Uber's self-inflicted controversies come at a price: public loyalty
Uber's self-inflicted controversies come at a price:
public loyalty
In a statement to Uber employees, Kalanick apologized and
said he intends to seek leadership help.
Tracey Lien and David Pierson March 1, 2017 4:40 AM
Uber founder Travis Kalanick has run his
hyper-competitive business under the assumption the ride-hailing service that
reigns supreme will be the one with the cheapest rates and best service.
On that count, the 40-year-old chief executive has won
handily. Uber has the most cars on the road and often the lowest prices.
But in recent months, the San Francisco firm has
discovered customers care about more than just cost and service. People have to
actually like your brand. But that’s hard to do when your company is battered
by one self-inflicted controversy after another.
Since the start of the year alone, Uber has had to
address criticism over:
·
Its ties to President Trump
·
A wide-ranging sexual harassment allegation from
a former employee
·
A lawsuit by Google alleging the theft of trade
secrets
·
The resignation of the company’s senior vice
president of engineering for not disclosing another sexual harassment claim
And most recently, dashcam footage showing Kalanick
losing his temper with one of his drivers that went viral.
In the latest spat, Kalanick lashed back at a driver who
said he had lost money working for Uber’s high-end black car service. “Some
people don't like to take responsibility for their own [expletive],” he told
the driver. “They blame everything in their life on somebody else.”
CEO Travis Kalanick is seen discussing Uber's business
model with a driver in a dashcam video obtained by Bloomberg News. The
discussion begins at 3:50 in the video.
The embattled company is now fighting to retain drivers
and customers while dealing with an image crisis that would make most Fortune
500 leaders lose their lunch. Its sweet justice for critics of the company,
which has ignored regulators, clashed with legacy taxi providers and declined
to guarantee its drivers a minimum wage. Uber’s winner-take-all attitude may
have helped it become the nation’s biggest ride-hailing service, but now it
seems to be scaring away consumers with a conscience.
“By focusing solely on the next round of funding and
speedy economic growth, the company seems to have left behind what matters the
most: people,” Fabian Geyrhalter, the head of Los Angeles-based branding agency
Finien, said of Uber’s treatment of its employees, drivers and clientele.
When Uber launched in 2009, its service and technology
was novel: tap your smartphone, get a ride from a friendly driver in a clean
vehicle with new-car smell, all for a price comparable to a taxi.
But “today, the only brand attribute left is 'cheap' and
the Uber brand took a massive hit because of greed and a one-track mind that
left the life force of a functioning company behind,” Geyrhalter said.
The negativity doesn’t just hit ridership, which
witnessed a reported loss of more than 200,000 users since Kalanick showed
willingness to work with the president. Experts say it could also weaken the
company’s ability to recruit talented employees, particularly women. Moreover,
it’s already weighing on the patience of Uber’s investors, who see Kalanick’s
abrasive leadership style and the questionable culture it fosters as an
eventual impediment to a successful public company one day. Venture capitalists
Mitch and Freada Kapor published a letter last week describing Uber’s culture
as “toxic.”
“Travis is competing in several markets here,” said
Duncan Davidson, general partner at Bullpen Capital, which is not an investor
in Uber. “One is competing with Lyft and taxies. The other is competing for capital.
And the third is talent. This is going to hurt him.”
None of this is particularly shocking to anyone who has
followed Kalanick, whose cutthroat reputation and Ayn Rand worldview hasn’t
engendered much goodwill outside of Libertarian circles and venture
capitalists’ offices. Apple’s Steve Jobs wasn’t particularly liked either
because of his caustic management style, but his products were so
transformative that he was labeled a genius above all else.
Kalanick doesn’t have that luxury. Ride-hailing just
isn’t that sexy. And so the chaos at his company is seen as a reflection of his
leadership.
“Leaders create the weather and they control the
weather,” said Scott Eblin, an executive leadership coach who has also written
bestselling books on the topic. “If you look at Uber’s history and how
aggressive they’ve been in their expansion, it wasn’t that surprising that
they’ve run into trouble because it’s a super aggressive, takes-no-prisoners
kind of culture. That starts with Kalanick. It’s played out to its logical
conclusion.”
Davidson said the missteps put more pressure on Kalanick
than ever before to change his act.
“He created this bad boy culture, he broke the rules and
was able to defeat the taxi cab industry, and everyone applauded him for it, but
he’s going to start getting in trouble now,” Davidson said. “Like Trump has to
get more presidential, Travis needs to start being a leader, and not be a
feisty little start-up bad boy. It’s a transition everybody has to make, and
he’s taken way too long to make it.”
Uber did not respond to a request for comment, but
Kalanick issued an apology Tuesday night for the argument with his driver
caught on video.
“To say that I am ashamed is an extreme understatement,”
Kalanick wrote. “It’s clear this video is a reflection of me.… I must
fundamentally change as a leader and grow up. This is the first time I’ve been
willing to admit that I need leadership help and I intend to get it.”
A more carefully cultivated public image can make a
difference. Consider Uber’s chief rival, Lyft. Neither of the privately held,
venture-backed companies offers benefits to its drivers, perhaps the most
controversial aspect of the ride-hailing business model. Yet Lyft has succeeded
in promoting a softer image with its plush, pink mustachioed vehicles. In an
industry where there’s little difference between competitors, Uber is leaving
money on the table simply because Lyft is viewed as being nice.
Uber’s belligerence is so well-known in Silicon Valley
that competitors don’t even have to bring it up as a point of differentiation
any more when it comes to recruiting and retaining talent, according to sources
at Lyft, who declined to be named because they weren’t authorized to speak on
the matter.
The question now is how long the backlash will last.
After Uber appeared to advertise low fares during a taxi
workers strike at John F. Kennedy International Airport protesting President
Trump's travel ban, the hashtag #deleteUber trended and thousands of users
removed the app from their phones (Lyft was there too, but few complained,
likely because of the company’s comparatively benign reputation).
Tiffany Seeley, 27, was one of those users. The UX
designer and fan of Uber's design said she deleted her account after learning
about the company's response to the Trump administration’s travel ban and in
protest of Kalanick's participation on the president’s economic advisory
council. She even wrote the CEO a letter, she said.
But within about a week, Seeley said, she was back to
using Uber.
“I realized I needed it,” she said, describing the
convenience of hailing an Uber from her loft in downtown L.A. and being picked
up and dropped off without having to think about it. "It's all done for
me."
With a valuation of $68 billion compared with Lyft’s $5.5
billion, Uber isn’t likely to lose its dominance any time soon. But the
controversies could ultimately diminish that valuation. Kalanick, experts say,
will have to show a humbler side of the company moving forward if it hopes to
extend its growth.
“Arrogance works if you’re Babe Ruth and you hit a home
run where you pointed or you’re Muhammad Ali and you get a knockout in the
first round,” said Ira Kalb, a professor of marketing at USC. “If you don’t
deliver on arrogance, that’s when the marketplace is very unforgiving. That’s
sort of what’s happening with Uber now.”
Comments
Post a Comment