anyway. "This speaks to New York, they wanted to embrace innovation and they did," Mr. Kalanick says. That sounds like a big change for the Big Apple. "You can trace this to [Mayor] Bloomberg. If anyone gets technology disrupting an industry, he was there." As long as the drivers don't smoke or drink Big Gulps.
Uber also launched in Chicago, where regulators tried to change the rules to block them, in Seattle with no problems, and in Boston, where a cease and desist was issued because the state's Division of Standards didn't have a standard for using GPS in commercial vehicles. The company ignored that one, too.
Then, last year, came the clash with regulators in the city where they order red tape by the truckload: Washington, D.C. A month after Uber launched there, the D.C. taxi commissioner asserted in a public forum that Uber was violating the law.
This time Uber was ready with what it called Operation Rolling Thunder. The company put out a news release, alerted Uber customers by email and created a Twitter hashtag #UberDCLove. The result: Supporters sent 50,000 emails and 37,000 tweets. Mr. Kalanick says that Washington "has the most liberal, innovation-friendly laws in the country" regarding transportation, but "that doesn't mean the regulators are the most innovative." The taxi commission complained that the company was charging based on time and distance, Mr. Kalanick says. "It's like saying a hotel can't charge by the night. But there is a law on the books, black and white, that a sedan, a six-passenger-or-under, for-hire vehicle can charge based on time and distance."
In July, the city tried to change the law—with what were actually called Uber Amendments—to set a floor on the company's rates at five times those charged by taxis. "The rationale, in the frickin' amendment, you can look it up, said 'We need to keep the town-car business from competing with the taxi industry,' " Mr. Kalanick says. "It's anticompetitive behavior. If a CEO did that kind of stuff—you'd be in jail."
He sits down and puts away the golf club. "A lot of my job is taking those kinds of things—anticapitalist taxi protectionism—and putting it in populist terms. What they're really saying when they put a floor on prices is that only wealthy people are allowed to get into town cars."
As an experiment, the company launched UberTaxi in Chicago last year—another option in the app, to hail a taxi for a lower fare than a town car. "If there is to be a low-cost Uber, Uber will be the low-cost Uber," Mr. Kalanick says. Company reps met with the Chicago Taxi Commission, which told them they needed a taxi-dispatch license. So Uber obtained a license and for a while had no problems. The company's limo business in Chicago tripled and the taxi business soon equaled the limo business. But in the course of one week in October, Uber was sued by taxi and limousine companies, and Chicago regulators sent citations and filed a class-action suit on behalf of passengers.
Rolling Thunder rolled out again, though this time the company broke the email list into 10 parts and sent out one-tenth every day, asking customers to let City Hall know what they thought. Mayor Rahm Emanuel's office received a constant torrent of emails, tweets and phone calls and, lo and behold, the regulatory threat went away. No permission, no plea for forgiveness.
The day that I spoke with Mr. Kalanick, UberTaxi launched in Washington. Next month, a one-year trial of UberTaxi will start in New York City. "We already know how the trial will come out," he says. "We ran taxi dispatch in New York for six weeks. Drivers will make a lot of money."
Uber investors seem to think they're onto a good thing too. The company raised $37 million in exchange for a 10% stake over a year ago from Amazon CEO Jeff Bezos and others. Mr. Kalanick says that Uber currently has 170 employees, not including drivers, and he expects the total to reach 800-900 by the end of 2013, all without raising any more money. Uber sends work to tens of thousands of drivers, who log hundreds of thousands of hours behind the wheel per week. Imagine, a company stirring up all that economic activity without government stimulus money.
What has Mr. Kalanick learned so far from his Uber experience? "The regulatory systems in place disincentive innovation. It's intense to fight the red tape." His advice for others: "Stand by your principles and be comfortable with confrontation. So few people are, so when the people with the red tape come, it becomes a negotiation."
The resistance to regulatory interference doesn't stem from a particular political stance. "My politics are: I'm a trustbuster. Very focused. And yeah, I'm pro-efficiency. I want the most economic activity at the lowest price possible. It's good for everybody, it's not red or blue."