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September 2017

Uber hoping new CEO will steer company out of controversy

by Mike Beggs

Uber’s hunt for a new CEO is finally over.

On August 28, the ride-sharing giant’s Board of Directors offered its leadership role to Expedia CEO Dara Khosrowshahi, who reportedly accepted. He will replace disgraced co-founder and CEO Travis Kalanick, who resigned in June.

Since 2005, this 48-year-old Iranian/American has built Expedia Inc. into the world’s largest online travel company, and Uber Board members hope he can get them back on track, after months of scandal.

Khosrowshahi takes over the most successful investor startup in history, valued at upwards of $70-billion, a corporate behemoth that has disrupted and devastated the taxi business in more than 70 countries around the world.

He also inherits a rat’s nest of problems, including: a dysfunctional culture at head office, leading to the exit of more than 25 executives; the lengthy shadow cast by Kalanick and his many transgressions; an upcoming trade secrets law suit, which threatens the future of its promising Autonomous Vehicle division; two separate cases alleging sexual assaults against Uber X drivers; and a pivotal hearing, which will determine Uber’s status in the European Union. And all the while he must position the company for an initial public offering.

And of late, Uber’s U.S. market share has fallen from 84 percent to 77 percent, while its negative perception has tripled to 27 percent (among respondents to a survey conducted in May by the management consulting firm, ch42).

The protracted search for a new leader reflected deep divisions within the Uber Board.

USA Today reports it took Board members a full weekend of wrangling, before finally voting unanimously in favour of Khosrowshahi as a dark horse candidate. This came after a month of infighting over the merits of frontrunners Hewlett Packard CEO Meg Whitman, and General Electric CEO Jeffrey Immelt, both of whom bowed out of the race.

The edgy Kalanick was among those muddying the waters, and apparently angling for a return to power with supporters on the Board, and a petition signed by thousands of employees. The New York Times reported that some Uber executive members feared he was lining up a Soft Bank investment, to dilute other shareholders’ stakes while continuing to buy stock back from employees.

But Kalanick ultimately remained on the sidelines, while falling subject to a law suit filed by Benchmark Capital (an early investor in Uber), alleging he “committed fraud” by hiding a range of past indiscretions from the Board. On August 6, Uber co-founder Garrett Camp issued a public statement that Kalanick would not return as CEO, and that, “We are committed to hiring a new world-class CEO to lead Uber.”

In the midst of the CEO search, and its much-publicized 180 Days Of Change, Uber certainly didn’t need any more bad press like The Verge’s report of the arrest of four men in New York for running a drug mill, busted with $3 million of fentanyl and heroin -- in baggies, emblazoned with Uber’s familiar logo. Nor, August 22 reports that Perth Airport authorities banned an Uber X driver from airport pickups, after he was caught defecating on a service road. (Uber immediately removed him from their app).

Meanwhile in Manila, the authorities were reportedly “shocked” to learn the number of Uber, and rival Grab cars on the streets 66,000, and 52,000, respectively -- that these Transportation Network Vehicle Services companies did not previously divulge.

“During the July 2016 hearing, Uber said they have about 28,000 drivers, or less. And today, they’re saying twice as many, or more than twice as many,” said exasperated Land Transportation Franchising and Regulatory Board chair Martin Delgra III to the Metro Manila.

An Uber spokesperson estimated that 60 percent of Uber drivers are part-timers, and stressed that, “one taxi is not equivalent to one ridesharing car.”

From Singapore, came the disturbing news that Uber purchased 1,000 defective cars (Honda Vezels), and knowingly leased them out to its drivers. The Wall Street Journal reported on August 1 that Uber managers were aware these cars had been recalled with an electrical issue and that at least one driver saw his car burst into flames in January (destroying the car, while he escaped unscathed).

Uber management issued a statement saying it has taken, “swift action to fix the problem”, while acknowledging “we could have done more.”

“What a horrible practice to make a buck” alleges Toronto owner/operator Gerry Manley. “Amazing how most see Uber as a train wreck, but our City politicians bend over backwards for them, eating their own bylaws while doing it. Damn shameful, and more than likely corrupt.”

“Uber always seems to have an excuse,” he continues. “In this case, their intentions were to remove the faulty parts until replaced, but keep vehicles on the road in the meantime, I guess Uber Mechanical didn’t launch in time to carry out the needed work orders.”

Veteran owner Andy Reti alleges, “Nothing is too low for Uber. Money, money, money. They don’t care. It all comes down to the bottom line.”

And, Taxi Action president Behrouz Khamseh suggests, “They sacrificed public safety for the sake of more profit. They do it here, too.”

Referencing that same article, Hamilton owner/operator Hans Wienhold recalls how one Hamilton taxi garage owner was forced to eventually shut down his fleet for such violations as malfunctioning security cameras and shifter cables secured with shoelaces. He suggests the disgraced owner’s misdeeds, “look like schoolyard pranks compared to Uber’s clear preference for lucre over safety.”

“When it comes to taxi regulation, the position of Hamilton is zero tolerance for non-compliance -- unless you are Uber,” writes Wienhold on his blog.

Wienhold alleges that while the Hamilton owner’s fleet was being decimated, Uber announced its plan to start operating a taxi service in Hamilton in total defiance of the existing laws.

“The main difference being Uber had billions of dollars behind it. The rule of law folded like a defective lawn chair,” he alleges.

“Uber was not only given a pass on its 100 percent defiance of the taxi bylaws, the politicians scurried to invent a whole new licensing category (for them).”

The negative news reports continued on August 24, when Uber X and Lyft drivers staged a demonstration at LAX Airport in Los Angeles, protesting low pay. Drivers in L.A. say they earn minimum wage, half of what their ridesharing counterparts make in San Francisco and New York.

Similarly, on August 9 taxi drivers in Adelaide, Australia caused passenger delays with a blockade protesting against the lifted ban on Uber X pickups at Adelaide Airport.

Meanwhile, on August 22, Recode reported that Uber drivers racked up $50 million in tips in the 50-plus days since the installation of a tipping option on its app, as according to Uber’s Registered General Manager Rachel Holt.

And as part of its “180 Days Of Change”, Uber has implemented further measures designed to address its troublingly low rate of driver retention, offering added flexibility in how they can structure their daily shifts.

Drivers can now select the specific types of trips they are willing to accept (for example, only UberPool), are notified if a fare will be 45 minutes or longer (and are given the option of turning it down), and choose a location they want to reach, and rides going in that direction (adding convenience when finishing up a shift, and heading off to other commitments).

Holt told Recode the entire company has come together around the 180 Days Of Change.

“General managers are headlining events in over 40 cities to share these changes directly with drivers,” she relates.

Meanwhile, on August 22 the Toronto Star reported that Uber’s Autonomous Vehicles (AV’s) have hit Toronto streets, in manual mode. Two of them are now operating near the University of Toronto campus, -- with drivers behind the wheels. These cars are merely conducting mapping tasks, but Uber hopes to test them in autonomous mode by the end of 2017.

Uber Canada spokesperson Susie Heath told the Star this data will support the engineering efforts of Uber’s recently opened AV research centre in Toronto.

In 2016, Ontario became the first Canadian province to allow the on-road testing of autonomous vehicles, and Uber is one of several companies to have received such approval.

However, Uber previously got in trouble in California for testing AV’s without a permit, after a video was posted showing an Uber self-driving car running a red light in San Francisco.

 

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