Does Uber's Explosion Mark the End of the "Brilliant Jerk?"
In case you missed it, Uber co-founder Travis Kalanick has recently stepped down from his position as CEO of the ride-hailing app that he founded in 2009. The resignation follows a four-month investigation into the company's "toxic" corporate culture.
It has been a tumultuous year for Uber. In February, former engineer Susan Fowler published a blog post that laid bare her experience of sexism and harassment at the company. Her exposé opened the floodgates to other revelations about the company's frat-house culture, including a trip by senior executives to a Seoul escort bar, a leaked sex-rules memo, allegations of breast groping and homophobic slurs, and the astonishing violation of privacy by executives who sought to cast doubt on a rape victim's story.
Kalanick's polarizing leadership style was already under fire before the latest allegations hit. In just eight years as CEO of the scandal-hit car service, Kalanick famously faced down every enemy in the beleaguered taxi industry—from federal law enforcement to city and local regulators, Uber cab drivers and even, on occasion, Uber's customers when they dared to question the company's practices. How can a man with the talent to build a $70 billion colossus create that much controversy and rack up that many foes?
The answer, of course, lies in his personality.
"It's hard to be a disrupter and not be an a**hole"
Innovating a big idea takes guts, resilience, and a fair amount of ruthlessness. Historically, founders who have been tough or even boorish have built some of the most successful businesses in Silicon Valley, which makes you wonder whether a jerkish reputation actually helps someone to get ahead. People with a reputation for ruthlessness divide opinion, since the characteristics that make them successful disruptors are, by definition, the same traits that make them volatile and emotionally unintelligent.
Take a look at the personality characteristics associated with some of the world's most-praised entrepreneurs:
Problems with authority: Innovators have the motivation to innovate precisely because they dislike the status quo. The biggest disruptors—people who change the face of an entire industry—have problems with authority and are reluctant to follow rules. Case in point: Kalanick's ugly and protracted battle with the taxi industry regulators and his well-publicized culture of principled confrontation. "Some city-council people are really awesome, but most are uninspired," Kalanick told Vanity Fair magazine back in 2014. "I meet with them as little as possible."
Narcissistic and unscrupulous behavior: Numerous studies suggest that innovators are more manipulative, narcissistic and Machiavellian than regular people, which arguably helps them to charm, persuade or intimidate people about the value of their big idea. It's a trait that lends legitimacy to the idea of screwing people over. While Mark Zuckerberg is widely respected today, it wasn't the case when he kicked co-founder Eduardo Saverin out of Facebook or allegedly stole the business idea from the Winklevoss brothers. "I'm going to f**k them," he admits to writing over IM, "probably in the ear."
Extreme risk-taking: All entrepreneurs take risks, but some studies suggest that disruptors are more likely to take risks to a reckless degree. There are two reasons for this. One has to do with a low boredom threshold, which propels entrepreneurs to do things for the sheer thrill-seeking pleasure of it. The second reason relates to an overconfident and over-competitive desire to win which makes disruptors more likely to seize any opportunity for a fight. Former Apple frontman Steve Jobs famously harassed people interviewing for jobs and employees frequently witnessed him making people cry.
Raw self-interest/fear of failure: The Hobbesian trap is a theory that explains why someone might make a preemptive strike out of fear of an imminent attack. Even where cooperation would give the better outcome for both sides, a person is driven to wipe out all potential threats. In February, the New York Times ran a fascinating expose into what it called Uber's "aggressive, unrestrained workplace culture." The story is a torrid tale of managers fighting their peers so they could advance through the company ranks, an environment current and former Uber employees described as Hobbesian.
Congratulations, you're a success. You're fired!
Just because people have unpalatable personality traits doesn't mean that they are bad people. But Uber's fairy tale, like so many others, is a classic example of what happens when all the unflattering traits combine into a startup culture gone awry. In Silicon Valley and elsewhere, successful disruptors-cum-CEOs are a very rare breed.
Writing in the Harvard Business Review, Noam Wasserman, author of the bestseller The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup, reveals that 50 percent of founders relinquish control before their company reaches three years old; by year four, 60 percent of founders have parted ways with the behemoth they created. Like Kalanick, most go unwillingly, pushed aside by investors who have a different blueprint for long-term management control.
Why the high dropout rate? Because at this point, the founder's strengths become huge liabilities that block the company's ability to capitalize on the opportunities before it.
Like most startups, Uber deliberately kept its structure decentralized, empowering talented regional leaders to make decisions without intense scrutiny from the company's west coast HQ. This structure enabled the company to grow aggressively and achieve ambitious revenue targets, but it meant that leadership were clueless about what was happening on the front line.
One group, known as the "A-team," allegedly were shielded from accountability because of their ability to deliver outstanding corporate growth. These people were chosen by the founder to build the business according to the founder's vision, which was of course an extension of Kalanick's personality, preferences and style. From the get-go, Uber was built upon a set of culture-curdling traits that were designed to shake up a stagnant taxi industry. It was never designed with integrity, credibility, or caring, because those traits aren't required to make a lot of money.
The lesson here should be obvious: that bright, agile and sometimes unpleasant people who come up with great insights may be brilliant at building a business, but they not necessarily brilliant business people. To get really big, and survive across the generations, a company has to have a mission. The nice guys are much more likely to have an authentic reason for being in business, rather than being motivated by rule-breaking, narcissism, and power.
Arianna Huffington, the Uber board member, hit the nail on the head when she vowed that Uber would be making a cultural change. According to the video of the meeting, Ms. Huffington said Uber would no longer be hiring "brilliant jerks."
Will it be enough to iron out Uber's cultural problems? Only time will tell.