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Why Uber's Travis Kalanick should not return as CEO

Daniel Roberts
Senior Writer

Tech startups tend to take on the persona of their founder. For Uber, that has long been a quiet problem that, in the past few months, escalated into a much louder crisis.

Travis Kalanick, the cofounder and CEO of the Silicon Valley ride-sharing darling, shaped Uber in his own image: aggressive, combative, hard-charging, hard-partying, cocky.

Now he is taking a leave of absence after his mother’s sudden death in a boating accident—and also because, as he acknowledged in a companywide email, “There is much to improve… If we are going to work on Uber 2.0 I also need to work on Travis 2.0 to become the leader that this company needs.”

But it’s too late for Kalanick to be the leader that Uber needs for its next stage, which will include an eventual IPO. It would be better for the company if he never return as CEO.

A man enters the Uber offices in Queens, NY. (Reuters)

Back in 2014, Kalanick boasted in a GQ interview that he calls Uber “Boober,” a crude allusion to the women he has attracted thanks to his position. In the same interview, he complained about having to take business meetings with city officials in Miami when he “would much rather be at [fancy beach clubs] the Shore Club or the SLS.” Also that year, Uber executive Emil Michael suggested at a dinner party that Uber hire someone to dig up personal dirt on journalists; Michael was not fired at the time. (He resigned this week.)

In 2015, Apple CEO Tim Cook caught and confronted Kalanick (a New York Times story this year revealed) for “directing his employees to help camouflage the ride-hailing app from Apple’s engineers” in order to keep Apple from figuring out that Uber “had been secretly identifying and tagging iPhones even after its app had been deleted and the devices erased.” The tracking is a violation of the App Store terms of service. Apple, and Cook, figured it out anyway. To recap: Kalanick violated Apple’s terms—and then told employees to hide it from Apple.

Just these few examples show that Kalanick was already known to be a wild card, and a PR risk to his own company, long before this year, when the company truly hit an ugly patch.

The narratives around Kalanick, and even the terms that the tech press use to describe him, have dramatically changed. In 2013, Fortune praisingly called him a “rebel hero” and a “badass.” This year, the New York Times says he “plays with fire” and notes that multiple sources call him “emotionally unintelligent.” Business Insider says Kalanick is Uber’s “biggest liability.”

A year of scandal

Now we arrive at 2017. In late January, Uber promoted its service in New York while city taxi drivers were striking during Donald Trump’s first travel ban attempt; the company got slammed, #DeleteUber began trending, and more than 200,000 people reportedly deleted the app. The incident led Kalanick to step down from Trump’s business council.

In February, Susan Fowler Rigetti, a former Uber engineer, wrote a bombshell blog post alleging repeated sexual harassment by a male colleague, and saying Uber HR took no action after she reported it. “What [Fowler] describes is abhorrent and against everything Uber stands for and believes in,” Kalanick said in a statement at the time.

But a New York Times story three days later suggested that such a culture is exactly what Uber stands for. Indeed, an internally-famous email he sent in 2013 before a company retreat to Miami, unearthed this year, shows Kalanick doling out rules about sex with coworkers, and using flippant jokes like “Travis will be celibate on this trip. #CEOlife #FML.”

Then there was the video footage. In late February, Kalanick was caught on camera arguing with one of his own Uber drivers over pricing policy. He lost his temper and told the driver: “Some people don’t like to take responsibility for their own sh—.” In an apology statement posted after the video came out, Kalanick said, “I must fundamentally change as a leader and grow up,” and congratulated himself for his maturity in admitting fault: “This is the first time I’ve been willing to admit that I need leadership help and I intend to get it.”

But he didn’t step down; instead, Uber launched a search for a second-in-command to Kalanick, a search that still has not concluded. (For a lively chat on Uber’s future, listen to the Yahoo Finance podcast episode below.)

A public attempt to fix the company

Uber brought on former Attorney General Eric Holder in February to investigate the company’s culture and suggest fixes. This week, the Uber board voted unanimously to enact all of Holder’s suggestions. It resulted in 20 immediate layoffs. But in an all-hands meeting this week to go over the report, there was more of the same: a board member made a sexist comment about women talking too much and had to resign; an HR executive, who is British, joked that for every time she had said the word “bloody” in the meeting, employees would have to take a shot.

All of this only reinforced the headlines we’ve seen for six months: that Uber’s culture is deeply male (65%), sexist, aggressive, childish, and lost. That started with Kalanick and his own ethos and leadership, but clearly has extended to the larger workforce. The New York Times reports that the company is losing talent and “morale is decimated.”

Kalanick is taking time to grieve his mother, yes, but respectfully, his leave is also about optics. It was necessary. And Kalanick’s absence alone won’t be an instant fix: his tone became the tone of the entire company, and now it must be expunged.

Uber’s C-suite has been gutted

Keep in mind also that Uber isn’t just without a CEO now: it also needs to fill COO, CMO, CFO, general counsel, and SVP of engineering roles. Keep in mind also that Uber loses a lot of money—nearly $3 billion in 2016. (Revenue was $6.5 billion.) As it seeks to achieve profitability, fixing its culture is a significant hurdle in the way.

If the company can follow Holder’s guidelines and actually improve in Kalanick’s absence, it must keep him away from the CEO job in order to move forward. In his own letter, he says the length of his leave is uncertain; he should make it a long one. And if and when he returns, Uber ought to give him an honorary title (Rafat Ali of travel site Skift predicts “chief evangelist”) or, at most, make him chairman or an advisor.

Of course, the retort to all of this would be that Kalanick deserves credit for building such an impressive company. He credits cofounder Garrett Camp with the original idea, but it is Kalanick that built the company into the most valuable private tech startup on the planet ($68 billion, on paper). It’s the No. 1 ride-sharing service in the US, and in most major markets Lyft is not very close. And there’s a case to be made that the average consumer doesn’t much care about these corporate scandals (the latest data in New York City, for one, supports that), and that as long as the product is good, the company can succeed.

That line of defense made sense until boardmember David Bonderman’s comment this week, which crystallized just how entrenched the Kalanick-created culture is at Uber. Yes, it was just one man’s thoughtless comment, but it was a sexist comment made at a crisis-response meeting about how to stop the sexism at Uber. It was a perfect Exhibit A of why the company does, desperately, need to reinvent itself.

Uber’s best bet to evolve is to decide that Travis Kalanick is done being its top executive.

Daniel Roberts covers tech at Yahoo Finance. Follow him on Twitter @readDanwrite.

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