Uber is broken. Can the new CEO fix it? – The Verge


Uber’s rise into the Silicon Valley stratosphere has been swift, however the consensus is that as the operation expands, the approach the firm does enterprise wants to vary. Because throughout that ascent, and particularly this yr, proof has mounted of a poisonous firm tradition that is hostile toward women. It was solely after public outcry and the ensuing strain from some main buyers that CEO Travis Kalanick resigned back in June. For months, speculation ran high over who would substitute him and, extra importantly, whether or not that individual might enhance Uber’s inner woes and maintain its quick-paced progress.

That individual is lastly right here. Uber’s board of administrators spent this past weekend discussing, and ultimately voting on, a alternative for Kalanick. It’s not General Electric chairman Jeff Immelt, who was the main candidate at one level. And it isn’t Hewlett Packard Enterprise CEO Meg Whitman, who, regardless of having sworn herself out of the race on Twitter in July, was apparently very much back in the mix over the weekend. It is Dara Khosrowshahi, the “dark horse candidate” whose identify hadn’t even been talked about in the combine till Recode’s Kara Swisher broke the news Sunday night.

In a world the place excessive-profile tech CEOs have grow to be family names and, in particular instances, the focus of hero worship, Khosrowshahi is a relative unknown. But whereas business specialists consider that any change might be good for Uber, these accustomed to his popularity at Expedia assume he’s outfitted to deal with the logistics of piloting the most extremely-valued personal firm in the world, and the issues that include that position.

The 48-year-previous Khosrowshahi got here to the United States when his family left Iran in 1978. They emigrated just before the Iranian revolution and settled in Tarrytown, New York. He graduated from Brown University in 1991 with a Bachelor of Science in electrical engineering, and spent the subsequent seven years as an analyst at the funding financial institution Allen & Co. (the place his brother currently serves as managing director).

There, he crossed paths with Barry Diller, the chairman of InterActive Corp. Khosrowshahi was interested in the famed businessman’s aggressiveness. “[Diller] made a hostile offer for Paramount when he was at QVC, and I thought to myself, That’s the guy I want to work for,” Khosrowshahi told Bloomberg earlier this year.

He wound up working for IAC, shifting up its government ranks till the conglomerate spun Expedia off as its personal enterprise. Khosrowshahi caught with the journey website as its CEO, and he’s held that publish till this week.

The twelve years he spent as Expedia CEO have been fruitful. Expedia is rather more than only one web site — it’s now an organization that employs over 20,000 individuals and operates greater than 150 journey websites beneath its umbrella, together with Hotels.com, Hotwire, and Trivago, to call a couple of. With Khosrowshahi at the helm, Expedia has gone from $15 billion in bookings to $72 billion in 2016.

“[Dara] was the chief dealmaker and a key figure [at Expedia], and he’s a pretty dynamic guy,” explains Dennis Schaal, the government editor of journey advertising platform Skift. Schaal, who has coated Khosrowshahi for greater than a decade, says that the incoming Uber CEO is properly revered in the journey business amongst each his friends and his rivals.

While some current breakdowns of Khosrowshahi’s background have painted the CEO as the “opposite” or “anti-Travis Kalanick,” Schaal claims that’s a mischaracterization. He says Khosrowshahi is “definitely a tech guy,” and that “he’s actually into synthetic intelligence, and voice activated search, and personalization, and large knowledge.” (Interestingly sufficient, Khosrowshahi was reportedly engaged on making Expedia “a sort of real-time travel assistant, one that can call your Uber ride to the airport at the right time,” in response to a recent profile in the Financial Times.)

Khosrowshahi’s additionally like Kalanick in one other method: he’s prepared to take dangers together with his firm’s cash. “Trivago final yr spent actually 87 percent of its revenue on marketing. It’s pulling out all the stops for progress at the expense of income,” Schaal says.

On prime of that, Schaal explains that Khosrowshahi is properly-suited to handle Uber’s largest company points, pointing to how he labored with Barry Diller to make main acquisitions whereas at Expedia, spun off TripAdvisor, and helped Trivago to an IPO. And a public providing happens to be a major priority for Uber’s board of directors.

But coping with that board — on which Kalanick nonetheless sits, with main voting sway — might be a serious bottleneck for Khosrowshahi.

“Dara has his work cut out for him, in terms of restoring confidence in [Uber’s] management,” says Raj Rajkumar, an engineering professor at Carnegie Mellon University, and the director of the Technologies for Safe and Efficient Transportation program. “I do believe that a single person, the right person, can make a big difference. The caveat is that, with Kalanick on the board, it’s not clear that Dara can make the decisions that he needs to make without Travis’s involvement.”

Carl Tobias, a regulation professor at the University of Richmond, agrees. “The board seems pretty splintered right now. I think it’d be really critical to try to have them work together better and not seem like they’re at odds with one another,” he says. “I just think they need to move the company off of the front page.”

These are truthful factors when you think about how Khosrowshahi reportedly turned the board’s decide in the first place. Immelt was Kalanick’s choice for CEO, whereas Benchmark Capital — a enterprise agency that invested in Uber early on, however is additionally at present suing Kalanick for fraud — needed Whitman. But Whitman requested for the moon, together with requesting that Kalanick to take a reduced role with the firm. Immelt reportedly backed out as a result of he both didn’t have enough support from the board, was turned off by its recent infighting, or each. Instead of giving into Whitman’s calls for, the board selected Khosrowshahi as a “truce” candidate.

These are turbulent waters for any government to navigate. But Schaal thinks Khosrowshahi’s expertise with outsized figures like Diller means he’ll be snug with that a part of the job, and that the board may have respect for Khosrowshahi. “I’m not saying that’s a panacea to Uber’s board troubles, but it certainly helps,” he says.

Fueling Uber’s enterprise and massaging the temperamental egos that make up the firm’s board are a fraction of what Khosrowshahi must do as CEO. He is coming into management of an organization that dug itself into a very deep hole. And an enormous purpose for that is that Kalanick let Uber’s tradition rot from the inside.

On Kalanick’s watch, Uber turned a pit of sexist behavior and sexual harassment. This reached a tipping level in February when former engineer Susan Fowler revealed a blog post describing her time with the firm. Her account was so damning that it inspired other women to come forward with their very own tales. Uber reacted with an outside investigation led by former US Attorney General Eric Holder, which ultimately turned up at least 200 claims of sexual harassment and 20 firings.

Luckily for Uber and its staff, Khosrowshahi doesn’t seem to have the brutish streak Kalanick was well-known for.

“I don’t just want — I need — people who have walked miles in the footprints of our partners and travelers,” Khosrowshahi wrote in a LinkedIn post in 2015 entitled “My Secret to Building a Team of Passionate Travel Geeks.”

In another, he wrote about abandoning a star-based mostly worker score system that Expedia utilized in its early days, which sounds not all that totally different from Uber’s. “Employees became obsessed with their ratings scores,” he wrote. “From an employee perspective, their year-end feedback sessions went something like this: “blah blah blah, blah blah blah, blah blah, blah blah. Your rating is a 3.5.”

“Nuance got lost and the rating took over,” he continued. “Sadly, our HR team has rejected my recruiting motto ideas: ‘Come to Expedia and be a human, not a number.’”

Since the election, Khosrowshahi has additionally spoken out against Trump, each in official statements and on Twitter. He even supported the authorized battle towards the President’s journey ban earlier this yr. “He’s taken a very progressive stance of on that front,” Schaal says.

Khosrowshahi was listed as one of the “Highest Rated CEOs” by Glassdoor this year, coming in at 39th, and Expedia was picked as the 16th greatest place to work in 2016 by the web site. And whereas ladies solely held one-third of the firm’s management positions in 2016, in accordance to the company’s diversity report, they made up 51 % of the workforce, and have been paid equally to males.

“While we compare well with many of our technology peers, we have a long way to go in bringing more female representation into leadership roles,” he wrote in the report. “We need to attract, hire, engage and promote talent of all kinds all around the world, and we believe that by enriching the diversity of our work force across all dimensions, including gender, we achieve the most enriched outcomes.”

All of this contrasts enormously to the frat house-style “Uber values” that Kalanick requested his staff to stick to, like “always be hustlin’,” or the time he outlined sex rules for a corporation get together in Las Vegas.

“It’s certainly encouraging that the company seems to be bringing in someone who has a track record, or at least has said that these issues and values are important to them,” says Maya Raghu, the director of office equality at the National Women’s Law Center.

“It’s even better if they have taken steps to actually implement changes to increase diversity, not just within the workforce with regard to employees, but with regard to leadership as well,” she provides.

While it might appear to be an uphill battle to heal Uber’s office, Raghu thinks the subsequent steps are clear. “Given that there was such a toxic workplace culture at Uber before, which was very closely tied to the founder and leader, I think it’s incredibly important for [Dara] to immediately establish things like sexual harassment and discrimination won’t be tolerated, and to introduce some written policies to make that clear,” she says. Khosrowshahi also needs to “make it clear that there are consequences for that kind of behavior, and people will be held accountable, because that doesn’t seem to have been the case before.”

For steerage, Khosrowshahi can look to the report that Holder’s investigation released back in June, Raghu says. “It would behoove the incoming CEO to review those recommendations and think seriously about adopting and implementing many of them, and to send a message to Uber’s employees, and to its clients, and to the general public, [that]they’re taking these issues seriously,” she argues.

It’s additionally necessary that Khosrowshahi usher in management that may work with him on these points. “That kind of culture change, it has to happen from the top,” she says.

The excellent news is Khosrowshahi may have about as a lot free rein in naming his personal executives as an incoming CEO might hope for. Uber presently has no CFO, CMO, or COO. It’s additionally lacking quite a lot of senior vice presidents. Being capable of fill these spots with recent candidates from numerous backgrounds is an amazing alternative, Raghu explains. “Culture change takes a long time. Nothing’s going to change overnight,” she says. “But there are certainly steps that they can take very soon to start that process.”

Another small credit score to Khosrowshahi’s fame: Expedia was named to the record of “Best Places to Work for LBGT Equality” by the Human Rights Campaign Foundation this yr.

But so was Uber. And whereas neither Uber nor Kalanick have gained any “best of” awards from Glassdoor, the firm’s general score is higher than Expedia’s.

That illustrates one other drawback Khosrowshahi faces as he takes on the process of fixing Uber’s corrosive tradition. Creating a office that is inclusive, truthful, and profitable in the eyes of Silicon Valley is a problem, particularly as a result of it’s straightforward to create the picture that you simply’re pulling it off.

Kalanick deserted that facade early on, and met his finish as CEO as a result of he put progress and success on a blindingly totally different precedence degree than the firm’s tradition. It’s now as much as Khosrowshahi to rebalance that scale in the center of this storm.

“I mean, the expectations are pretty low, given what the company’s been through. Anything he does, it seems to me, that’s positive, then more power to him,” Tobias says. “They just seem to be on this downward spiral, and if he can break that in any way that, then that would be valuable.”

And if Khosrowshahi does? “It could set a new standard in the tech industry,” Raghu says. “We can only hope.”

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