Thomas Lee:
The traits that new leader of Uber will need to right the ship
What a renowned headhunter is looking for in the next Uber chief executive.
John Thompson, a renowned Silicon Valley headhunter who nabbed the likes of Eric Schmidt for Google and Tim Cook for Apple, thought he had a tough job when Uber’s board of directors asked him to find a second in command for Uber’s Travis Kalanick. When Kalanick abruptly resigned under investor pressure, the search got upgraded from chief operating officer to chief executive officer — and suddenly Thompson had what’s possibly the most interesting headhunting assignment in tech.
I recently spoke with Thompson, a top executive at the Heidrick & Struggles executive search firm, and while he would not directly comment on the Uber search, he dropped some hints that suggest most of the people playing a Silicon Valley parlor game of CEO-picking on Twitter are way off base.
It might be tempting to assume that Thompson wants a young, uber-smart (sorry) technology executive, ideally with an engineering background, to lead the global ride-hailing company in San Francisco.
Instead, Thompson said, he covets self-aware people who can instinctively spot patterns on the fly, with little or no hard information to guide them. That defies the current fetish in tech for datadriven decision making — and likely rules out some of the top subjects of speculation.
Take former Yahoo chief Marissa Mayer, newly on the job market after selling the Sunnyvale Web business to Verizon. She recently told an audience of executives at Stanford University that Kalanick is an “incredible leader” and suggested that he probably didn’t know about Uber’s sexist culture because he was too busy expanding the company.
Her remarks were possibly pleasing to Kalanick, who Mayer said was a friend and who still wields significant control over Uber from his board seat. But they struck many in the audience at Stanford
as tone-deaf, given the huge management problems at Uber and Kalanick’s significant role in allowing them to fester. And then there’s Mayer’s overreliance on data: As an executive at Google, she once commissioned a test of consumer reaction to 41 shades of blue to make a simple design decision.
“The CEO must make decisions with very little data,” Thompson told me.
That person does not need to be a genius, just someone “with enough intellect” to grasp the technology and understand its potential, Thompson said.
The new CEO must also be sufficiently selfaware to know his or her limitations and attract talent to balance out those weaknesses.
For example, Apple co-founder and CEO Steve Jobs knew nothing about supply chains and had no interest in learning, Thompson said. That’s why he hired Tim Cook away from PC maker Compaq in the late ’90s.
“There’s this myth that the CEO is strong at everything,” Thompson said. “I have not met that person yet.”
Thompson has met plenty of people. Born in tiny South Boston, Va., Thompson earned an economics degree and a master’s in business administration from Virginia Tech. Over a 34-year career in headhunting, Thompson has conducted 210 CEO and 342 board member searches for companies like General Electric, Apple, Salesforce and Hewlett-Packard.
While Thompson said he generally approaches those searches in the same manner he’s done over his career, he’s noticed two big changes in Silicon Valley in recent years.
The first is that innovation, the type that disrupts industries, is occurring at a much more rapid pace, forcing companies to rethink business models every few years. That’s why Thompson prizes leaders with a knack for recognizing patterns and responding accordingly, he said.
The second is the rise of unicorns, those privately held tech firms worth $1 billion or more on paper.
Thompson suspects that many of these unicorns are highly overvalued, which poses unique leadership challenges as they try to go public. Take Snap Inc., the parent company of the popular messaging app Snapchat. Since going public in March, Snap, which initially valued itself at up to $18.5 billion, has seen its shares fall about 30 percent.
“It will take a long time for Snap to work into its valuation,” Thompson said.
The same is probably true for Uber, which is still private. Investors, who have begun agitating for a public offering, value the company at nearly $70 billion, more than the market value of giants like Southwest Airlines, Sony, and Ford Motor Co.
With so much money at stake, Uber needs an experienced leader who can stabilize the company before it files for an initial public offering, said Patricia Lenkov, founder of Agility Executive Search in New York. Uber’s scandals have nearly emptied out its top leadership team.
“For sure, they need a grown-up in the room,” Lenkov said. “They need someone who’s been there, done that.”
Thompson suggested that Uber’s situation is similar to that of Google in 2001. At the time, founders Sergey Brin and Larry Page knew they needed an experienced manager to help them sustain the company’s growth. It would not go public for another three years.
Today, Google’s market value exceeds $640 billion, second behind only Apple. But in 2001, as the dot-com bust was taking hold, Google’s success wasn’t seen as a sure thing, Thompson said.
“Investors only thought of Google as a search engine,” he said. “Why do we need another search engine?”
It was only after Google hired Schmidt — first as chairman in March 2001, then as CEO five months later — that the three leaders eventually convinced Wall Street that Google was not simply a search engine but rather the top way for advertisers to reach Internet shoppers at the moment they’re ready to buy.
“It’s about where the company can go, not where it is,” Thompson said.
Like Brin and Page, Schmidt was a software engineer by training. But he was also an experienced executive, having served as chief technology officer at Sun Microsystems and CEO of Novell.
As the outside “grown-up,” Schmidt knew he had to carefully manage his relationship with Google’s young, inexperienced founders.
“Eric was sensitive to things coming in,” Thompson said.
He was careful not to usurp the spotlight from Brin and Page, he said. For example, Schmidt would never allow himself to be photographed unless he was with the two founders, Thompson said. Schmidt continued as CEO for a decade, eventually stepping back to the chairman role to make way for Page to take back the reins as CEO.
The next Uber CEO will need to be mindful of the company’s cofounders, including Kalanick. He or she will also need to figure out how to stanch Uber’s losses. The company is burning through cash as it expands around the world.
Like Google, Uber is not merely one business but rather the underpinnings of many. In addition to connecting passengers with drivers, Uber cars are delivering goods. The company has also heavily invested in developing autonomous vehicles.
It may seem like the leadership vacuum at Uber demands urgency. But Thompson suggested that he will take his time. Because Uber is still private, he can conduct the search away from the scrutiny of Wall Street. Thompson noted that Google interviewed 30 candidates over the course of a year before deciding on Schmidt — who famously got the job because, like Page and Brin, he’d been to the Burning Man desert arts festival.
Thompson indicated that he will conduct a broad search and will consider people of different ages and industry experience. In particular, he believes that technology firms tend to overlook older, retired executives.
“Age is the biggest bias in Silicon Valley, even more so than women and minorities,” Thompson said.