Case Study ch 9: Winning at All Costs at Uber In early 2017, Uber, the world’s leading ride-sharing service, had a very bad month. Within the span of 30 days, the $70 billion company suffered a series of blows: · Former Uber engineer Susan Fowler blogged about her “slightly horrifying” time at the company.1 She reported that male managers routinely engaged in sexual harassment (one propositioned her on her first official day at work). Human resource staff ignored her complaints, defending repeat harassers who were star performers by continually claiming they were “first time offenders.” · A New York Times report backed up Fowler’s claims, finding widespread harassment (a manager was fired for groping multiple women) as well as evidence that employees snorted cocaine at a company retreat. · The senior vice president of engineering was fired after it was revealed that, before coming to Uber, he had been fired from Google for sexual harassment. · Several high-level executives quit, including company president Jeff Jones, who had been at the firm only six months. In his resignation statement, Jones criticized management, saying, “The beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber.”2 · A video surfaced of company founder and president Travis Kalanick berating an Uber driver. · Google—a major investor in the company—sued Uber for stealing its self-driving-car technology. · Uber blamed “human error” when one of its self-driving cars was involved in an accident when, in fact, the car’s system failed to recognize a red light at an intersection. · The #DeleteUber hashtag movement encouraged users to boycott the company, blaming it for trying to make extra profits off of an anti-immigration ban protest at New York City’s Kennedy airport. · News stories revealed that for years Uber used a secret software program to evade authorities in Las Vegas; Portland, Oregon; Boston; Australia; China; Italy; and other cities and countries where it was banned or closely regulated. The tsunami of bad news was the product of a corporate culture that has been called “toxic,” “aggressive,” and “unrestrained.” Uber’s culture, in turn, is a reflection of founder Travis Kalanick. Since Kalanick and a partner started their firm in 2009 after failing to land a cab ride in Paris, Uber has been focused on growth at seemingly any cost. Kalanick is combative, willing to take on taxi companies, government officials, and anyone else who might stand in his way. He doesn’t let government edicts slow him down, operating in cities that have outlawed the service. The company seemingly battles everyone, being the subject of more lawsuits than any other comparable startup. Many of these suits involve the classification of drivers as contractors instead of employees. Others address labor laws violations, passenger safety, lax driver background checks, and lack of access for disabled riders. The company’s winner-take-al.

1. Case Study ch 9: Winning at All Costs at Uber
In early 2017, Uber, the world’s leading ride-sharing service,
had a very bad month. Within the span of 30 days, the $70
billion company suffered a series of blows:
· Former Uber engineer Susan Fowler blogged about her
“slightly horrifying” time at the company.1 She reported that
male managers routinely engaged in sexual harassment (one
propositioned her on her first official day at work). Human
resource staff ignored her complaints, defending repeat
harassers who were star performers by continually claiming they
were “first time offenders.”
· A New York Times report backed up Fowler’s claims, finding
widespread harassment (a manager was fired for groping
multiple women) as well as evidence that employees snorted
cocaine at a company retreat.
· The senior vice president of engineering was fired after it was
revealed that, before coming to Uber, he had been fired from
Google for sexual harassment.
· Several high-level executives quit, including company
president Jeff Jones, who had been at the firm only six months.
In his resignation statement, Jones criticized management,
saying, “The beliefs and approach to leadership that have
guided my career are inconsistent with what I saw and
experienced at Uber.”2
· A video surfaced of company founder and president Travis
Kalanick berating an Uber driver.
· Google—a major investor in the company—sued Uber for
stealing its self-driving-car technology.
· Uber blamed “human error” when one of its self-driving cars
was involved in an accident when, in fact, the car’s system
failed to recognize a red light at an intersection.
· The #DeleteUber hashtag movement encouraged users to
boycott the company, blaming it for trying to make extra profits
off of an anti-immigration ban protest at New York City’s

2. Kennedy airport.
· News stories revealed that for years Uber used a secret
software program to evade authorities in Las Vegas; Portland,
Oregon; Boston; Australia; China; Italy; and other cities and
countries where it was banned or closely regulated.
The tsunami of bad news was the product of a corporate culture
that has been called “toxic,” “aggressive,” and “unrestrained.”
Uber’s culture, in turn, is a reflection of founder Travis
Kalanick. Since Kalanick and a partner started their firm in
2009 after failing to land a cab ride in Paris, Uber has been
focused on growth at seemingly any cost. Kalanick is
combative, willing to take on taxi companies, government
officials, and anyone else who might stand in his way. He
doesn’t let government edicts slow him down, operating in
cities that have outlawed the service. The company seemingly
battles everyone, being the subject of more lawsuits than any
other comparable startup. Many of these suits involve the
classification of drivers as contractors instead of employees.
Others address labor laws violations, passenger safety, lax
driver background checks, and lack of access for disabled
riders.
The company’s winner-take-all approach to the marketplace
carries over to employee relationships within the company.
Uber uses a stack ranking system that pits employees against
one another. Their fate depends on the ratings of their direct
managers. Those rated highly receive stock bonuses; those
receiving low ratings on a bell curve are disciplined. Susan
Fowler described a “game-of-thrones political war” among
upper management. Managers boasted that they were out to
undermine their supervisors so they could take their jobs,
withholding critical information and currying favor with other
executives.
Rapid expansion and decentralized management helped foster
the infighting. General managers in charge of city ride markets
operate autonomously. They have wide latitude to make
decisions without supervision if they achieve their growth and

3. revenue targets. Geographic regions compete with one another.
Company meetings usually begin with highlighting the ride
volume in different markets. One former employee compared
the system to how the Empire operates in the Star Wars films.
Imagine you’re in charge of the outpost and you’ve got to build
this planetary annihilation system, and your boss is back at HQ.
In that universe, of course you’re going to be aggressive and
competitive, because it’s your numbers that are going up on the
board.3
It wasn’t until six years after Uber started that CEO Kalanick
unveiled the company’s official values, called “Uber
competencies.” These include many traditional values, like
vision, obsession with customers’ innovation, and
communication, but also values like “make magic” (seek major,
long-lasting breakthroughs) “super pumpedness” (high energy
and enthusiasm), “toe-stepping” (don’t sacrifice good ideas for
social cohesion), and “champion’s mind-set” (put everything
you have on the line for the company to help it succeed.)
Kalanick vowed to change the corporate culture. In an email to
employees, the CEO declared his determination to create a
better organization, one “where a deep sense of justice
underpins everything we do.”4 The firm hired former U.S.
attorney general Eric Holder to investigate its corporate culture.
The Holder report recommended the company rewrite its
cultural values to remove items like “always be hustling” and
“principled confrontation” that were used to excuse bad
behavior. Holder’s group also recommended finding a chief
operating officer, changing the firm’s party culture (instituting
limits on alcohol at company events and in the office), making
diversity a priority, and increasing the independence of the
board. The Uber board unanimously agreed to adopt all of the
report’s recommendations, and Kalanick announced he was
taking a leave of absence. Soon after, five major investors
forced him to resign as CEO, though he remains on the board of
directors.
Discussion Probes

4. 1. What has been your experience with Uber? Why do you use
the service? Will you continue to use the service? Why or why
not?
2. Would Uber be as successful if it focused less on growth?
3. What mistakes did Kalanick make in creating his company?
What did he do right?
4. Should Kalanick have been replaced as CEO?
5. Do you think that Uber will succeed in improving the
company’s ethical culture? What advice would you offer?