Longtime Expedia CEO Dara Khosrowshahi might have the greatest opportunity, and worst job, in all of business. He has been tapped to rescue Uber Technologies from the ethical, legal, and public-relations nightmare left by former CEO Travis Kalanick.
The troubles and scandals at Uber seem to be endless, but the greatest threat is reputed investigations by America’s most elite law-enforcement agency – the FBI. Even though the Federal Bureau of Investigation (FBI) does not reveal details of cases until charges are filed, news stories point to three probable probes of Uber activities.
Uber is Under Criminal Investigation by the FBI
The most damning of these allegations involve the founder of Uber’s self-driving truck startup Otto Motors, Anthony Levandowski. Earlier this year, Alphabet (NASDAQ: GOOG) charged that Levandowski had stolen vast amounts of proprietary data from its self-driving car startup Waymo.
Alphabet’s attorneys alleged that Uber paid Levandowski $680 million for Otto and its’ data which would be receiving stolen property – a crime – if true. Those allegations prompted U.S. District Judge William Alsup to ask the US Department of Justice; of which the FBI is a part, to investigate Uber’s activities.
The Department of Justice is also investigating allegations that Uber executives violated a law against bribery of foreign officials, Endgadget and The Wall Street Journal reported. It is not clear where the alleged bribes occurred or who was involved but it sounds fairly serious.
Another reputed FBI investigation is focused on Uber’s alleged use of software called Hell to spy upon Lyft drivers, Forbes reported. Lyft is Uber’s largest competitor and rival in the United States. Uber’s use of hell might have constituted illegal interference with a competitor, The Wall Street Journal charged.
The alleged investigations may have led to one of Uber’s greatest setbacks, Transport for London’s decision to rescind Uber’s license to operate in the British capitol on 22 September 2017. Transport for London did not mention the FBI stories in releases about its decision – but it hardly seems like a coincidence.
What can Khosrowshahi do to “Fix” Uber?
All this presents Khosrowshahi with a tremendous opportunity because Uber is potentially an extremely valuable company. Some analysts have estimated the ride-sharing service’s valuation at $70 billion.
That raises the question of what Khosrowshahi can do to clean up Uber’s ethical mess. Some obvious moves he can make include:
Get rid of Travis Kalanick and company. Neither investors nor regulators are going to take a risk on Uber as long as Kalanick is around. This probably means that Uber will end up spending big money to buy out Kalanick and his associates. Parting paths with Kalanick is critical, because the former CEO might soon face criminal charges, prosecution, and prison time in the United States.
Negotiate a settlement with the U.S. Department of Justice. Ending the FBI investigations and avoiding embarrassing Grand Jury probes or court cases is critical. The best way to achieve that would be to negotiate a settlement; in which Uber agrees to end all practices the Department finds illegal or unacceptable. Part of the settlement would obviously be cooperating with the investigation and prosecution of Kalanick, Levandowski, and other former Uber executives.
Negotiate a settlement with Transport for London to restore operations in the largest city in the United Kingdom. This would probably necessitate drastic changes to Uber’s business practices and operations. It will probably take months of negotiations and a high level of transparency. Restoring Uber service in London will be critical for the company’s future.
Develop working partnerships with the auto industry and companies in the travel industry such as Expedia, tax-cab operators, hotels, car-hire agencies, and airlines. Khosrowshahi has had vast experience with such deal making in his years at Expedia. Those skills will be critical to Uber’s long term survival.
Develop effective partnerships with large retailers and transportation providers such as airlines, railroads, shipping firms and trucking companies. This will be critical because the most logical area for growth for Uber in North America is providing delivery services for large retailers and restaurants. Uber has made some progress here with UberEats and arrangements with large retailers including Walmart and Kroger. The UberEats meal delivery service is one of Uber’s biggest success stories in the United States.
Review Uber’s operations around the world and see if there will be more nasty surprises like the one in London. This will require extensive negotiations with authorities all over the world, which will require a skillset that Kalanick obviously lacked.
Deal with other allegations such as those of a “toxic-work environment” at Uber headquarters, and complaints about sexual assault and driver background checks.
Examine the possibility of selling Uber or folding it into another company – such as Expedia. One question that Khosrowshahi needs to ask is: “will Uber’s operations be viable on a long-term basis.” The company now faces direct competition from subsidiaries of the automotive giants General Motors (NYSE: GM) and BMW in the United States. GM operates a ridesharing subsidary called Maven and BMW has launched one called ReachNowRide. Another menace is car-hire giant Avis Budget Group (NYSE: CAR), which has launched a ride-hailing service in partnership with Waymo and Fiat Chrysler (NYSE: FCAU) in Arizona.
Improve Uber’s image and reputation. This might be Khosrowshahi’s greatest challenge; but if he can achieve it, the former Expedia CEO will develop a reputation as a miracle worker.
Addressing these questions is vital because there is tremendous potential for both profit and public-service at Uber. Some of its services; such as Uber Central; which provides rides for senior citizens and disabled persons that cannot drive, can greatly improve people’s lives. There’s also vast potential for profit with UberEats and same-day delivery services for online retailers.
Turning Uber around is a vast challenge but if Dara Khosrowshahi can achieve it, he will become of the world’s most respected executives. Everybody interested in management should watch Khosrowshahi and Uber closely because what happens there will provide important lessons for all future business operations.