Uber Can't Keep Driving Itself

Without a CEO, COO, CMO, or CFO, the company can't grow.
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When Benchmark Capital distributed a letter this week about its lawsuit against former Uber CEO Travis Kalanick, it was addressed to Uber’s employees. But make no mistake: It wasn’t written primarily for them. The letter quickly became a scavenger hunt for analysts, journalists, and investors trying to decode its meaning. Buried within it were clues as to how Uber’s future might play out. Is there more to the Holder Report? Did the board see Benchmark’s lawsuit coming? What does Benchmark want, exactly?

None of these questions is likely to be answered until Hollywood makes its epic tell-all movie. Meanwhile, Uber’s employees—the roughly 1,400 people who have signed on to help realize the company’s ambitious vision—are still swiping their badges at Uber’s downtown San Francisco headquarters and riding the elevator to the cavernous fourth floor, where their conference rooms may now have less belligerent names but the work of growing the world’s largest car service remains stubbornly hard.

It’s now been nearly two months since Travis Kalanick stepped down and the company embarked upon a CEO search. Many of the most important spots in the company’s executive ranks are still empty: Uber hasn’t had a chief financial officer in more than two years; its head of finance, who had a more limited role that nevertheless put him in charge of the books, left to join another startup in June. New chief brand officer Bozoma Saint John has been on the job for just more than two months. There is no chief operating officer or chief marketing officer, and the company’s first employee, Ryan Graves, left his role as senior vice president of operations last week.

For now, Uber is run by a large committee of executives. That’s an expedient short-term solution, but more than a dozen decision makers is no substitute for one decisive leader, supported by a strong, collaborative board and endowed with the moral authority and the obsessive conviction to navigate the company’s future. “From a vision and strategy and innovation perspective, it has got to be a lot harder to come to consensus and push forward given current circumstances,” says longtime tech analyst Scott Kessler, who is director of equity research at CFRA. “Who exactly is in charge?”

Uber’s day-to-day operations appear to be more or less on track. In the company’s first quarter results, which it shared with investors in June, Uber reported that the number of trips it handled had tripled over the past year, and it was growing at the same rate it had been a year earlier. The company divulged it had lost $3 billion the previous year, but that its loss had narrowed to $708 million in the first quarter, from $991 million a quarter earlier.

I checked in with Harry Campbell, who runs a blog and podcast series for rideshare drivers, and he said drivers haven’t felt much of a change at all. The service is still popular, and it works well. He says the problems in the boardroom “haven’t really affected the short term operations of drivers and riders,” adding that “even Lyft hasn't really been able to meaningfully take advantage of the turmoil.” (In a recent Recode podcast interview, Lyft’s director of product suggested otherwise, noting Lyft saw a 60 percent increase in activations during the #DeleteUber campaign in January.)

But like all venture-backed tech startups boasting unicorn status, Uber’s dizzyingly high $69 billion valuation is not predicated upon how well today’s business works. It’s a bet on future growth. That growth is threatened by Uber’s paralyzing leadership vacuum and board-level battles. It’s hard to retain the best talent, engineers, and business leaders when they are being actively courted up and down Highway 101. It’s hard to hire new talent. And then there’s the massive distraction middle managers face knowing there’s a civil war in the boardroom. It’s difficult to make decisions about which future-looking bets to back. And it’s challenging to seal brand partnerships with big companies that may fear that a scandal-embroiled Uber will taint their own brands.

It’s no surprise that after a couple of years of constant product announcements like the UberEATS app and Uber for Business, changes have been much more incremental. Rather than expanding into new markets, Uber is pulling back, announcing the sale of its China business to Didi a year ago and more recently ceding control of its Russia operations to Yandex.Taxi. It continues to tussle with regulators in Europe, where it has pulled out of Denmark entirely and waits for European regulators to judge whether it should be looked at as a taxi service or a software platform.

Meanwhile, Uber’s most promising innovation strategy—its move to develop self-driving cars—has been thrown into question by a trade-secrets lawsuit in which Alphabet accused former employee Anthony Levandowski of illegally downloading thousands of files before he left the company’s Waymo division to join Uber. Uber fired Levandowski in May, after spending $680 million to purchase his self-driving truck company, Otto, just ten months earlier. The case is expected to go to trial in October, and the results could impact whether and how Uber is permitted to use much of the technology it has continued to develop.

Even before Kalanick’s departure, many of Uber’s employees were demoralized. Software engineer Susan Fowler gets credit for exposing the extent of the company’s systemic cultural issues in her February blog post describing an environment where sexual harassment was condoned. The subsequent investigation led to the review of 215 sexual harassment claims; more than 20 people were fired, including several of the company’s most senior employees.

Liane Hornsey, who joined Uber as chief human resources officer in January, openly acknowledged employee burnout in a Buzzfeed interview. “Many employees are very tired from working very, very hard as the company grew,” she told Buzzfeed. “Resources were tight and the growth was such that we could never hire sufficiently, quickly enough, in order to keep up with the growth.” Hornsey, who has been introducing changes ranging from pay raises to earlier dinners for employees working late, told BuzzFeed News that during one-on-one sessions, roughly 10 to 15 employees told her they’d experienced panic attacks while working at Uber.

Benchmark begins its letter by saying that “Uber is the most important and promising company of our generation.” Not so long ago, this remark held the potential of truth. But with every day the company’s CEO spot goes unfilled, Uber’s prospects dim. There’s no doubt the investors, most of all, understand this—and even as they seek to flash their confidence publicly, they’re doing what they can privately to protect their investments. This is evident in Benchmark’s lawsuit, and it’s evident in other board members’ attempts to distance themselves from the suit. Anyone who claims to know the board members’ true motivation at this point is just speculating.

What is clear is that the lawsuit, paired with a public appeal to Uber’s employee base, will likely slow down the CEO search even more. And that’s a bad thing for Uber, and anyone else who once believed the company had a chance at being the global transportation and logistics behemoth that its disgraced cofounder originally envisioned. Self-driving cars are hard enough. A self-driving company is a recipe for a wreck.