Faced with the crucible of his mother’s accidental death and the crisis at his company, Uber CEO Travis Kalanick wisely decided to accept his investors’ advice to turn the fledgling company’s leadership over to a new CEO.
Just last week Kalanick announced he was taking an indefinite leave of absence to mourn his mother’s death and to prepare for “Travis 2.0.” Yet he left Uber with no one in charge and 20 key leadership positions unfilled. This was a formula for continuing chaos and potential disaster at the dynamic start-up that private investors have valued at $70 billion. The idea of a leaderless organization set off alarm bells among Uber’s major investors, especially Benchmark’s Bill Gurley who serves on Uber’s board. On Tuesday, Gurley and four other investors representing 40 percent of Uber’s stock gave Kalanick an ultimatum to step aside as CEO.
Kalanick deserves enormous credit for envisioning Uber as a transportation service that would disrupt and transform the entire land-based travel industry—including both the oligopolistic, old-fashioned taxi services and the overpriced limousine industry. He created a “killer app” that is easy-to-use and works like a charm. Uber has created tremendous economic value for its users all over the world. Kalanick also has Uber poised for next generation disruption through ride sharing and self-driving vehicles.
Kalanick had the courage to take on anyone who opposed his disruption—including the taxi unions, municipal authorities, and myriad competitors. He never flinched in his passion for Uber to dominate its markets. Sometimes he picked unnecessary fights though, including with his own drivers. In China, he met his match with Didi Chuxing, the Chinese ride-sharing service. His price war with it, on its home turf, lost billions of his investors’ money. But give him credit for never flinching.
In spite of his success, Kalanick was never able to evolve from an entrepreneur into an executive leader who could build a great team around him, as Facebook‘s Mark Zuckerberg, Amazon‘s Jeff Bezos, and Alibaba‘s Jack Ma have done. He was unable to grow up from Uber’s “Bro Culture,” as he permitted sexual harassment to rage out of control. Meanwhile, his erratic, often angry, temperament led to fights with his executives, as well as external groups he viewed as enemies. The contrast with Facebook’s Mark Zuckerberg is especially salient. Zuckerberg developed a close mentoring relationship with the Washington Post’s Don Graham, later making Graham Facebook’s lead director. With Graham’s encouragement, he recruited a true partner in Sheryl Sandberg to focus on operations so he could devote his time to new products and features and next generation strategies.
Today there is still no one in charge at Uber. With turmoil among company employees and Uber drivers, as well as external critics sensing blood in the water, Lyft — Uber’s major U.S. competitor ù is moving fast to take advantage of Uber’s leadership gap. While the board lacked the authority to remove Kalanick due to his control over Uber’s voting shares, his investors could vote with their feet – and they did.
Kalanick’s initial idea that Uber could be run by a 14-person committee was simply not going to work, certainly not without a chief operating officer, chief financial officer, general counsel, or engineering chief. Now, the board must move quickly to recruit a new CEO and give him or her the charge to rebuild the executive team, improve relations with the company’s drivers, and resolve myriad issues raised by external critics. Profit expectations will have to be put on hold until Uber can be stabilized. In the meantime one of the board members – most likely lead director Arianna Huffington or Gurley – should take on the temporary role of interim CEO until a permanent CEO is on board.
For the past four months the board has tried unsuccessfully to recruit a chief operating officer as Kalanick’s right-hand person. While many good candidates have considered the post, most have shied away from being under Kalanick’s dominance, especially after president and heir-apparent Jeff Jones resigned in January.
With the CEO role now open, many outstanding leaders will find the top job extremely attractive, as Uber has an almost unlimited opportunity to transform ground transportation. A short list should include Ford’s Mark Fields, Disney’s Tom Skaggs, Facebook’s Sheryl Sandberg, and eBay’s John Donahoe, who recently joined ServiceNow.
Until Huffington joined Uber’s board, Travis never seemed to trust anyone. In the end it may have been Huffington’s compassion and wisdom that enabled him to recognize it was time to turn over the reins to a new CEO while remaining on the board and retaining control over Uber’s voting shares.
The challenge for Uber’s new CEO will be to remake its leadership and its culture as a global growth company, following the lead of Apple, Google, Amazon, and Facebook. Whoever takes the CEO role will be ably assisted by my former Harvard Business School colleague, Frances Frei, who recently joined Uber in charge of leadership and business development. If anyone understands the transformation of male-dominated cultures into inclusive ones, it is Frei. She is also a remarkably creative thinker who is a pioneer in creative customer service. My bottom line:
The time is ripe for the successful transformation of Uber so it can realize its full potential. As for Travis, he can offer great counsel and ideas as its principal shareholder and an innovative board member.
Commentary by Bill George, a senior fellow at Harvard Business, former Chairman & CEO of Medtronic, and the author of “Discover Your True North.” Follow him on Twitter @Bill_George.
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