Commentary: Travis Kalanick is not ethical enough to steer Uber

Commentary: Travis Kalanick is not ethical enough to steer Uber

Silicon Valley may have enabled a cult of personality among start-up founders to thrive. But with all this chaos at Uber, the best way forward is for Travis Kalanick to dismiss himself, argues The Financial Times' John Gapper.

Travis Kalanick speaks to students at the Indian Institute of Technology in Mumbai, India in 2016. (Photo: REUTERS/Danish Siddiqui)

LONDON: Were Uber a conventional public company, the disgraceful way in which its chief executive has behaved for too long would leave its board with no alternative.

He would be fired and the directors would hire an outsider who could put in place a stronger leadership team and restore moral authority.

Since Uber is neither public nor has a board with the ultimate power to sanction Travis Kalanick, this has not happened. Emil Michael, his second-in-command, has resigned and Mr Kalanick has taken a leave of absence while Uber is run by other executives and it recruits an independent chairman.

ENABLERS AND APOLOGISTS

This might be called the meditation strategy, after Arianna Huffington, one of Uber's directors. The founder of the Huffington Post believes Mr Kalanick can reform because he is now meditating. "Travis returned and you could see the change," she said recently, recounting how he had gone into a room to reflect.

If the board is that gullible, no wonder he is still in charge. In fact, it has been filled with what one former executive calls "enablers and apologists". Mr Kalanick, his co-founder Garrett Camp and Uber's first chief executive Ryan Graves together have voting control, in the Silicon Valley tradition of placing trust in founders.

That has paid off handsomely in financial terms. Mr Kalanick's intuition and drive have propelled Uber to a US$68 billion valuation even before its likely initial public offering. It has revolutionised urban transport and become the model for platform companies, which connect customers and contract suppliers through software, reducing the need for human mediation.

Uber had been ordered by a judge in May to return allegedly stolen documents on self-driving car technology to the former Google car unit now called Waymo. (Photo: AFP/Justin Sullivan)

“COMPLETE, UNRELENTING CHAOS”

But consider some of the things that have emerged about Uber's testosterone-driven culture since Susan Fowler, a former Uber engineer, described "an organisation in complete, unrelenting chaos". Ms Fowler's blog post in February about her experience of repeated sexual harassment, unrestrained by human resources executives, revealed something very nasty.

The behaviour of executives after an Uber customer was raped by a driver in India in 2014 was also highly disturbing. Eric Alexander, Uber's head of business in Asia, obtained the victim's medical records as part of its efforts to defend itself against legal action, carrying them around and showing them to Mr Kalanick and Mr Michael. He was finally dismissed last week.

In Brazil, Uber responded tragically slowly when several drivers were robbed and killed after it allowed passengers to pay anonymously in cash. Despite local protests from drivers, and internal pressure from Uber executives who were horrified by what was happening, it only imposed identity checks for riders this February, five months after the first murder occurred.

In both cases, it appears the clique of executives around Mr Kalanick placed growth and beating rivals ahead of basic humanity. "Juicing growth", the phrase they employed, became Uber's priority. Mr Kalanick failed to recruit enough legal or human resources executives to impose suitable safeguards.

This has been exacerbated by a dubious fraternity boy culture at the top, with Mr Kalanick sending an email in 2013 to employees about a celebration in Miami that included light-hearted rules for sleeping with each other. Mr Kalanick and Mr Michael were also in a group that visited an escort bar in South Korea together on one business trip.

Uber's shakeup is continuing as a result of an internal investigation of workplace practices that have included harassment, discrimination and other issues. (Photo: AFP/Lionel Bonaventure)

Perhaps little better could be expected from an ambitious group of hard-partying, macho managers who often used Uber limousines on their own nights out. Investors probably hoped that Uber's restless co-founder would mature into the role of chief executive as Mark Zuckerberg has done at Facebook, but Mr Kalanick is 40 and he should have grown up long ago.

CULT OF PERSONALITY

Uber is heading for an IPO to reward its investors, including Fidelity and Goldman Sachs. Most IPO filings include warnings about the risk of key executives departing, along with other risk factors that could derail the company's finances. Mr Kalanick's leadership would be among Uber's main risks, given his ethical and managerial flaws

Silicon Valley's venture capitalists have brought it on themselves. Not only have they fostered a cult of personality among start-up founders, but they have turned it into a management philosophy. Companies including Alphabet and Facebook have been floated with dividing share structures to entrench the founders' voting control.

Ben Horowitz, co-founder of the venture capital group Andreessen Horowitz, once argued that good founders have "a burning, irrepressible desire to build something great" and are more likely than career CEOs to combine moral authority with "total commitment to the long term". It works in some cases, including at Google and Facebook, but has failed dismally at Uber.

Mr Kalanick was captured on video this year berating an Uber driver for evading responsibility, and complaining that people "blame everything in their life on someone else". If he reflects hard enough on what has occurred at Uber, he will know where responsibility lies and use his power as a controlling shareholder to dismiss himself.

By John Gapper

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Source: CNA/sl