Home >Companies >Uber: A hot start-up in need of a cultural shake-up
Uber chief executive officer Travis Kalanick. Photo: Bloomberg
Uber chief executive officer Travis Kalanick. Photo: Bloomberg

Uber: A hot start-up in need of a cultural shake-up

Uber's toughest challenge yet is curbing its ugliest, most aggressive impulses before its win-at-all-cost culture turns off investors, potential employees and users

In just four years of operation, Uber has ignited a new global ride-sharing industry with the promise of transforming urban transportation and helping many people get by without owning cars.

But these days, the hot start-up is facing its toughest challenge yet—curbing its ugliest, most aggressive impulses before its win-at-all-cost culture begins to turn off investors, potential employees and the ride-hailing public at large.

The revelation, reported on Monday by BuzzFeed, that an executive publicly floated the idea of investigating the private lives of journalists who criticize Uber was only the latest in a parade of unflattering news about Uber’s tactics as it navigates the next phase of its growth.

Uber has grown into one of the most valuable start-ups in Silicon Valley, with outposts around the world. It has raised about $1.5 billion and is valued at more than $17 billion, with the inevitable talk of a public offering.

Uber’s hard-charging culture is in many ways characteristic of start-ups in general. But fostering such a culture can become a losing proposition faster than you might imagine.

“The dangerous thing in tech is a narrative," said Jan Dawson, an independent industry analyst. “The more stories that come out about Uber behaving badly—whether it’s about the way it competes with rivals or the fact that an executive discussed looking into journalists—the risk is that it starts to become the main story about the company, rather than the great service it provides or its low prices."

On Tuesday afternoon, after the journalist-spying story had captivated much of Silicon Valley’s clubby tech press, Travis Kalanick, Uber’s chief executive, made an apologetic series of posts on Twitter regarding the executive, Emil Michael.

“Emil’s comments at the recent dinner party were terrible and do not represent the company," Kalanick wrote in the first of 14 posts, none of which mentioned Michael’s future with the company. Technology companies live and die by culture; “culture eats strategy for breakfast" is among the most cherished sayings in Silicon Valley. What that means is that a company’s ultimate success or failure is determined less by anodyne technological prowess than by the values and behaviour of people who work there.

This may be particularly true for Uber, which is in many ways an incorporeal company. It owns no cars, its drivers are at-will contractors who can easily switch to rival services, and its customers are just one tap away from some other service. What’s more, though it is growing quickly, it is still young, and many people haven’t ever used one of its cars.

If Uber’s brand becomes associated with bad behaviour, what’s to stop people from choosing its rival Lyft—or from just hailing a taxi?

Uber has recently been dogged by accusations of various sorts. Last New Year’s Eve, a driver hit an immigrant family in San Francisco, killing a 6-year-old and leading to a wrongful-death lawsuit against the company. There have also been several accusations of Uber drivers sexually assaulting passengers.

Meanwhile, some drivers have protested over their wages and working conditions. And this summer, The Verge reported that Uber was waging a sophisticated campaign to recruit drivers from its archrival Lyft, a plan that “resulted in thousands of cancelled Lyft rides."

Kalanick later told Vanity Fair he also tried to crimp Lyft’s recent round of fundraising by calling venture capitalists and issuing a not-so-veiled threat that anyone who invested in Lyft could be blackballed from investing in Uber.

Some passengers have also worried whether the company plays fast and loose with riders’ privacy—whether an Uber employee will one day be able to track where you went, and with whom. Uber says it has a strict policy that forbids employees and drivers to check into riders’ travel habits.

Still, the new revelations could increase that fear. The idea that a senior executive at the company thought it would be fine to publicly reveal a plan for spying makes you wonder if anything is considered off-limits at Uber—and that may be the sort of deep-seated worry that an apologetic series of tweets can’t do much to fix.

Uber and its investors believe the company’s long-term mission is to re-invent transportation, to become not just a taxi service but also a replacement for private cars. That mission can be realized only if people trust the company implicitly and automatically.

Dawson noted that Uber wasn’t in any serious danger of losing it all. It will surely keep growing, at least for the foreseeable future. The trouble may come when Lyft and other rivals become a more dominant force in a larger share of Uber’s markets.

“In places like San Francisco, where you have an abundance of options for ride-sharing, this is more likely to affect people’s willingness to use Uber," he said. “In other places right now, people may not have much of a choice."

Uber wouldn’t be the first start-up to see its early success overshadowed by problems with its culture and image. Consider Myspace, the once fast-growing social network whose rise was marked by internal struggle and with a failure to take its millions of mostly teenage users’ privacy very seriously.

Myspace’s problems left a wide opening for a more disciplined start-up to take over social networking—an opportunity that Facebook was happy to exploit.

During its subsequent rapid rise, Facebook, too, was often the subject of outrage by its users over the indiscriminate way it seemed to alter people’s privacy settings. But brushes with users eventually prompted a shift in tone by the company.

Today, Facebook takes pains to offer plenty of warning to people about changes to its privacy options, and when it introduces products—like a new location-sharing app—it often leads its marketing pitch with its privacy options.

“I think that there’s a lesson there for Uber," said Mark Rogowsky, a Silicon Valley entrepreneur who has closely followed the battle between Lyft and Uber. “Uber today is at the stage where Facebook was several years ago—they’re growing ridiculously fast, and we’re all wondering whether this will be the moment that they see they need to make a change."

He added, “We just don’t know yet."

©2014/The New York Times

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