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FRAUGHT HISTORY

Uber’s IPO is a lesson in the true cost of toxic culture

By Sarah Todd

Everyone knows that a toxic workplace culture is bad for employees. But Uber’s long-awaited IPO filing on April 11 shows how allowing harassment, discrimination, mismanagement, and other forms of bad behavior to persist unchecked can also endanger companies’ long-term financial prospects.

Summarizing the risk factors that potential investors in Uber should be aware of, the company admits, “Our workplace culture and forward-leaning approach created significant operational and cultural challenges that have in the past harmed, and may in the future continue to harm, our business results and financial condition.” The filing also acknowledges that the negative press that resulted from its widely publicized missteps may continue to impact the bottom line: “A failure to rehabilitate our brand and reputation will cause our business to suffer.”

So what have been the biggest issues with Uber’s work culture—and are they on their way to being fixed? Here’s a brief refresher on some of the Silicon Valley behemoth’s most noteworthy workplace weaknesses:

1. A volatile CEO

Any discussion of Uber’s workplace culture should begin with co-founder and former CEO Travis Kalanick, who was widely and frequently criticized for creating an aggressive, dysfunctional culture at Uber. A 2017 New York Times report cites a few memorable examples of goings-on there: “One Uber manager groped female co-workers’ breasts at a company retreat in Las Vegas. A director shouted a homophobic slur at a subordinate during a heated confrontation in a meeting. Another manager threatened to beat an underperforming employee’s head in with a baseball bat.” Kalanick’s personal behavior also damaged Uber’s reputation; he was famously caught on film yelling at one of the company’s drivers.

Kalanick was ousted from his role as head of the company in June 2017, and replaced by former Expedia chief Dara Khosrowshahi, who has tried to steady the ship and shied away from controversy. As Quartz reporter Alison Griswold noted in January, “boring is just what the company needs.”

2. A culture of discrimination

In 2017, former Uber engineer Susan Fowler wrote a viral blog post detailing her experiences at the company. The post, which described how she had been sexually propositioned by her manager only to have human resources and upper management dismiss her claims, forced the company to begin a reckoning with the ways in which women and people of color had been harassed, discriminated against, and otherwise made to feel unwelcome.

In May 2018, the company announced a number of steps it was taking for greater accountability, including ending mandatory arbitration and non-disclosure agreements for sexual-harassment claims. In July 2018, Liane Hornsey stepped down as head of HR after staffers alleged she had repeatedly and systemically ignored complaints related to racial discrimination. She was replaced in October with Nikki Krishnamurthy, who had previously worked with Khosrowshahi at Expedia.

3. A lack of transparency

Uber’s IPO filing is forthright about how the company’s historical tendency to emphasize cutthroat competition and growth at any cost—evident in Kalanick’s motto, “always be hustling”—made it more vulnerable to workplace toxicity.

“Our workplace culture also created a lack of transparency internally, which has resulted in siloed teams that lack coordination and knowledge sharing, causing misalignment and inefficiencies in operational and strategic objectives,” the filing notes. “Furthermore, many of our regional operations are not centrally managed, such that key policies may not be adequately communicated or managed to achieve consistent business objectives across functions and regions.”

Uber started to shift toward more collaboration between departments in 2017, former head of product Daniel Graf said in an interview that year with TechCrunch. But Uber notes that its efforts to address this issue could still go awry: “Although we have reorganized some of our teams to address such issues, such reorganizations may not be successful in aligning operational or strategic objectives across our company.”

4. Ineffective recruiting

All these issues mean that Uber has had an admittedly harder time recruiting, and keeping, much-needed talent. One high-profile example: In 2017, Uber hired Bozoma Saint John as chief brand officer. Saint John quickly landed a splashy New York Times profile with the headline, “Is This the Woman Who Will Save Uber?” But after one year, she packed up for a new job as chief marketing officer at the entertainment company Endeavor, telling TechCrunch that while nothing terrible had happened, Uber still had more work to do on its company culture.

Uber’s IPO filing suggests management is well aware that it has needed to put more effort into making the company an attractive place to work. “Challenges related to our culture and workplace practices and negative publicity we experience have in the past led to significant attrition and made it more difficult to attract high-quality employees,” the company says. “The loss of qualified executives and employees, or an inability to attract, retain, and motivate high-quality executives and employees required for the planned expansion of our business, may harm our operating results and impair our ability to grow.”

This story is part of How We’ll Win 2019, a year-long exploration of the fight for gender equality. Read more stories here.