By Greg Bensinger, Betsy Morris and Georgia Wells
SAN FRANCISCO -- Uber Technologies Inc., in its search for a No.
2 to Chief Executive Travis Kalanick, is interviewing candidates
with track records in large, established companies -- a sign the
ride-sharing titan is looking to temper Mr. Kalanick's
idiosyncrasies in exchange for a corporate culture more typically
in tune with its size and ambitions.
Mr. Kalanick built a defiantly competitive startup culture at
Uber over which he reigned supreme, turning it into a global
concern valued at $68 billion but also leading to a series of
missteps that in February inspired him to publicly plead: "I need
leadership help."
The search for that leadership help, in the form of Uber's first
chief operating officer, gives hints as to the type of executive
the company seeks. Mr. Kalanick and at least two Uber directors in
recent weeks have interviewed candidates such as Thomas Staggs, the
former Walt Disney Co. COO, Karenann Terrell, former chief
information officer of Wal-Mart Stores Inc., and Helena Foulkes,
executive vice president of CVS Health Corp., said people familiar
with the candidates.
Uber is also seeking prospects with experience in fields with
complicated labor and operational structures, such as airlines,
said people briefed on the search. Ms. Foulkes is no longer in
discussions with Uber, said a person familiar with the talks. It
isn't clear who, if anyone, is on a short list.
This is Uber's first executive search directly involving the
board, said one of the people familiar with the search. Uber
declined to make Mr. Kalanick available for an interview.
Uber is describing the new COO to candidates as a partner to the
40-year-old Mr. Kalanick, not merely a deputy such as he has had in
the past, these people said. Mr. Kalanick last month said he is
looking for "a peer who can partner with me."
Mr. Kalanick wooed a No. 2 before, retail veteran Jeff Jones,
telling him Uber was ready for a strong second-in-command, said a
person familiar with Mr. Jones's tenure. Mr. Jones, hired from
Target Corp. to be president of ride-sharing, soon found Mr.
Kalanick unwilling to be challenged, the person said. Mr. Jones
left in March after six months.
Whoever becomes COO must help steer Uber out of the biggest
turmoil in its eight-year history. In rapid succession, it has
faced sexual-harassment allegations, a lawsuit over allegedly
stolen technology, disclosure of an app to evade regulators, a
falling-out with its headquarters city over a self-driving car test
and an exodus of executives.
The blows have so far been mainly to Uber's image, but the
incidents are exposing it to legal challenges, threatening to slow
its critical push toward self-driving vehicles and complicating its
prospect of an initial public offering.
The new COO will also face problems with Uber's business model,
which requires subsidies -- such as sign-up bonuses and cash
rewards for reaching certain driving targets -- to keep its
contract drivers driving. Uber said it lost $2.8 billion last year
on $6.5 billion revenue, not including its unprofitable China
business, which it sold, and other items such as stock
compensation.
Mr. Kalanick has insisted on running Uber like a scrappy startup
even though it is now a global company whose private valuation
exceeds those of companies such as Ford Motor Co.
It operates in more than 70 countries with around 12,000
employees and 1.5 million contract drivers, yet it has no chief
financial officer. Unlike smaller rival Lyft Inc., it has had no
chief operating officer with companywide duties. Until lately, it
had a spartan human-resources department, said current and former
employees; it brought on its latest human-resources chief in
January, six months after her predecessor left.
"There is a point when you go from an entrepreneurial
fly-by-the-seat-of-your-pants startup to a professional
organization that needs all the structure and bureaucracy that goes
with it," said Michael Barnett, professor of management at Rutgers
Business School, "and they are big enough in terms of most measures
to need that."
Current and former employees describe a workplace that could
resemble aspects of the startup world parodied in the television
series "Silicon Valley." Mr. Kalanick, they said, established a
culture that pressured staff to stay late to be present when
strategic conversations happened and for fear they would get
reprimanded for not having a strong work ethic.
A Kalanick hallmark has been night jam sessions -- "seshes," in
Uber parlance -- that could last until 2 a.m. The CEO sometimes
summoned employees with little warning, causing them to delay other
projects and scramble to prepare for session topics such as how to
capitalize on Uber's size. A topic might be debated each night for
a week.
Mr. Kalanick played teams against each other, sometimes sowing
resentment. Those elements went beyond fostering competitiveness,
said some of the current and former employees, leading to
disorganization and infighting.
Mr. Jones, upon leaving Uber, issued a statement that "the
beliefs and approach to leadership that have guided my career are
inconsistent with what I saw and experienced at Uber."
Uber shareholders continue to support Mr. Kalanick, including
Shawn Carolan, managing director at venture-capital firm Menlo
Ventures. "Founders bring something else to the table; they deeply
feel and believe in the mission," he said. "I do believe Travis
believes in the mission to the core."
The board hasn't considered replacing Mr. Kalanick, director
Arianna Huffington, the media mogul, told reporters last month,
"because it hasn't come up and we don't expect it to."
Mr. Kalanick and two other early employees have majority voting
control in the seven-member board. The other directors are
private-equity billionaire David Bonderman, venture capitalist Bill
Gurley and an official from a Saudi Arabian government investment
fund.
In prior searches, the board generally left Mr. Kalanick and
other executives to conduct personnel reviews, though directors
have in the past recommended executives, said people familiar with
the search. This time, directors Mr. Gurley and Ms. Huffington are
helping interview candidates. Uber has retained executive-search
firm Heidrick & Struggles International Inc.
One of the COO's tasks will be to help Uber recover from those
troubles, which included its ignoring California regulator warnings
by putting self-driving cars on San Francisco streets in December.
Uber withdrew the cars, got proper permits, and brought some
self-driving autos back to the city. In February, a former engineer
accused Uber of being permissive of sexual harassment. Mr. Kalanick
condemned the behavior she described and ordered an
investigation.
That month, Google parent Alphabet Inc. alleged Uber conspired
to steal self-driving-vehicle technology, claims Uber denied. Then
a video of Mr. Kalanick yelling expletives at an Uber driver
emerged, prompting him to pledge to "grow up."
In March, Uber acknowledged an initiative to elude regulators
with a fake version of its app, meant to circumvent stings. It said
it ended the practice.
Mr. Kalanick's reputation likely isn't making the search harder
than similar hunts elsewhere, said Dora Vell, CEO of executive
recruiters Vell & Associates Inc. -- the firm isn't involved in
Uber's search -- because qualified executives usually believe they
can handle a difficult leader.
The bigger problem, she said, is that Uber wants someone with so
many qualifications and that it has such an unusual corporate
culture. "The sum total of the requirements and the culture fit
will make it very hard to find one person who has everything."
--Joann S. Lublin contributed to this article.
Write to Greg Bensinger at greg.bensinger@wsj.com, Betsy Morris
at betsy.morris@wsj.com and Georgia Wells at
Georgia.Wells@wsj.com
(END) Dow Jones Newswires
April 27, 2017 10:55 ET (14:55 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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