SAN FRANCISCO — Embattled Uber CEO Travis Kalanick is on the hunt for a savior.
In human resources terms, he’s looking to hire a chief operating officer, someone to help guide the operational and strategic direction of a company that has been rocked in past weeks by accusations of sexism, a lawsuit over tech theft, and revelations it used a secret program to thwart law enforcement.
On Friday, Uber said it had hired Heidrick & Struggles, a heavyweight recruiting firm, to search for a second-in-command.
In a very practical sense, the San Francisco start-up is looking for that rare C-suite executive who will be able to reassure employees that a new course is being set for Uber’s corporate culture, as well as revive investor and consumer enthusiasm about the nearly $70 billion ride-hailing giant.
“Unless investors perceive the adult supervision (coming in) as being at a rock star level, there is real risk to the company’s valuation,” says Roger McNamee, founding partner of venture firm Elevation Partners and an early investor in Facebook. “It’s not enough to have a good manager. They need a great manager.”
This is a pivotal moment for the company. While it has raised more than $12 billion, according to VentureDeal, it's not clear when it will start turning a profit. It was losing money a year ago, according to Bloomberg. Uber declined to comment.
Which is why the COO search raises big questions: Would Uber be better off if Kalanick, 40, simply vacated his post? Will a No. 2 have the power to change the company? And, ultimately, is the damage done in past weeks reversible?
Kalanick likely here to stay
What seems unlikely is that Uber’s board members will clamor for Kalanick’s departure. The board includes Kalanick, co-founder Garrett Camp and Ryan Graves, an early employee and formerly its senior vice president of global operations. Other voting members include TPG Chairman David Bonderman, Bill Gurley of Benchmark Capital, Yasir Al Rumayyan of the Saudi Public Investment Fund and Arianna Huffington, Huffington Post co-founder.
Kalanick, Camp and Graves maintain a majority voting stake in the company, according to the Wall Street Journal.
“Travis won’t want to let his company go, and this board isn’t about to make him,” says Silicon Valley futurist Paul Saffo.
Plus, Kalanick's brash and disruptive style — which led Uber to shirk municipal regulations and even create tools such as Greyball, a system that gave rivals and opponents false information about Uber rides — is seen as directly responsible for the company’s growth and investor excitement.
“(Kalanick) definitely has my confidence, he has the board’s confidence,” Huffington said at a March 3 conference in Vancouver. Huffington is also helping former U.S. attorney general Eric Holder with Uber’s internal investigation into ex-engineer Susan Fowler’s claims that management ignored her warnings about a boss who made sexual propositions to her.
As much as some employees and investors might view Kalanick’s departure as a plus, Saffo says “between him staying or stepping down, stepping down is far riskier for the company” because its growth is so linked to his tactics.
There is one immediate risk: continued impact on Uber’s business is only likely to translate into growth for smaller rival Lyft.
In the four weeks since Jan. 30, when a #DeleteUber campaign gained momentum in reaction to the company’s response to an immigration ban protest, spending nationwide on Uber declined 2% while Lyft spending jumped 30%, according to TXN Solutions, which analyzes credit card transactions.
Next Sandberg - or Semel?
The tech era is littered with examples of adults swooping into help young founders, with mixed results.
Success stories include Eric Schmidt lending executive gravitas and direction to Google founders Larry Page and Sergey Brin when Schmidt became Google's CEO in 2001. Failures include Hollywood veteran Terry Semel that same year not even bothering to move to Silicon Valley when he accepted Jerry Yang’s offer to be CEO of Yahoo, a company that has since had a slow unraveling.
Another one to emulate was Google veteran Sheryl Sandberg becoming COO to Facebook founder Mark Zuckerberg, says start-up adviser Maria Thomas.
“Mark was willing to listen and be coached,” says Thomas, who earlier in her career rose to become Etsy’s first non-founder CEO.
That’s both critical and difficult, as most CEOs tend to see themselves reflected in their corporate creation. “If a founder is still active in a company, it’s hard for an outsider, despite their credibility and ability to get the job done, to change them,” says Thomas.
Another challenge facing the new Uber COO is a leadership group that simply echoes the CEO’s world view.
“The first step (for Uber) is to take a look at the mirrorocracy they’ve created in senior leadership, people in positions of power that look alike, think alike and act alike,” says Allyson Kapin of Women Who Tech. The company needs to hire more women and people of color if it wants its core nature to change, she says.
In a blog post to staffers, Kalanick said he was in search of “a peer who can partner with me to write the next chapter in our journey.” In the wake of Fowler's allegations of sexism ignored by human resources and managers, Kalanick vowed to "root out injustice." Listen to Uber's meeting with employees.
One critical role of the new COO will be to keep the pressure on Kalanick to grow up.
“A brash start-up leader mentality gets you traction in the marketplace, but now he’s got to make moves that show he’s really able to do the hard work of changing his behavior,” says executive coach Russ Allison, who has worked with a number of large tech companies.
“Sometimes, a CEO will translate feedback that says they’re arrogant as ‘I hear people think I’m too smart,’” says Allison. “The key is to be able to shift your response to ‘here’s what I’ll do to make sure I don’t make all the decisions.’”
Uber’s global impact could hinge on post-crisis recovery
Uber’s new COO will be integral to at the very least convincing the company’s nearly 7,000 employees that Kalanick is making real efforts to address the issues that caused this crisis.
They are many, stemming back to the 2014 comments from top executive Emil Michael that it could conduct personal research on journalists who criticized the company. More recently, the company has been roiled by Fowler's complaints, which also claimed an organizational chaos that was delaying product launches.
Uproar about the systemic sexism in its engineering ranks followed closely on the heels of a customer and driver backlash over the company's initial response to President Trump's immigration ban, which led many to delete the app. And to make matters worse, last week, a dashcam video surfaced showing Kalanick berating a driver who was unhappy with pay changes; Kalanick apologized and promised to get "leadership help."
Leadership consultant Patty McCord, who was the architect of Netflix’s widely hailed culture deck, says CEOs can learn to be “compassionate and ethical and fair, and still win. But employees have to see it through. When they don’t, and when talented jerks get to stay, the real culture reveals itself.”
Contributing: Jessica Guynn
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