#UberCrisis: Beyond the troubled ride
There are 47 recommendations in this 13-page investigative report on Uber. Compiled by former U.S. Attorney General Eric Holder and Tammy Albarran.
The first thing that strikes you is that the recommendations are pretty basic.
The report instructs the board to:
- “use performance reviews to hold senior leaders accountable”
- “ensure it has appropriate tools, including complaint tracking software, to keep better track of complaints, personnel records, and employee data”
- “mandatory leadership training for key senior management/senior executive team members”
- “devote adequate staff and resources to human resources”
- “prohibit romantic or intimate relationships between individuals in reporting relationship”
- “prohibit[ing] consumption of alcohol during core work hours and prohibit[ing] consumption of non-prescription controlled substances during core work hours”
It makes you wonder what exactly was happening at Uber.
Read: Reflecting On One Very, Very Strange Year At Uber (a former employee's blog that triggered the review)
An uber-mess indeed.
There’s never any smoke without fire. And you wonder how the board didn’t smell something soon enough.
The #1 recommendation from the report: “reallocate the responsibilities of Travis Kalanick.”
With Travis Kalanick resigning as CEO this week, the board seems to have met at least one objective from the report. But Uber also has no COO, CFO, CMO and few more executives.
Values of “Always Be Huslin’”, “Toe-Stepping” and “Principled Confrontation” built Uber. Holder’s report now recommends that Uber “eliminate” them. And incorporate softer values such as “inclusiveness”, “mutual respect”, “diversity”.
That’s easier said than done.
Say you are driving full throttle on the highway. And your car begins to wobble midway. Starts making those weird sounds. What would you do?
You’ll possibly slow down, move to the curb. Check your wheels. Open the hood. And pray that you reach a garage safely. Or, for roadside assistance to arrive soon enough.
Surely, you won’t have inclusiveness on your mind. If you are a board member, you won't be advising anyone to rethink their values. Not at that moment.
There’s no question about the value of the right culture. It’s what sustains organizations through its most challenging times.
But now is the time to save the ship.
The problem no one's talking about
The media is full of stories about the company's toxic culture. But if you ask why Uber needed to grow as aggressively as it did, you'll also arrive at a reason that you cannot ignore.
Uber desperately needs to justify its $70 billion valuation. It took Apple 21 years to get to $70+ billion market cap, a year before it launched the iPhone.
In the startup valuation game, the next round depends on the valuation of the previous round. So that past investors experience "growth". User numbers (such as Uber's customers and drivers) justify the desired value.
When times are good, a company eventually catches up with its valuation expectations. Moves from losses to profits, even while raising round after round. Like Amazon did (it's been showing profits for last 8 quarters).
But right now for Uber, times are rough.
Reduce the footprint. Unlearn and rebuild
Not worrying about valuation will help Uber do the right things first. Like building an organization.
But first it needs to reduce its footprint. Reduce its risk.
Instead of expansion, the company needs to narrow its focus to the point that it can get its act right.
It already runs risks of its many battles. With governments. Lawmakers. Past employees. Other companies. #DeleteUber campaigners.
Focusing on a narrower footprint will help bring healthy economic fundamentals into play. Like profitability. A working business model that doesn't need constant infusion of capital.
Why burn so much of other people's money with no end in sight? (Uber lost $2.8 billion last year).
It would also allow the board to work on governance issues that Uber has. Holder's report devotes a full section to "enhance board oversight".
Then comes culture
Some of you would argue that culture must come first. The only problem is culture, like behavior, takes time to change. A lot of time.
Uber doesn't have so much time. If things don't look positive, its investors might sell the company and cut losses. They have their LPs to worry about.
If the board gets the right team in place, it must allow them to define and shape its culture. Not only with its 14,000 employees alone but also with its 200,000 driver-partners. Not only for now but also 20 years into the future.
Uber's future hinges on its ability to engage its drivers (Oddly, the Holder report doesn't talk of it). Just like most "shared economy" companies (think, Airbnb).
The world has changed. Power to the people
Anyone from its hundreds of thousands of constituents can derail the company.
It's possible that the video below added to Travis Kalanick's problems. Eventually, each problem moved him a step closer to his resignation.
Not only did the driver plan and record this video, he also seemed to have provoked him into an argument. Hours later, Kalanick sent this profound apology to his employees saying he must "change as a leader and grow up".
So, what happens to the founder?
Yes, founders play an all too important role of laying the seed and nurturing the company. But as companies grow, the needs change.
Sometimes a founder is able to address those needs. Sometimes not.
Either way, it's important to recognize that the organization comes first. An entity that has a life of its own.
Often bigger than the individual.