Uber's new CEO Dara Khosrowshahi's challenges are not technological but cultural
Dara Khosrowshahi has to ensure that Uber takes the leap from behaving as a startup to donning the role of a mature global company
Uber has got a new chief in Dara Khosrowshahi, the former Chief Executive Officer of travel company, Expedia. From the very public and controversy-ridden Travis Kalanick, founder and former CEO to the relatively less known Khosrowshahi, Uber is purring itself to a new lane. At least that’s what the choice of the CEO points out to.
Kalanick’s tenure at the helm of the startup he founded that now holds the global leading position as the ride hailing app has been stormy. Any interview or write-up on him has not failed to mention his ‘brash’ behavior. Though this trait worked for Kalanick ever since he dropped out of school and started up, it hastened his downfall at Uber too. Accusations ranged from not taking sexual harassment issues with required seriousness to playing favourites so much so that the board asked Kalanick to step down as the CEO, which he did on 20 June, 2017.
What awaits Khosrowshahi at Uber, the most valued (reportedly nearly $70 billion) startup with an established market and brand attraction? He has the task to change the image and culture within the company which cost Kalanick his job.
Khosrowshahi has a good persona and, according to media reports, has a personality quite different from Kalanick. At least that is what one gathers from the media interviews, says Paula Mariwala, Partner, Seedfund and Co-Founder, Stanford Angels. “Culture begins from the top. With a change in the CEO, Khosrowshahi will be able to bring about a cultural change as the board has taken that into consideration by choosing him,” she said.
The New York Times quoted Shana Fisher, venture capitalist, who had earlier worked with Khosrowshahi as saying: "People don’t get an excuse with Dara. They have to be good and good. Good and good. He doesn’t have tolerance for less than that."
Uber’s employees are loyal to Kalanick. They rooted for him and wanted him back as the CEO after he put in his papers. With Kalanick on the board, wouldn’t his shadow loom large over Khosrowshahi along with loyal employees of Kalanick? But that is expected, said analysts. A founder-CEO will have employees who are emotional about working with him. That will soon die down when they realise that a new CEO is at the helm, they said.
Harish HV, Partner, India Leadership Team, Grant Thornton India LLP, does not rule out the issues that could probably arise with Kalanick on the board, but feels that the board will have to ensure that there are no obstructions in the way Khosrowshahi functions. “At the end of the day, Uber is a company founded by Kalanick and he knows the key people in there and also in the business. The board will have to clarify Kalanick’s position and how to handle differences of opinion,” said Harish.
Kalanick founded Uber after tasting success with his first startup and selling his second one. He had become a millionaire before he set up Uber. And he has built a successful model with Uber. However, it is no longer a startup and its employees need to factor that change, said Sanchit Vir Gogia, chief analyst, Founder and CEO of Greyhound Knowledge Group, a global strategy and transformation research, advisory and consulting group. “Uber has to take the leap from behaving as a startup to donning the role of a mature global company. Investors need stability, predictability to run the business of the size and scale of Uber,” he said, and so it is imperative that the culture changes with a change in CEO.
The board has made its objective clear by choosing Khosrowshahi as Kalanick’s successor. According to media reports and interviews with people who worked or know Khosrowshahi, he has strong values. That was a factor that got the board to choose him over other big names who were in the fray for the job. He beat out Meg Whitman, CEO of Hewlett Packard Enterprise Co and a favourite of Uber investor Benchmark Capital; and Jeff Immelt, former CEO of General Electric Co, a favourite of Kalanick. “The issue at Uber was an HR (human resources) one. Uber is on a growth trajectory and there are other issues that the CEO will have to battle like taxis and unions,” said Mariwala, citing the infamous incident of Kalanick getting into a verbal duel with an Uber taxi driver.
One disqualifying factor, media reports cite, is that Khosrowshahi is not a techie. But Expedia is a tech co with customers and a platform that deals with consumers and travel.
"CEOs are not expected to be techies in the first place," said Mariwala. “The back-end technology has proved to be good for Uber. Any changes on that front can be taken care of by a techie. The challenges Khosrowshahi is faced with at Uber are non-tech in nature. He has to grow the business, handle regulatory framework within the US and outside, talk to unions, etc., besides changing the company image for the better,” said Mariwala. That is a big enough challenge that will consume Khosrowshahi for some time at least.
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