ANALYSIS: The ride-sharing giant finds the wheels coming off as it faces criminal investigations, lawsuits, executive departures and mass firings
A series of law suits, criminal investigations, executive departures and employee firings present a general picture of management disarray that calls into question whether once high-flying ride sharing startup Uber can survive as an independent business.
Lately it seems more bad news emerges from Uber almost every day.
A number of observers have put the start of Uber’s decline as Feb. 19 when engineer Susan Fowler posted a blog entry detailing an egregious case of sexual harassment coupled with total inaction on the part of Uber’s management.
Fowler’s charges convinced Uber to arrange for an independent investigation by former U.S. Attorney General Eric Holder. Holder and his legal team, which released a set of recommendations that was accepted by the Uber board of directors on June 11.
But the signs of corporate upheaval began long before that. Fowler’s blog entry mainly served to precipitate some long overdue reforms and reveal serious management and cultural problems inside the company.
The need for change reaches back to the early days of the company when the idea of a ride-sharing app was facing opposition on all fronts. This was partly because nobody fully understood Uber’s goals in the transportation business and partly because a number of entrenched interests were afraid of the disruption Uber was likely to cause.
And if Uber was anything, it was disruptive. It seemed that Uber went out of its way to make its ride-sharing app and its move into regional ground transportation markets as disruptive as possible. Uber’s mode of operation was to begin operations in a new city while ignoring any laws or regulations that cover local taxi services or ride-sharing.
This disruption proved to be effective. Uber, founded in March 2009, grew to a $70 Billion market valuation in seven years as venture capitalists poured money into a company that has yet to turn a profit.
Uber established operations in cities worldwide, sometimes to be greeted by massive taxi driver strikes, protests and even occasional violence. But more often than not, Uber was simply allowed to operate. While Uber’s tactics enabled it to overcome opposition, the culture that grew used to overcoming opposition grew out of control.
Those tactics resulted in an effort by Chief Business Officer Emil Michael to hire private investigators to look into the private lives of journalists he perceived as being anti-Uber. But it also resulted in the belief that anyone who was perceived to be a high performer was beyond reproach. That was what happened in the harassment charges raised by Fowler.
But it also appeared in other contexts, such as when Uber created Grayball, which was a version of the Uber app designed to keep potential regulators from getting rides from Uber. It also appeared in changes to the software that allowed Uber to follow users even when they weren’t using the ride-sharing app—a move that has resulted in a $20,000 fine by New York State.
Grayball, meanwhile, has generated an investigation by the U.S. Department of Justice. Then there’s the ongoing issue of the effectiveness of Uber’s background checks on drivers.
Originally published on eWeek