When Donald Trump issued a far-reaching ban on travel from seven Muslim-majority nations in January, Uber’s former CEO and its newly appointed one found themselves at opposite ends of the spectrum of public opinion. Travis Kalanick was pilloried for his participation on a Trump advisory council and a perception that his company was trying to capitalize on the chaos the ban ignited. Even after Kalanick distanced himself from Trump and the ban, the stench of opportunism stuck. Meanwhile Dara Khosrowshahi, then CEO of travel-booking company Expedia, quickly issued an internal memo condemning the ban and publicly supported a legal challenge to the executive order in Expedia’s home state of Washington. As the #deleteUber campaign kicked off a disastrous year for the ride-hailing service that culminated in Kalanick’s ousting in June, Expedia quietly explained its reasoning for opposing Trump and remained outside the limelight.
What matters here isn’t the two men’s politics but how they choose to steward their companies. Uber, though it is worth $70 billion and older than Google was when it went public, is the perpetual scrappy, unprincipled startup angling for whatever advantage it can find—and then begging forgiveness when it oversteps its bounds. Expedia is a 21-year-old publicly traded firm that’s been helmed by Khosrowshahi since 2005 and was last seen as a disruptor in the era of MapQuest. The fact Uber’s board settled on Khosrowshahi as the company’s new CEO on Sunday means the company is finally turning the page from its free-wheeling, “always be hustlin’” origin story. Uber wants to become a mature company that can reward its early backers with a lucrative IPO—it’s a less sexy narrative, to be sure, but it’s the smart one.
Like everything else about Uber in 2017, the two-month search for a new CEO has been chaotic. Following Kalanick’s forced resignation, the company’s board of directors sought out a new leader who could juggle the sexual harassment allegations, the driverless car lawsuit from Google, the ascendancy of Lyft, and the omnipresent anxiety of Uber’s ongoing losses. A long list of dream candidates powered the rumor mill over the summer, including Facebook’s Sheryl Sandberg, Disney’s Tom Staggs, and YouTube’s Susan Wojcicki. By this past weekend the field had been winnowed down to three executives: Jeffrey Immelt, the former CEO of General Electric; Meg Whitman, CEO of Hewlett Packard; and Khosrowshahi, whose candidacy was kept under wraps until the eleventh hour. Immelt didn’t have enough board support, and Whitman apparently wanted to limit the influence of Kalanick, who believes he’s living the dramatic nadir before his inevitable Jobs-like redemption.
What Khosrowshahi wants to do with Uber is unknown—the company has still not formally announced his hiring—but the 48-year-old seems well-equipped to scale Uber’s core business and get the company’s financial house in order. Like Uber, Expedia competes in a cutthroat sector where consumers who don’t like a company’s pricing or corporate values can opt for a competitor at the click of a button. Expedia suffered steep losses during the recession, but the company has steadily grown sales over the past five years and saw its stock reach an all-time high in July, in part thanks to strategic acquisitions of competitors like Travelocity and firms in adjacent markets like home-rental company HomeAway. “Khosrowshahi has demonstrated the patience and resolve to fix problems at their root,” tech analyst Ben Thompson wrote in a piece praising the Uber board’s selection. “In the case of Uber, the business may be in better shape than Expedia’s was (pending the fixing of finance, of course), but as this year has made clear the culture needs a fundamental reworking, not simply a fresh coat of paint.”
Khosrowshahi is taking charge of a company that still has lots of upside despite its recent challenges. Even as Uber stumbled through 2017, it has continued to grow bookings, and an ongoing campaign to address driver concerns will mitigate the chance of a mass defection to Lyft. But under Kalanick, Uber was positioning itself as a once-in-a-generation unicorn that could revolutionize the way people and goods are transported. The taxi app was supposed to be an opening salvo in a broader revolution that includes driverless cars, drones, on-demand product delivery, and media content. It was the company’s seemingly limitless potential that convinced investors to keep pouring in more and more money to build the next great tech giant.
Under new leadership, though, Uber’s aspirations may be reined in. Already, 2017 has seen a quiet tempering of internal expectations underneath the fireworks of the palace intrigue. Instead of creating and operating its own self-driving car fleet, the company is now considering partnering with a traditional atuomaker. An exodus of key talent will handicap its competitiveness in artificial intelligence, the key building block in the coming decade’s consumer-tech products. And the company’s courier service, UberRush, was recently revamped after failing to scale significantly. If Khosrowshahi dials back Uber’s ambitions and instead laser-focuses on on-demand rides (which may be necessary given the onslaught of ride-hailing services expected to accompany the arrival of driverless cars), he could create another travel-booking business—something he obviously has practice doing. But it wouldn’t be a world-beating enterprise on the scale of Amazon or Google, which may have been more Kalanick’s dream than anyone else’s.
Veteran leadership is likely to help put Uber on a coherent path toward profitability and a respectful workplace environment—the period when Google grew from a high-potential startup to a dominant tech giant occurred under the eye of the experienced business executive Eric Schmidt, not the company’s founders. But Google rose in an era when the internet had barely been colonized. Every day Khosrowshahi has to spend cleaning up Uber’s internal messes is a day that Google, Amazon, and Apple continue building their dominant platforms into increasingly impenetrable data fortresses. Kalanick’s gambit to compete with these much older firms was always a long shot that required a mix of ambition, megalomania, and at least a little cheating. Finding a way to catch up while still playing by the rules will be a tall order for Khosrowshahi’s new version of Uber.
