Internal investigation puts Uber and its CEO on the road to change
As far as ride- hailing companies go, it’s safe to say that the U in Uber stands for ubiquitous.
Over the past eight years, the start- up has barged its way into more than 600 cities in dozens of countries, notching a valuation that approaches $ 69 billion.
But a lengthening list of events that have painted the company’s corporate culture as sexist, aggressive and morally sketchy also suggest the Umay stand for untenable, at least as far as its current management goes.
Ahead of the recommendations expected to be made public Tuesday from a four- month internal investigation by former U. S. attorney general Eric Holder, Uber’s board has considered a possible leave of absence for CEO Travis Kalanick, according to the Wall Street Journal.
One of his top lieutenants and a key figure in some of Uber’s least- proud moments, Emil Michael, may resign Monday, the newspaper said, fast on the heels of 20 firings last week. Uber declined to comment.
Big changes at the top are essential during a period of crisis, say chroniclers of the tech industry’s great successes and flame- outs. They could help determine whether Uber becomes the next Facebook, dominant and immovable, or another MySpace, a forgotten firework sabotaged by mismanagement miscues.
“Roughly 85% of breakdowns of companies that seem to have it all were because of internal factors,” says Chris Zook, a Bain & Company partner and co- author with James Allen of The Founder’s Mentality: How to Overcome the Predictable Crises of Growth.
The company’s current maelstrom started with a February blog post by former engineer Susan Fowler, who described an environment that ignored complaints of harassment when it came to favored employees and condoned a dog- eat- dog style ofmanagement.
The bad news did not end there. The widow of one Uber engineer has sued the company, alleging that workplace stress was to blame for his suicide. Federal investigators are looking into whether criminal charges should be brought after the company created technology to deceive regulators with a false app.
Kalanick, who has been away since his mother’s sudden death, has been central to it all. He gets much of the credit for elbowing Uber’s way past opponents, from rivals including Lyft to taxi unions and reluctant city regulators.
But Kalanick now also gets the blame for a toxic culture.
“It’s time for ( Kalanick) to get back to basics, go with a big mea culpa, travel to all his offices, meet with drivers on the front line, and give the reins to someone who has really scaled a company,” Zook says. “A founder can still have value. But he has to purge the culture or lose the confidence of his staff. This is a major warning. A business can unravel when the human fabric unravels.”
Kalanick already was in apology mode after the Fowler post.
The company kicked off a hunt for a chief operating officer, and engaged a law firm to embark on an investigation of Uber’s culture and governance.
But while it has made some big hires, the COO post has gone unfilled. Other top executives have left, including president Jeff Jones, considered an advocate for Uber drivers. The company also is missing a CFO.
Unresolved organizational problems could also indefinitely put off an initial public offering, which is what many longtime Uber employees are banking on as a reward for putting up with long hours and often a thankless management.
If Kalanick steps aside, that would represent an about- face from recurring intimations by the board — controlled by Kalanick along with co- founders Garrett Camp and Ryan Graves, and includes investors Bill Gurley and David Bonderman, and board member Arianna Huffington— that their CEO is still integral to the company’s success.