Will Uber Survive? A Systems Perspective

Update: I’ve read a few more posts on this Uber situation (here and here) and my answer to the question ‘Will Uber Survive?’ is now a firm ‘No’.

I was pretty surprised to learn this morning that Travis Kalanick resigned from his position as CEO of Uber. Kalanick’s public perception is not of someone who backs away from a fight. A few friends reached out to ask me what I think this will do to Uber. I have no relationship with Uber (I even deleted the app a few months ago), so my friends reached out only because of this viral blog post I wrote on the Uber business model and how its survival is dependent on some fundamental changes. I did not make a recommendation that the company should change founders to survive. To the question, my answer is ‘No’. Because the reason why Uber has been so successful at what it does is because it is capitalistic manifestation of Travis Kalanick and, to lose Kalanick is to lose what has gotten the company to this point.

That’s because I have a systems view of companies.

Companies as organisms

Companies are an inseparable mixture of culture, talent and operations. Change one and you change the rest and change the company; become less aggressive culturally and you become more intentional in your operations, you hire less aggressive people and your company changes. Changing the CEO doesn’t change that. The ~13k employees (and the ones I know) are for the most part ‘bulldoggish’, a trait often used with Travis Kalanick.

I see a company as an organism/organic system made up of many, sometimes disparate, parts all working towards one goal. When the all the parts are working well (like all your organs) the company grows and achieves its set out goals. When it’s not, or when it has a cancer like bad culture, it affects the rest of the organism and hence reduces ability to achieve it’s goal (stay alive). And I use cancer intentionally; it eats away at the company and unless it is incised (causing pain and change in the core structure of the organism) it will kill the company.

We often use the term that startups are like our babies. Taking that analogy further; If we teach our kids that it’s OK to be rude/sexist/assholes and they see us succeed with that approach, when we die or become less involved in their lives (and until they get hurt, have a life altering event from taking that approach to life) they will continue to live their lives like that believing it is how they will attain the success they saw us attain. Replace kids with company. Culture in companies eats everything else (strategy, operations, money) for lunch. Company cultures are direct manifestations of a founders approach to life and business. The most game-changing companies have the DNA of their founders.

Founders and Their Dysfunctions

Products and businesses ooze their founders’ idiosyncrasies. This is not a post to disparage anyone. Just a hypothesis I developed after studying a few founder friends and myself. At my old startup, I was bad at financials, cared more about the product/customers than making money. We got bought by a company that took our customer centricity and added the financial diligence.

• Elon Musk is Tesla/Space X. Tesla/SpaceX is Elon Musk.
• Kellee James is Mercaris and Mercaris is Kellee James. Understated, ambitious, super creative and persistent. Tackling the organic and non-GMO markets with a technology product requires all four of those traits I just listed. Kellee is all that and more.
• Harper Reed was Modest and Modest was Harper Reed. Irreverent and curious and engaging. You see that when you walk into the Modest office and you hear it in the approach the company is taking on tackling the mobile commerce market. You could be talking about Harper.
• Say what you will, Travis Kalanick is Uber and Uber is Travis Kalanick. I’ve never met him but I have a good friend who has. The term used to describe him to me was dismissive; he had a goal at the event where they met (my friend was the event organizer and Kalanick’s chaperone) and he didn’t care much for the other folk at the event, some of whom were top female tech executives. It’s exactly the way cab drivers have spoken to me or emailed me about their relationship with the company, Uber.

I could go on and on listing a few more founders I know or know enough of to make that assessment. But you get my point. Look at your product and your company, how much of your positives seep into the company. How much of your personal idiosyncrasies seep into the company? Fill those holes with folk who have a different take or different quirks from yours.

No founder trait is wholly good or wholly bad. It’s actually two sides of the same coin. The things that are of the founder that are probably the company’s strengths are as much the company’s weaknesses.

Leverage Points and Systemic Change

For Uber to truly change will require more than just Travis Kalanick leaving. And it will require more than just the ~100 point plan that Eric Holder’s review suggested. It will require full self-organization; Self-organization means changing any part of a system by changing the rules and incentives that currently govern that system and in the process killing large swathes of the current system. It’s hard to do that with a company that is winning like Uber (as the highest valued startup ever). We find it easier to change when we are not succeeding with our current ways or approaches. You’ve met people who smoke but, despite all the warnings from everywhere, their best signal for deciding not to change is their own good health. But self-organization, also known as evolution, is the only way to ensure resilience. When the culture is cancerous, like Uber’s seems to be, there will have to be a killing of some cells (chemotherapy). What will be left is a different business entirely.

Can a different Uber keep up the momentum it has? I don’t think so.

More about self-driving cars than sexism

So we have a toxic culture and a recently departed founder. Both things are enough to kill any company. But, despite all I’ve written above, I cannot shake the unsubstantiated gut feeling I have that Travis’ resignation is less about succumbing to a need to change the toxic culture of Uber and more about the economic future of the company as it relates to self-driving cars, and the decisions Kalanick might have made in working towards that future. We’ve had CEOs that are jerks before (Jack Welch, Steve Jobs), but our capitalist society forgives and even deifies them if they make gobs of money for their shareholders.

Waymo is currently suing Uber for stealing its self-driving car intellectual property (Lidar). The claim is that a former Waymo employee, Anthony Lewandowski, stole 14k confidential pieces of information that he ended up taking to Uber when his company (Otto) was acquired by Uber. Uber’s acquisition of Otto happened after only just 9 months of Lewandowski launching the company. Waymo claims the 9 months of work that Otto did was a charade for technology transfer to Uber. We’ll see how this plays out but, if Waymo wins this case, losing the third prong in its strategic triangle (owning more of the value delivered and satisfying the customer being the other two prongs) will surely be the death knell for Uber.

Conclusion

The counter to my thoughts above is that Uber has reached a point where it should be ‘refounded’ and that is what is happening right now. Most companies have multiple founding points and this might just be the ‘refounding’ point for Uber. An IPO would have been an opportunity for that refounding point. But without its founder and the leadership void, that will not be happening soon. I’m pretty sure current investors are not happy about that.

As is the case with every company at the new founding point, Uber has to become a completely new and different company at its core. It might even do well to change its name and shake the current brand because the future Uber if it is to survive all this, will look absolutely nothing like the one we’ve known so far.

My answer is closer to a ‘Maybe’. But only if the company becomes a different entity.

Bye, Uber. Hello, Uber.

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