Embattled Uber CEO to take leave of absence in latest blow for company 'founded in controversy'

Uber's controversial CEO Travis Kalanick is stepping aside just as an internal report on the company reveals a culture of sexism and sexual harassment. It's the latest turmoil for the ride-hailing app, a company which itself has courted its share of controversy. Could this finally be one scandal too many?

Travis Kalanick steps aside as internal report released detailing culture of sexism and sexual harassment

Uber CEO Travis Kalanick has announced he is temporarily stepping away from the company amid controversy over a culture of sexism and sexual harassment. (Adnan Abidi/Reuters)

Uber's embattled chief executive Travis Kalanick says he is stepping away from the company he helped found.

Kalanick's announcement follows a day-long board meeting on Sunday during which directors of Uber Technologies Inc. discussed the possibility of Kalanick taking a temporary leave of absence.

Kalanick did not specify how long he would be away from the company, but cited the need to take time off to grieve the loss of his mother, who died in a recent boating accident.  His father was also injured in that accident.

The decision to step away was announced at the same time Uber released an executive summary of an internal investigation — conducted by the law firm of former U.S. attorney general Eric Holder — into the company amid allegations of a culture of sexism and sexual harassment.

Uber said it will implement all the recommendations in the report.

"Implementing these recommendations will improve our culture, promote fairness and accountability, and establish processes and systems to ensure the mistakes of the past will not be repeated. While change does not happen overnight, we're committed to rebuilding trust with our employees, riders and drivers," Uber said in a statement posted on its website.

In February, former Uber employee Susan J. Fowler published a blog post titled "Reflecting on one very, very strange year at Uber." In it, she outlined a litany of sexist incidents and sexual harassment — including being propositioned for sex by her manager on her first day on the job. Fowler wrote that she complained to Uber HR but instead of dealing with the problems, she herself was punished with negative performance reviews, with Uber even hiring a law firm to investigate her. 

Holder issued 47 recommendations, including adding independent members to the board of directors, changes to company culture, including prohibiting romances between bosses and their subordinates and creating clearer guidelines on the use of drugs and alcohol.

Holder also suggests holding managers more accountable and mandating manager training. The board will also create an oversight committee to monitor issues such as diversity and an audit committee to oversee spending, and improve the company's gender and racial diversity.

Uber is no stranger to controversy.

"The company was founded in controversy," said Adam Lachinsky, executive editor of Forbes magazine and author of Wild Ride: Inside Uber's Quest for World Domination in an interview with CBC's The Current.

"In its earliest days it received a cease and desist letter from the city and county of San Francisco who marched into its offices and said you're operating an illegal taxi service."

Other cities also tried and failed to stop Uber, after the ride-hailing app proved to be much more effective, popular, and cheaper than local taxis. 

String of scandals

Uber's innovative technology and tactic of deliberately undercutting local cab and limo companies helped the company grow to become what some call the biggest startup in the world. It's now in more than 600 cities in more than 80 countries around the world and has been valued at an astounding $68 billion US.

But with the growth and popularity came more and more controversy. First, it was concerns about poor pay and background checks for drivers, insurance issues, and surge pricing.

Then came a parade of scandals.

Uber, a ride-hailing company, has faced several controversies already. (David Gray/Reuters)

The New York Times reported Uber used its technology — a tool called Greyball — to identify and avoid officials who were investigating the company.  

The Verge revealed Uber's 'Slog' program, in which Uber used teams of independent contractors with burner phones to book and then cancel rides with its competitors including Lyft, and even try to recruit their drivers.

Uber executive Emil Michael, who just this past weekend resigned, had previously told a Buzzfeed editor that Uber should hire a team to dig up dirt on critics in the media.

The company was targeted by a widespread social media campaign — #DeleteUber  — after its drivers tried to do business at New York's JFK airport during a taxi strike. The taxi drivers were protesting against U.S. President Donald Trump's travel ban and Uber's offer of cheaper rides was seen as undermining the drivers and supporting Trump.  

And tech site Recode reported a top Uber executive was fired after he somehow obtained the medical records of a woman in India who had reported a rape and assault by her Uber driver. The driver was later convicted and sentenced to life in prison.

That incident was among dozens of claims reported to Holder's law firm and another firm, Perkins Coie, which Uber also brought in to investigate specific harassment allegations raised by Fowler.  

Recode also obtained a memo written by Kalanick advising staff about rules for sex and other behaviour in advance of a company outing in Miami.  

Kalanick has been the face of much of the controversy at Uber.  

"He has a reputation for being ruthless and lacking empathy and these things are true." Lachinsky told the The Current's Anna Maria Tremonti.

"He also is someone who is curious and intellectually demanding. Quite fun to be around if he's in a good mood. He's playful, argumentative and interesting."

The question now is whether Kalanick's departure will hurt or help Uber, which according to the Wall Street Journal had sales growth of 18% in the first quarter of 2017.

Ela Veresiu, an assistant professor of marketing at York University's Schulich School of Business who has studied Uber, says Uber was late in responding to crisis after crisis but calls Kalanick's leave of absence "a good start."

"They still need to do more. I think it would be smart if Uber would hire more female staff at the top of the organization in order to [show] they really mean what they say."

Uber recently released a diversity report showing that 36 per cent of its overall workforce are women.  That's about in line with other tech companies, which are notoriously male dominated. Fifteen per cent of technical roles at Uber are held by women, which is lower than Google (19 per cent) and Facebook (17 per cent) but on par with Twitter.

Twenty-two per cent of leadership roles at Uber are held by women.


Aaron Saltzman

Senior Reporter, Consumer Affairs

Aaron Saltzman is CBC's Senior Business Reporter. Tips/Story ideas always welcome.

With files from Reuters