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Uber: The crisis inside the ‘cult of Travis’

For Mr Travis Kalanick, Uber’s chief executive, “stepping on toes” is a good thing. In fact, at a lavish company retreat in Las Vegas two years ago, he listed this as one of Uber’s core values — along with slogans such as “always be hustlin’” and “let builders build”.

For Mr Travis Kalanick, Uber’s chief executive, “stepping on toes” is a good thing. In fact, at a lavish company retreat in Las Vegas two years ago, he listed this as one of Uber’s core values — along with slogans such as “always be hustlin’” and “let builders build”.

His hard-nosed attitude has helped propel the ride-hailing business to a global company over the past seven years. With a valuation of US$70 billion (S$99.3 billion), Uber is bigger and wealthier than any other start-up in Silicon Valley history. Mr Kalanick’s swagger has come to define the company, for better and for worse.

“Uber is what it is because of him,” said Mr Bradley Tusk, an early investor and adviser. “It wouldn’t be as valuable without him.”

However, a series of crises in recent weeks has challenged that calculation, raising the question of whether Mr Kalanick has stepped on too many toes and hustled too hard — and whether he has the maturity to guide the company towards a public listing.

Amid a mounting consumer backlash and criticism from investors about Uber’s “toxic” culture, Mr Kalanick said this week he was looking to hire a chief operating officer (COO), someone who could be a “partner” and a “peer”.

The implication was clear: The 40-year-old chief executive needed someone like Ms Sheryl Sandberg, Facebook’s chief operating officer, whose experience helped balance out the shortcomings of a young Mr Mark Zuckerberg in the years before the social network went public.

The crises began last month, when a former Uber engineer went public with her account of sexual harassment and rampant sexism inside the company.

Ms Susan Fowler described how the human resources department ignored her complaints, which included being propositioned by her boss. Mr Kalanick said the events described by Ms Fowler were “abhorrent and against everything Uber stands for” and set up a task force to investigate.

Since then, it has been one unpleasant surprise after another. Alphabet, Google’s parent company, sued Uber over allegations of stealing trade secrets and intellectual property related to self-driving cars.

An embarrassing dashcam video of Mr Kalanick berating an Uber driver went viral, prompting him to apologise.

Two executives left the company last week, and its top artificial intelligence researcher departed on Wednesday.

Meanwhile, the revelation of Uber’s secret Greyball programme, which it used to mislead law enforcers about the location of its cars, sparked an outcry from public officials. As Uber has lurched from crisis to crisis, Mr Kalanick has tried — not for the first time — to show that he is turning over a new leaf. “I must fundamentally change as a leader and grow up,” he wrote in an email to staff last Tuesday, following the publication of the driver video.

“I need leadership help and I intend to get it.” Hiring a respected chief operating officer would help mollify investors, most of whom have rallied around Mr Kalanick despite the recent mis-steps.

“I’m encouraged that Travis is owning the issue and quickly taking action,” says Mr Jason Calacanis, an early investor in Uber. “A world-class COO would be able to shoulder a lot of the work on Travis’ shoulders, giving him some room to breathe and grow.”

However, other people who have worked with Mr Kalanick say it would be difficult for him to share power. As chief executive since 2009, Mr Kalanick is used to having total control, and is known for jumping from team to team to help deal with the problem of the moment.

At least one shareholder is concerned that Mr Kalanick may not be the right person to lead the company towards an initial public offering. “It is time for him to step back and continue to be innovator-in-chief and problem-solver-in-chief,” the shareholder says, “but let a grown-up be CEO.”

Shareholders also expressed worries about Mr Kalanick’s aggressive leadership style, saying his deputies are too deferential.

“He clearly has developed a cult of Travis and that ultimately becomes very destructive,” says one of the shareholders. “He has got to change the culture, and the way to do that is putting people in place who are not afraid to speak up and have the authority to make changes.”

DOG-EAT-DOG ETHIC

It is not only Mr Kalanick’s leadership that is under fire, but also his values, which are hard to separate from those on which Uber is built. The company has 14 principles, which include being “superpumped”, having a “champion’s mindset” and not shying away from “principled confrontation”.

Mr Kalanick has long nursed a flirtation with objectivism, the philosophy of self-reliance developed by Ayn Rand. He once used the cover of her book The Fountainhead as his Twitter profile picture, and said it was one of his favourite works of literature.

Ms Rand’s glorified portraits of the entrepreneur undoubtedly appeal to Mr Kalanick, who got his start founding two smaller companies that struggled for years (one went bankrupt). Those experiences left him battle-hardened and hungry, with a start-up mindset that often serves him well. When he is speaking in public, or pepping up employees at an all-hands meeting, Mr Kalanick, who is known as “TK” inside the company, pounds home Uber’s ambitious mission statement: To provide transportation as reliable as running water, everywhere for everyone.

But he has also created a workplace at Uber that is extreme, even by the standards of US tech start-ups. Former employees interviewed by the Financial Times talk about gruelling work hours and a dog-eat-dog ethic reminiscent of the worst excesses of Wall Street.

“When I joined, it was like walking into a buzzsaw. It was a hostile culture,” says a former employee who spent seven months at Uber. The company’s rapid growth created leadership vacuums, he says, and workers often withheld information from each other in their efforts to get promoted. Ms Fowler, the engineer who went public with her account of harassment, described Game of Thrones-style political intrigues.

“It was an organisation in complete, unrelenting chaos,” she wrote on her blog. Recruiters say Uber’s workplace is not for everyone, although some people thrive in its highly charged environment. Mr Guillaume Champagne, president at SCGC executive search, says Uber and Airbnb represent the extremes of Silicon Valley’s cultural spectrum.

“Uber is high-octane, male, performance-driven. Airbnb is predominantly female, very mission-driven and less focused on short-term performance,” he says. “Most tech companies fall somewhere in between.” People who have worked at Uber describe an extremely competitive workplace that would not be out of place in a Rand novel.

“There is very much that culture of, if you fail it is your fault,” recalls a former employee. “You alone are responsible for your success or failure.”

This view extends to Uber’s drivers, who are not employees but independent contractors. Many say they struggle to make ends meet once they pay their vehicle expenses. Rand’s influence was even apparent in the dashcam video.

“Some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else,” Mr Kalanick yelled at the driver, who had just told him he is bankrupt because of Uber. The Uber chief executive later apologised and said he was ashamed of the outburst.

Uber’s win-at-all-costs mentality has damaged ties with regulators around the world, most recently after the Greyball revelations. Under the programme, Uber would identify users who might be rivals or enforcement officials, and show them a fake version of its app whenever they tried to order a car.

In new cities where Uber was not yet legal, Greyball could help thwart any potential sting operation. Uber announced on Wednesday that it was reviewing the programme and that employees are now banned from using Greyball to target regulators, but the revelations gave fresh ammunition to critics who say Uber is unscrupulous.

Most of Uber’s recent controversies have been a direct result of the culture Mr Kalanick has built, leaving many to ask whether he can really dig it out of its difficulties. The task of restoring morale and rebuilding his own reputation will be nothing short of heroic.

The clock is also ticking for an eventual initial public offering (IPO). Mr Kalanick has never expressed any particular desire to go public — in fact he has said that he wants to delay an offering as long as possible — but investors had hoped it might come in the next year.

Now, some say privately that they hope it does not happen until 2019, because it will take the company that long to recover. One shareholder says some investors recently had conversations about the company directly with Uber’s founder Garrett Camp, who is a significant shareholder.

Those conversations did not include Mr Kalanick. Mr Camp did not respond to a request for comment.

Even if investors decided they wanted to oust Mr Kalanick, that could be a challenge. Mr Kalanick and two of his allies, Mr Camp and Mr Ryan Graves, senior vice-president, control a majority of shareholder votes.

The shares issued during Uber’s earliest rounds of fundraising have super-voting rights of 10 votes per share. Moreover, the recent crises have had only a limited impact on the company’s business.

RESILIENT GROWTH

Uber’s rapid growth, with revenues tripling to US$1.7 billion for the third quarter of last year from US$498 million a year earlier, has a way of making its public relations crises seem secondary.

After the sexual harassment allegations last month, Uber’s market share in the US fell only slightly, according to research from TXN, a consumer analytics group.

(The #deleteUber campaign in January, launched in response to Mr Kalanick’s shortlived role on President Donald Trump’s business advisory council, had a bigger impact.)

Last week Uber drivers completed a record number of trips in the US, according to a person close to the company. Mr Kalanick may be a ruthless man who has built a ruthless company but until recently, it was hard to argue with his success. “If I didn’t do the things I did, we would have been beaten, I promise,” he says to the driver in the dashcam video, before their argument begins.

But pushing the boundaries this way would not be tolerated as well by investors in a publicly traded company.

A chief operating officer might put Mr Kalanick on a shorter leash but employees do not see him changing.

“Everyone knows what TK is really like,” says a former employee, using Mr Kalanick’s nickname. “Even if he comes back with crocodile tears, it has happened so many times everyone knows how he really feels.” FINANCIAL TIMES

ABOUT THE AUTHOR:

Leslie Hook is San Francisco correspondent for the Financial Times.

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