Narrative: Uber's Culture is Toxic

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    Narrative: Uber’s Culture is Toxic (Mar 7, 2017)

    Written: March 7, 2017


    Uber has been through quite the New Year – between political controversy, its treatment of women, its attempts to circumvent law enforcement, and its attitude towards drivers, it’s been a terrible couple of months, almost entirely of its own making. And if there’s one common thread in this Uber meltdown, it’s that Uber’s internal culture is toxic, and it’s toxic largely because of its CEO.

    This isn’t actually a new thing – Uber has been accused of immoral and illegal behavior for years, and I have a whole separate narratives about its treatment of its drivers and its flouting of regulation which each cite histories of bad behavior. I also wrote back in 2014 about Uber’s competition with Lyft and the way in which its approach to that competition has fostered immoral and illegal behavior.

    Let’s review the specific history here (there’s a detailed timeline with links to individual posts from its early-2017 meltdown above as well):

    The reality is that Kalanick is at the root of Uber’s cultural problems, which stem in part from his naturally combative and aggressive personality and in part from a prioritization of winning over all else at the company. Uber has essentially no moral cultural values at all – success in achieving its corporate goals is the single overriding value, and that has led it to both implicitly and explicitly devalue all else, including diversity, proper treatment of employees and drivers, respect for the law, and much else besides.

    That raises a big question: is it possible for Uber to change while Kalanick remains in charge, given that he has made past promises to change both himself and Uber which remain unfulfilled? Is appointing a second in command – perhaps even a woman – going to be enough to change things? I remain skeptical that sufficient change can come to Uber without a change at the top, but Kalanick remains one of only a handful of shareholders with the power to keep him in place, so absent a board revolt it seems unlikely he’ll be pushed out anytime soon.

    Uber’s biggest domestic competitor, Lyft, has appeared to take advantage of Uber’s troubles, first making hay out of the public backlash over the immigration orders and related issues, and then accelerating its expansion into new US cities. However, recent evidence suggests that its bounce from Uber’s meltdown may not have been either all that significant or long lasting.

    Here’s the thing: Uber’s culture is toxic – there’s been ample evidence of that over the past few weeks, and there’s likely to be more in future. The narrative is, to that extent, an accurate one, and it’s also a powerful one which Uber will have to counter with real change. But Uber is also far from the only tech company with such a culture, and even if other tech companies’ cultures aren’t quite as toxic as Uber’s, they likely share some of the same hostility towards women, disregard for regulation, and a win-at-all-costs mentality which causes them to act in ways which are often immoral if not illegal. So there’s a risk that by focusing so much on Uber’s toxic culture, we ignore the fact that these issues are far more widespread and let other companies off the hook. So even as we allow the narrative about Uber’s culture to take root, we need to ensure that it doesn’t get seen as the exception rather than the rule.

    For more on all this, see:

    Uber Press Call Highlights Huffington’s Conflict of Interest (Mar 21, 2017)

    One of the more troubling things about the sexual harassment investigation at Uber is that Arianna Huffington, who is helping to lead that investigation, is also currently acting as both Uber and Travis Kalanick’s most visible public defender, undermining claims that the investigation is independent. Either Huffington is committed to getting to the bottom of what has happened (and may still be happening) at Uber, or she can defend it and its leadership, but she can’t do both. That she reiterated those public defenses of Kalanick personally on this press call today just reinforces that point. Meanwhile, the call itself revealed little that was new, by all accounts – a previously promised diversity report is indeed on the way, and both the investigation and the COO search are ongoing, with nothing new to report for now. Meanwhile, Kalanick himself was apparently too busy with that COO search to appear on the call, while Uber’s (female) HR manager was available. (The headline here is mine – the headline on the Axios piece linked below focuses on the diversity report.)

    via Axios

    Uber president Jeff Jones is quitting, citing differences over ‘beliefs and approach to leadership’ – Recode (Mar 20, 2017)

    This is the first high-profile departure from Uber’s executive ranks which is being explicitly described as a response to the toxic culture at the company – Amit Singhal was forced out, while Ed Baker’s reasons for leaving were at least somewhat opaque. But Jeff Jones is, at least by his telling, leaving precisely because of the toxic culture and an unwillingness to stay at a company where he clearly doesn’t feel comfortable. Travis Kalanick’s explanation – which I think can probably be dismissed as face-saving – is that Jones decided to leave after Kalanick announced that he was hiring a COO. The fact that Recode had sources saying Jones’ reason for leaving was cultural even before Jones himself spoke out certainly reinforces that fact. Kalanick’s response just reinforces the sense that he hasn’t changed at all, and that if Uber’s culture is going to change meaningfully, that COO had better be a very strong individual, able to stand up to Kalanick and force real changes.

    via Recode

    Uber says trade theft case is between Otto chief and Google – USA Today (Mar 16, 2017)

    This feels like something of a slime ball move on Uber’s part on two fronts: firstly, trying to move the court case with Waymo out of open court and behind closed doors; and secondly, essentially trying to push the case off its back and onto Levandowski’s. I had said previously that the course was going to be fascinating for the details it would provide about how Uber developed technologies and how it would defend against what look like fairly solid allegations, but if it gets its wish here we won’t get to see any of that. But I think it’s the attempt to make this a case about an employee rather than the company that seems particularly sleazy – if the allegations are indeed true, then Uber and not Levandowski benefited the most, and making this seem like a dispute between an employee and former employer feels like a total misrepresentation.

    via USA Today

    Uber Changes Policy on Greyball App for Evading Law Enforcement (Mar 8, 2017)

    Uber has issued a statement announcing that it is ceasing the use of its Greyball platform for evading law enforcement and regulators, and that it’s in the process of responding to “organizations” (presumably regulators and law enforcement personnel in the cities where the platform previously did operate) who have enquired about it. This is striking because Uber’s initial response to the New York Times report was brazen in its lack of contrition – it had acted as though it saw nothing wrong, but has clearly now had a change of heart. The wording of today’s announcement certainly seems to concede that it did use the tool for evading regulators in the past, and even suggests it may continue to do so in the near future because of unspecified elements of how it works, which seems bizarre.

    via Uber

    Actually, Uber’s PR disasters aren’t that great for Lyft – Recode (Mar 7, 2017)

    This is interesting data which confirms something that I’ve always suspected but never had more than gut feel to go on: that matters of principle rarely cause large scale and lasting changes in consumer behavior. In other words, even with the high profile and almost continuous coverage of everything going on at Uber at the moment, only relatively small numbers of people seem to be switching to Lyft, and they seem to be doing so fairly temporarily. The article cites spend data from a company called TXN which shows only a brief and switch of spending from Uber to Lyft in a couple of cities, which appears to represent roughly 5-10 points of market share at its peak. Convenience, habit, peer pressure and a myriad of other factors all likely weigh as heavily or more so in decisions to use a service or not, and Lyft’s big problem is that in many cities it’s simply not as big as Uber is. In the two cities cited here, it looks like Uber had two thirds and four fifths of spending at its nadir following the negative news, and that’s likely representative of many other cities where both operate (and of course there are still cities where Lyft doesn’t operate at all despite its recent expansion). That makes it tough to capitalize in a major way even when Uber appears to be stumbling significantly, especially because those stumbles haven’t affected the user experience in the slightest.

    via Recode

    Uber CEO Travis Kalanick just told staff he’s hiring a COO to help him – Recode (Mar 7, 2017)

    Small follow-up on yesterday’s Information piece about Uber trying to hire a number two for Travis Kalanick. That news is now official, though Kara Swisher here also reports that Uber is looking to put another woman on its board, and that the board would prefer the COO to be a woman as well. That echoes both what I said here yesterday and what I implied last week in my Techpinions piece on CEOs and corporate culture: fixing Uber’s problems will be a lot easier with a woman in a senior executive role.

    via Recode

    Uber’s VP of product and growth Ed Baker has resigned – Recode (Mar 3, 2017)

    My apologies if you’re getting sick of Uber news this week, but here’s yet another. This one is tough to read, because the tie to the current investigation and fallout from the Susan Fowler post is more tenuous than with Amit Singhal – there’s a brief reference to an allegation of impropriety in this report, but it’s not substantiated or detailed. And unlike Singhal, who had barely got his seat warm, Baker had been at Uber for three years and been an integral part of its growth over that time. In general, as that Information article I just linked to indicates, he’s been a very well respected member of the team at Uber, so I’m inclined not to over-emphasize the link to sexual harassment issues. It’s possible that the timing is coincidental, though it’s obviously a particular loss coming right now with everything else that’s going on.

    via Recode

    How Uber Used Secret Greyball Tool to Deceive Authorities Worldwide – New York Times (Mar 3, 2017)

    I think there may have been one day in the past week when there wasn’t some new negative story about Uber, and that’s just based on what I’ve written about here. The latest is reporting from the New York Times that Uber has a program called Greyball which identifies app users who may not be who they seem and serves up fake cars or otherwise obfuscates the real activity going on with drivers in the area. Although there are some legitimate reasons for Uber to do something like this – for a time, competitors were frequently ordering and canceling cars – it was deliberately used to evade law enforcement in places where Uber was breaking local laws. Its statement in the article suggests it sees nothing wrong with this behavior, but characterizes this last scenario as “opponents who collude with officials on secret ‘stings’ meant to entrap drivers”. One might, I suppose, make a similar argument about police running speed traps, but radar detectors are illegal in some places anyway. The legality of what Uber did here isn’t 100% clear, but it’s yet another example of Uber’s disregard for regulations and willingness to do almost anything to flout or circumvent them. On the other hand, it appears Uber’s PR department has lost the will to fight on yet another front and isn’t even disputing this story.

    via New York Times

    In Video, Uber CEO Argues With Driver Over Falling Fares – Bloomberg (Feb 28, 2017)

    I know I used the phrase “another day, another ugly story about Uber” yesterday, but it’s literally another day and yet another story today. This time, it’s CEO Travis Kalanick recorded by one of his drivers who asked him some questions about pricing for the black car tier Uber offers. I’d actually argue that most of the conversation is pretty reasonable on Kalanick’s part, but right at the end he apparently loses his temper and we get to see how he really feels about all this, reinforcing the sense that Uber doesn’t really care about or understand its drivers and their needs. Here’s the point I made with regard to the sexual harassment allegations, and will make again here: as long as Kalanick himself doesn’t model the behavior he wants to see from his employees, the culture at Uber is never going to change, and it’s starting to feel like he simply can’t model that behavior because he doesn’t believe in it and isn’t capable of behaving in that way. If that’s really the case, that’s a pretty strong argument for him stepping down and allowing someone else to take over who can provide the cultural leadership his company needs – it’s hard to see how any of this gets better unless he does.

    via Bloomberg