THURSDAY, SEPTEMBER 5 , 2019. THE WASHINGTON POST EZ RE A
right its approach to marketing,
which suffered because messag-
ing diverged from location to
location. “A ll of the various local
players and teams expressing
Uber in that uniquely local way
started to become a weakness
because we weren’t talking with
one voice as to what Uber was
and what Uber meant,” he said,
according to excerpts of his com-
ments reviewed by The Post.
In a n email viewed by The Post,
he said that many teams were too
large, creating overlaps that
could lead to mediocre results.
It’s “ critical that we look at t he big
picture, admit when we aren’t
where we need to be as a compa-
ny, and, most importantly, get
back on track,” he wrote, saying
that while the company had
grown quickly, many felt it was
slowing. “So, put simply, we need
to get our edge back.”
A person familiar with the
company’s thinking who spoke
on the condition of anonymity to
discuss sensitive matters said
Uber took its approach to the
layoffs based on best practices to
minimize rumors and prevent
employees from agonizing over
whether they would be affected.
Employees were summoned
that day to turn in their equip-
ment, have their laptops wiped
and say their last goodbyes. One
former employee downloaded
the Lyft app for a ride the next
day, calling it “petty revenge.”
Since then, employees have
noted that the company seems to
have continued its cultural shift
from its heady start-up days,
instead focusing on pleasing in-
vestors.
Chief financial officer Nelson
Chai said in a company-wide
email last month that Uber
would no longer give out em-
ployee anniversary balloons, a
Silicon Valley tradition, opting
instead for stickers. He cited the
$200,000 the company was
spending annually on balloons,
applauding an employee for
bringing it to his attention. He
also noted the additional benefit
of being more environmentally
friendly.
Uber also recently implement-
ed a hiring freeze for some U.S.
and Canada engineers. And some
engineers are longing for the days
of Kalanick’s leadership, with a
handful leaving for his new start-
up, Los Angeles-based Cloud-
Kitchens, which connects restau-
rateurs with shared kitchen spac-
es for rent.
“A cross engineering, they want
to work for Travis again,” said an
employee who was not author-
ized to comment publicly about
the company and spoke on the
condition of anonymity.
Engineers aren’t the only ones.
Some early investors who are
friendly with Kalanick also think
he should return to the helm of
the company.
“A t this point, the market
might be receptive to a change at
the top,” said early Uber investor
Bradley Tusk, who also worked as
a political adviser for the compa-
ny and has been harshly critical
of management, though he
stopped short of advocating Ka-
lanick’s return.
Kalanick declined to comment
through a spokeswoman.
Jason Calacanis, an early in-
vestor in Uber, on Twitter last
month called publicly for Kalan-
ick to return. He acknowledged
mistakes the company had made.
But, he tweeted that “it’s also
clear that @travisk is the leader
who built the company to true
greatness. It’s time we discuss
bringing @travisk back — just
like #stevejobs rejoined @apple
(& the company surged again).”
He added, “#thereturnofthek-
ing.”
[email protected]rative” about the company.
That meant putting longtime
Uber stalwart Jill Hazelbaker in
charge. When she assumed her
new role as senior vice president
of marketing and public affairs,
she introduced herself with a
teamwide email saying she had
been appointed by Uber to reach
“the best of its possibilities,” f or-
mer employees recalled. She sent
regular emails to lay out progress
on restructuring, too.
“Something about that word-
ing made us all think ‘layoffs,’ ”
said one of the former employees.
Uber said that Hazelbaker
wrote in her introductory email
that she was “excited about the
enormous opportunity we have
ahead of us.”
On July 29, hundreds of em-
ployees — many focused on stra-
tegic marketing meant to build
the company’s external reputa-
tion — received a cryptic email
asking them to call into a 9 a.m.
video conference. Hazelbaker ap-
peared on the screen and ac-
knowledged it would be a tough
day.
“If you’re on this call, your
position is no longer needed at
Uber,” s he told them in comments
that lasted roughly 90 seconds,
according to multiple former em-
ployees. As she disappeared from
view, a human resources repre-
sentative took over. It left those
laid off stunned. One former em-
ployee described it as almost
“inhuman.” Employees ques-
tioned the methods at an all-
hands meeting the next day.
Khosrowshahi said at the
meeting the company had want-
ed to act “very, very quickly” tomuch time apologizing for Uber’s
past mistakes, inadvertently
drawing further attention to its
problems without a coherent
marketing strategy to help it
emerge with a new story.
“Brand damage and sentiment
is one of the final factors in
somebody’s decision” to use the
app, said one of the former em-
ployees.
While the company tracked its
brand reputation before its scan-
dals, the company afterward
weighted it so heavily that it may
have come at the expense of a
broader strategic vision, some of
the people said. Senior executives
have paid close attention to the
company’s reputation and image
over the past few months, accord-
ing to the former employees,
especially given Khosrowshahi’s
charge to turn the company’s
image around.
Around the time of Uber’s IPO
and in its wake, the company
faced criticism over its treatment
of drivers and the safety of using
the service. Its past cultural woes
were again examined. A driver
strike gained some traction. Hard
partying by some employees as
the company went public, The
Post reported, triggered bad
memories of an Uber many
thought had been left behind.
The stock price fell precipi-
tously.
A few weeks after Uber went
public, and after Khosrowshahi
saw that Uber’s reputation was
not improving, he announced the
company would combine its mar-
keting, communications and
public policy teams in an effort to
create a “consistent, unified nar-ousted, and Khosrowshahi, the
former chief executive of Expe-
dia, was brought in to clean up
the company’s reputation and
prepare it to go public.
Uber uses internal tracking
tools that gauge brand sentiment
in real time and tracks data from
outside polling companies, ac-
cording to former employees who
spoke on the condition of ano-
nymity because of separation
agreements with the company. It
relies heavily on customer email
surveys and in-app pop-up ques-
tionnaires, which help it measure
the all-important level of con-
sumer trust in its brand.
While that measure fell steeply
during the #DeleteUber fallout, it
recovered some last year. It fell
again around the time of the IPO
and after it, prompting conster-
nation inside the company, ac-
cording to these people.
These people attributed the
reputational declines to a swarm
of negative publicity stemming
from driver strikes — timed to
coincide with the IPOs of Uber
and rival Lyft — that helped draw
nationwide attention to the
working conditions and pay of
ride-hail drivers. That continued
a bad cycle of media coverage,
including a disappointing IPO
and big losses. Just this week,
Democratic presidential candi-
date Pete Buttigieg joined a dem-
onstration outside Uber’s San
Francisco headquarters pushing
for a state bill to reclassify “gig”
workers as employees rather
than independent contractors.
Even before that, investors and
longtime company observers
worried the new CEO spent tooafter a passenger was forcibly
removed from a flight, Chipotle
after a food poisoning outbreak
and Samsung after faulty batter-
ies began exploding in its Galaxy
Note 7 phones. Some of those
have recovered better than oth-
ers.
Brand reputation problems
immediately place companies in
danger of losing market share to
competition, said Charles Lind-
sey, an associate professor in the
University at Buffalo’s School of
Management who focuses on
consumer behavior and brand
reputation. Whenever a company
faces these types of public strug-
gles, it can trigger consumers to
say: “ ‘Oh, here we go again. Is
this a company that I trust? Is t his
a company that has a good busi-
ness model?’ ” Lindsey said. “A nd
maybe you start thinking about
the competition.”
Uber’s core ride-hailing busi-
ness has never been profitable,
with the company instead pour-
ing incoming cash into expan-
sion. Adding financial pressure is
rival Lyft, which has nearly dou-
bled its market share to as much
as 40 percent over the past two
years, according to its stock mar-
ket filing. The companies had
been locked in a fierce price war
to win customers in the lead-up
to their IPOs, offering steep dis-
counts to attract passengers.
Lyft’s b iggest g ains came in the
wake of the #DeleteUber move-
ment, which started with accusa-
tions that Uber disrupted a taxi
strike and spread as allegations
of a toxic “tech bro” culture at
Uber emerged.
Then-CEO Travis Kalanick wasBY FAIZ SIDDIQUIsan francisco — Uber has a
reputation problem.
The ride-hailing giant
launched a half-billion-dollar
marketing campaign last year to
rebuild its image. A string of
scandals, including the collection
of fares during a taxi strike, had
prompted a #DeleteUber move-
ment, and there were allegations
that its culture promoted sexual
harassment. It hired its first chief
marketing officer, rapidly added
staff and launched a national
campaign, including television
commercials, aimed at restoring
its image.
It didn’t pay off.
Uber’s metrics, based on a
mixture of internal tracking and
external polls, have recently
placed brand sentiment near the
same lows measured in the
depths of its crisis, according to
multiple people familiar with
Uber’s market research data who
spoke on the condition of ano-
nymity because they were not
authorized to discuss it publicly.
The company obsesses over those
metrics, the people said, because
it closely tracks Uber giving up
market share to rival Lyft.
As Uber’s reputation has con-
tinued to struggle — and taken a
toll on revenue growth — the
company made sweeping chang-
es to streamline its marketing
efforts and trim costs over the
summer. In July, in a curt video
conference call, it laid off 400
employees who were largely re-
sponsible for helping improve its
external image.
In U ber’s f iling before its initial
public offering in May, it detailed
the need to maintain and en-
hance its brand and reputation as
critical to the company’s future
success.
“We have previously received
significant media coverage and
negative publicity, particularly in
2017, regarding our brand and
reputation, and failure to rehabil-
itate our brand and reputation
will cause our business to suffer,”
Uber said in its stock market
filing.
Uber’s brand dilemma compli-
cates its already rocky start as a
public company. Uber is now
worth $55 billion, more than
40 percent less than the high end
of its projected price tag before it
went public. Investor pressure to
make money has heightened as
Uber reported its largest quarter-
ly loss ever — $5.2 billion — in
August.
The need to ease investor con-
cerns has triggered belt-tighten-
ing, including the layoffs, a hiring
freeze in engineering and even a
ban on “workaversary” balloons,
according to employees and cor-
respondence reviewed by The
Washington Post. That, in turn,
has resulted in a loss of the magic
that once came with working at
the “unicorn” company, current
and former employees say. Now,
employees say they are treading
on eggshells, waiting for the next
shoe to drop.
Uber declined to make chief
executive Dara Khosrowshahi or
other executives available for in-
terviews.
Uber’s attempt to revamp its
image following a crisis shows
the potential limits of a compa-
ny’s ability to win back consum-
ers — no matter how much mon-
ey i t spends. It j oins other compa-
nies that have struggled with
varying success to restore their
brands, including United Airlines
Economy & Business
HEALTH CARE
Judge approves CVS
merger with Aetna
A federal judge reviewing a
Justice Department decision to
allow U.S. pharmacy chain and
benefits manager CVS Health to
merge with insurer Aetna said
on Wednesday that the
agreement was legal under
antitrust law.
Judge Richard Leon of the U.S.
District Court for the District of
Columbia had been examining a
government plan announced in
October to allow the merger on
condition that Aetna sell its
Medicare prescription drug plan
business to WellCare Health
Plans. Both deals have closed.
— ReutersTHE ECONOMYFirms still upbeat,
Fed survey findsThe U.S. economy grew at a
modest pace through much of
July and August, with companies
remaining upbeat despite
disruption caused by global
trade disputes, a Federal Reserve
survey found.
“A lthough concerns regarding
tariffs and trade policy
uncertainty continued, the
majority of businesses remainedoptimistic about the near-term
outlook,” according to the report
released Wednesday. The report,
called the “beige book,” i s based
on anecdotal information
collected by the 12 regional Fed
banks through Aug. 23.
Auto sales grew modestly, and
tourism was generally solid.
Overall manufacturing was
down slightly, while housing
sales remained constrained.
— Bloomberg NewsAIRLINE INDUSTRYSouthwest expects
to fly 737 Max soonSouthwest Airlines, the largestoperator of Boeing’s 737 Max,
expects regulators will certify the
grounded jet to resume flight
before Thanksgiving in the
United States, clearing the way
for new deliveries by year’s end.
“We’re assuming that we will
have the go-ahead to return the
Max to service by, call it the
beginning to mid-November,”
Southwest chief financial officer
Ta mmy Romo said Wednesday.
The narrow-body jet has been
grounded worldwide since
March after two crashes killed
346 people. Boeing has made
changes to the flight-control
system implicated in the
disasters and has estimated that
the Max would return to serviceearly in the fourth quarter.
Southwest, which had 34 Max
aircraft when the plane was
grounded, has removed the jet
from its schedule until Jan. 5.
— Bloomberg NewsALSO IN BUSINESS
The U.S. trade deficit declined
in July, including the gap with
China that has been the focus of
President Trump’s tariffs. The
Commerce Department said
Wednesday that the gap between
the goods and services the
United States buys and what it
sells abroad fell 2.7 percent to
$54 billion in July from June.
Exports rose 0.6 percent to$207.4 billion, while imports
ticked down 0.1 percent to
$261.4 billion. Compared with a
year ago, the average trade gap
has increased $7 billion.Automakers pledged to equip
nearly all new cars with
reminders to check the rear seats
for children. Under a voluntary
agreement, essentially all new
autos by the 2025 model year will
at a minimum provide drivers
with visual and audible rear-seat
reminder alerts after turning the
vehicle off, the Alliance of
Automobile Manufacturers and
the Association of Global
Automakers said Wednesday.
— From news servicesDIGESTUber, despite much e≠ort, struggles to repair reputation
DAVID PAUL MORRIS/BLOOMBERG NEWS
Uber’s headquarters in San Francisco last month. People familiar with Uber’s market research data said brand sentiment has fallen near
the lows measured during the #DeleteUber movement in 20 17. Uber reported its largest quarterly loss ever — $5.2 billion — in August.
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Uber co-founder and ex-CEO Travis Kalanick in San Francisco last
year. He resigned from the ride-hailing company in June 2017.DAVID PAUL MORRIS/BLOOMBERG NEWS
Uber chief executive Dara Khosrowshahi in San Francisco last
week. He was brought in to help turn around Uber’s reputation.Marketing campaign,
staff overhauls haven’t
improved metrics