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How will Uber evolve without CEO Kalanick behind the wheel?

June 13, 2017 at 6:20 PM EDT
Ride-service giant Uber is in the midst of major turmoil. After months of complaints about the company's culture, sexual assault and bias, chief executive Travis Kalanick will take an indefinite leave of absence. That comes as a new report conducted by Eric Holder suggests ways to reform the company’s values. Jeffrey Brown speaks with Jessi Hempel of Backchannel about Uber's new direction.
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JUDY WOODRUFF: After months of complaints about the company’s culture, allegations of sexual harassment and bias, Uber announced changes at the top today.

Even though the ride service giant is worth tens of billions of dollars, it’s in the midst of major turmoil. Now it will take new steps to change the culture, it says, and values of a company that’s become criticized for very aggressive, unethical and potentially illegal tactics.

Jeffrey Brown has the story.

JEFFREY BROWN: Perhaps the biggest immediate change, Uber’s chief executive and co-founder, Travis Kalanick, will take an indefinite leave of absence.

That comes after a personal loss, the death of his mother, but also coincides with a new report on company policy and behavior led by former Attorney General Eric Holder.

Uber’s board of directors reportedly adopted a series of recommendations from Holder, including more oversight of leadership, new measures to increase diversity and inclusion, stricter guidelines for employee behavior, and a pledge to change Uber’s core founding values.

Uber’s problems grew after a former engineer wrote a blog post this past winter detailing how she had been sexually harassed at the company and how her managers ignored her complaints.

We’re joined now by Jessi Hempel. She head of editorial for Backchannel, a tech and business publishing site.

Welcome to you.

So, is this, first of all, a surprise that Travis Kalanick is taking a leave? And what further questions does it raise for you?

JESSI HEMPEL, Backchannel: I would say, in fact, it can’t be a surprise at this point that Travis is taking a leave.

Look, he’s having a hard personal time. He buried his mother on Friday. But, beyond that, the company needs it. Shareholders are worried. They’re worried that the company is going to begin the lose value.

And as to what questions that it raises for me, I think the biggest question is, Travis is a guy who has managed, through very smart manipulation of the shares of the company, to maintain a ton of control of this company. He certainly will stay on the board.

I want to know what it really means that he’s taking a leave. Is he actually going to be able to step back and let somebody else run the company?

JEFFREY BROWN: Well, so, what are the core — what is the core problem at Uber that comes through the reporting up to this point and what we know from the Holder report that’s just come out?

JESSI HEMPEL: I would point to two problems that are really highlighted by the Holder report. The first and the most egregious is a cultural problem. It starts at the top.

This is a company that has for too long taken it for granted that people are disposable, and that the CEO’s machismo attitude has just trickled down.

But, secondarily, this is a 14,000-per company, and Travis has been running it as if it were an eight-person start-up. So, it has none of the structures that most companies put in place the catch some of this stuff a lot earlier on.

And that’s what you really see in the Holder report. The Holder reports asks for what at many companies this size are very basic things, like a better H.R. structure that works, or a head of diversity and inclusion that actually does that job. These are pretty basic things.

JEFFREY BROWN: So, there is always a question, of course, when you have a company that’s really built and around the image of one person, how much can you separate that person from the company and how much the company can thrive now going forward.

JESSI HEMPEL: I mean, I think that really is the question for Uber.

It’s a paradox of sorts. The reason why Uber has been so successful so far is also the reason why the culture is in such crisis. If you truly are able to strip Travis, not just Travis, but his values from this company, what do you have left? What are you going to rebuild it as? What is the vision going forward?

JEFFREY BROWN: So, do you see any new steps in what you have seen so far to ensure the diversity, the better kind of leadership, the taking away the bias that’s been there?

JESSI HEMPEL: Well, absolutely.

I mean, this is a company that’s truly taking this seriously. Now, it’s about time. But last week, we saw that the company hired Frances Frei from Harvard Business School. She’s a renowned executive leadership expert. And she’s going to come in, and she says she has full leeway to do whatever she needs to do to improve the culture.

But, you know, the biggest challenge for this company right now is that it has no leadership. I mean, it’s not just that it doesn’t have Travis. It’s executive ranks are incredibly thin right now. And so Uber’s first — the first thing it needs to do is simply put new leaders in place.

And, frankly, it’s a pretty hard place to recruit skilled leaders right now. I don’t know a heck of a lot of people who want to go.

(CROSSTALK)

JEFFREY BROWN: Excuse me.

JESSI HEMPEL: Yes.

JEFFREY BROWN: How much impact has all this had on ridership and on the bottom line?

JESSI HEMPEL: Well, it’s hard to say right now. I mean, profits — revenues continue to agree at this company, and its loss last quarter shrunk some.

But we have also seen the competitor Lyft gain some market share in the U.S. And I have heard that advertisers are a little nervous about putting their brand next to Uber right now.

And so I think that we’re going to start to see over the long term, over the next few months the impact that the last few months has had.

JEFFREY BROWN: And just very briefly, Jessi, how much of all this is being watched by other companies who have been charged with a similar kind of culture in Silicon Valley?

JESSI HEMPEL: You make a really great point.

Uber is in the spotlight for this, but this isn’t an Uber problem. This is a problem that a lot of start-ups have that have grown to these massive valuations with many employees based on the charisma and the vision of one founder.

And I think one thing that we will see going forward is that Silicon Valley will hopefully look itself in the mirror and rethink some of the ways that it structures these start-ups to begin with.

JEFFREY BROWN: Jessi Hempel of Backchannel, thank you. Thank you very much.

JESSI HEMPEL: Thank you.

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