On a brisk night last July I took a long walk through the streets of San Francisco with Travis Kalanick. We walked and talked for more than three hours, and toward the end of our conversation I asked him if he liked running a big company. He’d been around since Uber was a mere handful of employees, and now it had many thousands.
His answer spoke volumes, especially in light of the blaring headlines about Uber and its CEO in recent days. “The way I do it, it doesn’t feel big,” he said. “You constantly want to make your company feel small,” he continued. “You need to create mechanisms and cultural values so that you feel as small as possible.”
On Tuesday, Uber released a list of recommendations by former U.S. Attorney General Eric Holder and a colleague based on a months-long investigation into those very company values. Their conclusion: Uber needs to change. What’s plain to all-perhaps even Kalanick, who announced he’ll take a leave of absence of undetermined length-is that while Uber was growing to become a global behemoth its CEO willfully continued to think of it as a brash startup.
There was good in that. Startups move quickly and big companies don’t. Steve Jobs use to boast that Apple was the world’s biggest startup.
Yet for Uber the bad outweighed the good. Smallness meant perpetuating the worst of chaotic startup life and a failure to grow into the mature corporation it needed to become. The Holder report revealed an undisciplined company with poor governance, weak accountability, a founder-dominated board and values—the very tenets Kalanick treasured—that encouraged bad behavior. Holder recommended, for example, that Uber seek top-management “candidates with experience dealing with organizations that have complicated labor and operational structures.” That would not describe leaders at the typical Silicon Valley startup Kalanick so badly wanted Uber to remain.
What comes next? Kalanick’s letter to employees implies he’s not letting go completely, noting that he’ll “be available as needed for the most strategic decisions.” Presumably he’ll have a hand in hiring the critically important chief operating officer Uber seeks as well as a finance chief and other top leaders.
Fresh blood will help Uber. But existing woes won’t vanish. Late-to-the-party investors who valued Uber at nearly $70 billion might reasonably want their money back. Uber’s legal battle with Alphabet’s self-driving car unit could be perilous if it heads to trial as planned. And a potential Justice Department investigation into a deceptive practice known as “greyballing” suggests possible criminal allegations.
Uber is attempting to turn over a new leaf. But its wild ride continues.
***
My wild ride continues too. Tonight in San Francisco journalist Kara Swisher will interview me before a sold-out audience at the Commonwealth Club’s INFORUM series. Swisher has attached herself like a barnacle to the Uber and Kalanick stories this year, and I expect our conversation to be lively, to say the least. If you don’t already have a ticket, watch the livestream instead at 6:30 p.m. PDT on the club’s YouTube or Facebook pages.
| Adam Lashinsky | |
| @adamlashinsky | |
| adam_lashinsky@fortune.com |
NEWSWORTHY
Time to get serious. Adam discussed the latest Uber developments in his essay, but there was one more sign that the company needs a major cultural overhaul. At an all-hands meeting discussing the Holder report, David Bonderman, a company board member, kicked things off with a sexist joke. Really? After an employee outcry, Bonderman resigned.
Finally. Verizon completed its $4.5 billion acquisition of Yahoo's Internet businesses. CEO Marissa Mayer stepped down, as her company's popular platforms like Yahoo Sports and Yahoo News will be integrated with Verizon's earlier AOL acquisition under another former Google executive: Tim Armstrong.
Sunk costs. Magazine publisher Conde Nast closed down its fashion retailing web site, Style.com,despite investing more than $100 million. The owner of leading edge fashion titles Vogue and GQ is rerouting potential shoppers to online market Farfetch.
Free as in beer. Feisty wireless carrier Sprint is offering its unlimited data plan free for a year. The seemingly crazy offer is available only to new customers who switch to Sprint before June 30 and bring their own devices. After July 31, 2018, regular rates starting at $60 per month resume.
Protecting the homeland. The United States will increase scrutiny of Chinese investment in Silicon Valley to better shield sensitive technologies seen as vital to U.S. national security, Reuters reports. China's interest in fields such as artificial intelligence and machine learning is of particular concern.
FOOD FOR THOUGHT
Here's a very on-topic food for thought: Panera Bread, the fast-growing bakery and casual dining chain, may be a model for a struggling industry in integrating mobile and digital technology. The chain is on track to exceed $1 billion in sales this year via its web site, mobile app and in-store kiosks. Fortune's John Kell talked about Panera's digital strategy with the company's president, Blaine Hurst:
As this plays out over time with the movement toward delivery and eating off-premise, the continued expectation from consumers is that you have a digital component. Unless we screw it up, digital will certainly approach that 50% [threshold]. I have little doubt about it.
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McDonald’s Is Using a New Method to Recruit Young Employees: Snapchatby Jennifer Calfas
BEFORE YOU GO
News of the demise of Style.com is just one more sign of the challenges of the fashion industry. But following the changing styles through the years got a little easier this week with the debut of Google's new We Wear Culture web site. Including some 30,000 images and videos and covering thousands of years of history, the site is a treasure trove of thought-provoking designs for fashionistas of any era.