Uber CEO Travis Kalanick has once again put his foot in it. Yesterday, he was caught in a video upbraiding a driver for the company who complained about falling rates, saying he had lost money working with the company. Once the story hit, Kalanick quickly said that he needed "leadership help." What he and the company need is far more extensive.
Leadership may sometimes seem like a mysterious process, but it's not. Plenty is known and understood about how it works. There are many books on the subject (I co-authored one) and there are actions you can take to improve.
But improvement isn't something you slather on like a coat of pain. It requires change, and it's not clear that Uber will be willing to make the necessary fundamental adjustments--or if Kalanick is capable of them.
Bloomberg first reported the event. Fawzi Kamel, a 37-year-old who has been driving for Uber since 2011, landed Kalanick and two female companions as a fare. Kamel brought up the question of falling rates, saying "You're raising the standards and you're dropping the prices [in general]." Kalanick said that rates in general had to go down because of competition. Kamel replied, "You had the business model in your hands. You could have the prices you want but you choose to buy everybody a ride." Things went downhill from there.
It's not that Kalanick's argument about dropping prices because of competitive pressure is necessarily wrong. But when you claim that you've "beaten" your main competitor, Lyft, and say that an additional service will be more expensive and you hear that people don't trust you anymore because things keep changing and they can't make rational plans, getting angry and blaming them isn't the solution. "Some people don't like to take responsibility for their own shit," Kalanick said. "They blame everything in their life on somebody else."
As Bloomberg explained, Uber has put enormous pressure on its longtime drivers.
In 2012, Uber Black cost riders $4.90 per mile or $1.25 per minute in San Francisco, according to an old version of Uber's website. Today, Uber charges $3.75 per mile and $0.65 per minute. Black car drivers get paid less and their business faces far more competition from other Uber services.
And that doesn't address the bigger price pressures on the less elite Uber driving services, even as costs of doing business have increased. But Kalanick's reaction was to blame the driver and deny what Kamel knew from personal experience.
Pot, kettle, just wanted to introduce the two of you. I'm sure you'll get along just fine.
After the story broke and the video hit the internet, Kalanick issued a "profound apology":
By now I'm sure you've seen the video where I treated an Uber driver disrespectfully. To say that I am ashamed is an extreme understatement. My job as your leader is to lead...and that starts with behaving in a way that makes us all proud. That is not what I did, and it cannot be explained away.
It's clear this video is a reflection of me--and the criticism we've received is a stark reminder that I must fundamentally change as a leader and grow up. This is the first time I've been willing to admit that I need leadership help and I intend to get it.
I want to profoundly apologize to Fawzi, as well as the driver and rider community, and to the Uber team.
Fundamentally change as a leader and grow up? That's been said about Kalanick for years. Uber has major problems, like the alleged systemic sexual harassment in the organization, resulting in the company hiring an outside legal team led by former Attorney General Eric Holder to investigate. But that's just the latest in what's been one issue after another.
Every one of the problems Uber faces is self-inflicted and a result of either Kalanick's direct decisions and actions or the culture for which he is responsible. There comes a time when you have to ask if an entrepreneur has the skills and temperament to take a company on its next stage of growth. It's not good or bad, just a recognition that few people can make the transition--just as few people who operate well as CEOs of large corporations are necessarily good at being entrepreneurs.
Uber has something like 11,000 employees worldwide. It works with millions of drivers--who it insists are contractors, not employees--but no matter what the term, there are a lot of people affected by the company's decisions and actions. People with friends. People who can deliver an enormous amount of negative publicity. And there's that little question of whether the economics of Uber can ever really work to become profitable, which the blog Naked Capitalism raised.
Bloomberg stated it simply: "The video shows off Kalanick's pugnacious personality and short temper, which may cause some investors to question whether he has the disposition to lead a $69 billion company with a footprint that spans the globe." Kalanick needs more than leadership help. He needs a leadership transplant and a managerial overhaul, or he needs to find someone who can adequately run the company.