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Uber is broken. Can the new CEO fix it?

Dara Khosrowshahi is more like Travis Kalanick than you’d think. But it’s the differences that matter

Illustrations by James Bareham

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Uber’s rise into the Silicon Valley stratosphere has been swift, but the consensus is that as the operation expands, the way the company does business needs to change. Because during that ascent, and especially this year, evidence has mounted of a toxic company culture that is hostile toward women. It was only after public outcry and the resulting pressure from some major investors that CEO Travis Kalanick resigned back in June. For months, speculation ran high over who would replace him and, more importantly, whether that person could improve Uber’s internal woes and sustain its fast-paced growth.

That person is finally here. Uber’s board of directors spent this past weekend discussing, and eventually voting on, a replacement for Kalanick. It’s not General Electric chairman Jeff Immelt, who was the leading candidate at one point. And it isn’t Hewlett Packard Enterprise CEO Meg Whitman, who, despite having sworn herself out of the race on Twitter in July, was apparently very much back in the mix over the weekend. It is Dara Khosrowshahi, the “dark horse candidate” whose name hadn’t even been mentioned in the mix until Recode’s Kara Swisher broke the news Sunday night.

In a world where high-profile tech CEOs have become household names and, in special cases, the focus of hero worship, Khosrowshahi is a relative unknown. But while industry experts believe that any change will be good for Uber, those familiar with his reputation at Expedia think he’s equipped to tackle the logistics of piloting the most highly-valued private company in the world, and the problems that come with that role.

The 48-year-old Khosrowshahi came to the United States when his family left Iran in 1978. They emigrated just before the Iranian revolution and settled in Tarrytown, New York. He graduated from Brown University in 1991 with a Bachelor of Science in electrical engineering, and spent the next seven years as an analyst at the investment bank Allen & Co. (where his brother currently serves as managing director).

There, he crossed paths with Barry Diller, the chairman of InterActive Corp. Khosrowshahi was attracted to the famed businessman’s aggressiveness. “[Diller] made a hostile offer for Paramount when he was at QVC, and I thought to myself, That’s the guy I want to work for,” Khosrowshahi told Bloomberg earlier this year.

He wound up working for IAC, moving up its executive ranks until the conglomerate spun Expedia off as its own business. Khosrowshahi stuck with the travel site as its CEO, and he’s held that post until this week.

Khosrowshahi is a “dealmaker” and a “tech guy”

The twelve years he spent as Expedia CEO were fruitful. Expedia is much more than just one website — it’s now a company that employs over 20,000 people and operates more than 150 travel sites under its umbrella, including, Hotwire, and Trivago, to name a few. With Khosrowshahi at the helm, Expedia has gone from $15 billion in bookings to $72 billion in 2016.

“[Dara] was the chief dealmaker and a key figure [at Expedia], and he's a pretty dynamic guy,” explains Dennis Schaal, the executive editor of travel marketing platform Skift. Schaal, who has covered Khosrowshahi for more than a decade, says that the incoming Uber CEO is well respected in the travel industry among both his peers and his competitors.

While some recent breakdowns of Khosrowshahi’s background have painted the CEO as the “opposite” or “anti-Travis Kalanick,” Schaal claims that’s a mischaracterization. He says Khosrowshahi is “definitely a tech guy,” and that “he’s really into artificial intelligence, and voice activated search, and personalization, and big data.” (Interestingly enough, Khosrowshahi was reportedly working on making Expedia “a sort of real-time travel assistant, one that can call your Uber ride to the airport at the right time,” according to a recent profile in the Financial Times.)

Khosrowshahi’s also like Kalanick in another way: he’s willing to take risks with his company’s money. “Trivago last year spent literally 87 percent of its revenue on marketing. It's pulling out all the stops for growth at the expense of profits,” Schaal says.

On top of that, Schaal explains that Khosrowshahi is well-suited to manage Uber’s biggest corporate issues, pointing to how he worked with Barry Diller to make major acquisitions while at Expedia, spun off TripAdvisor, and helped Trivago to an IPO. And a public offering happens to be a major priority for Uber’s board of directors.

“Dara has his work cut out for him”

But dealing with that board — on which Kalanick still sits, with major voting sway — could be a major bottleneck for Khosrowshahi.

“Dara has his work cut out for him, in terms of restoring confidence in [Uber’s] management,” says Raj Rajkumar, an engineering professor at Carnegie Mellon University, and the director of the Technologies for Safe and Efficient Transportation program. “I do believe that a single person, the right person, can make a big difference. The caveat is that, with Kalanick on the board, it’s not clear that Dara can make the decisions that he needs to make without Travis’s involvement.”

Carl Tobias, a law professor at the University of Richmond, agrees. “The board seems pretty splintered right now. I think it'd be really critical to try to have them work together better and not seem like they're at odds with one another,” he says. “I just think they need to move the company off of the front page.”

These are fair points when you consider how Khosrowshahi reportedly became the board’s pick in the first place. Immelt was Kalanick’s choice for CEO, while Benchmark Capital — a venture firm that invested in Uber early on, but is also currently suing Kalanick for fraud — wanted Whitman. But Whitman asked for the moon, including requesting that Kalanick to take a reduced role with the company. Immelt reportedly backed out because he either didn’t have enough support from the board, was turned off by its recent infighting, or both. Instead of giving into Whitman’s demands, the board chose Khosrowshahi as a “truce” candidate.

These are turbulent waters for any executive to navigate. But Schaal thinks Khosrowshahi’s experience with outsized figures like Diller means he’ll be comfortable with that part of the job, and that the board will have respect for Khosrowshahi. “I'm not saying that's a panacea to Uber's board troubles, but it certainly helps,” he says.

Fueling Uber’s business and massaging the temperamental egos that make up the company’s board are a fraction of what Khosrowshahi needs to do as CEO. He is coming into control of a company that dug itself into a very deep hole. And a big reason for that is that Kalanick let Uber’s culture rot from the inside.

On Kalanick’s watch, Uber became a pit of sexist behavior and sexual harassment. This reached a tipping point in February when former engineer Susan Fowler published a blog post describing her time with the company. Her account was so damning that it inspired other women to come forward with their own stories. Uber reacted with an outside investigation led by former US Attorney General Eric Holder, which eventually turned up at least 200 claims of sexual harassment and 20 firings.

Luckily for Uber and its employees, Khosrowshahi doesn’t appear to have the brutish streak Kalanick was famous for.

“I don’t just want — I need — people who have walked miles in the footprints of our partners and travelers,” Khosrowshahi wrote in a LinkedIn post in 2015 entitled “My Secret to Building a Team of Passionate Travel Geeks.”

Khosrowshahi killed a star-based rating program for employees at Expedia

In another, he wrote about abandoning a star-based employee rating system that Expedia used in its early days, which sounds not all that different from Uber’s. “Employees became obsessed with their ratings scores,” he wrote. “From an employee perspective, their year-end feedback sessions went something like this: “blah blah blah, blah blah blah, blah blah, blah blah. Your rating is a 3.5.” 

“Nuance got lost and the rating took over,” he continued. “Sadly, our HR team has rejected my recruiting motto ideas: ‘Come to Expedia and be a human, not a number.’”

Since the election, Khosrowshahi has also spoken out against Trump, both in official statements and on Twitter. He even supported the legal fight against the President’s travel ban earlier this year. “He’s taken a very progressive stance of on that front,” Schaal says.

Khosrowshahi was listed as one of the “Highest Rated CEOs” by Glassdoor this year, coming in at 39th, and Expedia was picked as the 16th best place to work in 2016 by the website. And while women only held one-third of the company’s leadership positions in 2016, according to the company’s diversity report, they made up 51 percent of the workforce, and were paid equally to men.

"While we compare well with many of our technology peers, we have a long way to go in bringing more female representation into leadership roles,” he wrote in the report. “We need to attract, hire, engage and promote talent of all kinds all around the world, and we believe that by enriching the diversity of our work force across all dimensions, including gender, we achieve the most enriched outcomes."

All of this contrasts greatly to the frat house-style “Uber values” that Kalanick asked his employees to adhere to, like “always be hustlin’,” or the time he outlined sex rules for a company party in Las Vegas.

“It's certainly encouraging that the company seems to be bringing in someone who has a track record, or at least has said that these issues and values are important to them,” says Maya Raghu, the director of workplace equality at the National Women’s Law Center.

“It’s even better if they have taken steps to actually implement changes to increase diversity, not just within the workforce with regard to employees, but with regard to leadership as well,” she adds.

While it may seem like an uphill battle to heal Uber’s workplace, Raghu thinks the next steps are clear. “Given that there was such a toxic workplace culture at Uber before, which was very closely tied to the founder and leader, I think it's incredibly important for [Dara] to immediately establish things like sexual harassment and discrimination won't be tolerated, and to introduce some written policies to make that clear,” she says. Khosrowshahi should also “make it clear that there are consequences for that kind of behavior, and people will be held accountable, because that doesn't seem to have been the case before.”

“That kind of culture change, it has to happen from the top”

For guidance, Khosrowshahi can look to the report that Holder’s investigation released back in June, Raghu says. “It would behoove the incoming CEO to review those recommendations and think seriously about adopting and implementing many of them, and to send a message to Uber's employees, and to its clients, and to the general public, [that] they're taking these issues seriously,” she argues.

It’s also important that Khosrowshahi bring in leadership that will work with him on those issues. “That kind of culture change, it has to happen from the top,” she says.

The good news is Khosrowshahi will have about as much free rein in naming his own executives as an incoming CEO could hope for. Uber currently has no CFO, CMO, or COO. It’s also missing a number of senior vice presidents. Being able to fill those spots with fresh candidates from diverse backgrounds is a great opportunity, Raghu explains. “Culture change takes a long time. Nothing's going to change overnight,” she says. “But there are certainly steps that they can take very soon to start that process.”

Another small credit to Khosrowshahi’s reputation: Expedia was named to the list of “Best Places to Work for LBGT Equality” by the Human Rights Campaign Foundation this year.

But so was Uber. And while neither Uber nor Kalanick have won any “best of” awards from Glassdoor, the company’s overall rating is higher than Expedia’s.

That illustrates another problem Khosrowshahi faces as he takes on the task of fixing Uber’s corrosive culture. Creating a workplace that is inclusive, fair, and successful in the eyes of Silicon Valley is a challenge, especially because it’s easy to create the image that you’re pulling it off.

“The expectations are pretty low, given what the company's been through”

Kalanick abandoned that facade early on, and met his end as CEO because he put growth and success on a blindingly different priority level than the company’s culture. It’s now up to Khosrowshahi to rebalance that scale in the middle of this storm.

“I mean, the expectations are pretty low, given what the company's been through. Anything he does, it seems to me, that's positive, then more power to him,” Tobias says. “They just seem to be on this downward spiral, and if he can break that in any way that, then that would be valuable.”

And if Khosrowshahi does? “It could set a new standard in the tech industry,” Raghu says. “We can only hope.”