chapter 9

In early 2017, Uber, the world’s leading ride-sharing service, had a very bad month. Within the span of 30 days, the $70 billion company suffered a series of blows:

· Former Uber engineer Susan Fowler blogged about her “slightly horrifying” time at the company.1 She reported that male managers routinely engaged in sexual harassment (one propositioned her on her first official day at work). Human resource staff ignored her complaints, defending repeat harassers who were star performers by continually claiming they were “first time offenders.”

· A New York Times report backed up Fowler’s claims, finding widespread harassment (a manager was fired for groping multiple women) as well as evidence that employees snorted cocaine at a company retreat.

· The senior vice president of engineering was fired after it was revealed that, before coming to Uber, he had been fired from Google for sexual harassment.

· Several high-level executives quit, including company president Jeff Jones, who had been at the firm only six months. In his resignation statement, Jones criticized management, saying, “The beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber.”2

· A video surfaced of company founder and president Travis Kalanick berating an Uber driver.

· Google—a major investor in the company—sued Uber for stealing its self-driving-car technology.

· Uber blamed “human error” when one of its self-driving cars was involved in an accident when, in fact, the car’s system failed to recognize a red light at an intersection.

· The #DeleteUber hashtag movement encouraged users to boycott the company, blaming it for trying to make extra profits off of an anti-immigration ban protest at New York City’s Kennedy airport.

· News stories revealed that for years Uber used a secret software program to evade authorities in Las Vegas; Portland, Oregon; Boston; Australia; China; Italy; and other cities and countries where it was banned or closely regulated.

The tsunami of bad news was the product of a corporate culture that has been called “toxic,” “aggressive,” and “unrestrained.” Uber’s culture, in turn, is a reflection of founder Travis Kalanick. Since Kalanick and a partner started their firm in 2009 after failing to land a cab ride in Paris, Uber has been focused on growth at seemingly any cost. Kalanick is combative, willing to take on taxi companies, government officials, and anyone else who might stand in his way. He doesn’t let government edicts slow him down, operating in cities that have outlawed the service. The company seemingly battles everyone, being the subject of more lawsuits than any other comparable startup. Many of these suits involve the classification of drivers as contractors instead of employees. Others address labor laws violations, passenger safety, lax driver background checks, and lack of access for disabled riders.

The company’s winner-take-all approach to the marketplace carries over to employee relationships within the company. Uber uses a stack ranking system that pits employees against one another. Their fate depends on the ratings of their direct managers. Those rated highly receive stock bonuses; those receiving low ratings on a bell curve are disciplined. Susan Fowler described a “game-of-thrones political war” among upper management. Managers boasted that they were out to undermine their supervisors so they could take their jobs, withholding critical information and currying favor with other executives.

Rapid expansion and decentralized management helped foster the infighting. General managers in charge of city ride markets operate autonomously. They have wide latitude to make decisions without supervision if they achieve their growth and revenue targets. Geographic regions compete with one another. Company meetings usually begin with highlighting the ride volume in different markets. One former employee compared the system to how the Empire operates in the Star Wars films.

Imagine you’re in charge of the outpost and you’ve got to build this planetary annihilation system, and your boss is back at HQ. In that universe, of course you’re going to be aggressive and competitive, because it’s your numbers that are going up on the board.3

It wasn’t until six years after Uber started that CEO Kalanick unveiled the company’s official values, called “Uber competencies.” These include many traditional values, like vision, obsession with customers’ innovation, and communication, but also values like “make magic” (seek major, long-lasting breakthroughs) “super pumpedness” (high energy and enthusiasm), “toe-stepping” (don’t sacrifice good ideas for social cohesion), and “champion’s mind-set” (put everything you have on the line for the company to help it succeed.)

Kalanick vowed to change the corporate culture. In an email to employees, the CEO declared his determination to create a better organization, one “where a deep sense of justice underpins everything we do.”4 The firm hired former U.S. attorney general Eric Holder to investigate its corporate culture. The Holder report recommended the company rewrite its cultural values to remove items like “always be hustling” and “principled confrontation” that were used to excuse bad behavior. Holder’s group also recommended finding a chief operating officer, changing the firm’s party culture (instituting limits on alcohol at company events and in the office), making diversity a priority, and increasing the independence of the board. The Uber board unanimously agreed to adopt all of the report’s recommendations, and Kalanick announced he was taking a leave of absence. Soon after, five major investors forced him to resign as CEO, though he remains on the board of directors.

Discussion Probes

1. What has been your experience with Uber? Why do you use the service? Will you continue to use the service? Why or why not?

2. Would Uber be as successful if it focused less on growth?

3. What mistakes did Kalanick make in creating his company? What did he do right?

4. Should Kalanick have been replaced as CEO?

5. Do you think that Uber will succeed in improving the company’s ethical culture? What advice would you offer?