As Uber looks for a new leader, the presence of former CEO Travis Kalanick on its board could prove to be one of its biggest challenges.
The ride-hail giant’s board began searching for a new chief executive after Kalanick resigned last week. Candidates for the top post are likely to ask Uber for a fuller version of former attorney general Eric Holder’s internal investigation into the company’s culture and full transparency around its litany of legal battles, including a federal investigation into a software tool that was used to evade authorities in places where the company's service was restricted, the handling of a rape victim in India’s medical records, and a trade-secrets lawsuit with a major self-driving car rival. And the board will also have to explain how much latitude a new CEO would get, given that Kalanick will remain on the board, and is part of the search committee.
“Great candidates will be attracted to this position, even if there are some challenges. The biggest would be what role Travis is going to play going forward,” said David Finke, co-leader of the global technology practice at the executive search firm Russell Reynolds Associates. “Having a visionary and hard-charging founder on the board is always hard, but having one that was just ousted from the CEO role can make for a very difficult situation.”
"Really what you're trying to figure out is how helpful or disruptive is this former founder/CEO going to be."
“It's really important to see, to what degree or not, would you have alignment with Travis's view of where the company is going, strategy elements, highest priorities around where the company is spending its time, energy and money,” one prominent startup CEO told BuzzFeed. "Really what you're trying to figure out is how helpful or disruptive is this former founder/CEO going to be in my efforts to get the company to a better place."
Some employees are already campaigning for Kalanick’s return. Finke said that outcry could make a CEO candidate “question whether it’s possible to end the drama and galvanize and focus the organization on the way forward.”
“If Travis remains involved in the company on a regular basis and maintains a controlling share of the company and an active board seat, it’s unlikely they’re going to be able to bring in the CEO who can make the kind of changes one would want to see here,” said Mercedes Chatfield-Taylor, a managing partner at the executive search firm Caldwell Partners.
While Uber searches for a new chief executive, the company is being run by a 14-person committee of top executives. Before Kalanick resigned, several investors raised concerns as to whether Uber could move past its scandals with Kalanick at the helm of the company, according to Bloomberg.
The ride-hail giant’s board described Kalanick’s decision to step away as “taking the time to heal from his personal tragedy while giving the company room to fully embrace this new chapter in Uber's history.” It’s unclear what that new chapter will look like without Kalanick, who shaped the company into a global juggernaut with a nearly $70 billion valuation, and the departures of more than a dozen other key executives earlier this year.
The company’s next CEO — and other top leaders who arrive to fill Uber’s various leadership holes — will face many challenges. For one, Uber has spent the majority of 2017 accruing an endless stream of bad headlines. On top of the internal investigation into allegations of systemic sexism at Uber, its self-driving program is facing a bitter trade secrets lawsuit from Waymo, the autonomous vehicle unit of Google’s parent company Alphabet.
"You'd certainly want to see Eric Holder's full report."
“There’s risk here,” said Micah Alpern, a principal at the management consulting firm AT Kearney, citing the Waymo lawsuit and Uber’s cultural challenges. “[As a CEO candidate], I'd want to know where we stand on this lawsuit. Are these things that we were in the wrong about that we’re going to have to settle on? Is the organization really willing to change? Do I have the full support of the board to change how the organization works going forward?”
Crucial to determining what sort of changes need to be made to Uber would be a review of all the material gathered by former attorney general Eric Holder during his inquiry into the company’s workplace culture. Uber’s board received a more detailed version of the report than what was made public, with Bloomberg reporting that some members worried that "Kalanick’s role in some of those incidents would continue to inflict damage on Uber.”
"You'd certainly want to see Eric Holder's full report,” the startup CEO told BuzzFeed.
While Rachel Holt, the head of Uber’s US and Canada business (and one of the executives running the company during this leadership void) said in a damage-control press call in March that Uber has “grown faster in the first 10 weeks of 2017 than the first 10 weeks of 2016,” third-party data show that Uber has lost some business to Lyft this year. According to the consumer spending analytics company TXN, about 88% of market spending on the ride-hail services went to Uber in the week of Jan. 4, 2017, compared to Lyft’s 13%. By the week of June 12, Uber’s share dropped to 78%, and Lyft’s increased to 22%. The company’s next CEO will be responsible for restoring the company’s public image.
Question is, who's willing to take on such a burden? Speculative lists of possible CEO contenders currently include the likes of former eBay CEO John Donahoe, YouTube CEO Susan Wojcicki, former Twitter COO Adam Bain, Thomas Staggs — the former chief operating officer of Disney — and David Cush, former CEO of Virgin America.
“Any finalist candidate worth one’s salt will sign an NDA and expect full and transparent disclosure of all issues — good, bad and ugly,” said Finke, the Russell Reynolds Associates headhunter. “No one should be expected to accept a role like this without having a good look at all the skeletons in the closet.”
William Alden contributed reporting for this story.