Travis Kalanick, the bullheaded CEO and founder of Uber, resigned last month after a private meeting in a downtown Chicago hotel that reportedly dragged on for hours. It was in Chicago that Mr. Kalanick received a “surprise visit” from two venture capitalists: Matt Cohler and Peter Fenton of the Silicon Valley firm Benchmark, which is one of Uber’s biggest shareholders. Cohler and Fenton reportedly presented Mr. Kalanick with a list of demands, including his resignation before the end of the day. Notably, the letter came from five of Uber’s major investors, including Benchmark and Fidelity Investments.
Anonymous reports suggest that Mr. Kalanick first balked at his investors’ requests. He then reached out to Arianna Huffington, an Uber board member, who apparently said the requests were worth considering. Eventually, Mr. Kalanick went into lock down Mr. Cohler and Mr. Fenton and by the end of the day, he had agreed to step aside in order to ensure the long-term financially integrity of the company.
The Uber crisis and Kalanick’s high-profile rise and fall had all the makings of a great Silicon Valley drama: Technological savvy, excessive drive, exploitive office politics, and billions of dollars on the line. The question that remains is whether Uber is a outlier or simply a company that has chosen not to cover up its messiness?
How Uber Stacks Up Against Other Tech Companies
While Uber’s reputation as a White boy’s club is well earned, other companies don’t necessarily stack up much better than Uber when it comes to diversity. When Uber released its numbers on diversity this spring, its place among large tech companies was better or only slightly worse than most:
Percentage of Leadership Roles Held by Women:
- Uber – 22%
- Facebook – 27%
- Apple – 28%
- Google – 24%
- Twitter – 30%
- Microsoft – 17.9%
Percentage of Tech Roles Held by Women:
- Uber – 15.4%
- Facebook – 17%
- Apple – 23%
- Google – 19%
- Twitter – 15%
- Microsoft – 17.5%
Racial diversity is also a problem at Uber but once again, it is not necessarily worse than it is across the tech sector. Uber’s managers are 75% white and 25% Asian. Uber employs no Black or Hispanic employees in leadership roles. Like other tech companies, Uber officials have admitted, “This clearly has to change — a diversity of backgrounds and experience is important at every level.”
Did Uber’s Mismanagement Hurt Its Bottomline?
The short answer is yes. A June 23 article in Tech Crunch reported that Uber’s estimated value may be $18 billion under what its primary investors assigned it earlier this year. Worse yet, Lyft, Uber’s primary competitor, has been gaining ground: “Lyft’s stock is on the rise…the typical 20 percent discount assigned to shares by secondary purchasers has, in Lyft’s case, dropped to between 13 and 9 percent, as buy-side interest grows and existing shareholders hang on for the ride.” While Lyft is still worth less than Uber, in April, the competitor closed on $600 million in fresh funding, and this was largely thanks to Uber’s downward spiral. Tech Crunch further predicts that “It seems logical that Uber’s valuation will drop further still before it rebounds, and not just on the secondary market. All things considered, a down round seems all but inevitable right now.”
Uber has clearly taken a hit for failing to embrace and promote diversity and even activity deterring the recruitment and promotion of women and some visible minority men, but it is important to bear in mind that the hit the company has taken is for its mismanagement of its current workforce and not necessarily for its low diversity numbers. What the Uber crisis appears to be suggesting, then, is that the shareholders continue to tolerate the absence of minorities in the tech workplace but not necessarily their active harassment. While other tech companies may be smirking, however, they shouldn’t be. While it may be the case that Uber’s workplace culture is especially hostile to women and many visible minority men, workplace culture is arguably also at the heart of the low diversity numbers that one finds across tech companies. For talent managers in the tech sector finding a way to transform the culture of their organizations from the ground up is a necessary and urgent task. While Uber may have an especially difficult road ahead, in reality, all tech companies are part of the problem for which Uber has now become emblematic.