Without Travis Kalanick, There's No Uber...And There's No Lyft

Without Travis Kalanick, There's No Uber...And There's No Lyft
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Imagine for a moment New England Patriots head coach Bill Belichick stepping down, only to be replaced by the team’s defensive coordinator, Matt Patricia.  Does anyone seriously think the Patriots’ present odds of winning the 2018 Super Bowl would hold firm at 7 to 2? What about if Tom Brady suddenly retires only to be succeeded by Jimmy Garoppolo?

All of this is worth considering from a business angle. In 2008, Tyler and Cameron Winklevoss were famously awarded at least $65 million after a legal battle with Facebook CEO Mark Zuckerberg.  The twins contended that Zuckerberg expropriated their idea. If so, they’re lucky to have met him. 

Indeed, it’s not a knock on the surely enterprising twins to say that few people in the world could have achieved as Zuckerberg has.  Rare is the visionary CEO who can transform a start-up into a global corporate behemoth worth $430 billion.  Absent Zuckerberg’s alleged expropriation, odds are readers would never have heard of Facebook.  Visionary talent like Zuckerberg’s is exceedingly rare in much the same way that Belichick is the exception to the NFL’s underperforming head coach rule.

All of this speaks in a broader sense to the unseen economic shame of excessive government spending.  Whatever one’s ideology, we can’t get beyond the basic truth that $4 trillion in annual government consumption amounts to a major shift of resources away from the very individuals who created them in the first place.  While the feds spend what we call dollars, they’re in truth usurping the role of wealth creation experts when it comes to directing precious resources to their highest use.  No NFL GM would hand House Appropriations chairman Rodney Frelinghuysen the job of hiring a coaching staff, yet we’re somehow supposed to believe Frelinghuysen is better than Jeff Bezos when it comes to directing trillions to the most skillful stewards?   

Reducing all of this to what is basic, Facebook wouldn’t be Facebook today had Mitch McConnell and Harry Reid expropriated it, only to hand over its oversight to those connected to them.  Odds are substantial that their cronies wouldn’t have known what to do with the then-obscure social network. 

Government spending should be viewed in the same way as politicians actively wresting businesses and entrepreneurial concepts away from the private sector.  In each instance, precious resources are being captured by those least capable of knowing how to best utilize them.  Governments don’t innovate, nor can they innovate, which means the $4 trillion in annual consumption must be considered in terms of the Facebooks, Googles, ESPNs and Amazons that never see the light of day thanks to politicians consuming resources that would otherwise reach the creative. 

Shooting fish in the most crowded of barrels, $1 million, $100 billion and $1 trillion is not the same in the hands of Paul Ryan and Nancy Pelosi as it is when controlled by FedEx founder Fred Smith, cable visionary John Malone, or investor extraordinaire Warren Buffett.  While Ryan and Pelosi may know more about policy than the three billionaires, Buffett, Malone and Smith are world class when it comes to directing resources to their highest use.  Government spending is anti-economic progress simply because politicking and keen asset allocation are two different skills.

Which brings us to Travis Kalanick, co-founder of Uber.  While taking the time to grieve over his mother’s tragic death was one of the expressed reasons that Kalanick announced a leave of absence last week, news accounts alluded to a bigger reason: the freewheeling Uber culture had gotten out of control in the minds of some, including board members.  Culture starts at the top, so Kalanick stepping away for a bit would seemingly be a way for Uber’s cultural ship to be righted. 

All of this sounds nice on its face, but one can only wonder what Uber’s largest shareholders think about this bouquet thrown to the political correctness police.  Seemingly forgotten by the handwringers troubled by Uber’s “bad boy culture” is that only a bad boy like Kalanick could do what it took to turn what was a concept into a global brand. 

Lest we forget, Uber wasn’t the first ride-sharing service.  Not by a long shot.  But Uber was the first ride-sharing service to achieve global scale thanks to Kalanick’s willingness to take on taxi cartels around the world.  Not only did he courageously force Uber’s service into markets in ways that some considered “illegal,” he also had the nerve to spend millions on the legal services necessary to make Uber legal in others. 

Thinking about Lyft’s growing market share, it’s worth pointing out that absent Kalanick’s unshakeable belief in Uber as a consumer necessity, odds are there’s no Lyft.  To believe otherwise is to believe that founders Logan Green and John Zimmer would have done as Kalanick did in taking his fight local and global, and in the process forcing realization of a consumer demand that most consumers didn’t know they had. 

All of this is a long way of saying that the PC police eager to see Kalanick separated from his creation might be careful what they wish for.  Stating what should be obvious, Uber is not Uber without Kalanick.  People like Kalanick and Zuckerberg don’t grow on trees.  They bring new meaning to sui generis.  While it’s certainly possible that Uber would benefit from the arrival of its own Eric Schmidt (Google), its $70 billion private valuation is far more informed by a “bad boy” culture that will surmount incredibly tall barriers to innovation than it is by the presumed arrival of an elder statesman to moderate what made it great. 

Much as Facebook wouldn’t be Facebook had the Winklevoss twins wrested control from Zuckerberg, neither will Uber become all that investors hope it to be if the visionary who made it amazing is deposed. 

Kalanick very much did build what is a $70 billion business.  That he did means that Uber’s many dedicated customers and employees should react to any efforts to remove him in much the same way that Alabama fans would completely lose it if Nick Saban were suddenly replaced by defensive coordinator Jeremy Pruitt.  It’s certainly possible that Pruitt’s skills match or exceed Saban’s just as it’s possible that Kalanick’s replacement might have the vision, skills and energy to outperform Uber’s co-founder, but the odds are exceedingly slim.

Commerce and rising living standards are always and everywhere advanced by those whom Canadian economist Reuven Brenner refers to as the “vital few.” Kalanick is vital in a way that a microscopic portion of the world’s population is.  Rather than remove him to please the overly sensitive among us, it’s time for us all to be adults and recognize that in order to achieve human progress, we sometimes need the “bad boys” to bust through some serious glass ceilings.   

John Tamny is a speechwriter and writer of opinion pieces for clients, he's editor of RealClearMarkets, Director of the Center for Economic Freedom at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is The End of Work, about the exciting explosion of remunerative jobs that don't feel at all like work.  He's also the author of Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

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