Peter Sims: The question is: How can a company like Uber get away with such egregious behavior over and over again?
Until companies like Uber move toward stronger corporate governance, bad behavior is unlikely to change, he writes
Editor’s Note: Peter Sims is a former venture capital investor. He is an entrepreneur and the author of “Little Bets” and co-author of “True North.” The views expressed in this commentary are solely those of the author.
It’s a sad statement about Silicon Valley today that virtually no one there is surprised about the latest developments at Uber, including allegations of sexual harassment, or a video of the co-founder and CEO berating an Uber driver.
These are only the most recent in a long line of incidents from a company that has celebrated disruption above community, and prized money, power and control above morality.
The natural question is: How can a company like Uber get away with such egregious behavior over and over again? Uber is a poster child of this Silicon Valley era: As long as the business is growing, companies can be amoral at best, immoral at worst. Until companies like Uber move in the direction of a stronger corporate governance, that is unlikely to change.
First, some context.
I have some personal experience with the company. Like many, I once loved Uber’s service. Then, one night in 2011, I was in an Uber in New York when I started getting text messages from a woman I had only met once telling me my exact location, street by street. Dismayed, I looked around to see if she was in an adjacent car. It turned out she was at the launch event for Uber’s Chicago operation, and my identity was displayed on a screen, along with other “tech notables,” as the woman described it.
Furious for the violation of my privacy, I immediately stopped using Uber. Later, after seeing Uber do a range of unethical things such as create and cancel 5,550 Lyft rides, I wrote about my experience, asking whether Uber could be trusted. When that blog post went viral, an editor suggested I get in touch with Uber co-founder and CEO Travis Kalanick, and give him a chance to respond. I did just that, but he never replied to my emails.
It’s no secret that Kalanick, who actively shapes Uber’s culture, is known for treating people as a means to an end.
I have heard the company’s culture described to me routinely by Kalanick’s colleagues as “toxic.”
One can only imagine what it would be like to be a woman inside Uber. Lawsuits will pile up soon enough, and that may be the only thing that will change Uber.
The real story about Uber’s egregious behavior starts with weak corporate governance, especially in an era in which some Silicon Valley founders take nearly total control of their companies. Google founders Larry Page and Sergey Brin popularized a “three-class share structure” whereby their shares hold 10 times as much voting power as common shares, while giving no voting rights to employee shares. Facebook founder Mark Zuckerberg followed suit, allowing him to maintain control as well, as did Snap in preparing for its IPO.
These structures take power away from everyone but the founders.
Uber’s share structure isn’t made public, but make no mistake: Kalanick completely controls Uber, including the board. Three of the board members, including Kalanick, are insiders, including another member of the infamous “A-team” (his like-minded – and exclusively male – colleagues). Another newer board member, Arianna Huffington, wants to help address the accusations of harassment, but I’m told she doesn’t have real power on the board beyond a close relationship with Kalanick. I am not even sure if Uber’s board, including venture capitalist Bill Gurley of Benchmark, can fire Kalanick.
But that’s exactly what needs to happen: A fish rots from the head, and Uber’s problems begin with Kalanick.
Silicon Valley doesn’t do self-reflection very well, but every toxic company and founder is enabled by a whole array of stakeholders. The influential angel investor Chris Sacca, who reportedly had a personal falling out with Kalanick some time ago, owns 4% of Uber. Last week, Sacca tweeted to Susan Fowler, whose blog about harassment while working at Uber started this latest PR storm, “This is awful. I’m very sorry it happened to you. I can’t imagine how that must have felt and still feels now.” When Sacca was then asked in a reply tweet what Uber investors (such as himself) can do moving forward, Sacca tweeted: “Well, as you might have read, I have zero say in how that company is run. Frustrating.”
What a weak cop-out. Sacca didn’t hesitate to use a personal blog to voice about Twitter, where he is also an investor. Instead, he set of a media firestorm by writing an 8,500 word manifesto about what Twitter should do. It was seen as a direct critique of Twitter’s then-CEO Dick Costolo, who resigned a week later.
If Sacca is so frustrated about the situation at Uber now, where’s the manifesto this time? I want to hear it.
The obvious difference between Uber today and Twitter then is that Twitter was struggling, while Uber’s business continues to perform. Uber’s enablers are obviously focused on cashing in someday. Their actions show that aside from a few rare exceptions, Uber’s investors are going to stay silent publicly, no matter how egregious the incident. Or they will defend him, as Inside.com founder and Uber investor Jason Calacanis has done, telling CNBC that Kalanick “is going to turn into one of those legendary CEOs that we have seen like Bill Gates … people are not perfect, they need to improve and I think he’s on that journey.”
In this era, money routinely trumps everything else in Silicon Valley and so much of America. If you only have principles when it’s beneficial to your wallet, you don’t have principles.
If only Silicon Valley had better mirrors.
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I was there when Uber began. One night in 2009, at a little jazz bar on Fillmore Street in San Francisco, I was shown the first prototype of the Uber app by co-founder Garrett Camp, a very creative guy, back when it was just two red dots blinking to represent two San Francisco black cars. Neither of us could have dreamed that night just how big an opportunity was ahead.
So as not to squander that opportunity, now is the time for a new generation of adult leaders to step up, so the needed changes can be made. I do believe Uber can change. But Travis Kalanick needs to go first. There are some very talented and impressive people and leaders inside the company. If changes can’t be made because one person controls everything, then we should all be very concerned.
An earlier version of this piece listed Peter Sims as the author of “True North.” He is the co-author, along with Bill George.