Uber’s Debacle is a Cultural Lesson for Startups
Uber’s culture is criticized as complicated and heavily toxic for a technology company. In the case of a tech brand, a toxic culture hurts more than anything else. A lot of friction among staff, profits above everything, and unreasonable expectations from the employees are some of the most common traits associated with toxic organizational cultures. However, organizations with such cultures hide much more underneath, a lot of which can often go undiscovered.
Toxic cultures cause a loss of employee morale, a decline in productivity, and can have other negative outcomes as well that are detrimental to the overall health of the organization and hurt investor confidence. Technology companies that adopt explosive cultures allow their employees to make mistakes. Commitment to ethics, accountability, and integrity, on the other hand, helps technology companies find profitable growth and build a responsible image.
In a 2017 article, Stanford researchers highlighted many problems with Uber’s work culture that encouraged irresponsible behavior and harassment. Some of the cultural values that Uber had adopted like ‘hustling’ and ‘toe stepping’ encouraged aggressive behavior and irresponsibility. David Larcker, a professor of accounting at Stanford Business School, and Brian Tayan, a researcher at the business school noted that Kalanick’s focus was business growth and everything else was secondary for Uber Technologies.
“In the words of an early employee, Kalanick’s focus was “growth above all else.”5 This mindset was reflected in the company’s 14 cultural values, which encouraged behaviors such as “always be hustling,’” “make magic,” and “toe-stepping”.
While these values may make Uber sound like young and aggressive but they also reflect a lack of ethics and a very high level of greed. Uber’s early employees have highlighted the level of toxicity and aggression that resulted from the founders’ greed for wealth. When Uber was in its initial stage of growth, this culture may have looked appropriate for the organization. Uber found explosive growth and also earned a lot of appreciation for its disruptive business model, but soon skeletons emerged from the closet.
A female Uber employee spoke out on Medium about the treatment of female employees inside the organization. The female employee with nickname Amy Vertino wrote about how female employees were ill-treated and new hires called with hideous nicknames at Uber. Employee abuse was common at Uber as per Amy Vertino. She also wrote about Uber’s hiring practices and how Uber poached employees from other organizations. They stole the cream of the crop at the Silicon valley from other organizations. She too was excited at the beginning about working with a company whose disruptive growth had become a thorn in the eyes of the traditional taxi companies and whose name was cited with awe for disruptive innovation. The gig economy was taking off and names like Uber seemed like saviors for the gig workers. Amy wrote:
The first two months at Uber was an exhilarating experience. I sat amongst the cream of the crop of Silicon Valley in fancy rooms where new innovations were being thought of at rocket speed. We had engineers who are stolen from Google, NASA, Apple and even a guy who used to work at a high position for the Federal Government.
Amy Vertino on Medium.
#deleteuber became a social media sensation in 2017. According to the Stanford researchers, the cure lay in the culture and if the founders could improve the organizational culture, the results could improve. While the appetite for wealth is logical to some extent; if it rots the organization’s culture and becomes a core value, it immediately spells a disaster. It became evident with the global boycott of Uber’s services. Uber had left customers and regulators furious from SanFrancisco to New Delhi. Uber founders had never imagined this outcome.
Larcker notes in his research paper on Uber,
“Uber is an example of a company that started small with a good idea, grew rapidly, became disruptive, and grew into a monolith. But along the way, [management] didn’t pay enough attention to how they wanted to do business from a cultural and ethical standpoint.”
David F Larcker.
Culture and ethics are the foundational bricks of a successful organization in the real terms, but Uber founders missed these two critical points. Startup companies must learn from these mistakes of Uber to avoid such a debacle. Finding the right cultural fit for your organization can be difficult but is an important initial step where the participation of the Board of Directors, as well as other stakeholders, is necessary. However, letting money override your cultural values is outright a grave mistake that was highlighted in Uber’s precipitous fall from grace. In the case of Uber, the Directors stepped in but it was too late by then. They fired the CEO and Cofounder Travis Kalanick. Hundreds of thousands of users around the world had deleted the app by then and the company’s reputation was now well known.
Uber’s debacle has become a cultural lesson for technology startups around the world. An organization that started as a leader in the sharing economy became an example of a poor organizational culture and the leadership’s blindness. Growth must be a focus for startups but being passionate for growth is a lot different from being greedy for money. Culture and brand image are interlinked and while a disruptive business model can help businesses attract investors initially, in the long run, it may become a pain unless the board applies the right controls on the CEO and executives.
Uber’s debacle was largely credited to Kalanick and his furious and excessive greed for growth. Kalanick’s blindness turned Uber into another widely studied case study like Enron. In Uber’s case, a lack of transparency is also notable. The question is if Uber’s culture can be fixed. What corrective measures can the leaders adopt to bring the company back on the right course? Regulators around the world are watching Uber closely and customers are still complaining. Uber has brought in a new CEO, Dara Khushrowshahi, who used to be the CEO of Expedia earlier. The new CEO must focus on removing toxicity from the organization. He must learn from Salesforce and other technology businesses that have found satisfactory growth but not without focusing on culture, ethics, and stakeholder satisfaction.
In his case study on Uber, Larcker has raised some very interesting questions about Uber’s business model and if in future the company might be able to correct its course by changing its culture. Will new management and culture help Uber correct its mistakes? Is not culture difficult to change once it is established? An important responsibility for the new CEO of Uber and its board is that the company does not return to its original culture. There are several challenges before Khusrowshahi and one is to implement a successful cultural shift but that is not as easy as he believes.
According to him, culture is written bottoms up but that is something very different from Uber’s original culture. Bringing about a large scale cultural change will require him to exert a lot of willpower. He wrote about the kind of culture he was trying to bring to Uber on Linked In. In his article, Khusrowshahi highlighted some new values like celebrating differences, being customer-obsessed, and valuing ideas over hierarchy. However, several questions still remain unanswered and one of them is if Khushrowshahi’s vision will enable a complete change of culture and brand image for Uber. While nothing is impossible, his vision seems insufficient to cure the disease Uber is infected with. Even if he mends some of Kalanick’s mistakes, startups must refrain from imitating Uber’s business model.
Any startup interested in creating an Uber-like culture and business model must ask itself if a disruptive business model is the right fit. Otherwise, they must remain ready to face the same results as Uber. Even in 2020, Uber is dealing with challenges that indicate it is still very far from bringing in the type of cultural shift Khushrowshahi promised.
Sonam Kapoor, an Indian actress, shared her horrible experience with Uber in London on social media and advised people to use other options instead of Uber. According to the female actress, she was ‘super shaken’. In another case, a driver cheated a blind female singer to earn a £20 tip and five-star ratings. All these cases highlight the same concern which is a lack of strong organizational culture and leadership’s failure to implement ethical business practices organization-wide. Removing a few employees is not the cure and to prevent such incidents from happening in the future and losing trust in more regions of the world, Uber must first address that part of its culture and strategy which is directed at the females.