Narrative: Uber's Culture is Toxic

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

    Updated: June 23, 2017


    Note: this narrative was the subject of the Weekly Narrative Video for the week of June 19-23, 2017. You can see the video on YouTube here, or view it embedded at the bottom of this essay.

    Uber’s first six months of 2017 have to have been one of the direst half-years in any big tech company’s history: between political controversy, its treatment of women, its attempts to circumvent law enforcement, and its attitude towards drivers, the last few months have brought to a head just how awful Uber’s culture is both as regards its own employees and others from drivers to regulators. 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):

    • Uber offered one of the weaker and more equivocal responses among major tech companies to the Trump executive orders, reinforcing perceptions that Travis Kalanick was fairly happy with the administration’s policies
    • That, in turn, was made worse by perceptions that Uber was attempting to break a strike by New York City taxi drivers during the ensuing immigration protests, leading to calls to delete Uber, which resulted in 200,000 customer losses and ultimately Kalanick’s resignation from the Trump advisory council
    • Things got markedly worse for Uber when Susan Fowler, a former engineer at the company, posted a detailed but very measured account of her mistreatment while an employee, sparking a formal semi-independent investigation
    • It then emerged that recently installed SVP Engineering Amit Singhal had left Google under something of a cloud relating to sexual harassment claims, which in turn prompted his resignation from Uber
    • A video recorded by an Uber driver showed Travis Kalanick first arguing with the driver and then ultimately insultingly dismissing the driver’s concerns while storming off, reinforcing perceptions about his and Uber’s disregard for drivers
    • The New York Times reported that the self-driving car Uber had strongly implied was being driven by a human being while it ran a red light during Uber’s very brief stint of testing in San Francisco in late 2016 was in fact driving itself
    • Another senior executive resigned amid some more tenuous connections to past sexual harassment allegations.
    • As a result of all this, but especially the driver video, Travis Kalanick finally conceded that he needed to change, and subsequently announced that he was formally looking to hire a COO to help him run the company.
    • Two separate investigations by different law firms were then launched, on the one hand into specific allegations of wrongdoing within the company, and on the other hand into the culture that allowed those things to occur without repercussions. The investigation into specific actions resulted in the firings of a number of employees and less dramatic action against others, with quite a few cases still being investigated. The Eric Holder report, meanwhile, led to a 12-page report full of recommendations for change, which the board unanimously adopted.
    • Eventually, Travis Kalanick was pressured by investors to resign and stepped down as CEO, though as of this writing he remains fairly involved in the company, not least as part of the search committee to appoint a new CEO in his place.

    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 raised 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’ve always been skeptical that sufficient change could come to Uber without a change at the top, but Kalanick remained one of only a handful of shareholders with the power to keep him in place, so absent a board revolt it seemed unlikely he would be pushed out. And yet even without a formal vote, pressure from enough big investors was enough to move him out of his role at the head of the company.

    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. Early evidence suggests that its bounce from Uber’s meltdown may not have been either all that significant or long lasting though more recent evidence has suggested a greater impact.

    Here’s the thing: Uber’s culture is toxic – there’s been ample evidence of that over the past few months. 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 Files Appeal in London Hours Before Deadline (Oct 13, 2017)

    Uber has formally lodged an appeal against its ban in London, on the day the deadline to do so would have passed, allowing its service and drivers to continue operating until the matter is resolved. As I suspected, though this kicks off a formal legal process, it seems the situation is most likely to reach a resolution through negotiation between Uber and Transport for London, the body that regulates cabs and ride sharing services in the city. My guess is that Dara Khosrowshahi’s recent visit will have shed light on specific changes Uber needs to make to pass regulatory muster going forward, and that it’s actively working on a plan to ensure it can continue to operate there.

    via London Evening Standard

    Uber is Reorganizing its Engineering Team to be More Efficient and Coordinated (Oct 10, 2017)

    Uber apparently recently kicked of an internal project to reorganize its engineering teams in order to make them more efficient and coordinated and less duplicative or competitive in their work. It sounds like the prior structure and approach grew partly out of Uber’s aggressively competitive culture and partly out of a lack of proper structure, both of which need fixing if the company is to make the best use of its resources, a consistent theme in its strategy over the last few months. The historical culture around engineering sounds a lot like that which prevailed in the various Google fiefdoms which built hardware for a long time, with little cohesion or coordination between then and teams often working on similar projects without talking to each other. Fixing that should not only make the company more efficient but more effective, and it may also help to fix the diversity and other issues if the team is run as a single unit rather than a disconnected set of engineering clusters.

    via BuzzFeed

    Uber Board Approves Governance Changes Limiting Kalanick’s Power (Oct 4, 2017)

    The Uber board met yesterday and approved proposed changes to the company’s governance, which limit Travis Kalanick’s power, commit the company to an IPO by 2019, open the door to an investment by SoftBank, and resolve some simmering issues among the board members. That’s a great step forward, and was followed by a somewhat bizarre statement from Kalanick welcoming the changes, which was rather odd given that his two appointments to the board late last week were widely seen as a petulant response to the proposed changes. Still, the changes should allow Uber to move forward on a more solid footing, with Benchmark apparently backing down from its lawsuit, Kalanick apparently on board, and therefore much of the recent drama starting to cool off. It would be great if the board could now focus on implementing all the other changes recommended in the Holder report and get on with transforming the company into one with a healthy culture.

    via The New York Times

    Uber’s Due Diligence Report on Otto is Unsealed, Confirms Levandowski Document Haul (Oct 3, 2017)

    Waymo has finally succeeded in getting the due diligence report on Otto which Uber commissioned as it planned to buy the company unsealed, allowing many details about what Uber knew and when to emerge. However, like earlier disclosures in the lawsuit, it mostly confirms that Anthony Levandowski, the executive at the center of the case who is nonetheless not named in the suit took documents and other information with him from Waymo, while not providing evidence that Uber benefited from that. Uber, meanwhile, continues to say that when it found out about the document haul Levandowski had, it ordered him to destroy it all and not bring it to Uber – proving that assertion false is Waymo’s biggest challenge. Of course, Levandowski as an individual might still have used that information in developing at least one version of LIDAR technology he worked on at Otto/Uber, but that would only cover some of the claims Waymo has made in the case.

    via Recode

    ★ Travis Kalanick Appoints Two New Board Members without Board or CEO Approval (Oct 2, 2017)

    The latest round of controversy at Uber erupted Friday night as Travis Kalanick unexpectedly appointed two new members to the Uber board as part of an earlier agreement, albeit without the knowledge or approval of either the existing board members or new CEO Dara Khosrowshahi. This is best seen as further evidence, if it were needed, that Kalanick’s main objectives continue to be serving his own self-interest rather than Uber’s best interests, and that if he’s using these appointments to bolster his power on the board, the rest of the board should resist that effort. The Recode piece I’m linking to below has a great overview of what all this means at this point and how it might play out, and importantly says that the board members don’t object to those nominated as much as the process. The context is that the board has been working on governance changes that would formally limit both Kalanick’s voting power and his ability to come back in a management role, changes he naturally opposes. At this point, I can’t imagine Kalanick actually thinks he’s doing what’s best for Uber, and in the meantime he continues to do the company substantial damage and distract it from the real changes which need to be made, including governance changes recommended in the Holder report. It’s ever clearer that Kalanick hasn’t changed and and indeed hasn’t taken any of what’s happened over the last ten months or so to heart.

    via Recode

    SoftBank Said to be Nearing Uber Investment Deal Blocking Kalanick Return (Sep 27, 2017)

    There’s been reporting for months now about SoftBank being interested in taking a stake in Uber, both making a new investment and buying shares from existing stakeholders, but a major sticking point was said to be worries on both sides of the deal about a potential return by Travis Kalanick to a senior leadership role at the company. It appears that those worries are being resolved by a commitment on all sides to keep Kalanick out of those roles as a condition of SoftBank’s investment. Both the potential new funding and that guarantee are good news for Uber, as we’ve seen plenty of evidence recently of the ongoing fallout from Kalanick’s toxic tenure as CEO, not least Uber’s pending London ban. The funding, meanwhile, will be helpful as Uber continues to lose money, though its belt tightening should lower the need to raise many additional rounds before its IPO, especially if that happens as soon as new CEO Dara Khosrowshahi seems to think it should.

    via Bloomberg

    ★ Uber Loses License to Operate in London Over Bad Behavior (Sep 22, 2017)

    Transport for London, the entity that oversees public transportation and taxi services in the UK capital, has refused to renew Uber’s license to operate a private ride for hire service in the city, citing several examples of bad behavior. It’s perhaps the most tangible sign yet that Uber’s toxic culture, disregard for regulation, and general willingness to do what it takes to win in the market have come home to roost. The timing is unfortunate given the ouster of Travis Kalanick and the recent appointment of Dara Khosrowshahi as CEO, but clearly stems from behavior that took place long before those recent changes. Uber has said it plans to appeal and Khosrowshahi has said both in communications to employees and in public on Twitter that the decision is in part Uber’s own fault, which is heartening. It’s important to note that this decision isn’t about ride sharing services in general but specifically about Uber’s bad acts, so Uber needs to address those specific concerns even as it makes its usual arguments about the benefits to society a service like Uber provides. This is an unusual situation for Uber to be in – being banned in a city where it’s well established and generally well regarded, without a broader ban on ride sharing services. If I were Dara Khosrowshahi, I’d be on the next plane to London to talk to TfL, understand exactly what the issues are, fix what still needs fixing, and promise to do much better in future. Losing its presence in a city like London could be enormously damaging to its business in the UK and Europe more broadly because so many people travel through London.

    via Bloomberg

    Uber Under FBI Investigation Over Tool Which Infiltrated Lyft’s App (Sep 8, 2017)

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    Uber Finally Makes CEO Announcement Official, New CEO Speaks to Employees (Aug 30, 2017)

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