Subscribe to Inc. magazine
GROW

Uber's CEO Owns Up to Growing Pains

After receiving public complaints about declining service quality in San Francisco, Uber's Travis Kalanick took to Facebook to offer an explanation.
Advertisement

As Uber has continued to push its car service into new cities, the company has become accustomed to fighting legal battles. In fact, a good fight is good for the company, CEO Travis Kalanick told Inc. earlier this year. But on Tuesday Kalanick took to Facebook to fight another fight--he openly admitted that the quality of Uber's service has declined in the San Francisco Bay Area.

In response to entrepreneur Noah Lichtenstein's complaints about Uber's service in San Francisco--among his gripes were late cars, high prices, and clueless drivers--Kalanick wrote a lengthy, straight-forward Facebook post explaining the start-up's growing pains and quality-control problems as it hits the two-year mark. He writes:

"Our SF business continues to rapidly grow, at a healthy double-digit month over month percent clip, in fact faster than our growth last year when we were far smaller. This means that we have to continue to get massive amounts of drivers on board as quickly as possible. Supply for experienced drivers in the city is dwindling, and that means introducing tens of thousands of new people into the commercial driving industry. This is contributing to the variance. We quickly weed out poor transportation providers, but poor service from new guys is definitely 'a thing.'"

The frank post is a sharp move on Kalanick's part: how companies handle customer complaints can make all the difference in the trajectory of a fast-growing business.

Back in 2011, Netflix lost 800,000 customers and saw its stock price fall 35 percent after CEO Reed Hastings botched an unexpected announcement about a price hike and a complete separation of its DVD-by-mail service and online movie streaming. In response to customer backlash, two months later Hastings released a video apology, acknowledging the company screwed up and was nixing the separation plan (but keeping the higher prices). Fortunately for the company, the impact didn't last long--this year subscribers hit a record 40 million, up from around 24 million in 2011.

In Uber's case, Kalanick did a number of things right by responding to Lichtenstein's criticism. Here's what the experts have to say about handling bad PR situations:

Tell the truth and tell it as soon as possible.

Jamie Diaferia, founder of Infinite Public Relations, says, whatever you do, the own up to the truth fast: "As soon as the news breaks, rip off the Band-Aid," Diaferia advises. "Provide a plausible story. Then stick with it. Having facts to back up your story is a pleasant bonus."

In his Facebook note, Kalanick follows this rule by acknowledging the possibility that service is slipping: "All quality metrics in SF over the last 12 months are flat or improved on an average basis. However, we do believe we're seeing a higher variance on those metrics. This could be contributing to the perception that 'Uber's going to hell' in that you may be slightly more likely to have a 'bad experience,'" Kalanick wrote.

Love the customer who complains.

Inc.com contributor Margaret Heffernan says that any smart CEO  will treat complaints as a present. "Any time customers complain about your product or service, they're doing you a favor. You might not like it but they're sharing their frontline experience of your company, experience that it's quite likely you can't see and therefore can't improve. This feedback is a gift," she writes.

Kalanick signed off his Facebook post grateful for Lichtenstein's criticism: "I hope we can resurrect some of that Uber love. We're innovating, not-sleeping, racking our brains every day to continue to make the service better. We actually appreciate you holding our feet to the fire, and I expect that we'll be up to the challenge."

Gather the info and respond just enough.

Jeff Haden  wrote an Inc.com story about how to respond to bad press, complaints, and crises. He has a simple first step: "Gather the facts, analyze the facts, and understand the nuances. It seems obvious, but this critical first step is often overlooked or rushed when people feel they have to respond rapidly--and when a crisis occurs, you'll feel like you need to respond instantly."

Kalanick nailed this step. He gathered the information and then gave a clear explanation for how to understand Lichtenstein's complaints. "Furthermore, with all this continued growth, we have a ton of new users that are experiencing things for the first time, and are as elated as you all were when you first used Uber," Kalanick wrote. "There are so many new users, that their high ratings are drowning out some of our power users' more moderate ratings driven by their higher expectation levels."

Last updated: Oct 31, 2013

WILL YAKOWICZ | Staff Writer | Reporter, Inc.com

Will Yakowicz is a staff writer for Inc. magazine. He has covered business, crime, and local politics for The Brooklyn Paper and was the editor of Park Slope Patch. He has also reported on the West Bank and Moscow for Tablet Magazine. He lives in Brooklyn, New York.




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Livestream events | Comments
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: