Can a CEO Make or Break All?
After months of scandals and bad PR, it wasn’t particularly surprising when Uber’s CEO Travis Kalanick stepped down from his post indefinitely in June. The move came at the demand of five of the company’s investors, all of whom insisted the CEO—who also helped found the company—was not helping revive the company’s tarnished image, but rather was damaging it.
In the wake of Kalanick’s absence, questions arise about the future of the company. Many worry that the company will suffer from even more reputation problems now that it’s public knowledge that its founder was unable to stay at the helm. The fact that a single person stepping down from their post could pose an existential question about a company’s future is a sign of how strong the cult of personality still is in Silicon Valley. But the question remains: Does Uber need Kalanick to survive? And do other startups run the risk of failing once their very well-known CEOs or founders step down?
Immediately after the announcement was made, reports surfaced that 1,000 Uber employees had signed a letter addressed to the board of directors, appealing for Kalanick’s return. According to their letter, it seems these employees very much felt that Kalanick was crucial to the future of the company. They wrote: ‘As the folks who’ve actually worked alongside Travis for years to help create Uber from nothing, we are extremely disappointed by the short-sightedness and pure self-interest demonstrated by those who are supposed to protect the long-term interests of our company. Yes, Travis is flawed, as we all are. But his passion, vision, and dedication to Uber are simply unmatched. We would not be here today without him, and believe he can evolve into the leader we need. He is critical to our future success.”
This letter shows one of the central tensions of the startup founder myth: while internally someone like Kalanick can be very good for the company’s growth, externally they can present a liability. After all, the culture that Kalanick created may have been obsessed with growth, but it was also a “prime example of Silicon Valley start-up culture gone awry,” as the New York Times put it. They went on to point out the unusual nature of Kalanick’s departure: “Taking a start-up chief executive to task so publicly is relatively unusual in Silicon Valley, where investors often praise entrepreneurs and their aggressiveness, especially if their companies are growing fast. It is only when those start-ups are in a precarious position or are declining that shareholders move to protect their investment.”
No one knows for sure how Uber’s balance sheet will fare in the wake of his absence, but we have other examples to look to. Twitter CEO Jack Dorsey left his post in 2008—only to be reinstated in 2015—and the company has generally struggled with its growth metric and vision ever since. Ever since Steve Jobs passed away in 2011, leaving Apple in the hands of Tim Cooke, there has been ample criticism about the company’s macro direction, including focusing more on ambitious projects like self driving cars at the expense of consumer projects already on the market.
But maybe Uber has an opportunity without Kalanick. If the company can manage to sustain growth without their controversial founder, it might be better for the company’s long-term health after all. As one academic from UC Berkeley who has studied corporate leadership told Salon, “Because everyone has flaws or makes mistakes, there is liability if the CEO falters. Any scandal or misstep will rebound more on such a company (its sales, etc.) than for one led by a bland CEO who isn’t a household name.”