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Will Uber CEO Travis Kalanick be able to effectively lead the company to success after the multiple scandals that hit him and Uber in 2017? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Answer by Joseph Philleo, USC undergrad, on Quora:
Travis Kalanick has already led Uber to success; most people just don’t realize it.
Industries tend to experience occasional periods of rapid, highly competitive change followed by long durations of maturation and incremental improvement. In the tech industry, rapid change is caused by the introduction of new, fundamental technologies; in other industries, the catalyzing enzyme can be more diverse (e.g. regulation, macroeconomic factors, demographics, consumer tastes, etc).
For decades, the ride-sharing industry was highly fragmented. Each city had one bus system (or public transport) and one or two local taxi companies. These businesses operated as small, highly-profitable monopolies protected by government regulation or run by municipalities. The incentive to innovate was low and, as a result, not much changed.
Fortunately, the adoption of GPS-embedded smartphones laid the conditions for the creation of a marketplace matching drivers with passengers in real-time. This allowed for drastic improvements in efficiency and convenience.
The question was never whether this real-time mobile-based driver—passenger marketplace would disrupt the ride-sharing industry (it would); the question was which company would end up controlling the marketplace.
As evidenced by Amazon, iTunes, and AirBnB, most industries can only support one primary marketplace. Economies of scale and network effects usually give the first-mover a huge advantage that cannot be easily overcome. Thus, every ride-sharing marketplace company (Uber, Lyft, Sidecar, and many more) quickly became embroiled in an existential fight for majority market share.
The only way to win in this type of market dynamic is to grow faster than competitors. The moment a company stops growing, it starts losing. Once a marketplace starts losing, it is really hard to catch back up.
In this context, Uber’s growth-at-all-cost strategy makes complete sense. By placing an unrelenting focus on expansion, Travis has built Uber into a $70B empire that fulfills 1M rides per day, “employs” hundreds of thousands of drivers, operates in 70+ countries, generates $5.5B in annual revenue, and controls 85% of the US ride-sharing market. His competitors went bankrupt.
However, the times they are a changin'.
In most countries, the ride-sharing industry is completing or close to completing its first paradigm shift. Beyond a few regional holdouts, the winners are Uber and Didi Chuxing. Over the next few years, no one will displace either of these two companies. Their moat is firmly entrenched.
The question of whether Travis Kalanick can effectively lead Uber to success is thus moot — he already has. If not clear already, the company’s success will become more apparent in the coming years as Uber consolidates its market positioning, reduces customer acquisition subsidies, and raises prices.
However, in order to maximize Uber’s success in this new market dynamic and ready itself for the next paradigm shift, Travis Kalanick will have to change his corporate vision and strategy. While a growth-first focus is imperative during the short and occasional period of rapid market change, it is counterproductive during the long incremental stages of industry maturation.
Instead of breaking into new markets, Uber must now focus on attracting the top-notch talent that can improve its platform, increase its profitability, and develop the technical capabilities needed for the next phase of competition (autonomous vehicles). For Travis, this means fostering a positive and productive company culture. This means revamping HR, committing to equality in the workforce, holding discriminatory agents responsible regardless of their technical ability, and, eventually, rebuilding Uber’s (and Travis’s) public image.
While fixing Uber’s culture will not be easy, it will be far less difficult than building Uber into its present day empire. Travis is an intelligent, highly focused CEO. If he can correctly recognize the need for change, there is no reason he cannot take Uber to new heights.
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