Sexual harassment, lawsuits, firings — can this company be saved?
On this episode of Too Embarrassed to Ask, Kara Swisher and Lauren Goode invited Recode Senior Transportation Editor Johana Bhuiyan to talk about Uber. The three discuss where the company is headed now that multiple scandals have come to light. Will the company be able to weather the storm? They then take questions from listeners, who want to know if Uber is a resume booster or a resume killer.
Note: This episode originally aired on June 16, before Travis Kalanick resigned as Uber’s CEO.
You can read some of the highlights from their discussion at that link, or listen to it in the audio player above. Below, we’ve posted a lightly edited complete transcript of their conversation.
Kara Swisher: Hi, I’m Kara Swisher, executive editor of Recode.
Lauren Goode: And I’m Lauren Goode, senior tech editor at The Verge.
KS: And you’re listening to Too Embarrassed to Ask coming to you from the Vox Media podcast network. This is a show where we answer all of your embarrassing questions about consumer tech.
LG: It could be anything, like, “Should I buy Apple’s HomePod speaker?” “What’s the future of payments and banking?” “What the hell is happening at Uber?”
KS: It’s a disaster.
LG: Seriously, what is happening at Uber? We’re asking ourselves that question a lot right now.
KS: Yeah we are. We’re writing about it a lot, we’re doing a great job.
LG: You are, indeed.
KS: So send us your questions, we do read them all, find us on Twitter or tweet them to @Recode or to myself or to Lauren with the #tooembarrassed.
LG: We also have an email address, it’s TooEmbarrassed@recode.net — and a friendly reminder, embarrassed as two Rs and two Ss. So, Kara, you’re wearing your fancy ear pods.
KS: I am. I have been.
LG: You’re making lots of phone calls these days.
KS: I have. I’m very busy. And yet, I’m here in person.
LG: Thank you so much for being here.
KS: No problem.
LG: Thank you for showing up to the show, your own show. I really appreciate it.
KS: These has been a lot of news. I have my children here for the summer. There is a lot going on in the Swisher universe.
LG: Yeah, what else is going on?
KS: That’s enough, I feel like. My kids and Uber seems to be taking up all my time.
LG: Yeah. How are you prioritizing them?
KS: Probably Uber. No, my kids. My kids, my kids. I split them, I split them. They have things to do this summer. But still, it’s been a really … I thought things would ease up after Code but that’s not happened.
LG: They don’t have their driver’s licenses yet, do they? No, he’s not old enough.
KS: No. No, he’s close though. He’s taking driver’s ed.
LG: I was gonna say, you could turn him into your own personal Uber for the summer.
KS: That would be nice, except that would be dangerous for Kara Swisher. I would never get here.
LG: That’s true, because you generally — you’re a much, much more cautious driver.
KS: No, I’m not at all, I’m a terrible driver.
LG: You’re never on the phone. You’re safe.
KS: I’m not on the phone. I do not do that and I do not when I drive. I’m very particular about that.
LG: No, you don’t text when you drive.
KS: I don’t.
LG: But you are on the phone a lot.
KS: I am on the phone a lot, you’re right. I am distracted.
LG: But you have to take meetings, and you’re a busy person.
LG: All right, so. Speaking of driving …
KS: Speaking of driving …
LG: Speaking of cars …
LG: Speaking of ride-sharing and everything else.
KS: Speaking of Uber.
LG: Speaking of Uber: Today on Too Embarrassed to Ask, we are thrilled to have back on the show Johana Bhuiyan, she is Recode’s senior transportation reporter, and we’re talking all about Uber again.
This is, I believe, the second time we’ve had Johana on the show in the past six months because things keep happening really quickly and so fast that, admittedly, I’m even having a hard time keeping up with the news.
KS: Yes, so are we. There’s a lot of news.
LG: There’s a lot of news.
KS: In one day, there were 19 things that happened, all of which would have made a major story, several major stories. But we’re going to go over the latest news and tell you what we know about the internal strife at Uber right now and then we’re going to answer all of the questions you have about Uber and where this very unusual company is going.
LG: So let’s back up a little bit because I think the last time you and I spoke about this on the show, it was sort of an off-hand mention that Travis Kalanick, Uber’s CEO, was not going to be showing up to Code Conference.
KS: Yeah, probably a good idea.
LG: And then a lot’s happened since then.
KS: Yes, indeed.
LG: You and Johana have been all over the story, along with a couple other reporters out there in the world. So tell us what the latest is.
KS: All right. Johana, why don’t you take over?
Johana Bhuiyan: Sure. So they just released the results of an investigation that was prompted by Susan Fowler, a name that is now sort of well known throughout the tech industry and other parts of the world, but prompted by an account of sexual harassment and sexism that she encountered at the company while she was there for about a year or so. That led to an investigation by the law firm Covington & Burling. They just released not the actual report, but the recommendations of how to change the company. Basically, the high level is that they think that the CEO needs to have less responsibility, the board needs to be more independent, and they need to restructure the company’s HR and management, and more training, etc., etc.
Since then, there have been firings and departures and leaves of absence. Travis Kalanick himself has taken a leave of absence. We don’t know how long that’s going to last. His right-hand man, Emil Michael, the SVP of business, has stepped down from the company and sources have told us that’s as a result of pressure from the board of directors. A number of other people have been fired. There was a separate investigation into individual claims of workplace issues that led to the firing of 20 people. It isn’t clear who that is yet, but we will try to find out and let you know.
KS: Yeah, and we’d like to get the actual investigation record. We’d like to get a copy of that, obviously, to write about it.
Yes, let’s put that on the record. If you have it and want to give us the report, please do.
KS: We will be happy to take. Because a lot of the recommendations you can read backwards, so you can sort of back-read into what was in the report by the recommendations. A lot of them were super simple, things that most companies would do, like giving them instructions on how not to talk about parties and have standards for parties, in advance, for the company, things like that. So you can read backwards.
We had released a memo that was pretty problematic for the CEO, Travis Kalanick. A lot of the recommendations, you can guess what the report said, but we’d like to get sort of the specifics.
Things like, “Be more clear about drinking during work hours.”
Which is obvious in most places, but, at Uber, apparently wasn’t.
LG: Yeah. I feel like, maybe, as journalists, we’re not the best people to comment on that. I don’t drink during the day, but people have made jokes for decades about journalists having their two-martini lunches and all that.
Yeah. I get that, but I think they had an enormous party culture there, it’s really clear.
KS: That has been going on and it needs to be corrected, from an HR point of view. I think one of the things — Johana can comment on this — but one of the things that was most interesting to me was the call for an independent chairman. The chairman is now Garrett Camp, who was one of the founders, really the founder of Uber in many ways, thought of the original idea. So there’s all kinds of things there you can sort of figure out, puzzle pieces of what’s going on. There’s plenty going on. Johana, why don’t you talk a little bit about what happened at the release itself? Even that couldn’t not be full of news.
Oh, right. There was an all-hands meeting discussing this investigation into sexism and sexual harassment, and the board member David Bonderman of TPG capital interrupted his fellow board member, Arianna Huffington, while she was talking about the effects of having a woman on the board. She was talking about how having one woman usually leads to having another woman on the board, and he made a joke off-hand, interrupting her, saying, “Oh, actually, it also leads to more talking.” He later apologized and later stepped down from the board.
KS: That same day?
LG: Okay that noise you hear right now; hold on, hold on (smacking sound). You hear that? That is me smacking my forehead, and I’m leaving out an expletive.
KS: Yeah, I think it shocked a lot of people. I’ve since talked to people. What he apparently seemed to mean — men are always explaining themselves — but [he meant] there was more good discussion. But I’m curious why there wasn’t the words “good discussion” rather than, “women talk a lot.”
LG: Talking more.
KS: Everyone in the room had the same reaction. I think what was interesting was the people at TPG understood that this was not going to get better, and so immediately removed him from the center of attention. I thought if you had to say something was laudable, he understood that they had to walk the talk and removed himself. To me what was interesting — and Johana, I’d love your thoughts on this — is that he said one thing that was a bad joke that could possibly be … I’m not going to say “misconstrued” because I don’t think it was in the room, but one single joke moved him off the board. And Travis has a litany of issues and was allowed to stay and take a leave of absence.
Yeah, I think it’s timing. He did this at the all-hands meeting in front of the entire company. Travis has also done that in the past, but it was … Arianna’s whole speech was, “Let’s condemn the past, and let today be the start of a new future.” I think, in order to say that and let those words have weight, they had to do something.
KS: Right. Absolutely.
I think also, now that Travis has now had a leave of absence, we don’t know how forced that is and how much of it was actually his decision because he wasn’t sure what he was going to do up until that morning.
KS: They did leave it in his hands. The board.
Right, but it’s very clear that he was going back and forth about whether that was the right move. I think this is something they’re trying, at least publicly, to take seriously.
LG: With regards to the investigation, there was an executive who was not fired, as far as we knew, as a part of the recommendations, but then there was a Recode story that came out within days of the recommendations, and ultimately he was fired, and it was for obtaining medical records.
KS: Yeah. That was before the recommendations had come out.
LG: That was before the recommendations came out. Okay, so, talk a little bit about that story.
KS: Johana, why don’t you do that?
Yeah, sure. It was the day after, actually, they fired 20 people as a result of that separate investigation into individual claims.
KS: There’s two investigations.
LG: Oh, okay. Talk about that a little bit first, just quickly.
Yeah, there was the Holder Report, which is the broader investigation that a lot of people are referring to, was done by Covington & Burling, and that was just looking at the company culture from the top. What is leading to all these individual claims of sexual harassment? Those individual claims themselves were investigated by a separate firm called Perkins Coie and that was what resulted in the 20 or so terminations. As part of those terminations, Eric Alexander, the executive you mentioned, was not fired until the day after when we reported that he obtained — or we were asking about him obtaining — medical records of a victim of a rape in New Delhi, India in 2014.
He basically went, right after the rape, obtained these medical records and carted them around for a few months afterward and showed them to a number of executives including Emil Michael and Travis Kalanick, and he was not fired.
KS: Emil Michael claims he never saw it, but everybody knew about this file and the fact that he had it in his hands.
Yeah, it was discussed.
KS: It was discussed in some … explain, the discussions were kind of disturbing.
Yeah. Sources were telling us it was discussed whether the rape was some sort of plot by Uber’s competitor Ola in India to sabotage the company, so, questioning the validity of the incident itself, and today, as we reported, the rape victim has filed another lawsuit against Uber for invasion of privacy, for defamation, and this is in California, so we could possibly see this play out in a way that forces the Holder Report itself to become public.
KS: Right. It’s a problematic situation. It’s a series of activities. It’s not just this. There’s the Waymo lawsuit from Google, there’s this India thing, which I think really did push a lot of people inside the company over the edge. A lot of this stuff was antics and problems and they don’t take it seriously, unfortunately, Silicon Valley sexual harassment issues, as they should. I think this was sort of beyond the pale for a lot of people, that top executives were carrying around a police file that then had a medical file of a rape victim in it. I think any other executive would have turned that over immediately if one of your underlings had gotten ahold of it.
KS: The whole thing calls into question the management of the company and the top management. Soon after, Emil Michael was fired. Why don’t you talk about that, Johana?
Emil Michael. There was a lot of board pressure leading up to this seven-or-so-hour meeting last Sunday discussing the recommendations before they showed it to employees. He had, at that point by Sunday, was sort of 50/50 on whether or not he was going to step down and whether or not he was going to leave the company, because the investigation, from what we’ve been told, really shed a bad light on him. People who were interviewed for the investigation were asked about this incident in South Korea where he, Travis and Eric Alexander, actually, visited an escort bar in Seoul, South Korea with a few other employees. Employees who were made to feel uncomfortable. So people were asked about that.
There’s a litany of other things Emil Michael has done in the past publicly. Talking about digging up dirt on journalists, etc., etc. The investigation was not good for him. That was what was clear to us. He announced to the staff on Monday that he was stepping down. What we know was that there was board pressure for him to step down. I don’t know if, in his email, he said that he was fired.
KS: There’s been stories afterwards by people who are close to him who are sort of indignant at him having to leave. I think what’s interesting, to him, that was sort of a growing thing around him. He’s the closest person to Travis, really, in the company and many considered him in the COO of the company in a lot of ways, although he does not consider himself that way, but everybody else does. He’s his closest confidant. I think what’s really interesting is that it built. It built over a long time.
Yeah. I mean, a lot of people describe him as Travis’s close confidant, adviser, sometimes his enabler. They had this sort of bromance that by 2014, he joined Uber in 2013, by 2014 they were speaking every single day. He sort of usurped other people who were close to Travis within a matter of a year as his closest adviser. Whether he wants to admit it or not, he played a big role in a lot of decisions that Uber made.
KS: And he was key to a lot of deals there, too. Worked on the China deal. There was not a critical deal for Uber that he wasn’t involved in. The other part is that the board had tried to put him on a leave of absence previously, and Travis just wouldn’t do it. They had promised to do something, especially around the escort bar issue, although I think they call it a karaoke bar. They keep trying to insist that it’s a karaoke bar, but it’s a karaoke bar where women have numbers around their necks and they’re for sale. You know, fine. We’ll call it that. The only thing, to be fair, is that a lot of tech executives go to these things when they’re in certain Asian countries. Everybody does it, but in this case someone complained at Uber, a woman who was there and was made to feel uncomfortable.
LG: Right. So with the Emil Michael situation, is this the kind of thing where he’s taking the fall for Travis in a way? That by him exiting the company, it could potentially save Travis’s job?
KS: Well, good things, right, Johana? Many think he deserves it.
I think the argument that he’s being scapegoated is not accurate. I know it’s an argument that people close to him have made to other publications, but he did things. He very loudly, to another journalist, suggested digging up dirt on other journalists. He was at the South Korea escort bar, or karaoke bar, whatever it is. It’s not as if he is completely free of any wrong.
KS: And Alexander reported directly to him, and he didn’t do anything about it. Or didn’t do it quick enough, or didn’t express enough urgency around the issue. There was a lot of issues around him.
It’s clear that he’s angry about having to leave. I don’t think he willingly fell on his sword for his buddy.
LG: Let’s talk about Travis. So, Travis is now taking a leave of absence. In an email to the company, which Recode published, he said that he was taking time to grieve his mother. This is an indeterminate amount of time. What else do we know about this leave?
KS: Well, just his mother. Let’s talk about his mother. She died in a very tragic boating accident, lovely woman. His father’s very sick. In the middle of all this, in this report, there was this horrible personal tragedy for Travis, which must be an astonishingly horrible thing to have to deal with, and also deal with issues around the workplace, which is, I think, the center of his life. The two centers of his life was his family and his workplace. There is a moment where you have to be empathetic and say, “Wow, this is a terrible time for this guy.”
LG: I mean, this has to be the worst year of his life. Uber has gone through public scandals before. They’ve managed their way out of it somehow. This is just thing after thing, and in the middle of it, his mother passes away, and his father is severely, severely injured. I don’t know if you read his account of what happened, it’s horrible.
LG: It’s really, really horrendous. I don’t doubt that the time he’s taking away from the company now will be spent partly with him recovering and grieving. I think anyone should take that time. At the same time, in his email, he did also say that he’s working on becoming Travis 2.0 so that he can lead the company. Will he return? It’s hard to tell at this point, because he didn’t put a timeline on it at all. It’s not clear if he’ll be welcome back by the board, by the company, depending on how long he’s away.
KS: I think the issue is, the problem is they left the door open so much and so unspecific that they’re trying to find a lot of different people. There’s a lot of openings. There’s not much management at the company. It’s being led by a group of people at the top, but there’s not many of those either, and certainly not senior enough. The issue is, can they get a COO in there? That’s really what they’ve been trying to do, that is adequate, that is a good COO, really wants to sit there with this overhang, because they didn’t clarify anything.
The question is, will they get kind of an “eh” COO, or will they get the kind of COO that’s really needed here? That’s a problem, because most people who are really good want to be CEO. If you have this guy with enormous voting power, and he does, between him and Garrett Camp they really can control a lot of the fate of Uber, or can try to, there’s obviously resistance from people but technically they can control it, the question is: Who wants to come into this? I mean, they’ll find someone, but is it going to be a great person? They keep saying they want a Sheryl Sandberg-like person. Trust me, Sheryl Sandberg wouldn’t, someone like Sheryl Sandberg wouldn’t touch this with a 10-foot pole.
Mm-hmm. Yeah. I think it also depends greatly on whether Travis does come back, because if you’re going to get someone to be the second-in-command, they also are going to want some sort of power. They’re going to want to be able to make decisions on their own. In the past, that has been incredibly difficult with Travis leading the company. He likes to be a part of every decision. He likes to be the one that makes the call. He lost a president who ostensibly at that time was supposed to be a second command after just six months. Part of that was morale issues, but sources were telling me that he also felt like Travis went behind his back on a number of issues. Will Travis be ready for a “true partner,” as they keep calling the COO role?
KS: And should he be? Has he developed enough? I think we had a memo that we published that was disturbing, even though sort of broey-funny kind of thing, but it’s certainly not a memo … it was advising about how employees should have sex.
LG: Right, there was a company off-site in Miami.
KS: Mm-hmm (affirmative).
LG: How long ago was it?
KS: Not very long ago.
LG: He was telling people, “Don’t have sex.” It was just very immature in tone.
KS: It was immature. It was also lamenting, as Casey from The Verge said, lamenting that he couldn’t have sex with people. He had a hashtag, FML, Fuck My Life, like, “Oh well, I guess I can’t have sex.”
LG: Yeah. Sucks to be me.
KS: It was something a frat brother, the head of a frat would send out, but not the head of the company. So, can he be a public company CEO? That’s leaving out the Waymo lawsuit, all kinds of criminal investigations, greyballing, and some privacy issues. I mean, the list is endless. Can this person be the CEO?
And the fact that they literally don’t have a C-suite of executives. They don’t have a CFO, they don’t have a COO, they don’t have a CMO. Who knows if other people are going to leave the company or be fired from the company as more and more things are being revealed? He does have his direct reports. I think there are probably three chiefs, one chief human resources officer, and basically that’s it. There aren’t any other high-level executives who are left to run the company right now.
LG: He’s also not young.
LG: He’s not a 25-year-old CEO who’s stumbled and made a bunch of mistakes.
KS: He’s over 40, yeah. You know, everybody can change.
KS: Any moment in your life until the end of your life, you can change. I think the question is, who’s going to train him? He’s hired a personal coach. He’s tried to do all kinds of things, and obviously when you have this great personal loss, it does make you reflect on your life. Not to psychologize people, but this seems to be the universe saying something to him.
KS: It’s a question whether he’s going to do that. I’m of the opinion that he’s not changed, necessarily. There’s a lot of “I’m sorrys,” but I’m not sure. The resistance to step down, the resistance to a lot of this, seems to display someone who just really thinks they’re on the right path, doesn’t want to change. This has worked in the past, this aggression, this pugnaciousness, that’s veered over into toxicity, really. It’s toxic.
KS: It works! To me, the medical records thing, away from the crazy memo, the medical records thing was, I think Johana and I agree, was so disturbing.
KS: To even imagine someone would consider that was okay.
I’ve been covering Uber for years now, and I’ve talked to people about awful things that have been done on behalf of Uber, by Uber employees, whatever it is. When I started talking to people about this and asking them about this, those who didn’t know and weren’t involved were shocked. Having known Uber from the inside, they were shocked. I think that says a lot, given Uber’s track record.
LG: Right. It’s almost like they’re not shocked about the fact that, Johana, when you were showing up to a meeting with them years ago they revealed that they were actually tracking your trip, and they’re not shocked that maybe Uber has made software that was assigned to keep authorities in certain municipalities in the dark about what they’re doing and what cities they’re operating in. They’re not surprised about that, but this is next-level stuff.
KS: It’s interesting. One of the reasons we had such good sources on this is because I had one person in the executive suite who was like, “This is my penance for letting this happen.” I think that’s what it got to; “I feel badly that I allowed this to go on.” They feel badly. I think ultimately you’ve gotta bring back this company and, Johana, maybe we can talk next about where it goes. You can write as many recommendations as you want. What is it going to take to change? Arianna is talking a lot about, “Let’s move forward. Let’s not think of the past,” but you really do have to think of the past. You can’t just let go and say bygones here. Johana, what do you think is going to change the culture at this point?
Let’s start first with what they’re going to do with these recommendations on a practical level. Liane Hornsey, the chief human resources officer, says she’s going to add more human resources stuff, because that was an issue. A lot of the problem with the company and a lot of the reason why so many, you know, sexism, sexual harassment, whatever it is, reports kind of fall through the cracks is because they were built like a startup. They had an HR department that basically only worked and served to help the company recruit and grow and didn’t really feel that their primary purpose was to help actual employee issues and make sure employees were happy.
Insofar as the recommendations say, that they’re going to use now established metrics to ensure that employees are happy, which is something that companies should have. Fundamentally. It’s unclear, though, whether these sweeping changes are really addressing these individual issues. Twenty people being fired and who knows what the cases were but, out of the entire company, it’s not clear if that’s enough to change the culture.
I mean, David Bonderman’s comment on its own shows, even after having dealt with this for the last six months, being in meetings, trying to fix the culture, spending seven hours with the law firm and then accepting all the recommendations, he was able to still make that remark. It’s clear that it’s not just like one day you flip a switch, all things are changed, culture’s different. There has to be a fundamental reimagining of the leadership structure because a lot of this comes from the top. It’s really unclear to me whether this is going to make a tangible, tangible different within the company. I’ve spoken to people who are upset that certain people haven’t been fired as a result of the investigation. They feel like things haven’t changed and still are actively looking for other opportunities, even after the recommendations were revealed.
KS: A lot of the people are now, “Kara, let’s move on.” I was like, “No.” I think, Johana, you feel that pressure. Let’s move on. Let’s forget about the past. I’m like, “Why? Why should we? We haven’t even gotten through half the things you’ve done.”
KS: They would like the slate to be wiped clean, but they haven’t fired the CEO. In any other company, he would have been fired because one, they have founder love, right? Such a Silicon Valley thing. The founder will be Jesus and save everything. And two, and I think this is the one that’s reasonable, they’re worried about attracting people into the company. The attrition rate has gotten rather high. The question is, can and will they attract the really innovative people? They’ve got competitors out the yin-yang. This is not like other companies. This is a hugely competitive space. Can they continue to stay innovative with all this hanging over them? That is a legitimate worry. They don’t want to easily replace a founder who’s proven himself to be very quick on the draw.
LG: To that point, how are they actually doing from a business perspective right now? There was a “delete Uber” movement a few months ago, but as Johana pointed out on an earlier podcast, they were still gaining new customers at a rate perhaps that wasn’t really impacting them. Now even the New York Times is writing a column about not using Uber. I have not used Uber in months.
KS: Yeah. Right.
LG: And it’s not that hard. I mean, we’re lucky we live in the San Francisco Bay Area. We have options. For other people in other markets, maybe they don’t have other options, but it’s not that hard to not use Uber.
KS: Yeah, I’ve stopped using it. I have to say, just from this reporting, I don’t care if people think I’m biased. I just can’t do it with the stuff I’ve learned. It’s just disturbing. Listen, there’s all kinds of issues around all these companies. The question is, it is growing more than ever, right Johana? I mean, that’s the thing. It seems like people say, “I hate these Uber people, but …”
For a $ 69 billion company, if every week is not better than the last week, it shouldn’t be valued at that much. They’re still growing. They’ve narrowed their losses from last quarter of 2016 to first quarter of 2017 from 990,000,000 or so to 700-something million.
KS: It’s like getting out of China, right?
Which still is a lot but they are narrowing their losses, and they say that they’re going to be profitable. Profitability is another issue. They also need someone to come in and help them perfect their business because they’re still subsidizing a lot. They’re in markets all over the world where they have very, very strong competitors that are getting a lot of financing and are willing to play this subsidy game with them, to go to war with them by giving drivers money and charging customers less. They’re growing, they are narrowing their losses, but still need to figure out how to have a better business model where they’re not just throwing money at buying drivers and riders.
I live in New York. We have a subway system that’s really great, sometimes is not, but we have a robust subway system, unlike most markets. We also have a bunch of different options, ride-hail options, but I can tell you right now for a fact that Lyft’s service is not as good as Uber’s here even though it’s a major market. They don’t have nearly as many drivers available as Uber does, so until other competitors can figure that out, figure out the balance between riders and drivers in a way that riders aren’t forced, riders who only use ride-hail services or really need to use a ride-hail service, aren’t forced to go back to Uber. Nothing is going to happen. You can tell people to stop using Uber as much as you want, but particularly outside of New York, outside of maybe L.A., San Francisco, I don’t think the news that we’re breaking really affects other markets, particularly if there isn’t a public transportation system, if there isn’t a real private car network or industry. Of course they’re going to use Uber because they need to get around, and they need to get around quickly and for cheap.
KS: It’s also, as Johana said, a better product. It just is. It’s a better app, it’s a better product, it’s better matching. I think a lot of people will tweet indignantly, “I can’t believe this!” And then they’ll call an Uber. Last night I was at an event, and after all this news, I was like, “I’m going to call a Lyft.” They’re like, “Oh, we’ll call an Uber.” These are people who just had criticized Uber. I was like, “Really? Are you friggin’ kidding me?” It was interesting.
LG: It’s almost like railing against your ISP and then you go home and use the internet every night. It’s just like, “Ugh,” you know, “Comcast, or Verizon.” Whoever it might be. It’s utility.
KS: It’s utility. I think that’s the issue. I think the question is, do keep in mind that I do think that’s right, people don’t think that hard and it doesn’t resonate outside of Silicon Valley or others.
No, it doesn’t.
KS: Which will matter, I think, eventually. Things do trickle down. They always try to compare themselves, Uber, from a business point of view to Amazon. They spent, spent, spent and then they suddenly got profitable kind of thing, and now they’re doing great. What Amazon did with all of that money, which people thought was wasted, was build, everywhere. Warehouses. Technology.
LG: They built AWS, too.
KS: AWS. Like, warehouses! Real things that differentiate them. Right now what differentiates Uber is a better app. People can catch up. I don’t see that they have moats that other people have. What they have is a brand, and that brand is most definitely tarnished. We’ll see what would stop someone from making a better product eventually. It’s just, they’ve got the head start.
I think the brand itself will matter a lot when it comes to self-driving cars. That is when we’ll see a real, real effect with Lyft’s brand, which is friendly. We’re the trustworthy ones. People will, of course, opt to use the service with self-driving cars that they trust more, and if Uber, we can barely trust them when they’re using manually driven cars, are we going to be able to trust them when they have robots driving these cars?
KS: I think it will have less of an effect. As long as its product is great, I think people will be like, “Ugh, what a bunch of assholes, but I still call it.” Unfortunately, they won’t care as much. Some people will, certainly, delete Uber. Stuff like that has an impact, but how big an impact is still open to question.
KS: Okay, we’re talking about Uber. Uber, Uber. With Recode’s Johana Bhuiyan. Now, we’re going to take some questions from our readers and listeners. Lauren, do you want to read the first question?
LG: Sure. The first question is from Eduardo Viero who asks, “Is Marissa Mayer a good name to be on the board or become new CEO of Uber?” She is available now.
KS: Yeah. I sense someone’s trolling me.
LG: He was trolling you because then he responded to me, “Lauren, can you convince Kara to make a case for it?”
KS: Here’s the case for it: She could go on the board. She certainly is on a lot of boards. She’s on some good and some bad boards. Look, the Yahoo experience wasn’t very good, and this is a highly complex company. You need someone for the transportation sector, the delivery sector, like FedEx, people like Tom Staggs from Disney. People who really understand logistics. She has absolutely no experience here, so I don’t see why they would want to jump into that. You know, out of the frying pan, into the fire. Whenever you think of Travis Kalanick, his whole career has been about distributed networks. Away from all these ethical issues, he’s terrific at that. Johana, your thoughts?
I don’t think they’re going to get Marissa Mayer to be their CEO. That is pretty much it. For all of his issues, Travis is what made Uber what it is. They’ve even said this themselves, the thing that brought them here, this aggressive mindset, is also what’s undoing the company right now. While he did bring the company to where it is today, is that as far as he can bring it if he doesn’t change? I think they’re coming up against the limits of that aggressive behavior now.
KS: Away from the aggressive behavior, he has a real knowledge of distributed networks. His past two companies were like that. He’s quite a mathlete.
LG: Navigating sort of sticky regulatory issues.
KS: More than that. He does sort of understand the mathematics involved in this really complicated business. It’s not just a digital business. It’s not like Instagram. It’s a analog business. It’s super complex, and I think he really is highly qualified in that regard, and that’s maybe why they keep him, eventually, if they can get rid of all these thorny ethical issues, and they’re quite thorny.
So, next question, from Anshul Kapoor, @iamaanshul: “Why hasn’t any Uber investor shown leadership and sold their stake in Uber yet?” Johana, you can answer that in one easy word.
The business is good.
LG: I shouldn’t laugh.
KS: Greed. Greed.
The business is good! Throughout the last few months I kept talking to investors, big and small, and I asked, “Why are you still here?” Barely even registered, some of them, that there was even a scandal. Maybe not recently, but before, because the business is good. They’re doing well. They’re the clear market leaders in the United States. There was little reason for any investor to really pull out. I think it’s Mitch Kapor who wrote a public letter denouncing the culture, but even then, after the recommendations were published, said that they feel like the company’s back on track.
KS: Yeah, so. Greed. They like their money. There’s not enough money in the world for some of these billionaires.
LG: There you have it, Anshul. There’s your answer. Plain and simple.
Next question is from MoonlightHalo on Twitter: “Do you believe their effort to clean up their act is sincere? I’m really tired of giving money to Thiel/Icahn.”
KS: Can you explain that, Johana? Thiel/Icahn is Lyft.
Yeah, so Thiel and Icahn are investors in Lyft.
KS: Explain who they are.
Peter Thiel is currently in the Trump administration. He’s also the person who apparently quietly helped sue Gawker out of existence as part of the Hulk Hogan lawsuit, and they’re investors in Lyft, which is interesting because as all this Uber stuff happened and any ethical issues people began bringing up about Uber, there was this other side bringing up the fact that, “Oh, Peter Thiel’s also an investor in Lyft.” So, it’s questionable whether they are themselves ethical. I do think it’s to their benefit, or Lyft’s benefit, that we’ve all been focusing a lot on Uber.
Do I believe their effort is sincere? I guess you’d have to define what sincere means. I think that they genuinely do want to change the company culture because, at the end of the day, they have to rectify their business. They are, we said earlier, they’re losing talent. Really, really talented people are questioning whether they want to be at the company, who have already left the company, and some people have genuinely asked me, people who have offers from Uber, whether they should join the company if it actually is really bad for their résumé. So it is having an impact at least on the people that they are able to get. And who is making the product? Who is backing this company? It’s the talent.
I think, also, public image is going to matter more and more. Maybe not so much yet, outside New York, San Francisco, things like that, but for the first time in a really long time I’ve seen people genuinely express, at least publicly, their discontent with the company, have said that they’re going to stop using Uber. That never, ever, ever happened before. Not when drivers were protesting, not when they suggested digging up dirt on journalists. It never happened before, until now. So whether or not it’s material on the business end, there is at least a perception issue, and that is going to affect recruiting, and that’s going to affect possibly getting more funding.
KS: It’s not good for business to be such assholes, I guess, at this point, and you know, karma’s a bitch kinda thing. I think it’s not sincere, although I do think that there are so many good people in the company. That’s what we have to keep underscoring. There’s wonderful people who work there and ill-served by their leaders, for sure.
All right, next is from Mark Little, @mtlittle: “Has any CEO in American history kept their job through so many self-inflicted scandals?”
LG: Hm. That’s a good question.
KS: Johana, very quickly? I can’t recall.
LG: I’ll tell you this: If the president makes it four years, that’ll probably be longer.
KS: The president. President Trump. President Trump.
Yeah, I can’t even think of someone who’s been through this much.
KS: Here’s one that’s been through …
At least in recent history. I’m very young.
KS: Yeah, you’re very young. I’m very old. You know, Bill Gates in the Microsoft trial. He held onto that job. That was a tough friggin’ trial, and a lot of it centered on him. He gave a terrible testimony. He kept his job for a long time, considered a very good CEO, but that was just the one thing. This is a lot of them. No. I can’t think of one. Elizabeth Holmes from Theranos is still there, right? She’s still running the company.
But again it seems like it was one thing, which is that the technology just didn’t work.
KS: It was one big thing. One big thing. Fraud, or whatever it is.
LG: Right, but do you remember the Mark Hurd expenses thing?
KS: Yeah. Mark Hurd.
LG: That was like, one thing. One scandal and out.
KS: Yeah, there’s usually one, and he was out. I think the tolerance level has gone high. It’s not unrelated to what’s happening in politics.
Next question. Lauren, if you want.
LG: Next question is from Justin Tomkiewicz. He’s @angrycritic97: “Why does it seem like every Uber executive is a pervert? #somuchUber #TooEmbarrassed.” That is what we define as a “leading question” in journalism.
KS: Johana, you get that one.
LG: We’re not gonna answer that.
KS: Define “pervert.”
I don’t think it’s fair to say that every Uber executive is a pervert.
KS: Define “pervert.” This is San Francisco, after all.
LG: It depends on what “is” is.
KS: Look, they got some problems.
LG: Yeah, it’s not fair. To make a sweeping question.
KS: Johana, don’t answer that. Don’t answer the pervert question, okay?
LG: All right, the next one …
I don’t know. This doesn’t feel like a good position for me.
KS: Do not answer the pervert question. Try to keep your objectivity on that one. “Isn’t it time that we discuss the culture crisis in other companies in Silicon Valley? Uber isn’t the only company.”
LG: Good point!
KS: You know what? It’s not, but it’s the worst.
Yes. No I mean, it’s front and center right now, but this story itself should either lead companies to clean up their act or force people to start talking about the issues that are within their company and force reporters to also pay attention. I have young journalists reaching out to me all the time about how to get into the tech industry, and my best advice is pay attention to the companies that none of us are paying attention to because we’re all writing about Uber.
KS: Right. But they are the quintessence, don’t you think? I’ve never seen anything like this.
Of course, yeah.
KS: By the way, I’ve gotten so many contacts from people in companies that are like, “We are looking at everything.” You have issues with sexual harassment and sexism in every single company. For example, just to pick one, you have dirty tricks not so much, comparatively, to this. You have such a panoply of everything here. You’ve got dirty tricks, you’ve got competitive high jinks.
KS: You’ve got stealing technology. You’ve got weird holding of medical records. You’ve got demented memos. You’ve got sexual harassment. Everything exists in companies, just not in this concentration. I think it’s really quite astonishing. But yes, we should look at other companies, at all of them. They have a responsibility to their employees and their customers and a wider range of people that they take responsibility for.
LG: We have a question from Bolaji @ballargee on Twitter. “A friend has a great offer from Uber. Should she take the job? Is Uber really officially a black mark on one’s résumé?” I’d say it’d be tough to go in right now.
KS: I think it’s a good time to go in.
LG: I was surprised, for example, they just hired away a top Apple executive, this woman Bozoma Saint John.
KS: Yeah, Bozoma. She’s great.
LG: She was working at Apple Music, and they hired her away and I was a little bit surprised by it just because I thought it’s a tough time to enter, because you don’t know what the top of the corporate structure is. You don’t know how they’re going to emerge from this.
KS: She’s pretty tough. No one pushes Bozoma around, is my guess.
If you believe that the company is turning a new leaf, then it’s probably a good time to join, but I do think that, and this has been forever, that being a former Uber employee doesn’t necessarily look great on your résumé depending on what you’re doing. It also depends on what the position is. You need to know the people you’re working with, I think, before you make a decision. I’m sure they’re offering a lot of money for these positions, and like I said, I’ve been asked multiple times by many people, “Should I be joining Uber? I have a great, great offer.” It’s tough to say. I would wait just to see if anything really changes.
KS: Do you think people actually blame the employees? Not most of them. I think most of them … this is focused on the top, the top leaders, so I don’t know if it’s such a bad thing. Although, I have to say, pretty much everybody there that I talk to is contemplating leaving, and says it to a reporter. That’s the issue is like, why would they tell me? “What should I do?” If they’re consulting me, you’ve got a problem. I don’t know. I don’t know what to say.
Yeah. I mean, Liane Hornsey said that at the all-hands, too.
KS: Did she?
She said, “I know that people are getting a lot of offers. I know you’re filling up your LinkedIn.” And she was like, “But this is the worst time to leave. We’re about to work on some change,” or something like that.
KS: That’s what an HR head would have to say, right? I wonder if she’s shopping her résumé. I don’t know. She’s from Google, by the way. Liane is from Google and has a lot of experience, for sure.
Next question. We have two more left, very quickly. Noel Walling: “How much corporate responsibility should we expect from companies that repeatedly violate local laws until they’re sued?” Johana? Kind of a lay-up there. How much?
KS: Not much, is the answer.
How am I supposed to answer this question?
KS: Not much.
They did what they needed to do to get legal, and is it surprising that a company that used the argument that laws that existed are antiquated and thus don’t apply to them, you’ll have questionable ethics? I don’t think it’s surprising. I don’t really understand if this question is rhetorical or not.
KS: It’s rhetorical.
LG: Thanks for writing in, Noel.
KS: I guess.
LG: Next question and last question is from Adnan. Adnan says, “How effed are we with regards to deterioration of worker rights via the ‘on demand’ labor by companies like Uber?”
KS: Well, that is a big question, Adnan. That is a big question. Johana knows a lot about these companies.
That’s something that Uber’s been grappling with for a really long time. Drivers are not necessarily happy working for Uber, and what are workers’ rights? Independent contractors aren’t really afforded any sort of employee benefits or anything like that via Uber. They have to do that through the government, or on their own, and then I think it’s really about whether or not this administration decides that it’s their responsibility to help independent contractors and freelancers as that subset of employees become bigger and bigger. I don’t think that the administration is one to get too deeply involved in things like that, and I feel like they’re probably really busy with other stuff.
KS: That’s a big question. That’s another topic for another day, but it’s not just Uber. It’s all of them. How do we treat workers in this new economy?
KS: Big, big, big, big questions. For bigger minds than ourselves at this moment, because we’re tired from covering Uber, aren’t we, Johana?
I was just saying that it’s Ramadan and covering Uber has made it easier to fast, because I can’t eat. I have no time to eat.
KS: Well, keep working! Harder, harder, Johana! She’s done an amazing job at the coverage and there’s much more to come, correct?
LG: You both have.
KS: We’re not going away, as many people used to say.
LG: That should be Recode’s slogan. “We’re not going away.”
KS: That’s an old gay rights thing.
LG: Oh, really?
KS: Yeah. “We’re not going away.”
LG: We should adopt it.
KS: And since I’m gay, we can do it. Johana, you can do it if you want.
I actually email that to people when they don’t answer me.
LG: “I’m not going away.”
KS: That sounds threatening! Johana, you’re learning fast! Fantastic. I love that.
I like this. Yes.
KS: Your next thing should be, “I will kill you.” You can use that. Unnerve people.
LG: I mean, I would be a little concerned putting that in an email. Or saying it in general.
“I will kill you.” I was trying to get Johana to … I gave her the phone number to text someone and I said, “It will unnerve them.” I wanted the person to be unnerved, right? No response yet though, right?
LG: Is that what happens when you were calling me at one o’clock in the morning?
Nope, not yet.
KS: I’m trying to unnerve you.
LG: You actually haven’t called me at one in the morning in a very long time.
KS: But I try to unnerve people, and we should do that here because it’s a great product and deserves a better leadership. For sure.
KS: Anyway, Johana, thank you so much. This has been another great episode.
KS: And thank you for joining us.
LG: Yes, thank you so much for joining us, Johana. I hope we have you on again soon, except if we do have you on again soon it means that yet another Uber scandal has erupted and you haven’t slept in a long time.