Uber has had a brutal start to 2017, and its CEO Travis Kalanick has borne the brunt of the backlash. But five peers of Kalanick, CEOs of hot private tech companies, speaking to Yahoo Finance under condition of anonymity, all say Kalanick should not resign.
At the end of January, more than 200,000 people reportedly deleted the Uber app from their phones after the company promoted its service while New York City yellow cab drivers were striking in solidarity with protests of President Trump’s travel ban. In the wake of the backlash, Kalanick stepped down from a Trump business council just before it was set to meet at the White House.
Then, in February, Uber found itself at the center of multiple separate scandals involving harassment allegations, aggressive workplace culture, surreptitious masking programs, and Kalanick getting caught on camera speaking harshly to an Uber driver.
Kalanick’s latest public response to the storm was to say, in an email to Uber employees, “I must fundamentally change as a leader and grow up. This is the first time I’ve been willing to admit that I need leadership help and I intend to get it.”
In the days that followed, Kalanick announced he is seeking to hire a COO. Many critics think that isn’t enough. Rafat Ali, founder and CEO of travel site Skift, predicted that Kalanick would resign because “there is no way forward from here.” Mashable came right out and said, in a headline, that Kalanick “needs to resign.” One Uber investor told Dan Primack of Axios that Kalanick should give up the CEO role and become chairman.
The five tech CEOs Yahoo Finance spoke to think otherwise.
Credit to Kalanick for building Uber
While everyone Yahoo Finance spoke with agreed that Uber has been aggressive and that it has a negative reputation at the moment, they all credit Kalanick for building the company into the highest-valued “unicorn” ($66 billion, at last valuation) in the world.
“He’s a phenomenal entrepreneur, he created a phenomenal business extremely quickly,” says one sports-tech CEO. “The business that he is in, they’re going up against car companies, Google, so many big giants, and to actually build a successful startup in that sphere is really impressive. The negative is that they’ve created an incredibly hard-charging public persona, and it wouldn’t surprise me at all if that’s what it’s really like internally. Too often, when you’re hiring to scale quickly, you’re not often managing for culture. And before you know it, you’ve hired a lot of people who don’t match the culture you want.”
Indeed, Kalanick is the face of Uber and the person who has been credited with its success—but that in itself is part of the problem.
“I think Uber is a really special company,” says the CEO of a finance-related tech platform. “Being able to grow it so fast and scale it so much was really hard, and people don’t appreciate that enough. On that level, I’d give Travis a lot of credit.” On the other hand, “Too much to me, it feels like the only leader at Uber is Travis. I don’t think that’s true, but that’s what it looks like to people. He does need a COO to help him run the day-to-day execution. I like how [Facebook CEO Mark] Zuckerberg has done it—he’s still in charge, it’s his vision, but it also feels like Sheryl Sandberg and the other great leaders around him are making the day-to-day happen. I’m not sure if that exists at Uber.”
Kalanick must be the one to fix Uber
Most of the leaders we spoke to were angered by the video, but pleasantly surprised by Kalanick’s response.
“I thought he’d say, ‘That was a really bad moment, it doesn’t reflect who I am,’ but instead he said, ‘I need help.’ That was certainly a non-PR trained response to it,” says a second sports-tech CEO. “And I don’t think it would make sense for him to come out and say that and then not to change, or to just leave.”
In other words, Kalanick built the company into what it is today, so Kalanick is the one who needs to fix the culture, rather than stepping down and handing off the mess to someone else.
“I’d be surprised if anyone who’s a CEO or founder would say he should step down,” says the CEO of an events-related tech platform. “If they’re saying that, they’re not putting themselves in his shoes. Despite all the backlash, he’s still responsible for building an extremely successful company. If I were in his shoes, I would not step down.”
That being said, the video of Kalanick raising his voice at an Uber driver, and swearing, “I was bothered by it,” says the exec. “It’s kind of crazy for him not to be aware—he’s in his own company’s car, more or less, and in his position, everything you do might be repeated or recorded. It’s like, here’s this CEO, a billionaire, and you just hope he sets an example, and it’s disappointing. It helps people say, ‘See, the smartest, most successful people are a–holes.’”
The finance-tech exec agrees. “I do not think he should step down. That is not the right advice. I think he has to right the ship himself—and become a little bit more empathetic.”
And a sports-tech CEO puts it this way: “Him stepping down would be the worst outcome, because the only person that could really change it is him. If they put in someone else, does that person really have the power to change the culture? I think that’s unlikely.”
How to change Uber’s culture
Four of the five CEOs we spoke with expressed serious doubt that Kalanick himself could actually change his demeanor.
Two of them both brought up the same example of another hard-charging, pugnacious business leader: Steve Jobs. “He wasn’t exactly known for being a nice guy, right,” says one CEO; “I don’t think Apple’s been a super cuddly corporation, because of its founder, and Uber is like that,” says another. And two brought up the same example of a company that often alienates employees and finds itself in the news for negative reasons, but thrives nonetheless: Comcast. “Most of us don’t feel good about Comcast, but that doesn’t stop us,” says one CEO. “Uber is a utility. Am I going to switch to Lyft just because the CEO of Uber is a bit of an a–hole? Probably not.” (Indeed, many Uber customers are unlikely to delete the app, despite scandals, because they see the product as so reliable.)
It may not be necessary for Kalanick to change, his peers reason, if he can improve the culture of the company.
So, how can Uber fix its culture?
Corporate culture is based on what you allow to go on, reasons one sports-tech CEO. “If somebody behaves against your culture and you accept it, that will become your culture. So, what has Uber accepted in the past and what will it now say it won’t accept anymore?”
An enterprise tech CEO suggests Uber start by releasing its diversity stats, as an effort to address the male-dominated culture that a recent New York Times investigation painted. (The Times reports that Kalanick “has promised to deliver a diversity report to better detail the number of women and minorities who work at Uber.”)
After releasing those numbers, “Tap someone who is in charge of these solutions,” the exec says. That is: rather than appointing an outside board member to investigate, appoint a new people officer or diversity chief. The current HR department, according to former Uber engineer Susan Fowler, did nothing when Fowler reported repeated acts of harassment at Uber, because the alleged harasser was a top performer.
Another exec suggested something similar: release statistics with full transparency, and make public decisions and stick to them.
“I think a lot of people respect when businesses just make decisions, even if they disagree. It just needs to be a clear decision. So Uber needs to figure out what their values are, and then share that message externally to the media and in their marketing, and internally in their recruiting… They need a north star.”
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Daniel Roberts is a writer at Yahoo Finance, covering sports, tech and media.
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