Dara Khosrowshahi, Uber’s newly appointed CEO, will inherit a company that has been wracked with public scandal, infighting among its board members, an investigation into workplace harassment and a slew of lawsuits.
In other words, the longtime Expedia CEO has his work cut out for him.
Khosrowshahi, who has yet to accept the company’s offer, was a surprise pick for the Uber board, but he’s a noted operator with dealmaking chops, and has garnered the good will of his staffers at Expedia, with a 94 percent approval rating, according to recruiting site Glassdoor.
Here’s what Khosrowshahi will have to do to fix Uber’s myriad scandals and business issues:
Manage Travis and the board: First and foremost, he’ll have to hash out Travis Kalanick’s role. The founder was ousted as CEO in June, but he still sits on the board and owns a significant voting stake in the company. Some of the rank and file still look up to Kalanick as a visionary, and feel deep loyalty to him as the founder. At the same time, it is Kalanick’s marauding ethos that has led to many of the company’s problems. He was also attempting a comeback before a new CEO was appointed. Kalanick may have to take a role under the new CEO, but it will be less than what he’s used to, which means managing that Kalanick’s ego will be Khosrowshahi’s biggest challenge.
Along with that, he will also have to manage how much influence the board will have on day-to-day operations. Uber’s board is unusually hands-on, which could be argued as necessary during the recent leadership vacuum. Now that there is someone designated to lead, it would make sense for the board to step back. Still, it may not be easy for some directors to relinquish their control.
Hire C-suite executives: As Uber is operating without a chief financial officer, a CMO and a COO, it’s a significant opportunity for Khosrowshahi to find an ally. Khosrowshahi, who used to be CFO of Barry Diller’s IAC, has a deep well of contacts.
Reset staff: Khosrowshahi will have to gain the trust of Uber staffers, especially in the wake of a series of sexual harassment claims within the company.
Khosrowshahi has a few advantages coming into the situation. As an outsider without too high a profile, he comes as a clean slate. He also was not the handpicked candidate of Uber investor Benchmark, which controls a board seat and is currently suing Kalanick over claims that he withheld crucial information regarding company operations. Staffers loyal to Kalanick have little trust in Benchmark.
The ride-hail player is also in the middle of implementing recommendations made by former U.S. Attorney General Eric Holder’s law firm, Covington and Burling. Holder began investigating the company’s internal issues after former engineer Susan Fowler shed light on the sexism and sexual harassment she encountered at Uber, in a post she published in February.
It’s not clear whether Khosrowshahi has yet seen the Holder report that came out of the investigation, but accelerating the effort to hire a chief diversity officer, for instance, will be key to his ability to earn the trust of the company.
Figure out the business: Uber still loses money — lots of it. It raked in $8.7 billion in bookings, but lost $645 million in the second quarter of 2017. The company has spent the last year finding ways to cut its losses.
Most recently, Uber merged its Russian operations with rival Yandex Taxi.
Identifying more areas where the company can curb its losses will be paramount for Khosrowshahi, who is described by many as an adept dealmaker. For instance, as The Information reported, Uber recently considered offloading the costs of its self-driving development efforts by partnering with an automaker.
Manage the lawsuits: In addition to the Benchmark lawsuit and other sexual assault complaints, Uber is embroiled in a messy legal battle with Alphabet. The trial for the trade-secret misappropriation lawsuit is scheduled for Oct. 10. If Alphabet is successful, its litigation could serve to stunt Uber’s efforts at creating self-driving technology.
Know when to go IPO: As it is for any CEO, Khosrowshahi’s constituency is the shareholders. And in this case, it’s a small but powerful group that has been itching for an exit. But timing an IPO is as much art as it is science. In this case, all of the above issues have to be dealt with, and even then it’s not clear if that will be enough to take Uber public.
Khosrowshahi, who saw steadily increasing stock prices while he led Expedia, will have to discern what benchmarks the company will need to hit before it’s ready to be traded on the public market. That includes determining whether Uber needs to raise additional funding.
To Kalanick’s credit, Khosrowshahi is inheriting a company that has achieved massive global scale in a short period of time, and — while Lyft’s market share is growing — is still the dominant player in the U.S. and other parts of the world. With the right leadership, the ride-hail player has the potential to significantly accelerate its growth.