Taking on the good, the bad and the ugly
On August 30th Dara Khosrowshahi took over the helm as Uber CEO, and took leadership of a company in need of a significant reputation re-build. Throughout 2017 the company has been rocked by numerous allegations of sexism, spying on competitors, evading authorities, internal culture issues and a split at board level. This is all while attempting to organise an IPO and maintain market share against strong competition from Lyft and others.
Adding to the difficulties, it has also been a year of significant reorganisation with many staff departing, making 2017 perhaps the most turbulent year since its conception in 2009. The most prominent departure was Khosrowshahi’s predecessor, Travis Kalanick who in June 2017 departed from the company that he co-founded. Kalanick, who was urged by the board to depart his position as CEO due to a growing lack of investor confidence, is argued by many to have, at best, failed to address the cultural issues at Uber, and at worst, through actions such as publicly referring to his company as ‘Boober’ (because of the amount of female attention he says his role afforded him), encouraged the misogynistic culture exposed earlier in 2017 by ex-employee Susan Fowler.
In February 2017, Susan Fowler, who had previously worked as an engineer at Uber released a blog documenting her experience of sexism and harassment at the firm, and with this her negative experiences of the reactions from HR and her line management in dealing with them. The company has since acknowledged the damaging culture of sexism that exists within the firm and is attempting to restructure its organisation to rectify this. However, women still remain a significant minority across the organisation. Some have commented that the failure of Uber to appoint a female CEO in light of its recent issues was perhaps a missed opportunity, particularly in terms of re-building its brand. Its brand, however, was also knocked by significant other events through 2017, including its relationship with President Trump – the hashtag ‘DeleteUber’ saw 200,000 wipe their accounts from the company in one weekend. In 2017 Uber also suffered external accusations of both spying (on competitor Lyft) through a program called ‘Hell’ and evasion of government systems in areas it is not permitted to operate (through a program called Greyball).
In short, 2017 has been tough on Uber’s reputation. And yet Uber remains one of the world’s most valuable companies (as valued by private investors – at over $70bn). It remains at the heart of one of the most innovative industries (transport) that is set to only further expand and evolve in the future. Remaining both competitive and at the forefront of these transformations is central to Uber’s success and this has been the key driver of the company in recent years, albeit at the expense of a healthy internal culture. As ex-CEO of Expedia, Khosrowshahi is well-versed in growing companies both organically and otherwise. During his tenure at Expedia he oversaw the acquisition of Travelocity, Orbitz and HomeAway. Furthermore, while many look to his failure to acquire Booking.com as a negative indicator of past decision making, his acknowledgement of this failure points perhaps to the positive kind of leadership he could bring to Uber and the lessons he has learned through his previous experience at Expedia.
The task for Mr Khosrowshahi, therefore, is to find the balance between the need to continue to expand and grow the company against an increasingly tough competitive landscape while building a structure and culture in which sexism and internal competition (with the latter associated with much backstabbing and personal career aspirations being put ahead of company interests) are a thing of the past.
In terms of Uber products, Khosrowshahi will also need to outline a clear strategy for Uber – be it through focus on its existing industries or expansion into emerging products and regions. With the growing popularity and profitability of ventures like UberEats, which delivers food from chains including McDonalds to user’s doors, tapping into an increased breadth of the transportation industry remains one of the key modes of expansion that many continue to forecast for the company. This breadth of exposure extends to driverless car technology and while it remains one of the key elements of the future transportation industry moving forward, it is an area in which Uber has struggled. Uber has had pilot programmes in Pittsburgh, however, its plans for San Francisco were halted by the state authority’s refusal to issue Uber an autonomous driving permit. One of the key concerns with Uber’s driverless vehicles is their high-level of disengagement (turning off of autonomous driving and requiring a human to take over), with some suggesting this occurred every 0.8miles in testing at the beginning of this year. What will be a key interest moving forward is whether Khosrowshahi looks to solidify Uber’s position in the autonomous industry through further investment into organic growth, or through the acquisition of smaller tech firms which may, with Uber’s funding, be better able to compete with Waymo and other market leaders.
While an internal culture restructuring, settlement of external investigations and continued adoption into new markets (both by geography and product) would be enough to keep any CEO in the office til-late, for Mr Khosrowshahi there is also the planned IPO of Uber that he will need to quickly take a clear and affirmative stance on. Slow progress on this left many both internal and external to Uber impatient in recent months, however in his first week at the helm, Khosrowshahi has been clear that the IPO is on track for an 18 to 36-month horizon.
For Dara Khosrowshahi, therefore, his first few months at Uber will not be a gentle settling-in period. He has a lot to contend with both internally and externally and a board who remain split in most discussions. His approach to Uber’s future will undoubtedly have its critics whatever the decision, but for Uber this is a critical period on which the company’s future outlook is heavily dependent.