Series of embarrassing revelations may force company founder to give up executive control
After a series of embarrassing revelations, ride-sharing giant Uber faces challenges in keeping growth on track, with top executive Travis Kalanick likely to face pressure to give up some control.
Analysts say Uber’s rocky past month – marred by disclosures about a culture of sexism and its covert use of law-enforcement-evading software – underscores the need for more mature management at the world’s most valuable venture-backed startup.
Kalanick, known for being brash and aggressive in propelling Uber’s rise, could now become a liability as the company deals with more complex corporate issues, some analysts say.
The firm’s founder and chief executive might help Uber by stepping aside, possibly taking the role of chairman, Pace University marketing professor Larry Chiagouris said.
“If I were him I would remain connected to the business but I would step up and bring someone with a fresh face and a lot of maturity,” Chiagouris said.
This would give riders and drivers a sense there was a serious and mature person running the business.
“He needs to find a way to put a face on Uber other than his own,” he said.
Uber’s woes appeared to deepen last week with the release of a dashcam video showing Kalanick cursing at a driver, followed days later by its admission that the company used secret software to steer drivers away from problems, though it denied reports the “Greyball” programme was used to evade sting operations.
“They have a history of priding themselves about being aggressive in moving into markets,” Daniel Korschun, of Drexel University’s LeBow School of Marketing, said.
“Some of this is starting to come back to haunt them. This aggressive behaviour is coming out in ways that are disturbing to their stakeholder base,” he said.
Uber, whose valuation is estimated at $68-billion (R884-billion), needs to balance the interests of its investors, riders and drivers, according to Korschun.
But Uber lost tens of thousands of users from the dust-up when Kalanick joined and then quit a panel advising President Donald Trump.
This and the other incidents could have dented its value, Korschun said.
“It’s clear this is a company on its heels,” he said.
San Francisco-based Uber last month hired former attorney-general Eric Holder to review workplace conditions after an ex-employee alleged sexual harassment and sexism at the firm.
Separately, Google’s parent company, Alphabet, filed a lawsuit against Uber alleging the firm used stolen technology for its autonomous driving programme.
Adding to the pile-up of woes, Kalanick was last week forced to make a humbling apology after a video showed him verbally abusing a driver for the service.
He also admitted: “I must fundamentally change as a leader and grow up.”
Scott Galloway, who teaches brand strategy and digital marketing at New York University’s Stern School of Business, said Uber had little room for further error after these missteps.
He said the news about Uber over the past month had been damaging but might be surmountable.
“What the market underestimates is the importance of being likeable; the CEO needs to be likeable,” Galloway said.
He said Kalanick’s image problems could affect not only customers, but regulators and the news media.
“The media is more apt to create a pattern and publish more negative stories,” he said.
“I would say he is one screw-up away from being promoted to chairman.”
Analyst Rob Enderle, of Enderle Group, said Kalanick’s rough-and-tumble image may not be suited to the chief executive of a major technology company.
“He is relatively young, dropped out of college, and lacks the breadth of experience in business and education to give him the skills to deal with a lot of this stuff, which is why everything is turning into a crisis,” he said.
“If this continues, he is going to have to step down to save the company.”
For now, Uber remains a major force in the so-called “sharing economy,” with tens of thousands of drivers operating in dozens of countries.