It’s been one crisis after the other for Uber, calling into question the future of the $US69 billion startup like never before.
And now it’s all coming to a head.
On Tuesday, Uber is expected to release to employees the results of an intensive months-long study into its corporate culture. The report is expected to include recommendations for how the company should address its problems.
We don’t know yet exactly what will be in the report. One of the biggest questions to be answered is what will happen to CEO Travis Kalanick; he’s reportedly considering a leave of absence.
Even ahead of the report’s release, Uber has already made some big changes. Emil Michael, Kalanick’s right-hand man and chief fundraiser, resigned Monday. And last week Uber fired more than 20 people after a separate investigation looked into 215 complaints of sexual harassment, discrimination, and other bad behaviour at the company.
Uber’s board has committed, unanimously, to following the recommendations of the report, whatever those turn out to be. Depending on those recommendations, the most valuable tech startup on Tuesday could have a totally new executive team or it could look like it’s protecting the status quo. Either way, the company’s response to the report could go a long way toward determining its future.
Here’s how Uber got to this precarious point and what’s at stake now:
It started with a story about 'one very, very strange' year at Uber.
On February 19, Susan Fowler published a blog post about her time as an engineer at the ride-hailing company.
Fowler detailed what happened after a manager allegedly propositioned her for sex. Uber's HR department dismissed her complaints, because the manager was a high performer, she said. When she persisted with her complaints, Uber's HR ignored them, and then her manager threatened to fire her for reporting things to HR, she said.
She also wrote about the broader culture at Uber. One time, all the men on her team got leather jackets, she said, adding that the team's women didn't get any.
Fowler's post was hard to dismiss as just the rantings of a disgruntled employee. In response to it, Kalanick immediately called for an internal investigation into the company's work culture. In the last four months, Uber's HR department and two law firms have been interviewing employees, fielding complaints, and digging into what went wrong at the company.
The New York Times published a bombshell story soon after Fowler's post reporting that her claims weren't unique. Employees did cocaine during a company retreat, and a manager had to be fired after groping multiple women, according to the report. Former employees said they'd notified Uber's leadership, including Kalanick and CTO Thuan Pham, of the workplace harassment.
The retreat apparently wasn't an isolated thing. Kalanick's former girlfriend, Gabi Holzwarth, told Bloomberg she spoke to Holder's investigators directly about two other incidents at the company.
One of them involved a visit to an escort-karaoke bar in Seoul Uber officials made in 2014 where 'four male Uber managers picked women out of the group, calling out their numbers, and sat with them,' according to a report in The Information. Michael, Uber's business head, allegedly called Holzwarth directly to ask that she not divulge that story.
Among those at the bar in Seoul was Eric Alexander, an Uber exec the company let go last week amid reports about a different scandal. Alexander, reportedly obtained the medical records of an Indian rape victim and carried them around in a briefcase for a year. According to Recode, senior Uber executives, including Kalanick and Michael, were paranoid the rape was being used by one of the company's competitors in India to sabotage Uber.
Uber's problems have gone beyond its alleged bro culture to include questions about its business ethics. In March, t
he New York Times revealed Uber secretly deceived authorities for years with a tool called 'Greyball'. The company used the tool to evade authorities, particularly in cities like Boston, Paris, and Las Vegas where regulators were trying to block the ride-hailing service. The U.S. Justice Department has begun a criminal probe into 'Greyball'.
Uber's executive ranks have been decimated recently. The company lacks a chief financial officer, chief marketing officer, president, and a chief operating officer. And it now lacks a chief business officer, after Michael, Kalanick's right-hand man, announced he was leaving.
But because other executives still at the company have been linked to the scandals, even more heads could still roll.
Among them might be Ryan Graves, the Uber exec and board member who oversaw the HR department. Graves has been strangely absent during the crisis, and as early as February observers inside and outside the company were wondering whether he might take the fall for Uber's allegedly toxic culture, Business Insider reported. On top of that, Graves also had ties to and was reportedly aware of 'Greyball'.
Another executive on the hot seat: Uber's CTO, Thuan Pham, who was implicated in Fowler's blog post. Fowler said Pham did nothing after she notified him about her boss' threat to fire her.
Kalanick was recorded getting into a verbal fight with a driver. He also sent out crude emails spelling out the rules at a company party, including advising employees when they should or shouldn't have sex with their colleagues.
Those revelations and others about the company's broader culture have led some observers to call for Kalanick's head. Despite that, he's largely seen as untouchable.
Kalanick and many Uber board members have super-voting shares, which give them outsized control compared to typical stockholders. What's more, employees who sell a portion of their stock back to the company are required to vote all of their remaining shares in accordance with Kalanick's wishes, according to the New York Times.
Thanks to those provisions, it'd be hard to force Kalanick out. Backchannel's Jessi Hempel explains it best:
According to Uber’s articles of incorporation, the company has 11 board seats, nine of which carry super-voting shares. As of now, the company has filled only seven of those spots. Two outside investors hold super-voting seats. The others fall to Kalanick and two of his allies: Garrett Camp, a cofounder who is a non-executive chairman of the board, and early employee Ryan Graves. Kalanick has chosen to leave four super-voting seats empty, according to The Information. Were board members to counter Kalanick, he could simply fill the empty seats.
That means Kalanick's future is largely in his own hands. He could leave the company or take a few months off, especially as he deals with a family tragedy after the sudden death of his mother. But the decision would likely be up to him.
The company may get headlines by firing executives and employees. But a longer-term remaking of its culture will likely be determined by changes the company makes in how it operates.
Uber said it's already taken steps to turn things around, including:
- Releasing a diversity report
- Opening an anonymous tip line for employees to air complaints
- Holding more than 120 'listening sessions' with employees
- Updating 1,500 job descriptions to eliminate any 'unconscious bias'
It also added two powerful women to its c-suite to help lead its turnaround.
Frances Frei, a renowned leadership expert, joined the company to specifically fix its management mess as SVP of leadership and strategy. Uber also brought in one of Apple's top marketing leaders, Bozoma Saint John, to be the new public face of the company.
The cascading series of crises will come to a point on Tuesday when employees will find out just how far the recommendations go and what changes the company will make.
Should Holder recommend that Pham, Graves, and Kalanick all go, Uber could face a leadership vacuum that's unparalleled for a $US69 billion company. Even if Kalanick just takes a leave of absence for a few months, it could place Uber in a tough spot, given that it has few top leaders who could take his place.
Internally, the company will have to struggle with rebuilding its workplace culture to make it feel inclusive and welcoming. One Uber employee told Business Insider that company all-hands meetings now feel more like press conferences than company gatherings, because Uber officials are now much more guarded about what they say and how they say it. As a result, employees have lost some of their trust that they're getting the whole story from Uber's executives.
Whether or not Uber can navigate the changes brought on by the Holder report remains to be seen, but it's a pivotal time for the company.
Should Uber succeed, people may look back to the Holder report as the defining moment when the company grew up and put itself back on the path to an IPO. If Uber fails, it could well be because it didn't push itself hard enough to change in the wake of the report and decided instead to protect its status quo.
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