Business

Uber has had a terrible month. Can it recover?

Saturday’s crash involving one of the ride-hailing company’s self-driving automobiles capped-off a tough 30 or so days for the ride-hailing startup.

A self-driven Volvo SUV owned and operated by Uber Technologies Inc. lies on its side after a collision in Tempe, Ariz. on Friday.
Mark Beach/Fresco News/Reuters
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Uber announced that it is suspending its autonomous vehicle program following a serious crash on the streets of Tempe, Ariz., involving one of the company’s self-driving Volvos, serving as the latest major setback to the beleaguered ride-hailing startup that has had a difficult several weeks.

From harassment allegations and reports of cocaine use on a company retreat to accusations of intellectual property theft and a string of departures by top-level executives, the period beginning mid-February may represent the beginning of the downward spiral for what was once one of the world’s most promising startups.

Beginning on February 19 when Susan Fowler, a former engineer for the company published a post on her website calling attention to the gender bias and sexual harassment she faced while working for Uber. In her post, she described in detail how her claims were dismissed and she was subsequently threatened with termination after she reported sexual harassment to Uber's human resources department.

While her allegations were immediately addressed by CEO Travis Kalanick, hiring the former US Attorney General Eric Holder to assist in the internal investigation, a report by the New York Times mere days later demonstrated her claims may not have been isolated.

The New York Times article alleged that during a 2015 company meeting in Las Vegas, a manager groped multiple employees (that manager was terminated within 12 hours) while other employees were doing cocaine in the bathrooms at private parties.

On February 23, Google, one of Uber’s investors, filed a lawsuit against the ride-hailing startup over intellectual property theft, alleging that the team developing Uber’s autonomous vehicle program had directly taken Waymo’s (the name of Google’s self-driving car group) technology to “avoid incurring the risk, time, and expense of independently developing their own technology” according to documents filed in court in San Francisco.

For their part, Uber denied any wrongdoing with an Uber spokeswoman telling CNBC that they “take the allegations made against… Uber employees seriously" and "will review this matter carefully.”

Barely had the dust settled from that Thursday’s courtroom filings when, the following Monday Amit Singhal, Uber’s Senior Vice President of Engineering, stepped down after a reporter for Recode alerted the company to the fact that Singhal had left his former position at Google because of sexual harassment allegations.

Once notified, Kalanick immediately requested Singhal’s resignation, however coming less than ten days after Ms. Fowler’s allegations against another Uber employee that reporting didn’t help the company's overall public image.

Further complicating Uber’s public relations issues came one day later when a video surfaced of Mr. Kalanick getting involved in an angry argument with an Uber driver over recent rate drops. Following the video’s release, Kalanick issued an apology for his behavior and admitted his need for leadership help.

That was on February 28th. On March 3rd, The New York Times published a piece of investigative reporting detailing how Uber used a tool called Greyball to effectively avoid authorities in locations where the ride-hailing services were under contest or banned altogether, such as in cities like Boston, Paris, and Las Vegas.

Pulling data collected by the app as well as other methods to identify city officials, Uber would alert drivers and then deliver a “a fake version of the app, populated with ghost cars, to evade capture”, according to The New York Times article.

The same day that The New York Times article was released, Uber’s Vice President of Growth and Development, Ed Baker, suddenly resigned after three years with the company. While his expressed intention was to move to the public sector, Mr. Baker had been peripherally involved in the sexual harassment and sexism allegations at Uber as he had previously been witnessed engaging in a sexual activity with another employee at a work event in Miami, according to Recode.

March 17th saw information leaked that demonstrated slow progress in Uber’s autonomous vehicle program. The data showed that the self-driving vehicles travelled independently only for about 0.8 miles before a human driver was forced to takeover.

Contrasted with Google’s Waymo, where the automated system was being disengaged on average once every 5,000 miles.

Two days later Uber’s president Jeff Jones left abruptly, saying "the beliefs and approach to leadership that have guided [his] career are inconsistent with what [he] saw and experienced at Uber,” according to Business Insider.

Following Mr. Jones’ departure, Uber stated their expressed desire to turn around their image. But on Friday, reports surfaced that Kalanick and other Uber managers visited an "escort bar" in Seoul in which they selected women wearing numbered tags out of a lineup. 

Now comes the crash in Tempe and the suspension of the company’s autonomous vehicle program.

Thus, while Uber had previously been accustomed to difficulties and controversy as they sought to launch an innovative ride-hailing system in areas seemingly resistant to change, the events of the past several weeks have derailed their entire corporate image.

Meanwhile, according to The Wall Street Journal, Lyft, Uber’s primary competitor in the ride-hailing arena is capitalizing on Uber’s latest setbacks by seeking $500 million in investments.