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June 15, 2017

How to avert (even more) disaster at Uber

by John_A

Uber is a classic example of that old adage about money not being enough to buy you class, especially in 2017. The startup, valued at around $70 billion, has been helped and hindered by the leadership of its controversial CEO, Travis Kalanick. After a tidal wave of revelations about the company’s ethical lapses, Kalanick is taking a leave of absence. Upon his return, his role will be diminished, with freshly appointed executives, including a new COO, taking on some of his responsibilities.

The company’s internal issues were initially highlighted by former engineer Susan Fowler in a tell-all blog post. In response, Uber officials asked former US attorney general Eric Holder to conduct an independent investigation. His report was voted on earlier this week, with the company’s board agreeing to adopt all of the recommendations. One of those is to reformulate Uber’s key cultural values, a manifesto that currently encourages or justifies “poor behavior.”

But we here at Engadget feel that Uber’s going to have to do more than just follow Holder’s recommendations to cure the sickness inside its soul. Which is why we’ve prepared a few hints and tips on how the company can heal itself from the inside out.

Do: Fix the corporate culture

The board has already agreed with the recommendations in Eric Holder’s report, and Uber is now hiring Frances Frei from Harvard Business School. An expert in gender equality, Frei is tasked with fixing a startup that has a big problem with seediness. After all, Travis Kalanick once wrote a company memo informally outlining to employees who they can and can’t have sex with inside the organization. That’s something best left to an HR department who won’t end their memos with the line “Yes, that means that Travis will be celibate on this trip. #CEOLife #FML.”

Don’t: Assume every government official is corrupt

Uber has a knack for getting into pointless fights with governments all across the world when it doesn’t really need to. Some of those battles, including Uber’s war of attrition against the Las Vegas taxi lobby and politicians who acted in its favor, were probably justified. But the constant skirmishes and tantrums with regulators, who seem to have legitimate concerns, are tiresome.

For instance, NYC mayor Bill de Blasio wanted a temporary slowdown on Uber licenses being offered, for up to a year. He wanted to do this so that the city could examine, in detail, ridesharing services’ impacts on traffic, safety and pollution. Uber’s response was to add a scaremongering “de Blasio mode” that suggested the service would die out if the mayor got his way.

Then there’s the apparent refusal to listen to district attorneys in both San Francisco and LA who believe Uber has a safety issue. Not only did they find that 25 drivers should have failed Uber’s background checks, but they believe the company has a problem with intoxicated drivers. One woman was left paralyzed from the chest down because her Uber driver ran a red light and crashed. It was later found out that the driver not only didn’t have insurance but had also previously been arrested for drug and gambling offenses. She’s now suing the company, an issue that might have been avoided if the company had listened to earlier concerns.

Do: Take safety more seriously

The crash mentioned above isn’t an isolated incident, either, and every time it happens, it gets plenty of press attention. The taxi lobby runs an admittedly biased website called Who’s Driving You that catalogs every incident in which Uber (and other ridesharing services) drivers risk passenger safety. In addition, instances of sexual assault and violence by drivers with histories of such acts are cataloged. Uber’s background checks have been found to be defective, and that needs to change.

Don’t: Keep burning cash

Uber’s business model is simple: Raise billions of dollars from investors, then use that cash to subsidize rides. By constantly undercutting the entrenched taxi firms, Uber will help put its immediate rivals out of business. Once it’s king of the hill, Uber can raise prices back to a sustainable level and then phase out human drivers with self-driving vehicles.

But let’s be honest: Uber’s already won the hearts and minds of plenty of millennial customers. How many stories do you see where property developers are handing out Uber credit in lieu of building parking spaces? Kids, too, are apparently ditching driving lessons and car ownership, since they can get where they need to with the service.

Surely, that blend of convenience and near-global ubiquity is enough to push the company to think about becoming profitable. After all, it lost $708 million in the first quarter of 2017 alone, and nearly $2.8 billion across 2016. Adding a buck or three to every ride will help stanch the bleeding and make the company look a little better when it comes time to launch on the stock market.

Don’t: Treat your employees with contempt

It’s a hard life being an Uber driver, and there are numerous reports about how shabbily the company treats them. The hours are long, the income is steadily dropping and Uber spends plenty of time and money preventing them from being classified as employees or unionizing. When Fawzi Kamel, an Uber driver, told Travis Kalanick of his problems, the CEO described him as someone who didn’t “take responsibility for their own shit.”

It would be easier to stomach if Uber hadn’t just had to settle a lawsuit concerning how it overstated how much prospective drivers could earn. Rather than handing out millions of dollars in legal fees and settlements, how about just do the decent thing anyway? These folks work for you, no matter how hard you pretend that they don’t, and the sooner you fix this, the better.

Do: Use the ‘Are We the Baddies?’ test

If you’re running a company that has demonstrated some spectacular lapses in ethical judgment, here’s a handy test. If you’re about to do something that feels like it might be problematic, stand in front of a mirror and state your intentions, out loud. If it sounds like the sort of thing a villain from an ’80s movie would do, then perhaps do something else.

You know, like if you’re planning to obtain the medical records of a woman who was raped by one of your drivers. Especially if those records were obtained through questionable means and you’re looking for reasons to discredit her or disregard her experiences. Or maybe if you’re thinking about building a tool that actively hinders a police investigation into your business practices. Or when you’re threatening a journalist with smears by using a secret customer tracking platform that violates their privacy.

Don’t: Let Kalanick get his own way

Uber’s board has voted to curb Kalanick’s power in a diminished CEO role that he’ll return to after his leave of absence. But he’ll still be the same person, driven to win at all costs and cross lines as he does it. The new management team will need to be strong enough to tell him, loudly and repeatedly, where the lines are and what he shouldn’t be doing. In addition, rules should be tweaked to ensure that Kalanick, despite his extraordinary power as a founding shareholder, cannot avoid accountability. Sure, he’s still answerable to the board, but without proper checks and balances, we could be here, doing this all over again, in a few years’ time.

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