Could bad PR pose an existential threat to one of tech's highest-flying companies?

It's a question worth asking following a string of very bad headlines for Uber, which may be one of the fastest growing companies ever.

Since the beginning of the year, the eight-year-old transportation company that investors have reportedly valued at more than $60bn has seen its name dragged through the mud:

  • On February 19, a former Uber engineer, Susan Fowler, published a blog post detailing a culture of sexism at the company, sparking outrage and forcing the company's founder and CEO, Travis Kalanick, to announce an independent review.
  • Shortly thereafter, Uber's SVP of engineering, Amit Singhal, left the company after it was revealed that he had left his former employer, Google, following an allegation of sexual harassment that the search giant had found to be "credible."
  • Around the same time, a video recorded by an Uber driver revealed a conversation the driver had with Kalanick who, when pressed about driver pay, responded, "You know what, some people don't like to take responsibility for their own shit. They blame everything in their life on somebody else. Good luck!" Kalanick apologized for his behavior and in a statement said "This is the first time I’ve been willing to admit that I need leadership help and I intend to get it."
  • In late February, Susan Fowler tweeted that "research for the smear campaign has begun. If you are contacted by anyone asking for personal and intimate info about me, please report asap" and shortly thereafter announced that she had hired a law firm. Uber responded and stated that it was not behind any investigations of Fowler's personal life.
  • Google parent company Alphabet, on behalf of its self-driving car unit Waymo, filed a lawsuit against Uber and Otto alleging that former Waymo employees engaged in a "concerted plan to steal Waymo’s trade secrets and intellectual property." Otto is a self-driving car startup Uber purchased in 2016. That lawsuit does not appear to be going well for Uber and might be why the head of Uber's Advantage Technology Group, who is at the center of the lawsuit, just stepped aside.
  • In early March, Uber was forced to respond to reports that it had built a "greyballing" system so that it could evade law enforcement and regulators in markets where it was not permitted by law to operate.
  • Also in early March, another former female Uber engineer spoke out about her last days at the company, which she claimed were filled with "disrespect, condescending managers, and sexism."
  • Uber's president, Jeff Jones, who was previously the CMO of retail giant Target, resigned from the company after just six months on the job. Jones said that, "The beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber and I could no longer continue as president of the ridesharing business."
  • In late March, a report was published claiming that Uber's Kalanick and five other employees visited an escort karaoke bar in Seoul, Korea in 2014, which resulted in a complaint to Uber human resources by a female employee who was present. According to the report, Kalanick's girlfriend was later asked by Uber’s senior VP of business to lie if questioned about the incident.
  • Earlier this month, it was revealed that between 2014 and early 2016 Uber had a software program called "Hell" which was used to track drivers driving for Lyft, the company's chief rival. As part of this program, which relied on fake Lyft rider accounts and a flaw in Lyft's technology, Uber tracked drivers who worked for both Uber and Lyft with the goal of luring them to work for Uber instead. Now, an ex-Lyft driver is suing Uber for $5m alleging that the program violated the Federal Wiretap Act and California's Invasion of Privacy Act. The lawyers representing the ex-Lyft driver are seeking class action status.

Given Uber's ubiquity and dominance in key markets, one might assume that the company will no doubt weather all of these scandals with minimal long-term damage, but is that really a valid assumption?

Lyft pounces

If Lyft's fortunes are any indication, Uber might have reason to worry.

While Uber has been dealing with bad headline after bad headline, Lyft has been courting riders and polishing its image. For example, when Uber was facing a #DeleteUber campaign over CEO Kalanick's participation in a business advisory council for US President Donald Trump, Lyft was responding to Trump's temporary travel ban targeting seven Muslim countries by announcing that it would be donating $1m to the American Civil Liberties Union.

Is Lyft's cleaner image winning over consumers?

According to Bloomberg, Lyft's ridership and bookings "surged" in the first quarter of the year and according to fundraising documents Bloomberg obtained, the company is beating its internal targets. The documents revealed that Lyft's gross bookings in Q1 grew to $800m, more than double what they were in Q1 2016, and total ridership in February was 137% higher than February 2016.

Obviously, there's no way to know just how much of Lyft's gains, if any, have come at Uber's expense, but it's difficult to ignore the fact that Lyft's momentum seems to be accelerating at the very same time its larger rival is under constant media fire.

The big problem with Uber's bad PR

Many companies face scandal at some point or another, and Uber is no stranger to bad press. From reports that the company impersonated journalists as part of a lawsuit reponse to claims it has spied on users for years and lied about it, Uber is at this point fairly well-versed in crisis PR. And on the surface, the company's response to the latest string of bad headlines has followed best practice.

High-profile claims of a rampant sexual harassment? Denounce the behavior and announce an investigation to be led by the former US Attorney General. CEO gets caught on camera treating a driver poorly? Have the CEO issue a heartfelt apology and promise to get help. And so on and so forth.

But something feels different about the latest crises. When the relatively new president of the company quits after only six months and points to the "beliefs and approach to leadership" as the reason, it suggests there's a bigger problem, as do the views of current, former and prospective employees, as well as recruiters.

To be sure, companies can recover from huge mistakes that create PR messes of significant proportions, but what happens when a brand burdens itself with a culture in which mistakes that wreak PR havoc are inevitable? And what happens if a company comes to be seen by the public as rotten at its core?

While the thought of the $60bn-plus upstart imploding seems like a far-fetched proposition, Uber appears to be testing just how far the limits of bad PR can be pushed in a way that is perhaps unprecedented.

Patricio Robles

Published 5 May, 2017 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (1)

Pete Austin

Pete Austin, CINO at Fresh Relevance

Uber's problem is not PR but corporate culture, business model, and technology.

The biggest one is tech, because it will take an extremely long time for self-driving cars to get good enough for real roads. This is *not* about steering a car along good roads; it's about coping with bad roads, poor signage, weather events, and the weird things that human road users do.

My personal guestimate stands at 19 years to reach 99% of roads (because in my experience all major technologies take at least 20 years to roll-out). And meanwhile Uber keeps losing money.

10 months ago

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