If Uber Wants to Fix Its Culture, It Needs to Stop Being So Paranoid

This bedrock issue links most of the company's big problems.

One of the most frustrating parts of profiling a successful tech company is asking the company's leaders how they've beaten their competition. You have to ask, and you almost never get a straight answer. Instead, the chief executive officer tends to say something like, “We don’t focus on competition.” Jeff Bezos says such thingsSo does Reed Hastings. Silicon Valley VCs do it all the time. It's a nice sentiment, but you can be damn sure that, say, Amazon.com's pricing team is thinking about its rivals. It’s a bit like asking Steph Curry about a game-winning shot and hearing him reply, with profound certainty, “Is there really such a thing as winning?”

In some cases, though, it's true that competition may be the least of a company's problems. The best example right now is the slow-motion implosion of Uber.

A quick catchup: On Wednesday, reporters from Recode and Bloomberg discovered that a senior Uber executive had accessed the medical records of a rape victim—a woman whose attacker, an Uber driver in New Delhi, was convicted by an Indian court and given a life sentence. A group of Uber’s leaders, including CEO Travis Kalanick, then apparently concocted and talked up an elaborate conspiracy theory that suggested the victim was lying and that Ola, Uber’s main competitor in India, had put her up to it. Even more troubling is that, according to Recode and Bloomberg, the alleged source of all this hadn't been disciplined by either of the two law firms investigating sexual harassment at the company. He was fired eventually, but only after reporters began digging into the story.

We don’t know much about the details of either investigation, one of which is being conducted by former U.S. Attorney General Eric Holder. To judge by the leaks, the findings have been damning, and there are likely more leaks to come. On Sunday, the board of directors met to discuss Holder's recommendations and, according to reports, to consider the possibility that Kalanick take a leave of absence from the company.

There are lots of theories about what’s wrong with Uber, and here’s mine: paranoia. It’s at the root of the revolting weirdness behind the India story, and underlies many of Uber’s compulsive-seeming missteps.

In 2014, when Uber was worth around $20 billion, the company's leaders interpreted press scrutiny—the kind that being worth around $20 billion gets you—as persecution. At a dinner that included journalists, Senior Vice President Emil Michael decided a good way to turn things around would be to threaten to dig up embarrassing personal information about the company's critics, as BuzzFeed later reported. Uber apologized, but inside the company, many still believed that it was BuzzFeed, not Michael, that had behaved unfairly. At least one Uber investor, actor Ashton Kutcher, backed Michael publicly.

Michael looks like he might be on his way out, but for the time being he still works at Uber. We know that because he was the guy who went to great lengths to keep a raucous night at a karaoke bar in South Korea out of the press, according to the Information. The attempted cover-up seems to have prompted Travis Kalanick’s ex-girlfriend, Gabi Holzwarth, to go public about the incident.

Paranoia can also help explain why Uber felt the need to create an elaborate counterintelligence program, known internally as Greyball, to keep regulators from investigating its service (and, presumably, fining a company that could surely have afforded a more conventional legal battle). That program is now the subject of two different investigations, including one by the U.S. Department of Justice.

I’d also argue that paranoia is the only way to understand why Uber, which went to incredible lengths to start a driverless car program and beat Google to a commercial launch, felt the need to spend $700 million to buy Otto just before putting cars on the road. The acquisition gave the company a nice public victory in its brewing fight with Google but also exposed the company to a blockbuster trade secrets lawsuit.

The funny thing about all this is that paranoia is mostly celebrated in business, especially in the tech world. Andy Grove attributed his success at Intel Corp. largely to paranoia (check out the title of his book), and he's not the only one to treat it as a sort of core competency. That is the case with Uber, where, as Brad Stone wrote in his latest book, aggressiveness was enshrined in the company’s values, and investors endlessly praised Kalanick’s pugnaciousness. The press helped, romanticizing some of the more hard-edged aspects of Uber’s culture, such as the fact that Kalanick named his main conference room "the War Room." I’ve been to the War Room, and, at the time, I thought the name was kind of cool. But, man, in retrospect it really should have been a red flag.

In individuals, we rightly see paranoia as something we need to guard against for the sake of our own sanity. And yet, for some reason, we’ve come to see it as an asset when it comes to business. Maybe it is, in limited quantities, and Uber has certainly built a valuable business. But the kind of all-consuming paranoia we’ve seen lately from Uber isn’t a sign of strength—it’s a sign of weakness, of cultural rot.

    Max Chafkin
    Before it's here, it's on the Bloomberg Terminal.