Book review: “Super Pumped – The battle for Uber”

super pumped

“Super Pumped”, written by NYT reporter Mike Isaac is a very recent book about Uber, the world’s first and biggest ride hailing company. The book covers Uber from the very beginning until the most recent events when founder Kalanick was forced out by investors and replaced by Expedia CEO Dara khosrowshahi.

As many successful companies, Uber didn’t start as a general ride hailing company but as an exclusive “Black Cab” service for SFC  Tech Bro’s that wanted a decent ride after partying until 3 am or so.

For founder Travis Kalanick, this was his third company that he started. The first one, a file sharing company was not successful at all, the second one, called Red Swoosh got sold and netted him a few million dollars. By starting and running these two companies for over 10 years, he learned how to “hustle” his way through investors, competitors etc.

The book also gives some interesting insights into the Siklicon Valley fund raising process and how VCs and companies interact. It became clear pretty soon that Uber would become a big idea and so Kalanick could dictate terms early on. One of the funny stories inside the bock is for instance that when Google Ventures wanted to invest, he required them to come over to Uber to pitch and that he gets a 1 hour one-on-one with Larry Page which he got.

Uber was also one of those cases where early investors got very rich. The author unfortunately doesn’t explain this very well, but the reason is that they were able to raise money early at high valuations. Their series C for instance was valued at 3.7 bn USD and the series D around 18 bn, which is extremely high for such a capital intensive business and results in very little dilution for early investors.

Most interesting is of course the actual story of the company itself. Disrupting the taxi business is not easy and it becomes clear that especially in the US, taxi operators didn’t play fair but tried everything to stop Uber from expanding. So Uber played hard as well, effectively going into cities without permission and then afterwards pushing local authorities to accept their service. This was possible because Uber’s product was just so much better than regular taxis. Regular taxis were difficult to get. You were never sure if they were coming so having an app, clean cars and easy non-cash payment were a combination that went viral very quickly.

However this “tough man” approach against taxi orginsations soon morphed into a “winning at any cost approach”. Not only were strongman tactics used against corrupt and often mafia infested taxi organisations but also for instance against competitor Lyft and sometimes their own drivers. Uber actually build up a “special forces” department consisting of Ex CIA and Ex FBI employees that were “solving problems” globally with often questionable means.

On the plus side, Uber from the beginning gave local managers great freedom to run their local businesses as in reality almost every larger city is a seperate business. So at the core, the company is very entrepreneurial which helps to explain their success not only in the US but globally.

There are also a number of really great “small stories” in the book. For instance Kalanick’s later hatred of Google might have started when on a dinner party, recently divorced Google Co-Founder Sergei Brin tried to hit on Kalanick’s girlfriend.

In summary, I think the book does a fantastic job in detailing how Uber became what it is now and on the side includes a lot of stuff on start-ups, VCs and corporate culture. I can highly recommend this book to anyone interested in Uber, transportation,  startups in general or even company insights in general. For people in the VC industry it is clearly a must read. One of my favourite books in 2019 so far !!

 

P.S.: Reading the book also motivated me to look at Uber in more detail…..

5 comments

  • Hi Diligent.
    Regarding Uber Valuation : I can highly recommend Damodaran’s blog posts!
    Best, searching4value

  • GNP-GlobalNosePicking

    It’s quite irritating how much people have no manners anymore….

    • GNP-GlobalNosePicking

      I basically refer to the earlier comment

      • Investment-noob

        GNP-GlobalNosePicking: not sure what irritated you but at least dilligent investor postet an actual contribution (= his/her opinion) instead of just nagging… but glad you got it out of your system…

  • The diligent investor

    Hello. I am actively shorting Uber since a while, which has proved to be very good move (so far). However these are at the moment only book gains so I would be interested to read your opinion. Looking at the price level (still sky high) and comparing it to non-existing profits and a very poor cash flow I would not see how any investor can make money unless he finds a bigger fool or invested early enough….. the fair value for Uber is rather hard to calculate (one could argue 0 based on the profit and despite growth, but the brand itself is very well known). So let me know your thoughts. Cu

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