The road ahead for Uber after 2nd climbdown in 2 years
Struck with a string of mishaps and a growing uncertainty regarding its future prospects, it won’t be wrong to say that the San Francisco based taxi aggregator is in utter shambles. In the past year or so, Uber seems to have completely lost its way and has been garnering all sorts of unwanted publicity, coming from all sorts of directions.
Once considered among the fastest growing startups of the Silicon Valley along with Airbnb, the two companies have grown to be foraying into completely dissimilar paths. While Airbnb too has had its fair share of criticism, it has always managed to come out of it quite gracefully; the same of which cannot be said of Uber.
Just last year, the company sold its China operations to its fierce local rival, Didi Chuxing, in a deal touted to be worth $35 billion. And that was after some reports according to Bloomberg, which said that the deal was struck after Uber lost close to $2 billion in revenue. The report also said that the increasing losses of the company’s China operations were proving to be a stumbling block for its IPO, which gave the company a reason to take such a step.
Although the deal was said to be a strategic move by the ride-hailing giant then; it now seems to be more of a survival mechanism, after another reported climbdown in Russia couple of months back followed by the ousting of the Founder and CEO of the company, Travis Kalanick, in the same month.
Uber ceded Russia to its local rival Yandex in a deal reported to be worth $3.7 billion, with Uber taking a 36.6% stake in the newly merged, yet-to-be-named entity. The deal also takes into account, Uber pulling out of 5 other countries (Azerbaijan, Armenia, Belarus, Georgia and Kazakhstan).
This cannot be considered as a strategic move and shows the worldwide challenges the company has been facing after expanding its operations. The current deal is reminiscent of the merger between Uber and Didi in China and is its second such retreat in a major market in less than a year. That being said, things are also looking bleak in other important markets of India and the Southeast Asia, citing heavy losses of the company amid increased competition from homegrown players Ola and Grab, respectively.
After a “shareholder revolt,” which saw the Founder Travis Kalanick, step down from his position as the CEO of the company, there have been further signs of the sense of things inside the headquarters of the transportation giant. Although recent family tragedies and internal issues at the company were cited as the reasons for stepping down of the embattled CEO, the actual picture says something different.
Following numerous reports of employee discrimination, bad management practices and investigations regarding sexual harassment inside the company, which eventually lead to the firing of close to 20 senior employees, the company now has a host of critical high-level vacant positions in terms of COO, CFO, CMO, Senior VP of engineering as well as that of a CEO, after Mr Kalanick’s resignation. The move did not come as a surprise to the thinktanks of the industry, according to whom, the recent scandals and a threat to the core business of Uber might have led the investors to take such a step.
Although there are a lot of issues which need to be addressed now, rectifying the culture inside the company, would definitely be the foremost mandate of the board of investors. Certain things which can be incorporated by the company as part of its overhauling of the processes are,
o A more diverse and inclusive environment with timely checks on the prevailing culture based on real-time data.
o Workplace surveys and training for employees, more often than not, to get a hold of the state of things, surfacing inside the company.
o Increased ways to report problems to the management, even if that means doing so with anonymity.
With the ex-CEO of Expedia, Inc., Dara Khosrowshahi now at the helm of the scandal prone company, huge turn of events could surely be in the offing; out of which renovating the culture and bringing in transparency would be the very first tasks that the Iranian-American CEO would have to deal with.
The company reached its highest ever valuation of $69 billion last year in a very short span, after being founded in 2009. This meteoric rise can only be accredited to some top-notch planning and bold steps in the market on the company’s part, which is now what Mr. Khosrowshahi will have to undertake. The complete re-imaging of its culture should not be a very big task, given that the company now has one of the most well-equipped American CEOs to steer the company away from the mounting crisis. Cumbersome, but doable.