Uber CEO Travis Kalanick is out. After a series of public relations disasters resulting from claims of sexual harassment, sexism, privacy invasions and law enforcement evasions, the co-founder announced his resignation under pressure from investors.
But a changing of the guard won’t necessarily right Uber’s listing ship. The new face for the company will undoubtedly encounter a slew of challenges right off the bat. But the most important matter is whether the person can continue to grow the business while completely changing its corporate culture.
Profit and culture
“It’s really important that they get someone in there that not only has a good business mind, but also has a good culture,” said Gartner research director Michael Ramsey. “That will be vital for them going forward.”
Kalanick, however, won’t be easy to replace. As Ramsey points out, a company’s founder helped bring the business to life, and as a result, thinks differently about an organization than an outsider does.
Still, as much as Kalanick’s leadership helped build the company to what it is today, it also damaged its standing enough to force investors to push for his resignation.
The change is all the more important as Uber moves closer and closer to its goal of going public. And while a $69 billion valuation is impressive, the company is still losing money. If Uber does want to become a publicly traded firm, its next CEO will have to provide some kind of blueprint for how the company will reach profitability.
“You can’t just manufacture losses without some plan for showing how those losses will disappear at some point,” Ramsey said. “I think that the management change and sort of a quiet period will help with that.”
Improving driver and rider relations
Outside of Uber’s cultural and growth issues, the company needs to drastically improve relations with both drivers and riders.
“They [Uber] have to do things to restore people’s trust, mostly their drivers’ first and then, second, they have to perhaps take on some things to improve their image with riders,” Ramsey explained.
It’s true. According to USA Today, Uber’s share of the on-demand cab industry fell from 90% to 74% in the past two years.
The data, which TXN Solutions compiled for USA Today using credit card receipts, also shows Uber saw a 3% decrease in rides following the explosive allegations of company-wide sexual harassment made former engineer by Susan Fowler.
(Photo by Mike Coppola/Getty Images for Lyft)
During the same period, Uber’s competitor Lyft saw its chunk of the ride-sharing industry increase by 3.5%.
“If there are drivers available, and the cost is relatively similar it’s very easy to use a different service,” Ramsey said. “You just need to have the space on your phone for two apps.”