Travis Kalanick, the founder and chief executive of ride-hailing startup Uber, is stepping away from the company for an unknown length of time, possibly for good.
With sympathy to the fact he just lost his mother, this has been in the offing for a while.
Go deeper with GlobalData
A report into the workplace culture of the company (authored by former attorney general Eric Holder, in a mark of just how powerful Uber has become) shows in its recommendations what the company is lacking.
Among the list are calls for greater ethics and culture oversight and a massive restructuring of the company’s HR department to ensure complaints are heard and addressed – no doubt prompted by Uber’s poor handling of sexual harassment claims within the company.
Kalanick says stepping away is for the good of the company:
If we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Company Profile – free sampleThank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData
So let’s take him on his word and look at three lessons we could all learn from disgraced startup founders.
1. Don’t believe your own hype
Elizabeth Holmes was the next Steve Jobs.
In 2016, Forbes had her at the top of their list of America’s Richest Self-Made Women, estimating her worth to be $4.5bn.
Within a year, her visionary biomedical company was in ruins, as was her reputation. Her story is a lesson in not writing checks you can’t cash.
In 2003, a 19-year old Holmes dropped out of Stanford to found a biomedical tech company.
She eventually named it Theranos, combining the words “therapy” and “diagnosis”, and began pitching to investors her vision of bringing blood testing direct to the consumer.
By 2006 Theranos had raised more than $45m despite operating in “stealth mode” (a state wherein startups give virtually nothing away about their product and patents pending so as not to alert competitors).
With little concrete detail of how Theranos was democratising health, outside observers had only one thing to focus on: Elizabeth Holmes.
Holmes became a tech-media star, dishing on Charlie Rose and to the Wall Street Journal on how the confluence of science and entrepreneurship would allow everyday people to take control of their health.
It was her, and her company’s, narrative — that key to success in Silicon Valley. You’re not selling a product, you’re selling a story. In Holmes’ case the story completely overshadowed the product. In the end both failed to meet expectations.
In 2016 the Wall Street Journal reported Theranos’ flagship technology was not up to the task and that it had been using other companies’ devices to conduct their own tests.
Less than a year later Theranos, once thought to be worth $9bn, is now valued at $800m, according to reports. Though the company disputes this valuation, it has not offered clarification. Forbes estimates that Holmes owns 50 percent of Theranos but as investors would need to be paid before Holmes is, her stake could be worthless.
By letting her company’s “narrative” take centre stage in her daily life, Holmes forgot to pay attention to the product.
From Theranos’ founding in 2003 all the way up to her taking the stage at Ted in 2014, Holmes had people around her warning that the technology could not do what she said it could.
A professor at Stanford told her that a pinprick worth of blood could not test for disease in any meaningful way with the tech currently available (though that technology has now been proven to some extent and has received FDA approval).
Theranos’ head scientist, Cambridge graduate Ian Gibbons, raised serious concerns about the technology, according to a detailed account in Vanity Fair.
All this time, Holmes had the opportunity to revise, rework, or completely restart her company’s operations.
If this had happened, there is a chance Theranos would be the revolutionary biomedical company Holmes envisioned. Instead, she clung to her narrative and let the house of cards collapse.
Holmes’ worth now, according to Forbes? $0.
2. Don’t alienate the people you rely on
When Silicon Valley legend Peter Thiel revealed himself to be an ardent supporter of Donald Trump and pledged to donate $1.25m to his campaign, most people assumed he was finished.
“If savvy investment is all about timing, Peter Thiel may have lost his touch,” said Fortune’s David Morris in October 2016 — a time when he said “that campaign seems to have roughly the turnaround potential of Theranos”.
“That campaign” ended up doing a bit better than expected and Thiel’s early support did not go unnoticed.
As president-elect Trump gathered his transition team, Thiel was there; vetting candidates for the Federal Trade Commission and wrangling jobs for his libertarian Silicon Valley friends.
When asked if there had been any negative effects to his businesses after he declared himself for Trump, Thiel responded: “Not in any meaningful way.”
All of this must be a little baffling to Oculus founder Palmer Luckey.
After outing himself in the Daily Beast as the money man behind “Nimble America”, a pro-Donald Trump organisation dedicated to swinging the election with “meme magic” and “shitposting,” the 24 year-old quickly found himself losing friends.
Game developers began pulling support for his flagship Oculus Rift VR headset, and Facebook, who bought Oculus in 2014, quietly showed him the door.
So why did things work out so well for Thiel and not Luckey?
Well, a few things, chief among them being Peter Thiel’s long-established credentials as a Silicon Valley demi-god.
When you’ve helped nurse into the world two of the Valley’s greatest successes (Thiel co-founded Paypal in 1999 and was Facebook’s first outside investor in 2004), you’ve made it past a few save points and can afford to be mercurial.
Your singular vision has already made you and many other people a lot of money, who cares if it takes you down some unconventional paths?
If, on the other hand, you are a brilliant but as yet unproven entrepreneur and still rely on collaboration to make your fortune, you might want to keep your unorthodox political views to yourself.
Especially if one of those views is that “Hillary Clinton is a freedom-stripper. Not the good kind you see dancing in bikinis on Independence Day, the bad kind that strips freedom from citizens”.
Without the bank account and legacy to rely on, there’s nothing to catch you on the way down.
3. Listen to your employees
This lesson we can learn from Travis himself.
It sounds like common sense, but common sense can be easy to forget when everyone is saying you’re a genius.
Silicon Valley and startup culture have a near-messianic regard for success, and talk in hushed tones of the inherent “leadership qualities” of founders.
By the time you’ve found yourself presiding over a unicorn company, there is a good chance you yourself have become a true believer.
Whatever idiosyncrasies and outright flaws in your personality, you believe that’s the constitution that propelled you to the top. Steve Jobs may have been a jerk, but look at where it got him.
Not everyone can get away with it like Jobs did, though.
Most of the time it’s luck and collaboration that bring success to a company. There’s not much you can do about luck, except perhaps be ready for it. Collaboration, on the other hand, is something you can work on.
Again, it may sound obvious to say that listening is vital to successful collaboration, but it’s remarkable how often it is forgotten. We know Travis Kalanick forgot it, because we have the video.
When confronted with the reasonable concerns of one of his drivers — that Uber’s constant model-switching was costing him his livelihood — Kalanick deflected with a near-rote delivery of bootstrap ideology:
Some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else.
Of course the video went viral and the world marveled at how high the ivory tower had grown.
As it is, Uber really is in trouble.
With multiple harassment scandals, a costly failed expansion into Asia and the looming irrelevance threatened by self-driving cars (if they don’t get way out in front of it), the company needs more than ever a leadership they can trust to recognise, take seriously and deal with the challenges it faces.
To sum up: if you need the former attorney general to tell you to pay your employees more attention, things may have gotten out of hand.
BONUS ROUND — Disaster relief tents are not “luxury accommodation”
The preposterous tale of Fyre Festival may seem like a highly specific cautionary tale: don’t sell tickets to your ultra-exclusive festival if you’re not sure you can build it; but it also falls under the broader lesson of “Don’t follow through if your idea is stupid”.
In theory it’s not the most stupid.
A high-class music and lifestyle “experience” on an idyllic private island in the Bahamas. Raise the capital, get some celebrities to plug it, book the musical acts and celebrity chefs and you’re away.
Or at least so thought 25 year-old founder Billy McFarland and his friend and early investor Ja Rule.
Here’s how the company itself describes that initial inspiration:
Billy McFarland and Ja Rule started a partnership over a mutual interest in technology, the ocean, and rap music. This unique combination of interests led them to the idea that, through their combined passions, they could create a new type of music festival and experience on a remote island.
The festival itself turned out to be a construction site, partially flooded with sewage and populated with half-constructed emergency relief tents.
The experience was described as more akin to Lord of the Flies.
The 5-star food comprised mostly cheese and salad sandwiches in Styrofoam boxes and the VIP concierge service turned out to be a unmanned wooden stand with a sign saying “concierge”.
That’s seriously only the tip of the iceberg, go read Buzzfeed’s account if you want to see the full extent of the chaos.
In the aftermath McFarland tried to lay the blame on a storm that had swept through the island a few days prior.
The simple truth is that he had failed to build a festival. Before the festival even took place articles were popping up detailing the cancelled services of unpaid contractors, the high-interest $5m loan McFarland took out last minute to try and manage costs and the apparent ambivalence of the booked acts, none of whom listed the festival in their touring schedule.
As a Fyre press release itself notes, they were more than aware of the magnitude of the task, if not of their own ability to keep up with it:
As amazing as the islands are, the infrastructure for a festival of this magnitude needed to be built from the ground up. So, we decided to literally attempt to build a city. We set up water and waste management, brought an ambulance from New York, and chartered 737 planes to shuttle our guests via 12 flights a day from Miami. We thought we were ready, but then everyone arrived.
Worryingly, McFarland is planning a make-up festival next year.
Don’t buy tickets to that.
