Uber: Who would want to work there now?

The Biggest Threat to Uber’s Business: Who Would Want to Work There Now?

The Biggest Threat to Uber’s Business: Who Would Want to Work There Now?

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A blog about business and economics.
June 15 2017 1:31 PM

The Biggest Threat to Uber’s Business: Who Would Want to Work There Now?

HONG-KONGUBERTAXICOURT
No thanks.

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On Tuesday, Uber CEO Travis Kalanick announced he would take an indefinite leave of absence from the company. The move followed an ever-tightening spiral of scandals for the San Francisco–based ride-hailing juggernaut that boiled over this week following the resignation of the company’s senior vice president for business, Emil Michael, on Monday; the release of a report by former Attorney General Eric Holder suggesting fixes to Uber’s sexist, Hobbesian work culture; and the company board’s vote to adopt all of Holder’s recommendations.

Could Uber, which has a valuation of $70 billion and is the dominant ride-hailing service across much of the globe, be in danger of losing its perch atop the industry pecking order? Three schools of thought suggest it might be.

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First, the company’s leadership has been gutted. Kalanick and Michael joins Uber’s former president, head of mapping, vice president of product, top communications executive, vice president of engineering, and head of finance, all of whom left the company in the past six months. An Uber board member resigned Tuesday after making a sexist joke at the meeting dedicated to reviewing possible solutions to the company’s long history of rampant sexism. How long can a company survive with its head cut off?

Second, as Aarian Marshall argued Tuesday in Wired, Uber is a toxic brand and an unreliable partner. “Bad news cycles are bad news for collaborations,” he wrote, and collaboration (especially with automakers) is essential to Uber’s dreams of one day dominating the self-driving car market. Wall Street backing is also the basis for any eventual IPO, which the company had been hoping to roll out as early as next year. But trust in Uber is in short supply these days.

Third, there are Uber’s customers. As Farhad Manjoo opined in the New York Times on Wednesday, a decline in app users could hose any prospects of future recovery. “To encourage a better Uber, it’s time to play the only card you’ve got” as a consumer, Manjoo exhorted. “If it backslides or otherwise fails to live up to the promises it’s making now, stop using Uber.”

But there are reasons to doubt that these particular doomsday scenarios will pan out. In both its bullish business model and pervasive workplace sexism, Uber is like a ghastly mirror image of the “nevertheless, she persisted” meme that has come to symbolize feminist perseverance in the face of misogynistic headwinds; its awful behavior never seems to dog it for too long. The company has been embroiled in controversy, flayed with unflattering headlines, and buried under court motions for years. But “instead of making any meaningful changes” to the way it operated, BuzzFeed editor-in-chief Ben Smith wrote Tuesday, “Uber simply pressed on,” continuing to win customers, score business deals, and rake in wads of cash despite a thuggish workplace culture and questionably legal behavior. Why should the temporary departure of its CEO and the rechristening of the company’s “War Room” (it's now the “Peace Room”) meaningfully change things for the embattled startup? As Manjoo himself admits, “No matter what it does, a lot of us just can’t seem to quit Uber.”

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But there’s a fourth constituency that could end up sealing Uber’s fate: Its employees, both present and future. The company currently employs an estimated 12,000 people worldwide, roughly 7,000 of them in the U.S. And in an employment landscape with as much turnover as Silicon Valley, the ability to attract top talent is the lifeblood of any tech company. Fail to extract the best employees from that churn and you’re not likely to keep your head above water very long. Uber’s failure to hold onto and attract employees might deliver the killing blow long before the company’s erstwhile leaders, jittery investors, or disillusioned customers do.

Of course, we don’t yet know much about how Kalanick’s departure is affecting employee outlook. But if it’s any indication, the company’s head of human resources asked Uber workers to stand up and give their fellow employees hugs after the oft-criticized CEO’s announcement Tuesday. And morale at the company has been low for some time. In part that’s the result of Uber’s infamously hard-charging, regulation-skirting, “bad-boy” corporate culture, which Kalanick both boasted of and embodied during his tenure. But the rumblings of dissatisfaction grew louder after Susan Fowler, a former Uber employee, published a blog post laying bare the undercurrent of unpunished sexual harassment that pervaded employee interactions in the company’s engineering division, which a group of female employees later called a “systemic problem” in a February meeting with Kalanick. Subsequent accounts—including a criminal probe launched last month by the Department of Justice and recent reports that the company’s president of business in the Asia Pacific mishandled the case of an Uber driver accused of raping a passenger in India—have only made things worse. (The victim in the India case, whose medical records were inappropriately obtained and shared by Uber executives, is now suing the company.)

None of this to say that anyone should feel bad for Uber employees who’ve stuck with the company—software engineers reportedly rake in an average of $292,000 annually, after all. But under those conditions it’s not hard to imagine employees, particularly women who feel unwelcome in the industry or who suffer harassment at the hands of co-workers, quickly vacating positions at the company—or simply choosing not to apply to them in the first place.

What’s more, Uber has already demonstrated a lack of grace when it comes to assuaging nervous employees in the wake of other high-profile departures. In late April, Anthony Levandowski, the former head of San Francisco–based company’s in-house self-driving car outfit, distanced himself from the division while under legal scrutiny related to an ongoing court case with Google (he was fired outright last month). The void reportedly sparked a spate of external job-hunting by nervous Uber engineers who worried their jobs might disappear out from under them—fears the company’s management apparently did little to quell, Recode reported at the time.

The company could also end up an unwitting victim of its own outsourcing business model. As Daniel Gross noted Tuesday in Slate, much of the Uber’s workforce—from its legions of nonemployee drivers to the owners of the vehicles that comprise its nationwide fleet—is only loosely yoked to the company. Those looking to jump ship could find a soft landing with Uber’s top U.S. competitor, Lyft, where drivers enjoy higher wages and greater levels of overall employee satisfaction (and for which many Uber drivers are already switch-hitters). Uber has struggled to retain drivers for years; fully half of them quit within their first 12 months with the company, Forbes reported in 2015. And with few employee protections and just 14 percent of driver jobs held by women, Uber’s outsourcing reflects many of the same pathologies of behavioral impunity and gender inequity that plague the wider company—mistakes its plucky rivals are eager to exploit.

That last prospect—an industry competitor scooping up not just Uber’s employees but also its vision for the future of transportation—might end up being the most optimistic outcome for the besieged ride-hailing startup. As Manjoo noted in the Times, there’s no need to eschew the company concept writ large even while kicking Uber to the curb. “Ride-sharing, as an industry and a civic utility, is too big an idea to be left to a company like the one Uber is now,” he wrote. And as I suggested just three weeks (but a lifetime of Uber scandals) ago, it’s looking ever more likely that the tech giant could end up a ride-hailing Ozymandias, a byroad warning to other startups barreling down the gig economy road. Besieged by demons of its own design, ending up a cautionary tale could be the best shot at leaving a positive legacy Uber has left.