Uber clings to hard-knuckled tactics in pursuit of growth
SAN FRANCISCO/ CAPE TOWN: Uber co-founder and former CEO Travis Kalanick used to tell investors he liked to keep his company teetering between order and chaos.
By the time he left, it was chaos. The company was battered by a slew of scandals, including revelations it had used illicit tactics to handicap competitors and dodge regulators. Almost two years later, under new leadership and set to debut Friday on Wall Street in the largest U.S. public stock offering since 2014, Uber Technologies Inc is still testing the rule of law.
With growth slowing, the company continues to spar with local officials around the world looking to limit Uber cars on their streets. In Cape Town, South Africa, for example, Uber dominates the market with an estimated 7,000 drivers, most of whom are operating illegally, according to city officials. Uber blames Cape Town’s “broken” system for approving ride-hailing licenses.
In the United States, Uber has used the courts to try to block what it see as unreasonable restrictions on its business. And it has successfully lobbied state legislatures to pass laws preempting local ride-hailing regulations, much to the frustration of officials in some cities where it operates.
Uber insiders say CEO Dara Khosrowshahi has made strides in cleaning up a frat-house culture that spawned allegations of sexual harassment and embarrassing leaks of executives behaving badly.
But Uber’s sharp-elbowed business tactics, detailed by lawmakers, city staff and regulators across the globe, as well as drivers and former employees, continue to drive the company.
“It’s in the DNA,” a former Uber manager said. “Old habits die hard.” Whether it’s playbook delivers the growth and profitability public market investors will be seeking remains to be seen. Revenue growth slowed to 2.3 percent in the fourth quarter over the previous quarter, a worrisome sign for a business that lost more than $3 billion last year.
Uber’s economics “are not immediately or obviously attractive for sustainable, longterm investment,” Mark Hargraves, Head of Framlington Global Equities at AXA Investment Managers, said in a recent note to clients. An Uber spokesman declined to comment. In its IPO filing, the company said it is “using a proactive and collaborative approach with regulators” and “rebuilding and strengthening” its relationships with cities. Where ride-hailing is banned, Uber is instead offering e-bike services or partnering with traditional taxi companies. Still the company acknowledged “legal and regulatory obstacles” around the world that could impede its revenue and growth. —Reuters