“Uber actually does a much better job working with government than people realize.”
On a recent episode of Recode Decode, hosted by Kara Swisher, political consultant Bradley Tusk took us behind the curtain of Uber’s blistering 2015 political campaign in New York.
You can read some of the highlights from their discussion at that link, or listen to it in the audio player above. Below, we’ve posted a lightly edited complete transcript of their conversation.
If you like this, be sure to subscribe to Recode Decode on iTunes, Google Play Music, TuneIn and Stitcher.
Transcript by Celia Fogel.
Kara Swisher: Today in the red chair is Bradley Tusk, the CEO of Tusk Holdings. He previously served as deputy governor of Illinois, and was the vice president of Lehman Brothers before running Mike Bloomberg's successful campaign for mayor in New York City in 2009. For nearly seven years, Tusk has advised companies like Uber, FanDuel and Google on policy, regulation and strategy. Bradley, welcome to the show.
Bradley Tusk: Hey, thanks for having me.
God, I love politics. I'm very excited about this. So, we met relatively recently in New York.
Well, we met once a couple of years ago. I was having drinks with Travis, and you were the next person having drinks with Travis, and we overlapped for like five minutes.
And how did that go?
Uh, I think it went okay? I think I was ready to leave my meeting so, you know, I was happy to have someone …
Was he horrified that I was showing up or not? At the time, he liked me.
I think he was kind of excited about it. This was probably three, four years ago.
Yeah, before he was Travis Kalanick.
And then, yeah, we spent some time in New York City together a couple of months ago.
Yes, exactly.
And then, of course, the Bloomberg world loves to talk about you. [Kevin] Sheekey has a lot of Kara stories.
Sheekey, exactly. So let's talk about your history. I like to get to know people, what they did before they did this. You were the deputy governor of Illinois?
I was.
[laughs] I didn't know that.
I was kind of crazy. I was working for Mike when he was mayor, sitting in City Hall, in the bullpen.
This is the first term.
This is the first term. Pretty early on. And the phone rings, and it's a friend of mine and he says, "Hey, do you want to be deputy governor of Illinois?" And I said, "What's a deputy governor, why are you calling me?" And the answer was, he's the guy that runs the state. There's probably two reasons why it happened, because that was a weird choice.
What were you doing [for] Bloomberg?
I was running a commission to change the city charter for Mike. So I ran that campaign, we won. And then early on in Mike's first term, he made a lot of decisions, they were good decisions, but they were unpopular. Smoking ban, he closed firehouses, he raised property taxes. And so I had this theory that we're never really going to like this guy based on his charm and his charisma, let's try to show he's the most transparent, competent mayor ever. So I went back and made a list of every single thing he promised in the first campaign. I read every newspaper transcript, every debate transcript, everything I could get my hands on. There were about 380 of them. And I started to talk to all the different commissioners of the agencies and saying, "How you doing on these 12 things?" And they'd say, "What 12 things?" Because running for office and holding office are two totally separate jobs. And I said, "Oh, you’ve got to do these, and by the way, in five months we're going to publicly announce where every single one of them stands, whether we've done it, failed to do it, changed our mind, and why." And we did. And what was cool about it was the Times challenged the notion that this was a rare thing to do, and went back, and couldn't find any politician that had done it. I think it helped further the basic notion that Mike was a totally different kind of elected official.
Let's back up further, though, from your governorship of Illinois. You started where? How did you get into this dirty business?
Yes, this very dirty business. The summer of '92, the democratic convention is in New York. Eighteen years old, I just finished my freshman year of college. I'm a first-generation American, we didn't know anybody. But my dad had a friend who was a lawyer for the carpenter's union. This guy called me up one day and said, "Hey, I can get you a carpenter's pass to the convention, do you want to go?" I said, "Great!"
Did you have to build things?
He said [to] just pretend if someone asks you to do it. So if you look in the newspaper, it says the convention is from, like, noon to midnight, even though nothing really happens until like 8:30, but I didn't know that. I was a super-naive kid. So I show up, and it's like two guys running for state rep of Montana speaking, and no one else is there. But Ed Rendell, who at the time was the mayor of Philadelphia, was sitting in the audience by himself, and I [had] just finished my freshman year at Penn, so I'm like, “okay, I live in Philly for college, he's the mayor of Philly, I'll go say ‘hi.’” And you know Rendell, if he's not talking to you, he's talking to the empty chair. He's talking either way.
Yeah, he likes to talk.
So we're chatting. 10 minutes in, I realize I probably used my time. I said, "Thanks, Mr. Mayor." He said, "Are you going back to school?" And I said, "No, not really." He said, "Okay, send me a note, we'll set up an internship." So I go home, I write a letter —
Wow.
It gets better. And I mail it in, and I what I didn't know then, but I know now, is [that] correspondence is the black hole of government. Everything goes in, nothing comes back out. But I don't know this. So every day I'm opening the mailbox, where's the letter from [Rendell]?
Waiting for your big break.
Yeah, right. So I get back to school, of course no letter. In retrospect, it's sort of a crazy thing to have done, but I was so naive that I thought, "I'll go see him." So I went to City Hall, and I got to not his secretary but the outer office. I said, "Is the mayor here?" And in retrospect that's a crazy thing to do. People who do that are either protesting, and I wasn't protesting, or crazy, and I wasn't crazy. I was just a super-gullible kid. And the woman was this old South Philly Italian lady, just really nice, and she said, "Oh, he's a little busy right now." Probably surprised. And I said, "Can I leave a note?" And she said, "Okay." So I write a note, and I take the subway back to the dorm, and it finally hits, "You idiot, you can't do that." I get back to the dorm, the phone rings, "Hold for the mayor." He said, "When are you coming to work?" And that's how it started. So I worked for him all through college.
Wow! You know, that's how I got my job at The Washington Post.
You just showed up.
I showed up. Well, no, I complained, I made a phone call, got through to the Metro editor by accident and started yelling at him for a bad story they wrote about Georgetown, and he said, "Why don't you come down here and say that to my face?"
And you did.
And I did. And I got an internship, and it was like that.
Right, lessons to all you kids listening.
Be obnoxious.
Be obnoxious and just show up and see what happens.
So you started working for the mayor.
I worked for him through college.
What did you do?
He had this office of policy and planning, which would come up with weird stuff, and Philadelphia had a problem where they had a hard time attracting middle management to government, so they created an internship — a post-college fellowship program — for city government. So as I was doing the research, New York City already had one. And when I was meeting with them, they said, "How old are you?" I said, "20." They were like, "You should apply for our program." So I did, and I went to work at the New York City Parks Department. And I did that out of college, and then I went to law school, but knew I didn't want to practice law. So I had this sort of existential crisis, because my Jewish parents couldn't think of anything [else]. What could be better than going to work at a law firm? They could tell all their friends! And instead, I sort of spurned all of that, go back to the parks department —
Like an episode of Amy Poehler's show.
Kind of. But it was a cool place to be. And what was interesting about it was we had this commissioner, this legendary crazy figure named Henry Stern, and he was sort of up for letting me do whatever. When I was in law school, I had done all this work around social-norm theory and how you could get certain laws obeyed without having to put a police presence on it. So I focused on the leash law, to get people keeping their dogs on a leash. And when I got back to Parks, I said to Henry, "Can I try this?" And he was like, "Sure."
What did you do? Signs?
We did all kinds of stuff. We had signs in eight different languages saying things like, "If you don't clean up after your dog, you don't deserve to own one." We raised fines up to $1,000 for the third offense. But then we also opened up all these dog parks to give people an alternative. And we tried to basically build this social norm that unleashed dogs are, in a crowded environment like New York City, a problem for wildlife, for parks, for cleanliness, even the safety of the dogs. And it went up like 80 percent.
Who says government doesn't have any effect?
Right! It was cool. And then I get a call saying, "Do you want to be Chuck Schumer's communications director?" And I said, "Not really, I don't want to do press, I don't want to live in Washington, I don't want to work in Congress." And of course, because I didn't want the job, that made him really want to hire me. So I did that for two years. You know, there's that joke, the most dangerous place in Washington is between Chuck Schumer and a TV camera. So he is a PR genius, but it is the most grueling thing you can imagine. And then 9/11 happened right in the middle of my time there. So it was actually kind of meaningful for a while, because of the work we were doing to help New York recover. Mike wins. [Kevin] Sheekey says, "Come to City Hall." I do. And then I get this call, taking us back to, "Hey, do you want to be deputy governor of Illinois?" So here's the story. A guy named Rod Blagojevich had just won the governorship.
Yes, him.
You remember him.
Isn't he in jail?
He is. He's in the middle of a 14-year sentence. So they kind of realized two things. There's a benign explanation for this, and a less-benign. So the benign would be, I was 29, I knew a little about a lot of things — policy, press, law, operations — and because it was such a career-making job, they knew he was kind of crazy and they figured, "Okay, we need someone who it's such a big opportunity for them they'll just sort of deal with it and work throughout,” which was true. And the less-benign argument would be, they had all kinds of legal schemes, they wanted someone really young and gullible who wouldn't notice. Also probably true. But you know, it was a pretty cool job. I oversaw the whole budget, every employee, operations, legislation.
So you really were governor of Illinois.
Well, to the point where he wouldn't come [in to work]. We talked earlier about that job of running for office and the job of holding office. Someone like Mike Bloomberg is really great at holding office, not that into running for office. Blagojevich was a political genius. Amazing at running for office. The most talented retail politician I've ever seen, but no interest in the actual work itself. He wouldn't come to the office for a couple months at a clip sometimes. And I remember, after the first legislative session, saying to him, "Okay, we have to sit down and go over all the bills, there's like 500 bills, do you want to sign them, do you want to veto them?" And he just didn't want to do it. There's a deadline coming up so I'm just like, sign, veto, sign. And that was it. Pretty much that was the next four years.
Oh, government.
But what was cool about it was [that] because there was no one telling us we couldn't, a lot of interesting policy stuff [happened]. We were the first state to import prescription drugs from Europe and Canada. We were the first state to tear down all the toll booths, build a full open-road tolling system. Because we could. It was just like, what's the point of being governor if you're not going to do new, interesting things? So I did that for four years. He wins reelection — in a landslide, by the way. I kind of know it's time to get out while the going is still good. And we had this idea in Illinois of privatizing the state lottery, under the theory that U.S. state lotteries are both highly regressive — because it's government employees, who are not really good at digital products, so they pick the low-hanging fruit, which are poor people and old people — and not even that profitable. And most government-owned lotteries around the world are actually run by private companies ...
... Who know how to run it.
Yeah, and it's not that they're so public-spirited, but because they want to expand the customer base, it becomes less progressive as a result because they are marketing and selling games to people like us, people who listen to this podcast, as opposed to people who are really trying to get rich off the lottery. So I thought, "Hey, this is good public policy, and it could be really profitable." So I went to all the different banks on Wall Street and I said, "Here's what I want to do." And then one really made me an offer that felt like they really meant it and would give me the autonomy to do it, and they did. They also took down the global economy with it, called Lehman Brothers.
Ahh. Wow. I don't want to know where you show up next.
Yeah, exactly.
It's a disaster.
So I did that for almost two years, but the interesting thing was, I spent five days a week going from state capital to state capital. So I basically learned the politics of almost every state, which then became really useful for what we do now.
Useful for Uber.
Uber and all these other companies we work with.
So then you went back and worked for Uber.
Well, Mike [Bloomberg] runs for a third term after Lehman, I run the campaign, we win. I start a consulting firm, initially, which is kind of big companies.
So with that last term, he really did get more into the tech issues.
A lot, yeah.
Obviously, his cities were his big thing. New York was on the forefront of that, can you talk a little bit about that?
Yeah, I think there's a few things. One is, Mike broadly understood that New York —
Well, he had a company that was information services.
And he's a tech guy, right. He understood, as a result, media, finance, tech — it's a little of everything. New York's economy is way too reliant on finance and tourism. And we needed some other big industries to try and diversify, and because he's a tech guy, he liked the idea of it. So the first thing, we tried to really make the city open and welcome to tech. Bill Peduto in Pittsburgh is doing that right now.
Carnegie Mellon, self-driving cars.
Right, exactly, there's autonomous cars, everything else. There are occasionally mayors who really get that and throw their arms open to it.
LA has tried.
Yeah. At points. LA is weird, because their municipal power is fairly limited. So Mike did that. But the thing he did that was brilliant is, if you look at the New York tech ecosystem, we've got a lot of capital, right? We've got a lot of financial capital, human capital, media. We didn't have as much engineering talent. And so he launched this competition to create a new engineering campus, applied sciences specifically, in New York City. Cornell and Technion won that.
This was on Roosevelt Island. Where is it now?
It is physically under construction. They have a program, I think Google still hosts it in their New York City office. So students are already going through it. But I drove by the other day on the FDR and looked over, they've actually done a lot of work. It's one of those times where like you look, and you're like, "When did they build that building?" But they built it. So, should open pretty soon.
The idea is to what?
It's basically just to bring, physically, into New York City, a lot of engineers who want to do applied sciences, and then link them up with New York City companies.
Can you create that? I mean, you're here in Silicon Valley now, can you actually create innovation like that? Because a lot of people don't think you can.
I mean, we'll see.
Singapore has tried.
If you take the basic notion that the Valley is, in part, the Valley because of Stanford; and when I mentioned Pittsburgh, you said, "Carnegie Mellon." There seems to me to be a university specifically geared towards innovation. And even though Columbia's a great school in New York City ...
Columbia and NYU.
They're not tech schools, per se, they're just good liberal arts colleges, very good schools. And I think Mike's view was we need something very specific —
Like an MIT.
Exactly. So we'll see if that works. That was his plan as mayor. And I think it's very different than what you have with a lot of mayors around the country, it's almost ironic. The places where tech employees want to live most — New York City today, San Francisco, Austin — are also cities whose mayors are the most hostile, often, toward tech.
Absolutely, Austin. But in New York, what's really interesting is that they have tried and tried again. And to me, there's no big company there that you can point to.
Yeah, it's funny. So I've got this little side project to get rid of the mayor. I think he's horrible, and I've been looking for a candidate. There's people who want to run who are politicians, that's fine, I'd rather get someone really great. And tech would be a good place to run out of, because I think in a democratic primary, Wall Street's not really a good way to approach the voters. And there isn't sort of a giant. There's not a Sheryl Sandberg of the tech community, not a Kara Swisher, so when you run for mayor of San Francisco, we don't have that. So it's a problem.
Can New York be a tech center that would be the competitor to Silicon Valley and San Francisco now?
No, in the way that — and this is part of what I love about living in New York — it's so big and broad, there is no one thing, right? It's Wall Street, and it's tourism, and there's media and marketing and publishing and the U.N. I don't think tech can ever be the [only] game in town, because there are too many other things happening. It's not like when you're here, where you just feel it so palpably all the time.
Like Hollywood or finance.
Right. You definitely feel finance in New York. I don't think tech can ever be that in New York, but it could be a really big employer, absolutely. Because there's a lot of money there, and there's a lot of smart people there, and that's what people need.
You've had a long political history, including running Illinois — for some reason, that's inexplicable and troubling in many ways. But you've now done this Tusk Holdings. It's unusual, there aren’t a lot of people doing this.
We're the only ones who have — at least in the political space — this particular model.
Yeah, because usually they take money; you guys take money and you take ad fees and things like that. Right? That's pretty much the business, it's mostly ad fees.
Correct. And so what we do instead is, we work with pre-IPO companies in regulated industries, solve their political problems, pursue specific opportunities, but solely in return for equity. I kind of fell into it by accident around five and a half years ago. I was sitting in a meeting and the phone rings, it's Sheekey.
Explain who Sheekey is.
[Kevin] Sheekey is a friend of Kara's [KS laughs] who is Mike Bloomberg's top adviser.
Yeah, that would be his more important job.
Kevin works with Bloomberg LP. He called me, he said, "Hey, there's a guy ... "
He's a Smoking Man of all time. Like he's always around, greasing the wheels.
He's sort of a difficult character.
He's a wheel-greaser.
Yeah, I don't know if he would agree with that.
I think he would. He'd have to, if he was honest with himself.
In a moment of candor. So he says, "Hey, there's a guy with a small transportation startup, he's having some regulatory problems, would you mind talking to him?"
Ahh.
So later that day, I become Uber's first political consultant.
Right. What did you think, when you heard about their [problems]? Was it when they were in San Francisco?
They just got to New York, and they got slapped with a cease-and-desist order, and Travis said to me —
Which they had experienced in San Francisco, which they ignored.
Right. And New York, I think he felt, he said, "We're not a transportation company, we're a tech company, the rules don't apply to us." And I said —
That's his motto.
Well, yes and no. I think that may be, in my experience, a little more myth than reality. But, in a sense, I think Uber actually does a much better job working with government than people realize.
You're doing a great job. Go ahead, all right, go ahead.
No, having done a lot of these deals for them. So I said, "Let me look into it." And I get really lucky, because he calls back and says, "Hey, your fee is a little steep, would you take some equity?" Thank God, I say yes.
What did you think?
I didn't know. I mean, it's not like now, where we have a whole investment team, we analyze stuff.
Now you look like a genius, right.
Yeah, I didn't know, he just seemed like an interesting guy, it was an interesting product, he was pretty intense.
Had you used Uber?
No. You know, it's funny. You had Bill Gurley on the other day. And I was listening to your podcast this morning, and Bill was talking about Travis's passion, just being such an outlier compared to almost anyone else. I sensed that. That I could feel right away. I said, "Okay, this is interesting." And we went about convincing, successfully, the New York City Taxi and Limousine Commission that they didn't need to regulate Uber in the way that they regulate taxis.
Talk a little more in detail about that, because it's an ugly fight.
Well, this one was not.
The initial one.
The initial one was not, because Bloomberg was mayor, it was more tech-friendly and more qualified, competent, talented in the administration. And I think once they understood that we weren't a traditional limo base, they were willing to say, "Okay, let's figure out how to apply this more intelligently." And we got an affidavit signed that said, "We are not these things." Like, okay.
Was this before or after they got in trouble for the snowstorm?
This was before the snowstorm.
Surge pricing.
And then Travis said, "Can you do this in other places?" And next thing I know, we're sort of helping out with the same problems in Boston and Chicago and LA and Philly and so on. And that sort of led to spending the last five years helping Uber fight the taxi industry. But the fight you were referring to was last summer. Mayor de Blasio, who is the mayor of New York City and has been one of his biggest campaign contributors to the taxi industry, proposed this cap on Uber's growth in Manhattan, which was insane. But the way the New York City council works, the suspense is whether the vote's going to be 51-nothing or 49 to Uber. And we need to win 26 votes to beat it back. There's a saying, "You can't fight City Hall," but we did. Very, very aggressively.
Talk about if you were on the taxi side. What else would you do?
What they should have done was not, for 30 years, relied on campaign contributions to be their only form of outreach. They didn't innovate at all. And one of the things they did that I think really came back to bite them in the campaign we ran last summer, is it's an industry with a tremendous history of racism. So what we found is, when we got to this very public fight with City Hall and the taxi industry, there was a huge amount of institutional support from African-American clergy, political leaders, columnists.
Because they're not getting picked up.
Because they're not getting picked up! And I said, "You know what? Every time I push the Uber button, I get picked up. 100 percent of the time." And so the taxi industry is like the quintessential example: Fat, lazy, failed to innovate, and then just tried to use political connections to stop Uber. And at the end of the day, you can't put the genie back in the bottle.
Right, so you're using political connections to do that.
What we did at least last summer was run a super-aggressive campaign.
It was very aggressive.
Yes.
Talk about why you did it the way you did. And explain some of the things you did.
Sure. So the tactics — this was probably the most multifaceted tech advocacy campaign that I've ever seen. We had about $400 million in TV ads.
Saying?
Saying a few things.
"Taxis suck. Taxis are racist."
No, we didn't. We hit de Blasio from the left. So de Blasio, who's this very progressive-style mayor, he always does well when it's him versus capitalism. And I said, "You know what? You are hurting both minorities, who rely on Uber to get around, and drivers, who are typically hard-working immigrants who are trying to make their way in the United States." So we had all these really gut-wrenching ads from drivers and riders hitting him from the left. And the City Council is so liberal, they said, "Oh, shit. These are our voters."
And then we went after council members by name in the mail. They're sell-outs to the taxi industry, and we got an editorial board, and we did big events with rallies. And there's a woman named Caitlin — I think she was an intern or a young employee at the Uber New York office — and she had this idea that one of the options could be de Blasio, there’s a 25-minute wait time, here's why, click here to email or tweet at your council member. And it was genius, and it just ended up being this sort of round-the-clock campaign, and we just kept picking on council members.
Did they expect it?
No. They didn't expect it. But what blew me away was —
I mean, Uber is known for being aggressive.
Yeah, so this was different. We had to win, because the whole world is watching what happens in New York. If you lost this in New York, you'd be vulnerable everywhere; you win, you actually have a chilling effect on bad regulation everywhere. We had to win. City Hall didn't expect it, nor did they really counter particularly well. And I think part of the reason why was the policy was so bogus, no one there even believed in it. It's one thing when you're fighting for something, even if it's a hard battle, but you believe in it; this was just pure pay-to-play.
The taxi commission.
Yeah, I mean the mayor's currently under seven separate federal criminal investigations. I don't know that this is one of the topics, but it wouldn't surprise me. Because he clearly took money, let the taxi industry write the bill, put his name on it, had it introduced and we beat it back. But if you're not Uber, if you don't have Travis's aggressiveness and resources and what's at stake, you just get steamrolled.
What would you do if you were the taxi industry, if you were on their side? What could you do?
Now or then?
Now.
I would be investing in Juno, in Via. I would basically just try to partner with ... There's no way people are going to go back to the old way of taxis.
It's a little easier in New York because you hail them, there's more of them.
Yeah, but at the end of the day, people just don't like using traditional taxis. They want the convenience they like with an Uber, or other services.
Getting in and out of the car.
Yeah, absolutely. So I would be saying, "Let me see what I can do to be involved in autonomous. How do I work with some of the upstart ride-sharing competitors." But trying to just sort of protect your turf is not going to work.
Let's go across the country: In Austin, not as successful.
No.
Was that something you worked on?
I did not, although my wife is from Austin, and her family lives there, so everyone in Austin thinks I worked on it and failed, so I kind of wish I had [laughs]. Bu, no, and look, the fingerprinting, it's an interesting issue. If I had to guess, because it is coming up ...
This is to fingerprint Uber drivers.
It's coming up in Chicago, Philly. And my guess is that there will be some sort of more global — and I'm just guessing here, this is not based on conversations with Travis or Rachel [Whetstone] or anyone — but some sort of global solution on this that both helps regulators have some of the certainty they want, safety, but does it in a way ... I think part of the industry's argument is the method you want is wildly inefficient and not that good. So I think it's almost agreeing upon a relied-upon approach. And it will happen.
What are the challenges, for not just Uber, but Lyft and others?
In fingerprinting?
In everything. To me, it's safety.
First of all, it's protectionism by the taxi industry. When you get past that, people will claim potential safety issues, and then we have issues around drivers and independent contractors — not just Uber, it's every single sharing kind of company. In fact, we are in a coalition — Handy, Uber, Lyft, Instacart and Taskrabbit — to try to create a new worker classification that’s not W-2.
Right, and we're going to talk about that next.
So, independent contractor issues. And then third is going to be autonomous, because the regulatory framework is really, really complex, and my view is you have to do — I hate doing things in Washington, but this is an example where you can't have every municipality, city, county, you need federal preemption. Which means you need to pass major legislation through congress. If I were Hillary, and I wanted to do something forward-thinking on tech, I would make autonomous car regulation an issue.
Nationwide laws.
Yeah, absolutely.
What would they look like?
I think what it would set up is a standard for how autonomous cars can function, regulations around speed, all variety of safety regulation — maybe you're creating special lanes at first. You know, because it's not like we're going to flip a switch and every car is autonomous.
No, it's sort of like the horse-to-car thing. Remember, in New York, on the West Side, they used to have all those accidents.
Yeah, you're going to see some version of that for the next probably decade, two decades, right? So thinking through those potential problems, and how do you deal with the socialization of it.
A federal solution.
I think so. So if you look at one corollary, it would be: Reagan wanted to raise the drinking age to 21. What he did that was very smart was, he said, "Look, this is up to states, I can't make them do it, but you will not get this year's federal highway money unless you do it." And every state but Louisiana did it. Louisiana said, "No, no, no."
Because they like to drink.
So that's how you do it.
So, how much of a chance — because Travis famously, on the stage of one of my conferences, said to me, "Well, once we get rid of drivers, that's where we’re headed." In a moment of candor, obviously. it caused a great consternation among the drivers.
Yeah, I think we're probably still quite a while away, so most people who are driving for Uber today probably don't even envision themselves being an Uber driver in 10, 15, 20 years or something like that.
Right, it's going to be self-driving.
I think trucking is an area where that's really going to be an issue. And you're going to have to have — and I guess Uber is now a trucking company, too, because they bought Otto — but you're going to have to have some sort of effort in what's going to be a lot of fighting to deal with the Teamsters.
How are politicians going to even slightly get behind that?
Politicians are initially going to be job-friendly. And on the left, Democrats are going to be afraid of the Teamsters, on the right, a lot of people in red states are truckers. So you're going to have problems on both ends, and I think what you're going to have to work out is — you just take trucking as an example, okay, there are this many truckers in the U.S., there's this much need for truckers, we will over time have early retirement, attrition, for a while you're going to have a trucker still in the cab somewhere to deal with. I remember when I was deputy governor, I mentioned open-road tolling. We had to effectively figure out, what do we do with the toll-takers? Because we don't need them anymore. And in this case, with the SEIU, they were very reasonable. We were able to sort of work out an agreement where some people took a buyout, some people shifted into other state jobs, some people just kind of, well, we said after they retire we'll replace them.
It gets us into — which I do want to talk about for a minute — the sharing economy. You're working with Handy. Who else are you working with?
Handy and Uber are the two main companies in the sharing economy.
Right. Where's this going? Gavin Newsom is pushing it really hard.
Yeah, it's interesting. So this should be federal legislation. This is a really good example of Washington in action and dysfunction. Because, really, what you need to do is amend the IRS code, the tax code. And that's an act of Congress. But I don't think anyone has an expectation that Congress could get their act together and do that. And so instead it's going to end up being a state-by-state issue.
Here in California and in New York — they’re the two big battlegrounds — what's ironic about it is, you're going to have sharing-economy venture-backed companies pushing to be able to give benefits to workers, and unions pushing to not allow them to give benefits to workers, because the unions know if people can both have the flexibility to be an independent contractor and get portable benefits, why would they want to be W-2? And if they're not W-2, you can't unionize and you can’t collect dues from them.
So what does that do to the environment? Because I think this is much bigger, more than auto regulation, these are all big issues. I had a very interesting interview with Gavin Newsom; he's like, "Every idea of the employee has to change. Everything. And it should be done first in California." Obviously, he wants to do that. But at the same time, it does make sense. This is where the change is happening rather dramatically.
Yeah, the future of work is obviously going to look very different than it does today, and I think the real trick with regulators and politicians is to find some people who are willing to not just — everyone sort of looks back and then they make their views based on what's already been and where the politics line up, as opposed to what can be. So a guy like Gavin Newsom's pretty rare, in that he's one of the rare forward-thinking politicians on a lot of issues.
Well, he turned out to be right on gay marriage, but got killed when he did it.
Right. But I think he will be proven — whether or not he ever becomes governor, I don't know, although I think that's not a bad idea at all — but I think, over time, he will be proven right on a lot of these issues.
But how can you get a public to say, "More jobs that are different," or "No more drivers"? How is our political thing going to have to change to keep up with with these changes that tech is putting throughout the world?
There’s a few things. One is the reason why the sharing economy and tech companies are saying, "Let's pay into a portable benefits program," because they recognize that if they want to keep doing what they're doing, they've got to come up with something that makes these attractive jobs that people want to be in. Even if they're independent contractors, you still need to do that. So it's not going to be, "Hey, this is just the future, deal with it." It's going to have to be some sort of compromise, just like on any other issue, where you figure out, "Okay, these are what workers are going to need, at least over a transition period, this is what we can afford to do," and trying to be thoughtful about it as opposed to just trying to mandate some particular solution that's clearly not going to work.
Do you think politicians have the concept of fewer jobs? Because Larry Page at one point said it out loud, like with AI, with computers replacing so many jobs.
They don't, and I think UBI [universal basic income], in a way, is a clever attempt by some people to try to introduce this notion of it. We're going to need some pretty radical reforms to the way the system works. I have this concept that I haven't gotten much traction on, but I'll try it on you, which is: Take the minimum-wage fight. Big fight here and in New York. Everyone always looks at it and says, "There has to be a winner or a loser," and the winner is either the employer or the employee. But I'm not sure that's really true. What if you said, "Okay, we're going to raise the minimum wage to $15 or $20. We're going to mandate health care, paid sick [leave], FMLA, all that stuff, but we're going to figure out the delta of how much more that costs the company this year, and we'll get a tax credit."
Because the theory right now is, we have to pay taxes to fund social services to help people who are only making $7 an hour. If they're making $20 an hour, they don't need those social services. And if you think about it right now, when you and I pay that dollar on taxes, first we pay an accountant, then it goes to some sort of tax-collection government agency, then it gets appropriated by a legislature who weighs it in 20 different ridiculous ways, then it goes to a giant social service agency that's wildly inefficient, huge union contracts, and then how much of that on the dollar makes it to the person who needs food stamps? Ten cents on the dollar?
This way, the whole dollar is going directly from the employer to the employee, the employer's being held harmless, and the loser in this is government, because the theory is you don't need as much of it. Now, obviously, public sector unions aren't going to like that, but I think whether it's that or .... There's just so many fundamental functional problems in the economy, in our politics, in our government, that if we're not able to make these sort of structural changes ... You were giving Bill Gurley a hard time the other day for being a pessimist on the bubble. I don't want to sound like an even broader pessimist, but ...
I wasn't giving him a hard time, but he just keeps saying it.
Societies kind of rise and fall. And if we can't tackle some of these structural problems, then we may not make it. And so we've got to do it. We announced, literally today, a challenge on mobile voting. This is Tusk Ventures. With the idea being that if someone can come forward with a good idea where people can securely vote, which is not super-hard to do, but then it has to be verified but anonymous, because you have to be able to vote in secret, we will A) provide some funding if you need it, but B) — and I think more importantly in this case — we will work with you to find a municipality or a state who will try this out in a pilot program in some way.
We'll talk about that next, because I agree. I said something on “Meet the Press” about how mobile voting is the way they're going to do it in the future, and all the old white men on the panel: "I like voting in a box." I'm like, "Come on, nobody does that anymore, and it's so fraudulent." Anyway, it was an interesting discussion, but the reaction was fascinating. Now, you've worked for FanDuel also — gambling is another area.
Yeah, it's an interesting one. And what's interesting about it is it's a good usage of grassroots mobilization of customers.
People like to bet.
People like to bet. And these are games of skill, so it's a little different. Every state has a different definition of gambling, but what has been interesting about it is, in the same way that for Uber, we as a company have been able to mobilize our customers to advocate against bad regulations, we've been able to do the same thing for FanDuel and DraftKings, where, obviously, it's not the same kind of scale.
Where every attorney general goes against these companies.
They don't like it, but here's what happens. We go to a state rep in Kentucky or New York or Arizona, wherever, and say, "You have 2,300 constituents in your district who play daily fantasy sports. They don't know who you are, they don't vote, they're not political. But if you take this away from them, we're going to make sure they know who you are, and then they're going to hate you for the rest of your life."
Ah, fear and loathing.
Yeah. And the reality is, if you're a politician, it's one thing if it's an ideological issue, but they don't care about this. So that's far left and far right. The vast majority of them are like, "I don't need the headache, okay." And that's why we've passed this now in nine states, and I think over the next probably two years of legislative sessions, we'll pass it pretty much everywhere.
What about more serious gambling, like they have in Europe and other places?
It's interesting, because the climate keeps evolving. In the casino world, there's no reason for anyone under the age of 40 to ever step foot in the casino, because those games are really boring. We're talking with a company right now that makes a slot machine terminal but for different types of eSports, World of Warcraft or wherever it is, because that's the only thing that's going to attract people into physical casinos. You need ways that people can wager on it, but at the same time play a game that they actually want to play.
And increasingly on a mobile device.
Yeah, absolutely. That's why if casinos don't adapt, they will die. Lotteries, too: If they don't adapt, they will die. Something's going to fill that void, and I think it's going to be eSports and fantasy sports. That's why we've been very active in that sector.
And where do you think the fight is right now, realistically?
I think on the fantasy sports I really do believe we're winning. And I believe that, because I'm putting my own capital to work in this. On eSports, the issue hasn't hit the political radar screen yet. So politicians don't realize that people are betting on video games. They're going to lose their shit when they do. We're going to have press conference after press conference, Chuck Schumer will have 40-something press conferences about it. The smart thing for eSports companies to do — and we're working on this right now — is look at FanDuel and DraftKings and say, "Okay, what are the different consumer protections they're putting into place in these different pieces of legislations that are passing, and how do we implement these best practices now? So rather than being reactive, we're proactive, and we can get out of ahead of it." And I think some companies will and some won't, and the ones that will are going to survive.
Let's talk about the reactive nature of politicians. I can just see an indignant Chuck Schumer press conference any day of the week. Or any of them really pretty much, some more indignant than others. Same thing happened in Austin, and some people in Austin liked that win. Some people did not. They wanted to feel like they owned Austin, keep Austin weird.
Politicians, though, are just reacting to their own set of incentives, which is: They care about attention, they care about fundraising, they care about votes. And if you change the inputs, you're going to change the outputs. So if they thought, "Oh, people love eSports, I don't want to mess with this," they're not going to. They're just going to do what they think is popular and will get them covered.
Why are they reactive? Let's look at this election. This has been a fascinating election, I'd love to get your thoughts on this. Trump literally is the first Twitter presidential candidate, as far as I can tell. The true effective use of the medium — whether you like it or not, it's effective. Hillary Clinton sort of stumbles along behind him, is doing better at it, but really doesn't have the same kind of skills of social media. Are politicians learning how to use these, or is it just simply reactive? It feels very reactive, and obviously there's digital everything in campaigns.
Occasionally, a candidate is intuitive, so, Obama for fundraising online. Trump for Twitter.
Bernie online.
Bernie. Though Bernie in some ways was a little more derivative of what Obama already did. But then, I think, everyone says, "Oh, this is how you have to do it now," and they rush in and just try to emulate it, typically unsuccessfully. I still think it is somewhat dependent upon the personality capturing people's attention.
And look, Trump, as abhorrent — in my view — as he is, you pay attention to him. Hillary struggles with this, because she's just not as interesting. Obama captured people's attention, Bernie captures people's attention. But at the end of the day, they're reactive.
What's interesting is, I would argue, the solution to money in politics is actually this, because as TV becomes less and less effective for reaching voters, 80 percent of the spend in a campaign is TV advertising. Once campaigns finally realize, and the political equivalent of the old white guys that you were with on “Meet the Press” who desperately hang on to their TV commissions, once they retire, then you're going to see a world where campaigns say, "I can't reach anyone I need to reach on TV." And once they stop spending that money, then campaigns will become fully digital.
What does the political consultant of the future look like? What are they good at?
They're always good at the same thing, which is: What's the right message to reach voters, how do you reach them, and who's the right messenger to do so, and how do you get them to the polls? I think those fundamental skill sets always have been and always will be the skill set.
To vote.
To vote and to reach voters. I think the difference is going to be — rather than reaching them in this very clumsy, broad-based way where you're going to run a TV ad that reaches 12 million people with the hopes that the 52,000 who need to see that message are hopefully going to be watching at that time and see it — you can target them very, very individually, and then get them to vote. But ultimately, getting back to our point on mobile voting, it's only going to really work if people can vote on their phone. And that's when you have real participation.
How long is that going to take? It makes perfect sense to me.
Probably a couple of decades.
And I get the fraud thing and worries about Russian hacking this year and everything else. But voting, anyway, is fraudulent, since Roman times.
And the real problem is, look, in a presidential campaign, 60 percent of people will vote, that's not terrible. But next year there’s mayoral elections all over the country, and you're going to downgrade to 10, 15 percent, and that's when you get trouble. That's when people like de Blasio end up getting elected.
So you really like Bill de Blasio.
I love him. The Russians don't know when the New York City mayoral primary is. They don't care. So I don't think that's a real concern. I think in some ways, it's just like we talked about the horse and buggy and cars, where autonomous vehicles and traditional vehicles will kind of coexist for a while, and it'll shift. I think you'll have the same thing, where mobile voting will hopefully start to have pilots in different jurisdictions. It's funny, I was talking to Steve Hilton about this the other day.
[Hilton] is married to Rachel Whetstone.
He’s the founder of Crowdpac and was David Cameron's campaign manager.
And wears no shoes.
Yup. He was wearing shoes at dinner, but he warned me he might take them off. [He said] that Seattle has an initiative where they're actually mailing people $25 vouchers that they can then send to campaigns and candidates. So Steve's theory — and I want to make sure I credit him, because Seattle might be open to it — I think part of what we would need to do in this process is really take a good look at different elected officials around the country who are innovative in different ways, and do a lot of outreach.
But who pushes that button? That's the thing.
Me. We're going to do it. Because I think someone has to.
To get mobile voting.
Yeah, that's why we're running this challenge, because I think if someone doesn't say, "Let's figure out who it's going to be," talk to a lot of politicians, convince someone to give it a try. The good thing is, once it pilots somewhere, the press will totally follow it, it will get a lot of attention. And if it's positive attention, other politicians will then follow suit. Because they're reactive, like you said.
Presumably the issues would be around hacking and fraud. As they are now. That was an entire episode of “Scandal,” I think, an entire season of “Scandal.”
Yeah. Absolutely. You think you can't manipulate a voting machine that was built in 1953?
They're still writing about that.
Exactly. Ask Al Gore about that. You know, sure, you can come up with reasons to not do anything, but when 80 percent of an electorate isn't bothering to vote ...
And they all have mobile phones.
And they all have phones! They all have phones.
So how does that change the electorate? It goes very Democratic, is what it does, probably.
I was thinking about that. It's interesting. So if you are a Republican, if you are a traditional Republican, you've got to hate this, right? Trump would probably love this, because there's a lot of people in Pennsylvania, Ohio and everywhere else ...
They don't go to the polls.
… that aren't going to vote. But maybe they have a phone, and they would on their phone.
"I like this Trump guy."
Right. And he might all of a sudden win those states. So if it's an economic populist Republican, they very well may like this. If it's a kind of cultural-wars Republican, they probably won't.
And among the Democrats? They probably just like it.
They should generally like it. The further left you are, the more you should like it. But you know, I think people are afraid of change in every sector.
So when will mobile voting be ubiquitous?
I'm going to be optimistic and say 20 years. And that's optimism. But my hope is that within a few years we can have a pilot program in some jurisdiction.
It does mean we don't have to argue about all these crazy laws they pass of keeping people away from polling booths.
Right, you can just vote with your phone. And I also think the whole criminal justice reform movement — which is interesting because it's both on the left and the right — will probably start to restore voting rights more and more to ex-cons. So you won't even need rules to keep people out. It's just like, "Hey, we want everyone to vote, everyone has the technology in their pocket already to vote, we're going to pass laws that accommodate it,” and people will vote.
And presumably the great fear is hacking, at some point.
Yeah, but ultimately, let's assume that hacking occurs, and there's a social harm by that. On the flip side, the social harm of politicians knowing that only 10 percent of the electorate votes, all they have to do is cater to that narrow segment of donors or voters. That's why nothing gets done. Because all they have to do is not piss off the far left or the far right.
And the same thing with funding, that you can fund quickly.
Exactly right. So even if hacking ended up being rampant, I still think that the ultimate societal harm of that will be lower than what we have today, which is a totally non-responsive political body. Because they're not stupid, they know that they just need to cater to a few people, and that's what they do.
That's why all the fringes get to be part of the act.
Yeah, exactly.
So let's finish up talking a little bit about ... So you take money, too, but you mostly take ...
No. I mean sure, if you're a Comcast or a Walmart or whatever.
And you're making investments, right?
Because we have not completed that process, my lawyers keep warning me not to talk about that publicly, so that's a non-answer.
Okay, that's a yes.
So what we do is we only take equity. We work with typically 15 to 20 companies at any given time that we think are really interesting. Often some sort of confrontational set-up with government, but not always. And then we will do things like pass legislation, block legislation, pass regulations, block regulations.
Where do you win? Selling the equity? Or wait ‘til Uber, in some distant future ...
We win with the exits, like any VC. But keep in mind, for me, in this case, I'm the LP.
And you have investors?
No. I mean, not on the equity-for-services part of our model. I just fund it out of the profits of our traditional consulting business, where we do take cash. But 54 percent of that in New York would go to taxes anyway. And now I'm getting equity that I can hold and turn into cap gains. And you know, we should be able to ... from the money that it costs us to run this, to where even if we stay at 3x, which is good but not crazy good, we're looking at like a 200x return. So the model, I think, makes sense. You have to have an appetite for risk.
Which political consultants don't often.
Often not.
They're sort of pay for play.
Yeah, more traditional.
Mercenaries.
Right. You've got to have an appetite for risk, you've got to have some capital to be able to do this. You've got to have some facility with tech policy and tech. And then, I'm just really lucky that between the Uber validation and the Bloomberg validation, it's sort of an easy conversation to have with VCs and founders.
What digital tech fight would you like to have?
We've been looking at different spaces [asking] exactly that question. So: Desalination. Jerry Brown's task force is not going to solve the drought problem. Even Gavin Newsom's task force would not solve the drought problem.
They like a task force.
Right. It's going to be some scientist in a lab that comes up with an energy-efficient membrane for desalinating water, and then that scientist is going to have no idea how to deal with fighting the water utilities, public procurement, all of that. So we're already in a great company called Nagare Water in New York that's developing a product, a purification product for that. Cannabis.
That's a big one. John Parker's behind this, Gavin is also. I'm with you on that. San Francisco.</s