A week ago, it looked like the storm circling the world’s most valuable technology start-up may have done its damage. App cab service provider Uber’s board had unanimously accepted the recommendations of a damning report into the company’s culture, carried out by the former United States attorney general, Eric Holder, and Travis Kalanick, its founder and chief executive, had got away lightly, agreeing simply to take a short leave of absence. Just a few days afterwards, Kalanick’s world came crashing down when a group of investors forced him out. Holder’s investigation, which centred around claims from a former employee that sexual harassment was endemic at Uber, was not held back. But all it said about Uber’s leader was that his responsibilities should be reviewed and reallocated to other executives. There was no demand that he step down, or be disciplined in any other way.
Nonetheless, Kalanick took it upon himself to show humility. He said he would take an indefinite leave of absence, partly to grieve for his recently deceased mother, but also to work on his own leadership skills. “If we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve,” he told staff in a company-wide email.
Holder’s report had a more direct effect on others. It led to more than 20 people being dismissed from the company, whose app is used by millions of people around the world to order on-demand minicabs. Among those forced out were Emil Michael, Uber’s second in command. Kalanick’s fall from grace is a cautionary tale of the damage that a technology visionary with billions in funding and almost no checks on his influence within the company can do if left to run amok. For years, Uber has been the technology start-up that others had aspired to emulate. Founded as a smartphone app for hiring luxury chauffeured vehicles, it morphed into a cheaper and more convenient alternative to taxis that expanded to hundreds of cities. It was seen as the possible future of transport: An alternative to car ownership for many people.
One of Silicon Valley’s favourite words — disruption — summed the company up, but not always in a positive light. It was a pioneer for the “gig economy”, an often-criticised but widely copied form of work that saw its drivers not employed so much as rented. Drivers are defined by their star rating, a score from zero to five based on passengers’ feedback. Uber also exemplified a new breed of “unicorn” technology companies, for whom the mark of credibility is not a public flotation, but raising ever-greater sums of venture capital. Uber has raised $15 billion (Dh55.17 billion) and drawn a valuation of $70 billion. Ardently capitalist, the company has picked fights with anyone who has opposed its ascendancy.
In New York, when mayor Bill de Blasio proposed rules that would have limited its growth, Uber introduced a “de Blasio” mode on its app that showed 25-minute wait times for vehicles. The mayor eventually backed down. When challenged by a rival, Lyft, it developed a software codenamed “Hell” that tracked drivers working for both firms and routed extra Uber rides to them, to make driving for the company appear artificially lucrative. At the same time, company executives would emphasise the good that Uber was doing: Getting rid of hundreds of tonnes in emissions by taking cars off the road, or reducing the number of drunk drivers by giving them a convenient alternative.
The arguments convinced many, allowing Uber the odd transgression. This year, though, one nightmare after another has seen time run out for Kalanick. In addition to its failure to address a “bro culture” that made many female employees uncomfortable, Uber’s aggressive DNA has seen it hit by a catalogue of ethical and operational mishaps. Kalanick agreed to join United States President Donald Trump’s business council, then quickly departed after public criticism of the move. In February, he was filmed in a heated row with an Uber driver, telling him to “take responsibility for [his] own s--” after being asked about falling fares.
A criminal investigation into the company’s use of secret technology used to evade regulators was launched by the US government. Its driverless car programme, a vital priority, has gone from bad to worse — deemed illegal in San Francisco, found running red lights, and then sued by Google over claims the technology was stolen. The most damning revelation, however, was the online expose written by Susan Fowler, a former engineer, alleging that her manager had made sexual advances while at work, and when she reported them to the human resources department, it was reluctant to take action.
Kalanick was lionised by a technology industry that worships founders such as Apple’s Steve Jobs and Facebook’s Mark Zuckerberg, and is willing to forgive individual faults, brushing them off as by-products of genius. Founders are allowed to retain absolute power through split-share structures even when they raise billions, and can also inspire great loyalty in employees.
According to figures from Owler, which tracks perception of company bosses, 95 per cent of employees approved of Kalanick even as recent scandals emerged, compared with 42 per cent of the public. Some staff vocally backed him week before last, urging his reinstatement.
The company’s valuation on secondary markets has fallen to around $50 billion, while that of its main rival Lyft has risen. Google, a leader in driverless technology, is experimenting with its own Uber-style service. If it becomes the first to create road-legal fully autonomous vehicles, the company has the money and the clout to undercut Uber significantly.
Uber has never been so vulnerable, even before the loss of its visionary. Its strategy was built on building itself a monopoly, turning itself into a verb, as in “to Uber somewhere” in the same way that Google and Skype have done. The risk is instead that Uber becomes a synonym for corporate complacency and greed.
— The Telegraph Group Limited, London, 2017
James Titcomb is technology news editor for the Daily Telegraph.
