Culture starts at the top. I could stop right there and call it a blog post. Travis Kalanik resigned yesterday as the CEO of Uber, after a number of Uber investors demanded he leave. Here are a few questions that, as a total outsider and customer of Uber, would ask of the Uber Board and Executive Management.
What effect, positive or negative, will Kalanik’s exit have on the day to day operations of Uber?
The company continues to burn massive amounts of cash, despite huge success in upending the transportation marketplace. Also, it doesn’t seem like there was any succession plan in place, since it appears, according to this NY Times article, that Uber will be governed by a committee of 10 people, which leads to the next question.
How long has the board known that some sort of change was necessary?
We’ll never know when the topic first became a board-level discussion; however, there have been odd reports coming from the walls of Uber for at least 2-3 years. Even at the smallest of startups, life happens, someone gets hit by a beer truck, people leave. Uber is valued at around $70 Billion. Surely there is a #2 in line?
What effect, positive or negative, will Kalanik’s exit have on the organizational culture at Uber?
You’ve read that “culture eats strategy for breakfast“, but in the coming months, Uber’s employees, investors, and customers are going to get a first hand look at whether or not Peter Drucker’s famous line is true. Uber “has been so molded in his [Kalanik’s] image” for better or worse. The straw that broke the camel’s back for Kalanik was the culture at Uber, which reportedly includes sexual harassment, cut-throat competitive tactics, questionably legal software, and discrimination.
Tough call. Good call.
Personally, I think it’s a positive move by the big shareholders to call for Kalanik’s resignation. It’s certainly a bold move, but anyone who has ever built or lived through the lifecycle of a startup knows that different leadership is required at different stages of the business. To upend the entire global taxi cab industry required a ridiculous level of aggressiveness and fortitude to fight through the legal and legislative battles in order to disrupt a market that really needed to be whacked. However, building a sustainable, profitable business and attracting great talent for the next decade requires a very different leader.
Gone, not forgotten
Kalanik is no longer the CEO of Uber. However, he still retains control of a majority of Uber’s voting shares. That in itself is a huge statement about Kalanik, in an era in which startup founders rarely keep a majority of equity, especially after raising $14 billion since its beginning in 2009. He is also still on the board. That, in my opinion, is problematic, since it is a lack of board oversight at a $70 billion organization that has allowed such an exit by the company’s founder without any succession plan. However, even Bill Gurley, the man who led the effort to force Kalanik’s resignation, shared powerful words about Kalanik on Twitter.
There will be many pages in the history books devoted to @travisk – very few entrepreneurs have had such a lasting impact on the world.
— Bill Gurley (@bgurley) June 21, 2017
Single Point of Failure
It appears that Kalanik was really the only executive leader at Uber. The same investors who called for his resignation are demanding that Uber hire a COO and an “experienced” CFO. How does an organization valued at $70 billion after raising $14 billion not have an “experienced” CFO? How does the board allow that to happen? This situation is what we call a “single point of failure.” What if Kalanik had not agreed to resign? Or worse, what if something had happened and Kalabik could not advise the new day to day leadership?
Hot technology startups appear romantic, exciting, thrilling, and attractive. Uber is an example of how far out of control things can get when nobody holds leadership accountable. It is my opinion that, while Kalanik was unbelievably successful at growing Uber from nothing into a $70 billion behemoth, Uber’s board has failed to prepare to make Uber a sustainable, profitable business with a positive culture. This bold step is a good start.