MGMT 301 Dominican University Uber Kalanick Tumultuous Era Case Study Questions Hello, please answer the following questions. The answers is found in the c

MGMT 301 Dominican University Uber Kalanick Tumultuous Era Case Study Questions Hello, please answer the following questions. The answers is found in the case.Combine the answers in essay format, 3 paper length. Uber Case Study Questions
“Uber; Kalanick’s Tumultuous Era”
MGMT 301
1. Describe the “sharing economy” and explain how it works with regard to transportation.
2. Uber seemed to use whatever means were necessary to accomplish its goals. How would you
assess the manner in which Uber responded to its competition?
3. Under Kalanick’s leadership, describe some of the significant events that shaped Uber’s
culture. How would you assess Kalanick and what aspects of their culture did you find most
concerning.
4. How did Uber use behavioral science to manipulate its driver workforce and evade
government scrutiny? Given your study of Organizational Behavior and Motivation, how do you
assess these practices?
5. With the departure of Kalanick, Uber is at the crossroads. What does Uber need to do to
change? What would be the company’s best choices for the future? (Feel free to refer to outside
resources to amplify your answer but cite all your sources.)
6. Apply and explain six to eight concepts from our study of Management that are helpful in
understanding this case and underline them.
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W18144
UBER: KALANICK’S TUMULTUOUS ERA1
Robert Eames wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective
or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to
protect confidentiality.
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University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.
Copyright © 2018, Ivey Business School Foundation
Version: 2018-03-09
A new business model emerged in the 2010s that relied on technology that connected companies directly
with customers and allowed them to conduct business without a formal workforce. This new form of
commerce had been called the sharing economy, the gig economy, the platform, peer sharing, and even the
on-demand economy.2 Within this context, Uber Technologies, Inc. (Uber) transformed itself into an
international transportation powerhouse that dominated its sector of the sharing economy in just seven
years. Uber had gross booking revenues of US$5.4 billion3 in 2016 and net revenue in the fourth quarter of
that year of $1.7 billion.4 It operated in 70 countries,5 had an approximate valuation of $70 billion in 2017,6
and maintained a polished web presence that was designed to reflect regional cultural norms.7
However, Uber’s rise to prominence was controversial almost from the company’s inception. The
corporation had an increasingly contentious relationship with its drivers and was the subject of numerous
lawsuits, which included a much-publicized sexual harassment lawsuit that eventually contributed to the
departure of co-founder and chief executive officer (CEO) Travis Kalanick.
What had been the substance of Kalanick’s tumultuous era, and how had his leadership as CEO affected
Uber’s organizational culture? How did Uber’s manipulation of its drivers through the use of knowledge
derived from behavioural science affect the company’s operations? And finally, after Kalanick had been
fired, what were the options for Uber’s next plan of action?
KALANICK: THE PERENNIAL ENTREPRENEUR
Kalanick was a product of the southern California suburbs. He attended high school in Northridge, just
outside of Los Angeles. Kalanick’s father was an engineer, and his mother pursued a career as a retail
advertiser with the Los Angeles Daily News. When he was young, Kalanick was known for being confident,
persuasive, and a particularly good salesman—a quality he demonstrated as he sold knives door to door for
Cutco. Some described the young Kalanick as a perpetual hustler who always had his game face on.8 Those
who had known Kalanick when he was young agreed in interviews and other commentary that he was a
smart, intense, hyper-rational, and driven entrepreneur. At the same time, many viewed him as both an
egotist and an opportunist who had no compunctions about stepping on people’s toes in order to succeed.9
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Kalanick started his first business, an SAT-preparatory service called New Way Academy, when he was 18.
His own impressive SAT scores helped him get accepted at the University of California, Los Angeles (UCLA),
where he majored in computer engineering. This was where he met Michael Todd, Vince Busam, and Dan
Rodrigues, who were working on a peer-to-peer search engine enterprise called Scour, which was supported
by angel funding from their friends and relatives. Kalanick was hired at Scour in 1998, and he dropped out of
college to work for the start-up. Although Kalanick was actually Scour’s second employee, he often later
described himself as one of the company’s founders, sometimes to the dismay of the actual founders.10
Kalanick took no salary for a year, but instead lived on unemployment insurance while he devoted
considerable energy and talent to the file-sharing enterprise. Working out of Rodrigues’s apartment
bedroom, Kalanick handled business development and marketing for Scour and became known for the
guerrilla marketing campaigns he undertook to push the product name.11 Scour was ultimately sued for
$250 billion by a group of entertainment companies that claimed Scour had allowed consumers to obtain
copyrighted content without paying for it. The company filed for chapter 11 bankruptcy in 2000.12
After the demise of Scour, Kalanick had a new venture underway almost immediately. He and Todd
launched Red Swoosh, a technology company that focused on delivering web content and worked by having
users share bandwidth. In effect, Red Swoosh was a networking software company. Kalanick called it his
revenge company; he intended to make the customers of the companies that had sued Scour his customers.
By mid-2001, the company had seven employees but was completely out of cash and struggled to meet its
payroll obligations. Even worse, the financial effects of the attacks of September 11, 2001, meant that startup funding—especially for companies in the software industry—was disappearing.13
As Red Swoosh struggled, the company cut corners and neglected its financial responsibilities, including
the responsibility to withhold income taxes from employees’ paycheques. The company soon owed the U.S.
Internal Revenue Service (IRS) $110,000 for unpaid income tax—a criminal offence. The founders were
able to pay the debt before the end of 2001. They avoided prosecution, but the company was almost finished
financially. Employees had gone through long periods without any pay at all, and disputes arose over stock
options that were promised but not realized. According to insiders, both Kalanick and Todd had hidden
business decisions from each other, and each had accused the other in the IRS debacle. Their amicable
business relationship was permanently destroyed, and Todd left Red Swoosh.14
After Todd’s departure, Kalanick managed Red Swoosh through a series of ups and downs until 2007, when
he sold the company to Akamai for $23 million. Many former employees of Red Swoosh later made
negative comments about their impressions of Kalanick, noting his constant reinterpretation of events, his
pomposity, and his winner-take-all attitude. Meanwhile, Kalanick had been working for three years without
a salary and had lived in his parents’ basement for a time after Todd’s departure from Red Swoosh. He had
relocated the company headquarters to Thailand as a cost-saving measure and had made numerous changes
to the team in order to make Red Swoosh a success.15
The sale of Red Swoosh made Kalanick a millionaire. He spent the first year after the sale travelling the
world and investing in various projects. During his travels, he met Garrett Camp, from whom he first heard
the idea for Uber. The company began as UberCab under Camp and co-founders Oscar Salazar and Conrad
Whelan. Kalanick was brought on board in 2008 as an advisor, and he quickly gave himself the title of chief
incubator. UberCab was officially launched in 2010 with Camp as CEO, but Camp, in an amicable
arrangement, deferred to Kalanick at the end of the year. Kalanick became CEO, while Camp assumed the
role of general manager.16
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Kalanick had earned a reputation for being a hard worker, but he also spent much of his time embroiled in
various controversies of his own creation. Kalanick made enemies quickly. His foes included regulators in
jurisdictions where the company was located, business and personal rivals, the taxi industry, and even
customers who criticized the company. Kalanick expressed himself vigorously in speeches, e-mails,
company blogs, and videos.17 In early 2017, a video distributed by Bloomberg showed Kalanick losing his
temper in an argument with one of his drivers about falling pay rates.18 Kalanick was verbally combative
with the driver and used profanity—and was forced to quickly offer a public apology only hours after the
video began airing. Kalanick did not deliver his apology to the driver in person, but instead delivered an email apology to all employees and referred to a different conversation with the driver. The apology was
subsequently posted to the company’s public blog.19
At least one contemporary analyst noted that Kalanick’s approach was to win at all costs. This was a source
of strength but was also the executive’s biggest weakness.20 Certainly, Kalanick embodied the stereotype
of a technology industry mover and shaker: he was young, brash, energetic, known for his intensity and
pompous style, and was credited with being reckless although effective by many who had known him over
the years.21 However, the video of Kalanick’s argument with the Uber driver publicized the dark side of
Uber’s top manager and shed light on another undesirable personality trait: immaturity. Employees who
mimicked Kalanick’s full-tilt work- and lifestyle were known within the company as “Uberettos”—a
comparison that was not meant to be flattering.22
UBER’S CULTURE
Like that of all founders or early leaders of organizations, Kalanick’s personality and style made a lasting
imprint on Uber. The company’s organizational culture was influenced significantly by Kalanick’s
demonstrated values and ethics.23 Some of these values and ethics were illustrated in a list of 14 core values
Kalanick presented to employees before a company retreat in Las Vegas in 2014. Among the phrases in the
list were “toe-stepping,” “always be hustlin’,” “super pumped,” and “principled confrontation.”24 Kalanick
demonstrated similar thinking early in the company’s history: a profanity-filled 2013 letter he sent to
employees was found during an investigation into sexual harassment at the company just before his
departure in June 2017. The document set “rules” for an upcoming company party in Miami; these included
a monetary penalty for vomiting and a prohibition against throwing kegs from the tops of buildings, and
the document outlined explicit rules for sex between co-workers.25
Unethical behaviour was often the rule at Uber, and the corporation’s highly publicized activities certainly
influenced public perception of the company. Uber’s dispute with its drivers, for instance, was the source
of numerous articles in the public press as well as the subject of blog posts from Uber itself and the topic
of social media postings from current and former drivers. Uber’s internal measurement of driver satisfaction
showed driver turnover averaged approximately 25 per cent every three months.26 The sexual harassment
allegations levelled in 2017 by former employee Susan Fowler were certainly well-publicized.27
Uber used questionable tactics against rival ride-sharing company Lyft in San Francisco. Uber employees
booked rides with Lyft drivers and then cancelled,28 and Uber used “brand ambassadors,” who booked rides
with Lyft and then tried to persuade the Lyft drivers to work for Uber.29 Uber also purchased analytical data
about Lyft’s customers and used the information to evaluate Lyft’s financial health.30 Additionally, Uber
gathered an intimidating legal team and hired a private investigator to interview friends and colleagues of
its legal adversaries.31 It made extensive use of political operatives who argued the company’s merits with
officials at all levels of government, including the federal administration under President Obama.32
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The corporation’s well-known aggressive philosophy and disregard for regulations was reflected in the
observable artifact that hung proudly on a wall at Uber’s headquarters: the first cease-and-desist order
issued to the company. The company’s reputation epitomized that of the Silicon Valley tech industry in
general. For example, executives had an overall disdain for regulation, a penchant for flouting laws, an
active anti-union stance, and a boy’s-club atmosphere that devalued female employees and was often
rampant with sexual harassment. Uber also used technology, such as Greyball and other cyber products that
helped it evade government officials who were investigating Uber’s operations.33
Uber used surge pricing—that is, raising rates at various times and locations when the corporation felt it
could dominate the marketplace—to increase profits. Uber even instituted surge pricing during hurricanes
and blizzards. Surge pricing infuriated users, who perceived it as price gouging.34
CONTROVERSIAL PRACTICES
In early 2015, Kalanick had a meeting with Tim Cook, the CEO of Apple, Inc. (Apple). Although Kalanick
showed up wearing his trademark hot pink socks and red tennis shoes, his bravado was short lived. Cook
had summoned Kalanick because Uber technicians had unsuccessfully tried to alter the company’s ridesharing app so that its activities would be hidden from Apple’s technicians. Kalanick had used the app to
identify and tag iPhone users—even those who had deleted the Uber app from their iPhones. Kalanick
agreed to desist after Cook threatened to remove Uber’s app from Apple’s app store, which would likely
have decimated Uber’s customer base.35
In mid-2015, a privacy rights group, the Electronic Privacy Information Center (EPIC), filed a lengthy
complaint with the Federal Trade Commission against Uber. The complaint alleged that Uber’s information
gathering practices were dangerous to consumers. EPIC claimed that Uber collected data about passengers
after their rides were concluded by monitoring GPS data even after users had turned off their GPS location
finders. This allowed Uber to access users’ contact lists for marketing purposes. This ability to track
locations and identify and collect data about users was an internal program at Uber known as “God View,”
and the program worked without the users’ knowledge. EPIC further claimed that Uber had already abused
users’ trust when it tracked the location of journalists who had reported on the app and then shared personal
information about the journalists within the workplace.36
Uber similarly used a secret program called VTOS, an acronym for “violation of terms of service,” which
identified potential abusers of the service as well as law enforcement officials who sought to ticket or
otherwise compromise Uber’s drivers.37 VTOS included a tool called Greyball, which was first noticed in
operation in Portland, Oregon, in 2014, when the company used it to evade local officials who were trying
to catch Uber drivers who operated illegally in the city. Greyball used an algorithm to identify where and
when customers opened the Uber app; for example, it identified those who opened the app in proximity to
a government agency or building. After Greyball identified potential law enforcement agents, the app
tagged the users, denied them rides, or cancelled rides already accepted. It then sent them a fake app
populated with ghost drivers to protect the actual locations of real Uber drivers.38 In May 2017, the U.S.
Justice Department initiated a criminal investigation into Uber’s use of Greyball, but neither the Justice
Department nor Uber released any public comment about the situation.39 Uber had publicly announced in
early 2017 that it would no longer use the Greyball tool.40
ECONOMIC ADVISORY COUNCIL
The year 2017 began poorly for Kalanick and continued that way until his eventual departure from the
company in June. Kalanick joined President Trump’s economic advisory council in December 2016 and
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encountered a strong backlash from employees during the year’s first all-hands meeting in January 2017.
Employees were primarily critical of the president’s immigration policies. In fact, President Trump’s
immigration stance was almost universally unpopular with workers and executives in the tech industry,
many of whom were immigrants themselves or believed strongly in globalization.41
When New York City taxi drivers supported protests against President Trump’s selective immigration ban
by striking at John F. Kennedy International Airport in January 2017, Uber responded by saying that it was
not going to institute surge pricing. This was perceived by the New York City taxi drivers as intimidation
meant to break their strike, although it was unclear if that was actually the intent of Uber’s press release.42
Kalanick announced his departure from the council after only a week, but Uber employees had to convince
him that he needed to distance himself from President Trump’s policies. Employees circulated a 25-page
letter in the workplace that listed the reasons employees wanted Kalanick to resign from the council.
Meanwhile, more than 200,000 customers had deleted their Uber apps and accounts since Kalanick had
announced he would join the president’s council.43 There was considerable concern about how easy it was
for them to delete the Uber app and replace it with Lyft’s.44
UBER’S USE OF BEHAVIOURAL SCIENCE
Uber used a variety of psychological techniques to influence where, when, and how long its drivers worked.
These approaches used graphics and video game techniques and included noncash rewards that enticed
drivers into working longer hours. The company intended to minimize its labour costs as much as possible,
and it often needed drivers to work in areas and at hours that were not as profitable for them as other times
and places. At times, the company’s own efficiency worked against it because faster pickup times overall
meant more idle time for individual drivers, and this led drivers to log off from service. To prevent this,
and because many in…
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