Travis Kalanick Resigns as Uber CEO: Lessons in How Not to Run a Company
Travis Kalanick has been synonymous with transforming the face of modern urban transportation world over. He took a simple idea of having a cab available to riders anytime, anywhere and turned it into a shared economy. Co-founder of the world’s most successful ride-hailing platform, Uber, Kalanick’s accidental genius has made Uber a behemoth. Uber is valued at nearly $70 billion, the largest unicorn in the world.
On Tuesday, Travis Kalanick begrudgingly succumbed to investors’ demand to step down as the CEO of Uber; after an intense fight, he finally conceded.
What must have happened from being regarded as a visionary and guiding light by who’s who of the business world to being someone hastily resigning from the top post of a company worth $70 billion? It’s a real-life story worth telling and learning from.
Who’s Behind Kalanick’s Resignation
Kalanick’s resignation came because of persistent pressure from major investors in Uber for months. For months, the speculation was rife over the Uber leadership coming under direct fire from the investors. The key player who is pushing for Kalanick’s resignation is Bill Gurley. A partner with the venture capital firm Benchmark, Gurley is on Uber’s board and has long been seeking Kalanick’s removal. Although he has resigned as Uber’s CEO, Kalanick will remain on Uber’s Board.
What Mandated the Resignation
The bigger question is what prompted the investors to make such a demand. And that too from someone who has taken Uber to astronomical evaluations. Uber’s major investors clearly saw the writing on the wall. They couldn’t risk Uber to fall and bite the dust because of one individual — Travis Kalanick. Too much money was at stake. With mind-boggling valuations, Uber’s investors knew they need to do everything to protect their biggest investment. Unfortunately, Kalanick’s actions and culture he had helped thrive at Uber worked against it. So, the investors were left with no choice but to remove Kalanick and course correct.
Travis Kalanick has built a reputation for being ruthless and boorish. A deeper analysis of how Travis Kalanick established a regressive and oppressive culture at Uber is worth a dekko.
Sexual Harassment Complaint by an Uber Employee
While trouble was brewing for the past couple of years, the first major trouble that Kalanick faced was the allegation of sexual harassment by a female employee. Susan Fowler, the Uber employee, wrote a blog post on her personal website where she labeled some extremely serious allegations. Fowler complained of sexual harassment, gender discrimination, threats regarding termination of her employment, sabotage of her career, and others charges. And she slapped the allegations against a number of members of Uber’s management team.
Fowler revealed that she and other female employees had regularly faced such harassment and discrimination. However, even after repeated complaints to HR and the senior management, everyone turned a deaf ear. Unfortunately, this clearly showed that under Kalanick Uber was deeply entrenched in a regressive culture that undermined employee’s welfare. Under mounting pressure, Uber had to hire former US Attorney General Eric Holder to go ahead into investigating these allegations. The report tore into Uber’s management and HR, and a spate of resignations followed. More than 20 top-level executives had to resign. This was a loud and clear call for Kalanick to mend Uber’s way. He, instead, chose to pursue the style he always believed in: being aggressive, boorish, and dismissive. Quite strange for a visionary to not see the elephant in the room.
Kalanick could have strived a little, showing some courage and empathy and acknowledging that there’s a problem. A big problem! And then could have worked on it. Gaining employee’s trust and goodwill is central to any company’s growth. Sidestepping it brashly has come to haunt Kalanick now.
In another incident, Kalanick reportedly went through the medical records of a woman rider in India who had accused an Uber driver of rape. Any questions were always brushed aside and allegations vehemently denied — something hardly fitting a leader.
Mishandling the Drivers’ Issues
Uber always insisted that they are strongly focused on the customer. In the ride-haling business, however, there is another important part of the equation — the driver. Strangely, Uber ignored that very important part. Uber increased focus on lower-priced offerings resulting in lower margins for drivers, no-benefits, and no-tipping policy that was driving drivers away.
To make things worse, in March this year, a video went viral showing Kalanick fighting with an UberBLACK driver. It showed Kalanick in a heated argument with the driver about lowering of fares, mouthing expletives, and behaving like a rogue. It’s hardly the kind of behavior one expects from a leader. Like a lowlife pedestrian, he let a simple issue blow out of proportion and set a bad precedent. He later apologized for his actions.
Further, in the mad rush to have as many drivers enrolled, the quality of Uber drivers has gone down. As a result, Uber is facing an increasing number of complaints and lawsuits about drivers’ behavior from all over the world.
Kalanick, in his single-minded focus to grow Uber, has been neglecting issues central to both the customers and the drivers. Striving for excellence truly reflects in the values a company practices, and Uber, under Kalanick, has abysmal track record.
In a major legal battle with Waymo, it was alleged that Travis Kalanick knew that Waymo engineer, Anthony Levandowski, had possession of Waymo propriety information after moving from Waymo. Levandowski left Waymo to launch his startup Otto, which Uber took over later. This case further underlines dubious and unethical practices that Kalanick employed and promoted at Uber.
A Chest to Fight Lawsuits
Uber is, quite embarrassingly for itself, a shining example of how to rub everyone the wrong way. As a result, it attracts lawsuits from every entity: drivers, customers, employees, competitors, reporters, and what not. Consequently, to counter these lawsuits, Uber maintains a huge budget. This clearly demonstrates the prevalent culture at Uber where aggressive retribution is answer to every issue.
There have also been reports of Uber using private investigators to malign reporters writing negatively about the company.
On numerous occasions, Kalanick’s has exhibited his sexist and disparaging behavior. Right from ex-girlfriend Gabi Holzwarth to an interview with GQ magazine to checking a woman rider’s medical record, Kalanick has attracted controversies.
Further, there have been issues with Uber Greyball — a technology Uber used to deceive authorities. This is something totally unethical, but given the prevalent culture at Uber, it’s hardly surprising.
Where Does Kalanick Go From Here
While every crisis presents an opportunity to make amends and course-correct for better, Kalanick has repeatedly acted the opposite. Kalanick’s deeply entrenched belief in aggressive expansion and growth devoid of any ethics has culminated into his downfall. Hard work and perseverance minus the compassion and ethics take you nowhere.
It’s now totally up to Kalanick to resurrect himself. He is undoubtedly a brilliant entrepreneur, but now is the time for him to strive to become an ethical leader. A leader that people respect and look up to. Kalanick represents a prime case study of what happens when leaders of major companies do not strive to self-disrupt themselves. What worked in the past is not a guarantee for the present and the future. Strive mandates that we do the things that are most uncomfortable to transform ourselves from the inside out.