Uber is no longer #winning. A non-exhaustive summary of the company’s no good, very bad week:
Monday (Feb. 20): Uber says it has hired former US attorney general Eric Holder to “conduct an independent review into the specific issues relating to the work place environment raised by Susan Fowler, as well as diversity and inclusion at Uber more broadly.”
Tuesday: An “emotional and visibly upset” Travis Kalanick apologizes to employees at an all-hands meeting for Uber’s lack of diversity. Media mogul and Uber board member Arianna Huffington vows to hold Uber’s “feet to the fire” on how it treats women at work.
Thursday: Kalanick meets with 100+ female engineers who push him to acknowledge a “systemic problem” with how Uber treats women. Mitch and Freada Kapor, two early Uber investors, blast the company for appointing “a team of insiders to investigate its destructive culture and make recommendations for change.”
Also on Thursday: Raffi Krikorian, senior director of engineering at Uber’s Advanced Technologies Center in Pittsburgh, is reported to be stepping down.
Also on Friday: Google self-driving car spinoff Waymo sues Otto, the self-driving trucking startup acquired by Uber, alleging its CEO stole 14,000 “highly confidential” files. (Incredibly, Waymo also alleges it learned about the theft after one of its employees was accidentally copied on a supplier email.) Uber calls the lawsuit “a baseless attempt to slow down a competitor.”
Even more on Friday: The New York Times reports, citing “internal Uber documents,” that the self-driving Volvo that ran a red light in San Francisco late last year was operating autonomously when it barreled through the intersection. It was one of six red lights that Uber’s cars failed to recognize. Uber said in December that the incident was due to human error.
Monday (Feb. 27): Uber fires Amit Singhal, the SVP of engineering it hired this past January, for failing to disclose sexual harassment allegations from his time at Google.
Let’s pause for an exclusive look inside Uber HQ:
What is there to say? Uber is used to controversy and I think could weather a handful of these incidents, but really, they just keep piling up. Don’t expect the avalanche to stop anytime soon. An anonymous account of sexual harassment at Uber that made the rounds yesterday is even more graphic and extreme than the stuff described by Fowler. The writer, under the alias “Amy Vertino,” alleges that her manager (“Mike#2”) was hired to Uber two years ago by Kalanick, who interviewed him personally and “liked his combative style.” Mike#2 crudely suggested to Amy that she should wear heels, made unwanted advances toward her, and belittled her contributions in the office. When Amy complained to HR about his behavior, she alleges, the department responded that Mike#2 was “highly valuable to Travis.” Then, last summer, she openly disagreed with him over a policy that would unfairly punish drivers during a meeting:
When I voiced my concern, Mike#2 looked at me and said “There is no place for ethics in this business sweetheart. We are not a charity.” I was upset to hear such an insensitive comment. I repeated my point and this time, I raised my voice to show that I was unhappy with his attitude. Visibly angry, Mike #2 covered the microphone of the conference phone, he reached over to hold my hand tightly and told me to stop being a whiny little bitch.
Amy went to the bathroom to cry. When she came back:
He pulled me aside and warned me that he does not like it when girls like me are insubordinate and think they got here because of their brains.
Yes, these are anonymous allegations. But they are widely circulated allegations on a company whose already poor track record is worsening by the day. By next week, Uber’s #losing list will undoubtedly be much, much longer.
There will surely be business school studies and entire books written about where Uber went so wrong in terms of culture, but I think a good bit of it can be explained by the de facto value system the company implemented through its performance reviews.
Uber uses stack ranking, a system popularized by GE legend Jack Welch that requires managers across a company to assign their employees numeric ratings along a bell curve. Uber managers rank their employees twice a year on a scale from one (low) to five (high). Three is average, five so rare that it’s reserved for “Jesus or Travis,” a former employee joked. Employees who receive twos or ones are considered underperformers and placed on performance improvement plans (“PIPs”), which also serve to warn that they could be fired or let go down the line. In interviews, half a dozen current and former employees described the system to me as “competitive,” “very unfair,” and “a black box.”
It’s understandable why Uber would want to create a fiercely competitive culture. Ride-hailing is a cutthroat and unforgiving industry that many believe has room for only one winner. Uber, valued at $68 billion, is under tremendous pressure from investors to produce results and has little if any margin for error. That its employees are held to similarly exacting standards isn’t surprising. Nor is such a culture unique to Uber. Amazon, to use an easy example, has been slammed for its “bruising” workplace and ruthless mass-firings of underperforming staff (nicknamed “purposeful Darwinism”). It’s worth $402 billion.
But every approach has consequences and Uber is no exception. The company’s performance reviews seem to have reinforced Kalanick’s decidedly Machiavellian approach to doing business. The result is zero-sum meritocracy tinged with brash, bro-y swagger. By now, it may be too deeply embedded to change.
Things are heating up for China’s bicycle-sharing industry. Last week, Shanghai-based Mobike raised an undisclosed amount of funding in a round led by Temasek Holdings and Hillhouse Capital. The round was said to bring its total new funding to more than $300 million this year alone, after Mobike also landed $215 million led by Tencent and a strategic investment from Foxconn in January. Meanwhile, Mobike’s main competitor, Ofo, is busy expanding abroad, with its pineapple-yellow bikes hitting streets in Singapore, Silicon Valley, and Cambridge in the UK.
Bike-sharing looks set to be the new ride-hailing of China’s startup scene this year as Mobike and Ofo jockey for market share. Already, the schematics appear similar: two companies racing to raise money, deploy their technology in cities, and acquire users at questionably sustainable price points (they charge around 1 CNY, or $0.15, per hour). Mobike claims to have more than 100,000 bikes and 6 million weekly users. Ofo in January said it had 70,000 bikes in Chinese cities and 1.5 million registered users who took 500,000 rides per day. It’s valued at $500 million and funded in part by Didi Chuxing, the ride-hailing company that acquired Uber’s China operations.
Mobike and Ofo have tried to appeal to different markets—Mobike is snazzier and higher-end, Ofo more for a student crowd—but if the ride-hailing wars are any precedent, the only differences that actually matter are cost and convenience. Also, while we’re on branding—the name Ofo. The conventional wisdom is that Ofo’s “letters resemble a bicycle,” which, I guess? Like, I see the argument that each “O” is a wheel and the “f” is the frame, but, I dunno. It works better with two lower case o’s (ofo) or the capital O second (ofO), if you’re going for a penny-farthing look. I like to think that Ofo resembles O2O, shorthand for “online to offline” in China's tech industry. But hey, maybe it’s a double entendre.
SoftBank set to invest $3 billion in WeWork. Skurt raises $10 million for rental car delivery service. Drizly gets $2 million for liquor sales platform. Hostmaker raises $6.5 million. Ola gets money but valuation plummets. Airbnb acquires Tilt. Denver warns 1,000 Airbnb hosts of short-term rental fines. Big Apartment Landlord Sues Airbnb. Google’s Waze plans carpool expansion. Didi adds English-language interface. Uber plans to limit UK driver hours. Nobody likes Uber anymore. Are “crowdwork” platforms employers? Weekend subway riders would rather take Uber. Lightspeed’s tense relationship with Snapchat. Elon Musk rails on Tesla union drive. Crowd Cow. Live chilling. GoGoGrandparent.