Uber CEO Dara Khosrowshahi doesn’t believe in regrets, but as he looks back on his first year leading the company, he sees one thing he’d like to have changed more quickly.
Uber’s corporate culture was in dire need of an overhaul when Khosrowshahi took the job. He’s made progress, but in an interview with CNNMoney ahead of his one-year anniversary as chief executive, Khosrowshahi said, “If there’s one area that I would have liked to change faster, it is to execute more fully on our cultural transformation as a company internally, across all levels at the company.”
“It will never be done,” he said. “It’s a continuous exercise. If I talk to you next year, I hope to be further along on the exercise than I am right now.”
It was one year ago Monday that word leaked that Khosrowshahi was leaving a comfy gig as the head of Expedia to lead what was at the time the most dysfunctional company in tech. Founder and CEO Travis Kalanick had made such a mess of things that the board finally pushed him out four months after harassment and sexism allegations rocked the company.
Khosrowshahi arrived to his first official day of work on September 5 with a daunting to-do list. Uber faced a slew of sexual harassment and gender discrimination allegations. It was embroiled in a messy lawsuit with Waymo. Several executive roles were vacant, its drivers were on the verge of revolt and its losses were widening.
Khosrowshahi told CNNMoney the past year has been such a whirlwind that it feels like he’s celebrating his one-month anniversary, not marking the passage of an entire year.
“It’s been filled with good days and bad days,” he said. “The good news is that the good days are outnumbering the bad days more recently. But I didn’t get into this expecting an easy ride. It’s been just as challenging as I expected.”
Arguably the most pressing task Khosrowshahi faced was reshaping the company culture and abolishing Kalanick’s anything-goes, growth-at-all-costs ethos. He said Uber has made “enormous strides” when it comes to its attitude towards dealing with regulators, for example.
Early on in his tenure, he revamped the company’s cultural norms, ditching attitudes like “Always Be Hustlin” and “Superpumped” in favor of things like “Customer Obsessed” and “We Do The Right Thing.”
“We haven’t made those norms an everyday reality at all levels of the company and while we’ve seen progress, it’s not a job done,” he said.
Underscoring that point was the departure in July of Uber’s head of human resources, Liane Hornsey, following an internal investigation into how she handled claims of racial discrimination within the company. In her goodbye email to staff, Hornsey didn’t address the probe. Uber confirmed an investigation, but would not elaborate on the claims against her.
And several employees have raised concerns about Chief Operating Officer Barney Harford for alleged racially insensitive comments. Harford, who worked with Khosrowshahi at Expedia, remains at Uber. In a memo to coworkers shared with CNNMoney in July, Harford described allegations as “painful” and said he was “embarrassed.” He pledged to work with a coach who could challenge his “blind spots.”
Such things leave some of Uber’s critics skeptical of any claims that Khosrowshahi has made enough of an impact. “We’ve been very critical of Uber and we maintain that position,” Brenda Darden Wilkerson, president and CEO of Anita Borg Institute (AnitaB.org), told CNNMoney.
AnitaB.org puts on the annual Grace Hopper Conference, the largest gathering of women in computing. It also partners with more than 70 companies on recruiting practices, keeping women in tech, and creating an inclusive workforce.
It first partnered with Uber in 2015 but cut ties with the company during the company’s turmoil in 2017 under Kalanick’s leadership.
Uber re-evaluated employee salaries after bonuses were paid out in March to ensure all employees — regardless of gender or race — are paid equally based on their location, job and tenure in the role.
In April, when Uber released its latest diversity report, Khosrowshahi stressed that the company needed to hone in on hiring or promoting more diverse leadership.
Uber has also agreed to a $10 million settlement over harassment and discrimination claims by female and minority engineers earlier this year.
Cultural change isn’t the only ongoing challenge for Khosrowshahi. He still has to confront safety issues and a growing wave of regulatory battles, as well as continue his effort to diversify Uber’s business ahead of an anticipated 2019 IPO.
Regulatory challenges pose a significant threat to the company’s growth. London threatened not to renew Uber’s license to operate, only to relent when Khosrowshahi made several concessions, including sharing the company’s traffic data. More significantly, Khosrowshahi admitted to past mistakes and shortcomings — something Kalanick wasn’t known for.
“He went almost deferentially down that second route,” Tony Travers, a government professor at the London School of Economics, told CNNMoney.
Khosrowshahi stressed that the first step to dealing with cities and regulators is “getting in the room and having a dialogue. We’re having a continuing dialogue with really all the cities that we operate with, and the regulators we operate with.”
“We want to be seen as a partner that’s part of the solution,” he added.
That didn’t work so well in New York. Earlier this month, the city, Uber’s largest US market, adopted a temporary cap on the number of new for-hire vehicle licenses as it explores ways of reducing traffic congestion. The legislation could encourage other cities to follow suit as they attempt to rein in ridesharing firms believed to have increased congestion even as they’ve revolutionized transportation.
“We don’t think the City Council came to the right conclusion but at this point, we’re not going to dwell on that,” said Khosrowshahi.
Bradley Tusk, an Uber investor and former regulatory adviser to the company, said Khosrowshahi’s conflict avoidance approach “made the New York loss all but inevitable,” telling CNNMoney it could be “sign of political trouble to come.”
“They ran a very risk averse, tepid campaign that didn’t engender any anger but also had no chance of winning,” he added, while stating that Khosrowshahi has done a good job of “generally calming things down.”
Khosrowshahi stressed that the company will continue working to improve experiences for drivers and riders in New York and to ensure that its service is accessible and available to customers who don’t have access to mass transit. Pushing customers to use alternate modes of transportation is also a way of ingratiating the company with cities and regulators: It could help cut down on traffic congestion.
Under Khosrowshahi, Uber has expanded beyond its core ride-hailing service into other modes of transportation like bikes and scooters.
“Uber is not a one-note company. We’re a selection of different businesses, with different maturities and growth profiles,” he said. “We want to be your everyday use case for getting from point A to point B.”
Uber carved out a “new modalities” unit earlier this summer. The department includes the alternative offerings Uber has in store. Uber launched an electric bike option in San Francisco in February, and has since expanded the offering to a handful of other American cities. In April, it acquired electric bike-share startup Jump Bikes. E-scooters are also coming to the Uber app in San Francisco, as well as other cities. It also plans to integrate city bus and subway systems into its app.
Uber’s new CFO, Nelson Chai, will be tasked with continuing to grow the company’s core ridesharing business as well as its “big bold bets,” into which scooters and bikes fall. While they may take “years to mature” and may suffer losses in the near term, they will bring in “billions of revenue at maturity,” Khosrowshahi said. “The focus and the weight of our efforts is going to be around innovation — but not innovation for a wonderful prototype but innovation for scale.”
“We’ve got a ton of work ahead of us,” he added. “I think we can say that one year later, Uber is on much more solid ground.”
CNNMoney (New York) First published August 29, 2018: 12:01 AM ET