Tech

Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

Uber Technologies Inc. has finally settled on a new CEO after a lengthy and messy fight over whose vision of the company should win out. The even harder part starts now.

Uber needs to decide whether it's a grown-up company that will start building a sustainable, profitable business suitable for a public company, or if it's still in a teenage phase of spending like mad to push into every country and new area of business it can.

The trouble is, the tempest over picking a new CEO and the ugly ongoing feud between a group of investors and ousted CEO Travis Kalanick each reflect a rift over this fundamental question about Uber's strategy, as well as a seemingly irreparable division of the company's most important personalities. Even a perfect CEO will find it tough to succeed in such conditions.

The Kids Are Alright
Uber's status as the world's most valuable private technology company is imperiled by internal feuding and business challenges
Source: CB Insights

This is what new Uber boss Dara Khosrowshahi will face on his first day: A queue of angry regulators in many countries suspicious about Uber's practices; a lawsuit with Google's corporate cousin over Uber's driverless car program; drivers angry about how Uber treats them; a workforce demoralized by months of bad headlines and a sick corporate culture; a board of directors spewing more venom than the characters in the "Valley of the Dolls," and a founder with outsize voting power who has seen himself as a CEO in waiting, and appears willing to smear anyone who disagrees with him.

Why would anyone want to be CEO of this mess? 

No matter what, it is healthy for the CEO spot to be filled because many tough decisions have been on hold. For example, the board discussed whether to team up with a car company for Uber's driverless car operation, tech news outlet The Information recently reported.

That move would have been unthinkable under the watch of Kalanick, who has called autonomous cars a life-or-death initiative for his company. But the operation also has been costing a fortune and it has uncertain potential. A grown-up company would have to decide whether the initiative is worth the investment. A teenager would roll the dice without question.

Red Ink
Uber has continued to grow during its internal tumult but the company's losses remain high
Source: Bloomberg News and other news reports
Note: Uber selective reports its financial results. These losses likely don't reflect the company's bottom line financial results.

The fate of the driverless car program is just one example of the teenage-or-grown-up fork in the road for Uber. The company threw in the towel on China and Russia when the on-demand ride business in those countries didn't seem worth the red ink. Uber will face similar cut-or-run decisions in other countries, including India, where it faces tough local rivals. Uber also needs to decide on how much to continue investing in new areas, including restaurant food delivery and, most intriguingly, logistics.

If Uber gives up on some geographies or some of the expansion businesses, it will help the bottom line but at the same time limit what had once seemed like a limitless potential market for the company. Uber didn't become the most richly valued private tech company in the world solely because of its on-demand ride operation.

Its biggest backers saw that as step one to Uber's mission of being the middleman for many businesses that match supply and demand, including package delivery and trucking. If Uber scales back its ambitions, the company's ceiling may not be as high as optimists believed. 

Another of the pressing questions for the company is whether to accept the offers of SoftBank and other firms eager to buy Uber shares -- preferably at a steep discount -- from the company's existing investors. The big deal is how such a transaction might alter the makeup of the company's investor base, and whether that would soothe some of the company's internal feuds -- or make them worse.

For example, it's possible SoftBank would buy shares from early Uber investors Benchmark, a firm that has been Kalanick's harshest critic and helped push him out. Benchmark also clearly wants Uber to start down the grown-up path, and if their influence at the company is diminished it's likely Kalanick's wish to continue the scrap-for-every-inch philosophy will continue. 

Uber's business challenges would be tough to navigate even if the company's owners were all on the same page. And they're not. Kalanick is a wildcard. At any moment he could agitate for what he wants and throw the company into chaos again. Khosrowshahi was apparently a compromise choice as CEO. He was a middle ground between Meg Whitman's wish to cast Kalanick into the wilderness and Jeff Immelt's embrace of the old boss.

The new CEO's most important role, then, is to play peacemaker-in-chief. That is in addition to all the other most important decisions. Good luck. He's going to need it. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Shira Ovide in New York at sovide@bloomberg.net

To contact the editor responsible for this story:
Beth Williams at bewilliams@bloomberg.net