Lessons from and of the Uber affair: Failing leadership, a bankrupt startup culture or nothing to worry about?


    By Hans van der Loo and Martijn Arets

    The leave of scandal plagued Uber CEO and co-founder Travis Kalanick has fuelled public debate lately. This comes to no surprise, when taking into consideration that Uber has been presented as the world’s paragon in being the most successful, disruptive and exponential growing company. Yet, after the explosive rise, an as spectacular fall followed. Which lessons can be learned from this case? Well, exponential growth and exemplary roles are no guarantee against failing leadership? Or, that the fall of Kalanick could be a sign that Silicon Valley’s start-up culture is rotten to the bone? Or, perhaps nothing big is going on and this is a healthy sign of the economy’s self-cleansing capacity? We present you the arguments one by one.  

    The naughtiest child in the class

    A ‘wild ride’, is how the renowned American journalist Adam Lashinsky presented the explosive growth of Uber in his recent book. While writing, he wasn’t aware the ride would end up crashing into a tree. Though he had a strong presentiment as he stated: ‘opposition has become part of the journey’.

    There has been sufficient opposition during recent years: partially because of external factors, like the fact that Uber, as newcomer, entered an overcrowded and overregulated market. You might describe this as a functional opposition, but a collaborative stance would have probably resulted in next to nothing in this market. A great deal of the opposition was caused by the leadership and the culture of the company itself. Travis Kalanick has the character of a born street fighter, a foul-mouthed, over ambitious and especially uncompromising leader, who doesn’t rest until he sees growth and experiences victory. At first, his hard and disruptive approach brought the company success and admiration. Competitors favoring a softer approach and trying to reach consent with existing taxi companies, found themselves either caught up in or crushed by the existing system. Uber gave the status quo a cold shoulder and grew explosively.

    Such behavior in leadership will always show its downsides. The aggressive and brutal approach while hitting his home run, formed ideal soil for narcissistic and superior behavior. This, in turn, went hand in hand with a complete disdain of the meaning of others. It became strikingly clear as Kalanick made a nightly ride in one of his own taxis this year February. He was recognized by the driver, who took advantage of the opportunity to address his boss reproachfully about the low rates Uber pays. ´I’m almost bankrupt because of you. I lost thousands of dollars…´, the driver told. This allegation did not go down well with Kalanick. ´You know what…´, he angrily replied the driver, ´… some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else´. He slammed the taxi door with a clear curse coming over his lips. He didn’t realize that this whole disgrace was captured by a rolling dashboard camera. The video promptly appeared online and resulted in a negative media storm, after which Kalanick was forced to his knees to openly promise improvement.

    This behavioral pattern –of rashly creating malpractices or causing scandals, initially ignoring the fuss completely, and only offering excuses and promising improvement at a second or third instance– would be repeated time and again. Be it the accusations of a female employee about a misogynistic policy and systematic sexual intimidation, the allegations that the company had been hiding from government controls for years, by installing secret software (government officials whose names were known to the company where invariably shown a screen saying no rides to be available), the allegation that of Uber had stolen company secrets concerning self-driving cars from google –Kalanick invariably dismissed it with a puberal wittiness or an empty promise to look into it. Only under heavy outside pressure (and majorly from his financiers) he showed his insightful and lenient side. He announced –mentioning it in regard of ‘Travis 2.0’– to polish his leadership style. But even such was done quite reckless; while an independent research made a devastating judgement about the misogynistic culture of the company, Kalanick simply decided to start meditating… in a room intended for women to breastfeed their infants.  

    Sign of a rotten start-up culture

    Who hails the statement that the Uber affair is the result of an ill-considered failing leadership, easily draws the conclusion that at least someone should be blamed. Replace the man by a more capable leader and the problems are solved. But it isn’t that simplistic. Although Kalanick has waived his position as CEO (for now), he still remains connected to the company as a director. Moreover, behind every leader is a multitude of followers. According to many, much more is going on than just failing leadership. The Uber affair would be a typical symptom for a sexist, racist, and age discriminating, unethical and money-grubbing behavior of the hailed techies in Silicon Valley. The flood of criticism over the last weeks crushing in on the high-tech sector showed major similarities with the negative way bankers and other financial services were treated a few years ago.

    What is central to all this criticism? The fact that all explosively growing companies are virtually exclusively in the hands of young white men, and for any other age group, race, or gender is no room. That this results in a uniform, aggressive and puberal culture of fraternity men, where insiders pretend themselves to be superior to everyone who isn’t part of their clique. That all is about money and growth. That leaders of fast growing companies, despite their roaring missions and world improving slogans, hardly show any social responsibility. And that executives and investors usually turn a blind eye.

    Their criticism is partially rooted in true facts. Folks cherishing the ideal picture of ‘nerdy white young males’ swarm within and around Silicon Valley. Women, blacks or latino’s, and elderly just don’t fit in this picture. The numbers tell their own story in this case. According to a 2014 research, the percentage female employees of companies financed by venture capitalists didn’t reach above the 15% mark. Only 2.7% of the companies appeared to have a female CEO. Discrimination is the norm, diversity is hard to find.

    Several counter examples, which show that a different and better approach is possible, are however available. They show us that it is possible to constantly bear this mission in mind (e.g. Google, Facebook and Tesla), that there really is room for diversity and input from employees (Airbnb and Zappos) and that it’s not always and exclusively about personal gain.

    Self-cleansing capacity

    With a little good will, even the Uber affair can be regarded as a sign of self-cleansing capacity. This at least is the opinion of a select group of key players. Most attention was drawn by the statements made by Marissa Mayer, former CEO of Yahoo and current Uber commissary. She, though unsolicited, shared her opinion of Kalanick being a “phenomenal leader”, who simply didn’t had clue of what was going wrong within the his business. “When your company scales that quickly, it is hard” –to get to know such things, she added to be sure not to be mistaken. The usual nonsense argument to condone failing leadership behavior. Why this indication of adhesion? Malicious gossipers claim that Mayer was just in to be catapulted as the Kalanick’s suited successor. A little diplomacy wouldn’t hurt in such a process, even the more as Kalanick remains present in his role as director (and is still co-responsible for the appointment of his successor). The other, at least as cynical assumption, has to do with Mayer’s bad reputation as leader. Based on her rather unsuccessful performance at Yahoo, she is widely stigmatized as one of the –if not the– worst leaders of our current time. The list of vices on her account reaches from egocentrism, over the incapability to listen to others, micromanagement, lack of strategic direction, the creation of a negative work space, to deceitful behavior and a strong preference for just as extravagant as unnecessary expenditure patterns. These praises addressed to Kalanick appear, in light of this, as a lame helping a blind to walk…

    The renowned American scholar Jeffrey Pfeffer points out that the most start-up founders bit the dust after a few years, and are forced to hand the rod of management to more experienced and leaders tailored for larger businesses. This happens based on the view that starting, and creating movement with, a new company requires different character traits and skills, that for the running of an existing company. The number seem to proof Pfeffer right; according to a 2012 study about half of the founders leave their ground after 3 year, however another research shows that the number of founders in the CEO seat doesn’t exceed a 15% rate after about six years. Upon reflection, there is more to say about these percentages. Considering that less than a quarter of these start-ups reach the age of 5, you will have to conclude that the founders of successful start-ups –and especially of the ‘unicorns’ (starting companies with a market value of 1 billion of more)– have good chances to remain at the helm for a longer period (like Larry Page of Google, Mark Zuckerberg of Facebook and Brian Chesky of Airbnb) or to follow the route of Steve Jobs (leaving in order to return again, which also counts for Twitter’s Jack Dorsey).

    How to continue

    Looking at Uber’s future it becomes clear that the current success, with a confronting approach is the result of a needed strategy to disrupt a market like the taxi market, but that this approach isn’t durable. Though Uber is the world’s biggest taxi company of the moment, and could become a healthy business, within the present business model, despite a legacy of 12 billion of investments, which have to be paid down with interest, the ambitions reach further. With the wish to become the dominant platform within the self-driving transport sector, the business will have to shift from a confronting to a collaborative organization. Where inside the taxi world (an independent position in transport with existing cars from A to B) looked comprehensible, the outlook on the world with self-driving vehicles (with dozens of businesses contributing their part to the value chain) is a whole lot more collaborative. Uber is challenged to take a turn. We are looking forward to which rabbit appearing from magical hat of the actual Uber board and stake holders will take the lead, and how they will secure his leeway to make this turnabout happen.