The issue is that this is but the latest in a series of actions that signal growing unease with the company's tactics, its strategy and its leadership. And that matters for one reason: the company has garnered a $60 billion-plus valuation but in the process, is accumulating chronic billion dollar a quarter operating losses.
It's investors are reasonably patient by today's standards, but not infinitely so - and they do expect to monetize their investment. Anything that threatens that payout requires urgent attention.
Which is why - following the Trump support imbroglio which spawned a surprisingly successful #deleteUber campaign, Uber has now hired a former US Attorney General to investigate sexual harassment claims, and why its famously combative CEO publicly apologized and promised to change. JL
Erik Sherman comments in Inc:
The big problem facing Uber is that it has built a long list of alleged questionable behavior over its short existence. In the tech industry, it's not uncommon for startups, particularly well-funded ones, to push the boundaries of business and behavioral rules. As the old saying goes, it can be more effective to seek forgiveness than permission. But any company comes to a point where that approach is no longer tenable.
Uber has long had a penchant for getting into reputation trouble. When it came to the Trump administration's immigration executive order, the ride-sharing service took flak for breaking a one-hour taxi work stoppage protest at JFK Airport in New York. But that has nothing on the fertilizer that hit the fan over a blog post that claimed widespread sexual harassment.
Former Uber engineer Susan Fowler published a blog post on Sunday relating alleged systemic sexual harassment that was stunning in both detail and scope. Included were the following claims:
USA Today received a statement that, in part, quoted CEO Travis Kalanick as saying, "We seek to make Uber a just workplace for everyone and there can be absolutely no place for this kind of behavior at Uber -- and anyone who behaves this way or thinks this is OK will be fired."
- Male engineering managers propositioning female engineers.
- HR claims to multiple women that reports of employee misconduct were the first ever lodged against people, even though the women later confirmed they discussed the same people.
- Women reporting problems who did not take a position in another group could face retaliation in performance reviews with HR unable to do anything.
- Performance ratings being altered to prevent women from moving to other groups because retaining female engineers improved the standing of managers.
- HR suggestions that Fowler was possibly the problem as she was the common theme.
According to reports, Uber has hired outside counsel led by former Attorney General Eric Holder to investigate Fowler's charges. Helping in the investigation by undertaking "listening" sessions reportedly will be board member Arianna Huffington and head of HR Leane Hornsey. Associate General Counsel Angela Padilla will also be involved. In such an investigation, outside counsel typically would work independent of anyone in the company to help establish a sense of objectivity. It is unclear how much of a broader investigation might happen.]
The big problem facing Uber is that it has built a long list of alleged questionable behavior over its short existence. The charges include competitor Lyft's claims of Uber's attempts at business sabotage, reports of a plan to dig up dirt on journalists who were critical of the company, and a number of questionable things Kalanick said in an interview with GQ, including the dismissal that a woman's complaint of being choked by a driver as something that didn't really happen and calling his then-current success with women "Boob-er."
None of that touches on broader business issues as being sued by a competing taxi company for "predatory pricing tactics", the $90,000 fine of former Uber lobbying executive David Plouffe for violating Chicago ethics rules by not registering as a lobbyist when approaching Mayor Rahm Emanuel on the company's behalf. (Both Plouffe and Emanuel were on Barack Obama's staff.)
It's quite the extensive list of messes. In the tech industry, it's not uncommon for startups, particularly well-funded ones, to push the boundaries of business and behavioral rules. As the old saying goes, it can be more effective to seek forgiveness than permission. But any company comes to a point where that sort of approach is no longer tenable.
Uber would seem to be in that position. It wants world domination in transportation but faces many hurdles, including hard questions about its operating economics and whether the company really can become profitable one day, let alone justify the amazingly high valuation it has received from investors, according to Naked Capitalism.
With such challenges, every need to address what seem largely self-inflicted wounds is a distraction that keeps the company from focusing on its goals. And if the charges of sexism and sexual harassment are even partly true, the company has a much larger problem: a dysfunctional culture that will repel large numbers of talented individuals, anger many customers, and potentially put the company in the crosshairs of one lawsuit after another. The question is whether Kalanick has the executive skills to fix these significant problems or if investors might decide that they have to replace him with who can bring order to the operations.