What Went Wrong at Uber Under Travis Kalanick? Power Without Safeguards

The Short Answer

What Went Wrong at Uber Under Travis Kalanick?

Uber chose to grow at nearly any cost and treated rules and regulators as obstacles. Once winning justified breaking rules, that logic became the culture and reached its own people. In 2017, under investor pressure, Kalanick resigned as CEO. The company survived because outside accountability existed.

This is the cautionary tale in Chapter 5 of Become Your Version of Rich by Dr. Paul Borosky, DBA, MBA. It follows what power in business is and the method in how to build influence without authority. For the lesson in the same chapter about holding power well, see Franklin vs. Napoleon. All of it sits inside the Become Your Version of Rich guide.

What Happened

From Bulldozing Rules to a Forced Resignation

Dr. Paul begins with a warning: the lesson lives at the level of the decision, not the person.

• Early yearsUnder co-founder and CEO Travis Kalanick, Uber chooses to grow at nearly any cost and to treat rules, regulators, and norms as obstacles. It launches in cities without permission and dares officials to shut down a service the public already likes.
• About 2014 to 2017The company uses a tool known as Greyball. According to a New York Times report summarized by TechCrunch, it flagged users the company believed were violating its terms of service, including code enforcement and city officials, and denied them rides.
• 2017Public accounts of a toxic workplace and other scandals and governance failures follow.
• June 20, 2017After five major investors step up pressure, Kalanick resigns as CEO.

Sources: TechCrunch, Uber uses a software tool to identify and sidestep code enforcement officials (March 2017). Quartz, Travis Kalanick has resigned as CEO of Uber (June 2017). Isaac, M. (2019), Super Pumped: The Battle for Uber, W. W. Norton.

Uber has said the program denied rides to users who violated its terms of service and protected drivers from people seeking to harm them, competitors, and opponents working with officials on sting operations. Read both accounts, then judge the decision, not the people.

The Mechanism

Once Winning Justifies Breaking the Rules, It Becomes the Culture

The strategy resembled what the Silicon Valley playbook called blitzscaling: grow so fast you dominate a market before anyone can stop you. In pure power terms it was breathtakingly effective. But a decision made for regulators does not stay with regulators. If winning excuses bending a rule outside, it excuses bending one inside. The same approach shaped how the company treated its own people.

That is the sense of the book’s warning that power cut loose from values and from any check creates the conditions for its own destruction. The power built by ignoring limits was torn apart by the absence of them.

Sources: Hoffman, R., & Yeh, C. (2018), Blitzscaling, Currency.

The Difference

Why the Founder Lost His Job and the Company Survived

Napoleon had dismantled every check, so only reality stopped him. Uber was different. A board and investors existed who could act, and they did. Kalanick was not destroyed. He stayed wealthy and went on to other ventures. But he lost the top job and much of his control. The company survived. The unchecked version of his power did not.

Set that beside Warren Buffett, who kept his influence for decades by tying it to a settled purpose and real restraint. The pattern is not that two men were good and two were bad. It is each person’s relationship with reputation, ambition, accountability, and restraint.

What the Research Says

The Power Paradox Is a Tendency, Not a Law

Psychologist Dacher Keltner calls it the power paradox: people often gain power through qualities that serve others, such as empathy and generosity, and the experience of power can then erode those very qualities. Earlier work by Keltner and colleagues proposed that power tends to increase action and reduce inhibition, which helps explain why powerful people can act on impulse. It is a tendency, not an iron law.

What decides the outcome is what most powerful people skip. Values set the course. Accountability keeps you from fooling yourself, because power is good at convincing you that what you want is also right.

Sources: Keltner, D. (2016), The Power Paradox: How We Gain and Lose Influence, Penguin Press. Keltner, D., Gruenfeld, D. H., & Anderson, C. (2003), Power, approach, and inhibition, Psychological Review, 110(2), 265-284.

The Fix

Four Brakes to Build Before Your Power Grows

Dr. Paul calls these safeguards. Build them while you are small, and they keep working as you grow.

Here is how Become Your Version of Rich puts it.

How This Helps a Business Owner

Spot Your Smaller Version Before It Grows

Few owners will run a company like Uber. Many will meet the same decision at a smaller size.

One Honest Caution

Describing Events Is Not Judging People

Do This Tomorrow

Three Steps for This Week

1. Write down one rule or standard you have bent or ignored in the last month, and who bore the cost.
2. Name two people who may challenge you, and tell each of them they are safe to do it.
3. Put one safeguard in writing, such as a second signature on large spending or a quarterly review of your own decisions.

Safeguards cost a little speed today and save a lot of damage later. Once your power is held by values and checks, you can decide what it is for. That is the subject of the next chapter, starting with how to calculate your financial independence number.

The Book

The Full Story Is in Chapter 5

This page covers one cautionary tale. Become Your Version of Rich places it beside three people who held great power in very different ways.

• The seven-step power method, from ethical boundaries to safeguards
• Warren Buffett and Benjamin Franklin, two people who held great power and kept it
• Napoleon at Notre-Dame and in Russia
• A day spa owner who built earned power before she opened
• Daily Actions and a 30-day check on whether your influence holds without your title

Get the Book on Amazon →

Keep Going

More From Chapter 5

FAQ

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