Uber report shows foresight necessary in running startup

Tech executive Glen Meakem knows the startup life cycle — from a small operation housing a few huddled shoulders in an office, he created a software company in the 1990s. Since then, he has become a venture capitalist and headed another startup.

“I found that when people leave college and start a business, they don’t have a company model in mind,” Mr. Meakem said. “They make mistakes because of that.”

That inconvenient truth appears to be what happened to Uber, the San Francisco-based ride-hailing giant that this week weathered the public humiliation of being schooled by former U.S. Attorney General Eric Holder through a 13-page list of recommendations on how to act like a real company.

Among some bizarre points — like suggesting Uber move the time of its catered dinner to be more convenient for employees — the document suggested that Uber reconfigure its entire 14-point set of company values. The report notes that existing values like “Let Builders Build” and “Always Be Hustlin’” served as an attempt to excuse poor behavior.

from scratch and eventually selling it for $500 million.

While entrepreneurial programs and accelerators like Carnegie Mellon University’s Project Olympus, the University of Pittsburgh’s Blast Furnace and East Liberty-based AlphaLab provide instruction to inventors who become businesspeople, not all entrepreneurs are afforded the luxury of learning howto make a business plan.

Of course, Travis Kalanick, Uber’s CEO, is much older and experienced than the founder of a fledgling startup, fresh from college, Mr. Meakem pointed out.

“He’s in a role now where he is accountable in a way he wasn’t before as an entrepreneur,” he said.

Uber — which now employs over 14,000 people, including at least 500 based at Uber Advanced Technologies Group in the Strip District — earlier this year requested the external investigation after former engineer Susan Fowler wrote a blog post detailing the harassment and retaliation she faced while at the company, including a human resources department that she viewed as inadequate.

In the report issued this week, Mr. Holder and his law firm outlined remedial suggestions for Uber’s leadership and workplace culture. Selected recommendations in the 13-page Uber report: • • • • • The first guideline included reallocating the responsibilities of Mr. Kalanick, who announced Tuesday that he would take an indefinite leave of absence.

Company values that Mr. Kalanick has created for Uber are not sufficient for business operation, the report stated.

“An effective company has to have values that are considered fair and promote the business,” said Bill Newlin, chairman of Sewickley-based Newlin Investment Co., a private equity investor that makes long-term investments in technology, industrial and retail markets. “Some companies will write a cultural statement that is either misunderstood or no one pays attention to it.”

Still, the most unusual revelation in the report issued this week might have been that Uber apparently does not have an adequate human resourcesdepartment.

In the Covington report, Mr. Holder dedicates a full page to effective policies, noting the company should — at a minimum — increase headcount for human resources business partners, individuals responsible for aligning business objectives with employees and management.

Sandra Mervosh, an instructor of human resource management for Point Park University’s Rowland School of Business, agreed that such policies are necessary from the start.

“Some companies are nowadays trying to implement those processes from day one and obviously that’s hard if there’s only a couple of people, because you might not have the resources or need for an elaborate policy,” she said.

“But you would hope that when the founders see growth they would already have solid goals and corporate values and a plan developed so that as they start hitting mile markers they would realize when they need to institute policies.”

Mr. Kalanick at Uber has had his integrity questioned endlessly in the last few weeks with the emergence of the “Miami Letter,” a memo to employees about conduct at a party that includes unsavory language and principles. In addition, more than 20 key employees who exhibited inappropriate behavior werefired.

Jeesoo Sohn, a recruiter at East Liberty-based language learning app Duolingo, said in an email that there isn’t a clear signal when a company needs a human resources department.

“I think a good rule of thumb is for companies to determine at what size managing people in general on a day-to-day basis is something that is not realistic for the founders, CEO, etc. to do,” she said.

Duolingo evolved its company structure to include a human resources department when it reached 50 employees.

Mr. Meakem chalks Uber’s mistakes up to a Silicon Valley culture that went wrong.

“In order to do what they [Uber] did, they had to have a culture of breaking the rules,” he said. “But while some rules need [to be] challenged, some are good and in place for a reason. Maybe Uber had a hard time differentiating between the two and that might be a maturity thing.”

Source: Scribd Inc.