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Uber 2.0: Will a New CEO Be Able to Revive the Company?

By: Bridget Clerkin September 7, 2017
Last week, Uber announced the hire of Dara Khosrowshahi as the rideshare giant's new CEO. He's got his work cut out for him at the struggling startup.

When we last left our ridesharing heroes, they were fleeing from a horde of problems, newly leaderless and backed up close against the edge of a precipice.

How would Uber make it out this time? Could they make it out at all?

The debate raged all summer as Uber kept any press at an arm’s length, perpetuating a cliffhanger most TV shows would kill for. But last week, that suspense—and radio silence—was broken. Uber announced it had selected a new CEO.

The Silicon Valley fixture tapped Expedia chief operating officer Dara Khosrowshahi to take on the top spot at the business and to help steer Uber out of its tumultuous era.

Though arising from reports of internal strife over the decision, the move has been widely hailed by outsiders as a solid choice, bringing Khosrowshahi’s levelheadedness to the helm of the notoriously confrontational company.

And with a litany of existing issues still on the table, plus a pair of pending lawsuits—including a monumental legal fight with driverless carmaker Waymo due to kick off this October—Uber needs the guidance of a steady hand now more than ever.

But while cooler heads tend to prevail in a crisis, they could also damper the red-hot growth of the company. At the end of the day, will the change be enough to help the start-up not just survive but continue to thrive in the cutthroat tech industry?

New Leadership

DaraKhosrowshahi
A slow-growth CEO, Dara Khosrowshahi is a vast departure from Uber's previous aggressive management.

It’s a good thing Khosrowshahi comes from the travel sector. Uber needs to make some serious moves to get itself back on track.

The company is still reeling from the fallout of its rough year, during which it faced widespread pushback—and the loss of half a million accounts—over issues ranging from sexual harassment to unfair compensation.

Khosrowshahi, on the other hand, comes fresh from a company where he earned high praise for leadership, ranking in the top 40 highest-rated CEOs on employment site Glassdoor.

The Iranian immigrant made headlines—and some fans—earlier this year when he took a stand against President Donald Trump, backing a lawsuit challenging the travel ban issued by the White House this January. (Uber, on the other hand, suffered during the ensuing protests over the ban, when it continued offering service to the airports in spite of a widespread taxi strike, which helped lead to the massive #DeleteUber campaign.)

The head of Expedia for over 12 years, Khosrowshahi is also known for his belief in slow, sustainable business growth. In fact, one of his most well-known moves as head of the company is often pointed to as a lesson in risk aversion, albeit one that lead to a wide-scale loss for Expedia.

Khosrowshahi had the opportunity to purchase Booking.com, and notoriously passed on it, after which the travel site was picked up by Priceline and went on to become the top hotel booking site in the world.

Letting such a lucrative chance slip to a competitor would have previously been unheard of at Uber. Founder and former CEO Travis Kalanick, who resigned in June amid mounting pressure from the board, was a bombastic figurehead with grand ambitions for expansion. He had the company dabbling in virtually any area with potential for growth, from delivering food to developing self-driving technology.

But big vision comes at a big price. Uber closed 2016 at a nearly $3 billion loss, and in the first quarter of 2017 was down $708 million—which was considered an improvement.

Shifting to a slow-growth model like the one employed by Expedia could help the company come into its own in the ridesharing world, allowing Uber to mature from a jack of all trades to a master of one.

Still, Khosrowshahi has yet to announce his strategy for the company—and may still find himself operating in the shadow of its former chief executive.

Same Old Problems

Khosrowshahi was a dark horse in the CEO race—so much so that his name was never publicly mentioned for the role until his hire was announced.

The selection came as a surprise to many and serves as another example of Uber’s inner turbulence.

The frontrunner for the top spot was long thought to be Meg Whitman, chief executive of Hewlett Packard Enterprise and former head of eBay. Rumors of her candidacy swirled through late July, but halted after the CEO Tweeted that she was not in interested in the job.

WhitmanTweet
Meg Whitman announced via Twitter that she wasn't interested in Uber's top spot.

Still, other accounts placed her at Uber headquarters as late as last week, making presentations and meeting with board members, who seemed excited to bring her into the fold. But, like a ghost haunting his former residence, Kalanick’s presence may have come back to torpedo Whitman’s bid.

TravisKalanick
The involvement of former CEO Travis Kalanick complicated the CEO search.

The HP exec reportedly made a list of demands in exchange for her leadership, including the reduction of Kalanick’s role in the company to “founder.” The former CEO is still a board member, and reportedly still holds a lot of sway in the boardroom despite getting tangled in a legal battle with longtime Uber investor Benchmark Capital, which recently sued Kalanick for fraud, alleging he failed to disclose the true breadth of the company’s problems to the board.

Throughout the CEO discussions, Kalanick threw his weighty support behind other candidates—and was rumored to be making moves that could lead him back to an operational role in the company.

All told, the situation made for reportedly contentious negotiations between Whitman and the board, leading the body to instead swing for Khosrowshahi, who now must add uniting a divided house to his long to-do list for the struggling company.

An Uncertain Future

Perhaps more important than getting Uber through its present trials, however, is setting the course for the company’s future.

Whatever else can be said of Kalanick’s pushy demeanor, it’s largely responsible for the rideshare giant’s rapid growth—and its $70 billion valuation.

Uber was also widely expected to go public this year, which could bring a windfall of new cash to the company coffers. The fate of that initial public offering now, too, rests in the hands of Dara Khosrowshahi.

But will the new boss be able to give Uber the true reboot it needs? To be continued...

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