Chapter 2
A New Business Frontier

Social and technology changes require a new way of doing business.

The rules of the road in business have changed. Just ask Uber.

In a few short years, the ride-sharing service both transformed the transportation industry and found itself crashing against new standards related to leadership, transparency, and fairness.

With its phone-based app for arranging car trips, Uber pioneered a new, cheaper, more convenient way of getting around. It jump-started the “gig economy” by tapping independent contractors rather than traditional employees and quickly became a global force. Eight years into its existence, Uber’s revenue in 2016 had raced to $6.5 billion and it was valued at $70 billion—$15 billion more than General Motors.

But its brash CEO Travis Kalanick also steered into one accident after another. In January 2017, Kalanick and the company were slammed for allegedly seeking to profit when taxi drivers protested the Trump administration’s refugee ban. Fueled by a #DeleteUber campaign on Twitter, roughly 500,000 users reportedly asked to delete their Uber accounts in the wake of that incident.

The negative publicity continued in February 2017. Former Uber engineer Susan Fowler published a blog post claiming a culture of sexism at the company—including her charge that Uber refused to punish her manager after he made sexual advances, in part because he was a “high performer.” There were legal troubles as well, including a U.S. Justice Department probe. Kalanick’s reputation was further bruised by a video of him losing his temper with an Uber driver over fare policy. Several executives departed amid all the troubles.

Along with the scandals came a financial warning sign: Uber was burning through cash at an astounding rate. It posted net losses that rose to nearly $1 billion in the last quarter of 2016—an amount that may have been the largest quarterly deficit in business history. Meanwhile, rival Lyft added more than 50 cities to its operations, and other companies were considering entering the ride-share market.

Uber tried to course correct in early 2017. The company put a plan in place to fix its culture, and fired 20 employees in June because of harassment, discrimination, and inappropriate behavior. And Kalanick pledged to get leadership coaching in the wake of his altercation with the driver. But it wasn’t enough to prevent investors from pushing him out of the driver’s seat. Kalanick stepped down as CEO on June 21, remaining on the company’s board of directors.