Ubers toxic culture risks its driverless future, too

So Ubers blowhard-in-chief Travis Kalanick is finally out, out as CEO after some of its most prominent investors put the squeeze on him to go (not just take a time out).

Scandal after scandal has hammered the company in recent times, culminating in an external investigation into a corporate culture accused by a former female employee of being rife with sexism, aggression and inequality.

Kalanicks aggressive style of management has been the Uber rule, not the exception and arguably, setting aside the current slew of internal scandals, the company has been taking a more emollient approach, at least vis-a-vis business expansion. Working to change rules, for sure, but not always so publicly riding roughshod over them as it used to.

Although in private the underhand tacticshave evidently continued.

Which does beg the question, why now? Why is Kalanick finally being pushed from Ubers driving seat?

The short answer is because a toxic corporate culture has the power to kill a company stone dead by turning its customer base against it.

#deleteuber has been a very potent hashtag indeed.

Contrast that with the thrusting Uber upstart that was, revving its engines against regulators and able to enlist its own user-base as a lobbying army to help get its rubber on the road messaging and mobilizing users to apply pressure to city authorities Uber slammed asbureaucratic and anti-innovation.

Petitions to save Uber have, previously, garnered hundreds of thousands of signatures. The company even Uber-ed in its own users to pad out pro-Uber demonstrations in years past.

How times change. And how far the mighty can fall when they squander goodwill.

Brand car crash

Investors, first and foremost, are concerned with the value of a company because that will ultimately determine the value of their investment. So make no mistake, Ubers investors have calculated the companys toxic culture under Kalanicks leadership is a risk to their long term investment.

Yes, its not just Kalanick whos gone. There are a raft of changes being driven through the upper echelons of Uber. Prior to Kalanicks resignation his controversial righthand man, Emil Michael, also departed one of the recommendations from the external investigation.

More than 20 other Uber employees were also fired earlier this month, following the report. Others are still under investigation.

Meanwhile, Uber poached a female marketing lead from Apple for a new senior role: chief of branding. Repairing the companys fratboy image is clearly front of mind for board member Arianna Huffington, who was reportedlyresponsible for hiring in Bozoma Saint John.

Boz has a long track record of successfully creating emotional connections between people and the products they love, said Kalanick in a statement about the hire earlier this month. Her creativity and deep understanding of consumers will allow us to build the same love and appreciation for Ubers brand as weve built for Ubers service.

Having the (now ex) Uber CEO talking about emotional connections and love is about as far from Travis Kalanick 1.0 as its possible to get. Yet here we are.

Also recently coming in at senior level: another woman,Frances Frei, an academic from Harvard Business School, who takes up another new role: SVP of leadership and strategy.

The message from Ubers investors is clear: aggressive tech bros out; responsibility, accountability, empathy and diversity in.

In Travis own words, Uber needs to grow up.

Whether this last ditch reboot comes in time to save Ubers tattered and tarnished brand remains to be seen. But Ubers investors clearly want the company to project a very different set of values and view a radical shift in how outsiders perceive Uber as key to its future.

Sexism, bullying, inequality, lack of diversity, low empathy all are being judged as negative factors for ROI.

Looking beyond the immediate damage of a campaign like #deleteuber, theres something else to consider for the long term: A big part of Ubers perceived value has been attached to the notion that autonomous vehicle technology will enable the company to slough off its (human) driver cost-base entirely, i.e. not just by (as it does now) minimizing employment costs by using some would say exploiting low paid, freelance contractors who do the actual work of driving people from A to B.

As far back as 2014 Kalanick has been saying Ubers future lies in driverless cars.

When theres no other dude in the car, the cost of taking an Uber anywhere becomes cheaper than owning a vehicle. So the magic there is, you basically bring the cost below the cost of ownership for everybody, and then car ownership goes away, he saidthree years ago, when Uber was valued at around $17BN, and without apparently a thought for the thousands of dudes he planned on leaving in the dust down the road.

Ubers most recent valuation is ~$70BN although its not clear what portion of value investors are attaching to its autonomous long term vision. (Also worth noting: somequestion whether Uber is worth half so much.)

Questions about the profitability of ride-hailing models are certainly being asked much more frequently these days. And whileUbers business has been growing, with the company pulling in $3.4BN in revenue in the first quarter and narrowing its losses to $708M, it is still burning a LOT of cash.Ubers route to profitability must at least be on the mind of itsvery long list of investors who have packed its coffers with some $8.81BN over the years.

These investors sure dont want to see their money getting sucked into a toxic sinkhole.

One reason for the companys backers to be asking more questions about its future profitability now is because labor costs are unlikely to do anything but rise in the short term i.e. before its able to replace all drivers with robots.

Not least because lawmakers and regulators are paying closer attention to the gig economy eyeing what are being seen as employment law loopholes.

And also because a proliferation of ride-hailing rivals are available at the switch of an app to lure away disgruntled Uber drivers.

Hence Uber finally adding tippingto try to keep its drivers happy and, if were honest, to provide a way to raise their financial remuneration (i.e. via customer largess) without having to increase how much it pays them.

While Uber trying to flip a future profit by raising the price of rides would of course risk an exodus of users accustomed to cheap Uber trips.

But if youd bought into the big autonomous vision, as Kalanick painted it those sorts of near term problems (and costs) standing in the way of Ubers profitability looked set to evaporate over thelong term, once the app could deliver shiny, driverless cars on demand, 24/7.

Or if, rather, Ubers management could deliver on the autonomous promise.

Autonomy and empathy

The problems Uber has run into in developing self-driving technology are thus of huge significance for its investors. And there are problems aplenty.

At the end of last month Uber fired the person Kalanick brought in to lead its autonomous efforts, Otto co-founderAnthony Levandowski, who is now embroiled in a trade secretslawsuit between Uber and Waymo, the Google-owned company whereLevandowski used to work.

Its not clear how the case will shake out, with the judge denying Ubers request for a stay pending its appeal forarbitration earlier this month. In the meanwhile Ubers efforts to develop self-driving tech are facing an obvious set back. That has to have been a big black mark against Kalanicks judgement as far as Uber investors are concerned.

But Id argue its not just technology that counts here. Culture is also crucial because autonomy demands empathy. Lots of empathy in order to win human populations into accepting the robots being placed among them.

Even in a 100% driverless scenario Ubers autonomous cars will still have to interact with humans. Firstly as passengers and humans who dont appreciate a product or a service wont necessarily treat it very well. Witness the state of public toilets which dont have attendants, for example.

But also, and arguably more importantly, with non-Uber users because Ubers robot cars will be operating in the public environment, sharing the streets with human pedestrians, human cyclists, humans driving standard vehicles and so on.

Now Uber may have built its rep as a company with a thirst to rip up the rulebook earning itself accusations of putting business growth before safety (witness, for example, its effort to defeat a city bill requiring fingerprint-based background checks for drivers; when it lost that battle it pulled its business out of Austin returning only after Texas legislators reined in the power of municipalities to regulate ride-hailing companies aka: classic Uber 1.0 behavior).

But theres no self-driving company on earth that will be able to program its robots to do anything other than slam on the brakes when a flesh-and-blood human walks out into the road.

Slaying non-users is not a viable business model unless your business is making military drones. So self-driving cars will necessarily have to give way to pedestrians. And will require the goodwill of other drivers giving way to them.

These robots will therefore be highly susceptible to human emotions. And will rely on supportive sentiment in wider society. Which means Uber really has to care about how non-users view it. It will need a positive brand that can shield it from the risk of vandalism and spite.

History has lessons for what can happen to expensive technology that lacks wider public support.And if people generally associate Ubers brand with toxic inequality theyre not going to feel inclined to offer respect and courtesy to Ubers robots. Why should they?

Indeed, some humans may feel justified in deliberately messing with Ubers machines as a form of protest. Its very easy to imagine a reclaim the streets from robots type of movement gaining momentum.

Roads are after all shared spaces. Even Teslas Elon Musk is not proposing to replicate the entire road network with bespoke tunnels that can carry a single type of vehicle.Nor will every autonomous car be able to be a flying carthan can rise above the fray.

Respect for or at very least tolerance of other road users will be vital for traffic to flow for the foreseeable future, and I would also argue for Ubers autonomous business to grow.

As weve written before, the limitations of a technology are at least as important as its capabilities. So it looks clear that self-driving cars will only function with the goodwill of humans.

And it goes without saying that angry humans forced to rub up against a toxic brand wont have much goodwill to give.

So Ubers path to a profitable, autonomous future arguably relies, not just on it being able to build or acquire the necessary technology, but on building a company whose culture and brand reflects and represents the sorts of qualities courtesy, respect, fairness, humility, compromise, co-operation, concern that have been so drastically lacking at its leadership level to date.

Nothing short of a 180 degree handbrake turn in company culture will do.

It looks like Ubers investors have finally realized that too.

Read more: https://techcrunch.com/2017/06/21/ubers-toxic-culture-risks-its-driverless-future-too/