UBER’S NEW CEO SEARCH THE LEAST OF ITS WORRIES
Eroding brand image, business model are just tip of the iceberg
Want to run Uber? You better have a steel constitution for cleaning up cultural rot and the insight to make the leaky business profitable.
As the ride-hailing start-up gets set to replace co-founder and chief executive Travis Kalanick, who resigned late Tuesday after a group of investor firms pushed him to quit, it’s on the hunt for a change agent who can revamp a company rid- dled with uncertainty and still hasn’t passed one of the biggest tests of a start-up — its IPO.
“There is a combination of factors that will create some significant pause for any qualified manager to come in,” says Stephen Beck, founder of competitive strategy consultancy cg42. Among the issues:
Whether Kalanick, who remains on the board with power- ful voting shares, is truly out of the picture. With his forceful personality still tinkering under Uber’s hood, some candidates might balk.
How entrenched its cultural problems are. They range from a sexist work environment to strategic practices that sometimes skirt the law. Uber has many top positions to fill, including president, COO and CFO, big leadership holes at a firm with 12,000 employees.
And perhaps most significantly is the tenuous ride-hailing business model. It relies heavily on raised capital to keep fares artificially low. Uber and Lyft both are ploughing money into self-driving cars, but it remains to be seen when that cost-saving tech will fully come on line. Raising the urgency:
Uber’s market share has slipped to rival Lyft and its brand image is tarnished with riders.
“It’s surprising how incomplete the messaging is from (Uber’s) board, ranging from Kalanick’s exact role to who they’re retained to conduct the CEO search,” says Jason Schloetzer, a corporate governance expert and professor at Georgetown University’s McDonough School of Business. “The fact that so much wasn’t said reveals the continued instability at the highest levels of Uber.”
Candidates for the potentially lucrative CEO post — Uber has been valued at upwards of $70 billion — at this point are just rumored. A Fox Business report citing unnamed sources mentioned two potential COO candidates, Thomas Staggs, the former Walt Disney COO, and Karenann Terrell, former chief information officer of Walmart. The names of YouTube CEO Susan Wojcicki and former Ford CEO Alan Mulally have also been thrown into the ring, reports tech site Recode.
Another buzzy Silicon Valley name is Facebook COO Sheryl Sandberg, whose operations acumen and cultural imprimatur could serve Uber well. But she is unlikely to leave the social network if offered the role, according to sources close to Sandberg.
Uber’s next CEO will have to both fix a range of internal issues as well as convince investors that ultimately the company will become massively profitable, Gartner analyst Mike Ramsey says.
“I do think there’s an existential threat to this business model,” Ramsey said. “There are already cracks in it. Despite what analysts say about their exponential growth, there are things that need to be worked out (with the model) or this won’t work.”