Dara Khosrowshahi, Uber’s newly appointed CEO, will inherit a company that has been wracked with public scandal, infighting among its board members, an investigation into workplace harassment and a slew of lawsuits.
In other words, the longtime Expedia CEO has his work cut out for him.
Khosrowshahi, who has yet to accept the company’s offer, was a surprise pick for the Uber board, but he’s a noted operator with dealmaking chops, and has garnered the good will of his staffers at Expedia, with a 94 percent approval rating, according to recruiting site Glassdoor.
Here’s what Khosrowshahi will have to do to fix Uber’s myriad scandals and business issues:
Manage Travis and the board
First and foremost, he’ll have to hash out Travis Kalanick’s role. The founder was ousted as CEO in June, but he still sits on the board and owns a significant voting stake in the company. Some of the rank and file still look up to Kalanick as a visionary, and feel deep loyalty to him as the founder. At the same time, it is Kalanick’s marauding ethos that has led to many of the company’s problems. He was also attempting a comeback before a new CEO was appointed. Kalanick may have to take a role under the new CEO, but it will be less than what he’s used to, which means that managing Kalanick’s ego will be Khosrowshahi’s biggest challenge.
Along with that, he will also have to manage how much influence the board will have on day-to-day operations. Uber’s board is unusually hands-on, which could be argued as necessary during the recent leadership vacuum. Now that there is someone designated to lead, it would make sense for the board to step back. Still, it may not be easy for some directors to relinquish their control.
As Uber is operating without a chief financial officer, a CMO and a COO, it’s a significant opportunity for Khosrowshahi to find an ally. Khosrowshahi, who used to be CFO of Barry Diller’s IAC, has a deep well of contacts.
Reset staff
Khosrowshahi will have to gain the trust of Uber staffers, especially in the wake of a series of sexual harassment claims within the company.
Khosrowshahi has a few advantages coming into the situation. As an outsider without too high a profile, he comes as a clean slate. He also was not the handpicked candidate of Uber investor Benchmark, which controls a board seat and is currently suing Kalanick over claims that he withheld crucial information regarding company operations. Staffers loyal to Kalanick have little trust in Benchmark.
The ride-hail player is also in the middle of implementing recommendations made by former U.S. Attorney General Eric Holder’s law firm, Covington & Burling. Holder began investigating the company’s internal issues after former engineer Susan Fowler shed light on the sexism and sexual harassment she encountered at Uber, in a post she published in February.
It’s not clear whether Khosrowshahi has yet seen the Holder report that came out of the investigation, but accelerating the effort to hire a chief diversity officer, for instance, will be key to his ability to earn the trust of the company.
Figure out the business: Uber still loses money — lots of it.
It raked in $8.7 billion in bookings, but lost $645 million in the second quarter of 2017. The company has spent the last year finding ways to cut its losses.
Most recently, Uber merged its Russian operations with rival Yandex Taxi.
Identifying more areas where the company can curb its losses will be paramount for Khosrowshahi, who is described by many as an adept dealmaker. For instance, as The Information reported, Uber recently considered offloading the costs of its self-driving development efforts by partnering with an automaker.
Manage the lawsuits
In addition to the Benchmark lawsuit and other sexual assault complaints, Uber is embroiled in a messy legal battle with Alphabet. The trial for the trade-secret misappropriation lawsuit is scheduled for Oct. 10. If Alphabet is successful, its litigation could serve to stunt Uber’s efforts at creating self-driving technology.
As it is for any CEO, Khosrowshahi’s constituency is the shareholders. And in this case, it’s a small but powerful group that has been itching for an exit. But timing an IPO is as much art as it is science. In this case, all of the above issues have to be dealt with, and even then it’s not clear if that will be enough to take Uber public.
Khosrowshahi, who saw steadily increasing stock prices while he led Expedia, will have to discern what benchmarks the company will need to hit before it’s ready to be traded on the public market. That includes determining whether Uber needs to raise additional funding.
To Kalanick’s credit, Khosrowshahi is inheriting a company that has achieved massive global scale in a short period of time, and — while Lyft’s market share is growing — is still the dominant player in the U.S. and other parts of the world. With the right leadership, the ride-hail player has the potential to significantly accelerate its growth.
This article originally appeared on Recode.net.
Dara Khosrowshahi became Uber's CEO at the end of August, leaving his longtime job as head of Expedia to join the controversial unicorn startup. He replaced strong-willed, controversy-seeking co-founder Travis Kalanick. In the first month of his tenure, Khosrowshahi has made it clear he's the kind of successor who's not there to continue his predecessor's legacy. Here are eight things he did to set a new tone at Uber.
"I have to tell you I am scared," Khosrowshahi wrote in a note to Expedia staff, which Recode excerpted on August 29. He continued, "I've been here at Expedia for so long that I've forgotten what life is like outside this place. But the times of greatest learning for me have been when I've been through big changes, or taken on new roles--you have to move out of your comfort zone and develop muscles that you didn't know you had."
The admission of fear--even if he didn't know the note would be made public, and therefore visible to all his new employees as well--was the first sign that Khosrowshahi will shape a new kind of Uber. One with a softer touch and a little more sensitivity, to balance out the Kalanick era's hard-charging bravado.
On September 5, Khosrowshahi joined the rest of Silicon Valley by expressing unambiguous support for "DREAMers," illegal immigrants who were brought to the United States as children:
It's against our values to turn our backs on #DREAMers. Everyone deserves a chance to work, study and contribute - the #AmericanDream!
-- dara khosrowshahi (@dkhos) September 5, 2017
Khosrowshahi himself is an immigrant. His family fled the turmoil of 1970s Iran and arrived in America with nothing, according to The New York Times. Khosrowshahi has criticized President Trump's job performance in the past. Predecessor Travis Kalanick took a lot of heat, both within and outside of Uber, for consulting with the Trump administration and failing to condemn its unpopular decisions quickly or loudly enough.
Khosrowshahi left his position on The New York Times board of directors on September 7, "in light of his new role and increased responsibilities," as the SEC filing put it. He had originally joined in 2015. The move was not a snub, but it's worth noting that the Times has covered Uber's struggles closely, and Khosrowshahi's resignation removes a conflict of interest on both sides.
Massive Japanese conglomerate SoftBank has been pouring money into American technology companies, and it wants a piece of Uber. But negotiating the investment has been tricky, given that Uber wants to keep its paper valuation of $70 billion, and that previous investors want to make sure they cash out at a high multiple.
Recode reported on September 11 that Khosrowshahi beginning to participate had a positive effect on the potential deal. Although no definite conclusion has been reached, it's another sign that Khosrowshahi is a break from Kalanick's baggage and bellicosity, which were widely believed to be holding the company back.
The diversity of Uber's work force--or rather, lack thereof--and the treatment of women and minorities who work at the company, has been among the most contentious issues plaguing Uber's public image. Riders and drivers may be oblivious, but Silicon Valley startups live and die on recruiting. No one wants to work at a company that will make their résumé radioactive.
In light of this history, Khosrowshahi made a point of demonstrating his commitment to diversity and inclusion:
Great breakfast with our Uber Employee Resource Groups - inclusivity and diversity @Uber are hugely important. We will make #progress. pic.twitter.com/ZVdwqrxSVl
-- dara khosrowshahi (@dkhos) September 13, 2017
Khosrowshahi's tweet is blatant pandering, of course, but pandering lands better when it comes from an immigrant of color who has almost assuredly faced prejudice and discrimination himself. To employees, Khosrowshahi's outspokenness may feel more like strategically timed sincerity than pure corporate signaling.
"In all my conversations with [Khosrowshahi], he has been extremely supportive that we continue to build on the great culture work we've already done," Uber HR chief Liane Hornsey told Phys.org on Monday. "It's absolutely top of mind for him. I know he is particularly passionate about creating a diverse and inclusive workplace for everyone. I'm confident positive cultural change is more possible than ever." She added, "Culture change usually takes 18 months to two years. I think it's going be quicker here. A lot of people are saying to me 'I can feel the change.'"
Shout out to @dkhos for listening and engaging our Women of Uber + LadyEng leads today. #UberOn #hustleandheart @joshclemm @bernardcoleman3 pic.twitter.com/ADLH2ovcX5
-- Ann Bordetsky (@annbordetsky) September 28, 2017
After an earthquake rocked Mexico, Uber offered free rides and donated 5 million pesos (the equivalent of almost $275,000) to the Mexican Red Cross:
So proud of our @Uber_MEX team for offering free rides in impacted cities and contribution to @CruzRoja_MX - #FuerzaMexico #giveback //t.co/efgZjIQh7k
-- dara khosrowshahi (@dkhos) September 21, 2017
The gestures of goodwill keep piling up! This type of move wasn't new--Uber, like most prominent tech companies, has made similar donations in the past. But just as conspicuous statements about diversity and inclusion will come across better now, donating to areas suffering from catastrophes is a little more image-friendly when the CEO's personal image makes it seem like the decision wasn't, well, all about image.
Near the end of September, authorities in London decided to ban Uber. Khosrowshahi promptly issued a contrite open letter. He wrote, "While Uber has revolutionised the way people move in cities around the world, it's equally true that we've got things wrong along the way. On behalf of everyone at Uber globally, I apologise for the mistakes we've made." He even used British spelling to make his words that much sweeter.
He promised, "We won't be perfect but we will listen to you; we will look to be long term partners with the cities we serve; and we will run our business with humility, integrity and passion." Skeptics might say that humility and integrity will be new tools in Uber's arsenal.
According to CNBC, "London's transport regulator holds that Uber failed to meet regulatory requirements in regard to reporting serious criminal offences involving its drivers, obtaining checks on its drivers, and using a software tool known as Greyball, which allegedly allowed it to block regulators from gaining full access to the app."
In an email to employees, obtained by Mike Isaac of The New York Times, Khosrowshahi once again showed that he understands the need to rehabilitate Uber. "While the impulse may be to say that this is unfair, one of the lessons I've learned over time is that change comes from self-reflection," he wrote. "The truth is there is a high cost to bad reputation." Khosrowshahi emphasized that "it really matters what people think of us, especially in a global business like ours, where actions in one part of the world can have serious consequences in another."
On Monday, Khosrowshahi boarded a plane to London to work out the mess.
Former CEO Travis Kalanick appointed two new board members out of the blue on September 29. Khosrowshahi wrote a note to employees calling it "disappointing news" and "highly unusual," according to Recode. Khosrowshahi has consistently showed in his first month that he's a different man from Kalanick, with a very different style of operating a company. If we didn't already know that from his decade-plus at Expedia, we'd certainly know it from Khosrowshahi's first month as Uber CEO.