1 September 2017

Can Uber’s new boss steer the company out of the headlights?

Dara Khosrowshahi has a daunting in-tray.

When the board of the “ride-sharing” app Uber went looking for a new CEO, it wasn’t so much hunting for a successor to Travis Kalanick as an antidote. The company’s co-founder was forced in June to take an indefinite leave of absence, but even that wasn’t enough to satisfy some investors. They wanted him out. So he left.

The new CEO, Dara Khosrowshahi, has a daunting in-tray. First, there’s a legal dispute with Waymo, formerly Google’s self-driving car unit, which alleges that a former Google engineer stole research before ultimately quitting to join Uber. (The man involved has invoked his US Fifth Amendment right against self-incrimination; the case is expected to reach court later this year.) Then there are the ongoing regulatory battles around the world, as Uber claims it is part of the “sharing economy”, rather than a minicab service with employees and all the responsibilities that come with that.

Finally, there are deep concerns about Uber’s corporate culture. Kalanick’s downfall was accelerated by suggestions that, under his watch, the company had become a haven for gropers and sex pests, and that he hadn’t done enough to investigate the problem.

In February, a former employee called Susan Fowler published a blog post alleging that she had been propositioned by a manager. “When I reported the situation, I was told by both HR and upper management that even though this was clearly sexual harassment and he was propositioning me, it was this man’s first offence, and that they wouldn’t feel comfortable giving him anything other than a warning and a stern talking to,” she wrote. “Over the next few months, I began to meet more women engineers in the company. As I got to know them and heard their stories, I was surprised that some of them had stories similar to my own.”

Fowler’s blog attracted huge publicity, and senior figures decided that they needed to respond decisively. The board member Arianna Huffington, the co-founder of the Huffington Post, promised that there would be no more hiring of “brilliant jerks”. Uber asked the former US attorney-general Eric Holder to write a report on how the workplace culture could be reformed.

But the bad PR wouldn’t go away. In June, an all-hands meeting was held, at which Huffington noted that once companies had one female board member, it was easier to recruit a second. The venture capitalist David Bonderman, another member of the board, interrupted her: “Actually, what it shows is that it’s much more likely to be more talking.” He resigned soon after, calling his remark “careless, inappropriate and inexcusable”.

Inevitably, there were efforts from the men’s rights movement to turn Bonderman into a free speech martyr – an episode reminiscent of the recent resignation of the Google engineer James Damore, who circulated a memo suggesting there were biological reasons for the paucity of women in his company. (Silicon Valley might portray itself as ruthlessly Darwinian but somehow that impulse fades when the person sacrificed for the good of the company is a powerful man.)

As the sexual harassment row grew, it became clearer that Travis Kalanick – who referred to Uber as “Boob-er” in a 2014 GQ article because it had helped his success with women – was not the right figure to smother the flames. Hence his defenestration and the search for a more low-key replacement. At 48, Khosrowshahi already has 12 years of leadership at the travel company Expedia on his CV. It’s the kind of company Uber would prefer to be: quietly, uncontroversially successful.

Unlike Kalanick, whose 14 rules for new Uber employees included an injunction to “always be hustlin’”, Khosrowshahi has a traditionalist streak. He worked at the banking firm Allen & Company and is on the board of the New York Times. He restructured Expedia several times, raising hopes that he will do the same to Uber’s sprawling international empire. His rebellions are quiet: when he married his wife, Sydney, in Las Vegas, she wore a Slayer T-shirt.

In contrast to Kalanick – who accepted an offer to serve on Donald Trump’s business council – Khosrowshahi, an Iranian American, has been critical of the US president. He was born in Tehran and moved to New York at the age of eight in 1978. When his father returned to Iran to care for his grandfather, he was detained there for six years, splitting the family apart. Unsurprisingly, he opposes Trump’s “Muslim ban” and, after a neo-Nazi rally in Charlottesville, Virginia, he tweeted: “I keep waiting for the moment when our Prez will rise to the expectations of his office and he fails, repeatedly.”

That attitude is more in tune with the prevailing mood in Silicon Valley, where even those titans who initially tried to work with Trump on his business advisory council have given up attempting to influence someone so capricious. As for Khosrowshahi’s lack of star power, that is exactly what Uber wants: better an invisible CEO than one who creates bad headlines.