The last week must have been one of the worst in Uber CEO Travis Kalanick’s life. It began with viral allegations of toxic misogyny in the company’s ranks and continued with a high-profile public apology and an internal investigation launched from the executive suite.
Then came the corporate espionage allegations, and lawsuit, that could kneecap a key piece of Uber’s future plans.
Taken together, the events underscore just how tenuous of a position Uber occupies on the tech landscape, especially compared to other giants such as Facebook or Apple. Uber is in danger of losing employees to rivals with more welcoming corporate cultures. Uber is in danger of losing customers if the lawsuit slows its ability to deploy self-driving car technology.
And Uber is in danger of going out of business altogether if it can’t figure out how to turn a profit before its investors lose patience with the billions of dollars of losses it’s suffering each year.
All of those problems were compounded by a remarkable week of what appear to be self-inflicted corporate wounds.
An engineer accused Uber of rampant misogyny
In a Sunday blog post, former Uber engineer Susan Fowler alleged that between her hiring in November 2015 and her departure in January 2017, she experienced a string of sexist incidents that, if proven, would give her grounds for a sexual harassment lawsuit, several times over.
Fowler alleged that on her first day on her new team, her boss propositioned her for sex over company chat. When she reported the incident to HR, she says, he did not lose his job because she was told the man was a “high performer” and it was his first offense. She says she later discovered this was untrue: Other women had reported the same manager to HR for similar offenses.
It didn’t stop there. Fowler says she experienced several more sexist incidents and reported them. When she pointed out that there were few women engineers in her part of the company, Fowler alleges, an HR representative replied with “a story about how sometimes certain people of certain genders and ethnic backgrounds were better suited for some jobs than others, so I shouldn't be surprised by the gender ratios in engineering.”
She says her manager threatened to fire her if she kept reporting problems to HR. At this point, she left the company.
Travis Kalanick moved quickly to address Fowler’s accusations
Within hours of Fowler’s post, Uber put out a statement from Kalanick vowing to investigate and promising that heads would roll if Fowler’s allegations were true.
“I believe in creating a workplace where a deep sense of justice underpins everything we do,” Kalanick wrote in a Monday memo.
Kalanick also released statistics about Uber’s gender diversity. “If you look across our engineering, product management, and scientist roles, 15.1 percent of employees are women and this has not changed substantively in the last year,” Kalanick wrote. He noted that this figure was only modestly smaller than Facebook (17 percent) and Google (18 percent).
At a Tuesday meeting of Uber employees, Kalanick acknowledged that Uber had a culture problem and that he needed to do more to fix it.
“Travis spoke very honestly about the mistakes he’s made — and about how he wants to take the events of the last 48-hours to build a better Uber,” wrote prominent publisher and Uber board member Arianna Huffington. She vowed to “hold the leadership team’s feet to the fire on this issue.”
Kalanick recruited Huffington and former Attorney General Eric Holder to sit on a five-member panel to investigate Fowler’s allegations and Uber’s treatment of women more generally.
Those steps did not satisfy some key constituencies. In an open letter, Uber investors Mitch Kapor and Freada Kapor Klein questioned whether the panel Kalanick had chosen was really independent. The panel includes two Uber executives, Chief Human Resources Officer Liane Hornsey and Associate General Counsel Angela Padilla. And Kapor and Klein note that Holder has done advocacy work for Uber over the past year. They worry that these ties will cause the investigators to whitewash the problems with Uber’s corporate culture.
Waymo says Uber stole its secrets
The lawsuit may have been an even bigger blow, economically. It came from the self-driving car division of Google, called Waymo, and levies some explosive charges.
Otto was a self-driving vehicle startup founded in January 2016 by former Google (now Waymo) engineers and purchased by Uber in August for a reported $680 million.
In a Thursday post on the company blog, Waymo describes how it discovered that Otto may have stolen Waymo’s technology. “One of our suppliers specializing in lidar components sent us an attachment (apparently inadvertently) of machine drawings of what was purported to be Uber’s lidar circuit board ,“ Waymo writes. The plans bore striking similarities to Waymo’s own design.
Waymo says it then conducted a forensic analysis of former employees’ hard drives and discovered that one of Otto’s co-founders, Anthony Levandowski, had downloaded 9.7 gigabytes of confidential Waymo data to an external hard drive before he left the company. Included with this data were the design files for Waymo’s proprietary lidar system.
Lidar is a powerful sensor that has emerged as a key component in self-driving car technology. It uses a sequence of laser pulses to build a 3D, 360-degree map of the environment around a vehicle. Lidar technology is commercially available, but Waymo says it has developed its own advanced version that is less expensive and better suited to self-driving applications than off-the-shelf technology.
The big danger for Uber is that the lawsuit could hamper its efforts to develop its own self-driving car technology. If another company develops self-driving car technology significantly before Uber does, it could undercut Uber’s rates and put its human-driven business model in danger.
Over the past two years, Uber has embarked on a crash course to master self-driving technology, raiding Carnegie Mellon’s world-class computer science school for technical talent. But Waymo charges that this effort was “floundering” last year, and so Uber took an illegal shortcut, acquiring Otto so it could get its hands on Waymo’s technology.
Time is not on Uber’s side
The company has billions of dollars in the bank, but it’s also taking billions of dollars per year in losses, so that cash won’t last forever. Uber is hoping that being a leader in self-driving technology will help it to finally reach profitability.
The problem with the lawsuit for Uber isn’t just that it will be a distraction for Uber’s management team. It’s that — if Waymo is right that Uber used copied technology — Uber’s development project could be set back by months. And with Uber already behind Waymo, those may not be months Uber can afford to lose.