Could allegations of sexual harassment and sexism put the company’s future IPO prospects at risk?

Uber CEO Travis Kalanick has hired former U.S. Attorney General Eric Holder to help lead an investigation into claims of sexual harassment and pervasive sexism leveled against the car-hailing company by former engineer Susan Fowler, whose explosive blog post hit the Silicon Valley startup like a tsunami earlier this week.

“As most of you know, I left Uber in December and joined Stripe in January. I’ve gotten a lot of questions over the past couple of months about why I left and what my time at Uber was like,” Fowler wrote at the start of her very detailed recounting of what can only be described as an organization in chaos. “It’s a strange, fascinating, and slightly horrifying story that deserves to be told while it is still fresh in my mind, so here we go.”

Strange, fascinating and horrifying indeed, from Fowler’s gripping telling. In response to Fowler’s essay, Kalanick wrote that it was the first he’d heard about these claims, which are numerous and detailed. Her account even includes a truly bizarre example of Uber denying women engineers leather jackets that the male techies got since there were too few female hires to bulk-order.

But most of her allegations are much more serious and problematic. For example, Fowler wrote that she and a number of other female engineers had reported her manager for propositioning them. She was told he wasn’t penalized because he was a “high performer.”

“It became obvious that both HR and management had been lying about this being ‘his first offense’, and it certainly wasn’t his last,” Fowler wrote. “Within a few months, he was reported once again for inappropriate behavior, and those who reported him were told it was still his ‘first offense.’ The situation was escalated as far up the chain as it could be escalated, and still nothing was done.”

It was a devastating allegation, of course, and one that seems inexplicable at a company the size and status of Uber, which is perhaps Silicon Valley’s most prominent startup. It has raised almost $16 billion in cash and debt, is valued at $69 billion and is expected to attempt to go public in 2018. Its numerous investors, including Google and Benchmark, are likely to reap giant rewards.

But all that could be at risk if this controversy is not fixed — and quickly. So, if Fowler’s report is accurate, what gives?

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Presumably, and if it is conducted with maximum independence, much will be uncovered in the investigation, which includes Holder and another outside attorney named Tammy Albarran — both partners at the leading law firm Covington & Burling. In addition, Uber board member Arianna Huffington, associate counsel Angela Padilla and relatively new HR head Liane Horsley.

But, in initial interviews with many former and current employees this week, the main problem appears to have been an ill-formed and broken system that was in place from the start.

It’s most glaring overall problems seems to center on how the human resources role was conceived at Uber by its brash and commanding leader Kalanick. The issue: He felt the function of HR at Uber was largely to recruit talent and also efficiently let go of personnel when needed, according to sources.

It’s not unusual for a tech startup to focus primarily on recruiting, especially at the stage where Uber was before 2014. But an Uber spokesperson conceded that though there was coaching and mentorship, it might not have been enough.

And that’s apparently why it took until 2014, when the company had around 500 employees, for the company to hire its first official head of HR, Renee Atwood. At the time and throughout her tenure, however, Atwood reported to then-head of operations Ryan Graves, and not Kalanick.

Before her, the department consisted of a small team that mostly handled administrative issues, sources said. This is also not unusual for a growing startup, according to Uber.

How she may or may not have communicated problems is also at issue. Several sources, for example, point out that during her tenure, Atwood would sit in on weekly executive meetings attended by Kalanick, Graves and other top execs, like the company’s general counsel, Salle Yoo. During these, Atwood was expected to share any highly sensitive information, especially if it could put the company at legal risk.

Uber confirmed that Atwood sat in on these meetings. But it’s not clear yet if she ever shared Fowler’s issues during these meetings, or if there was a clear protocol to do so as there is at other companies at that level.

In addition, it’s not clear if other managers failed to act.

For example, Fowler wrote that she also spoke to the company’s chief technology officer, Thuan Pham, about a termination threat Fowler’s manager made for reporting his manager. That type of threat is illegal under equal employment laws.

New York Uber Drivers Protest Rate CutsPhoto by Spencer Platt/Getty Images

Are complaints like Fowler’s more widespread at Uber? The investigation will be aimed at finding out. But many former employees I spoke to in the aftermath of her essay have echoed sentiments regarding the department’s careless treatment of their workplace issues.

They say that’s because Kalanick didn’t think spending resources on HR representatives who worked with staffers on things like managerial coaching or dealing with performance-related or other workplace issues was as important as investing in a robust recruitment process.

Former Google exec Chris Messina, who was also at Uber for a year in 2016 leading the company’s developer platform, voiced similar sentiments on Twitter about working at Uber.

“This is outrageous and awful,” he wrote, after reading Fowler’s account. “My experience with Uber HR was similarly callous & unsupportive; in Susan’s case, it was reprehensible.”

While no company’s interactions with its staff is perfect, to be sure, other sources said they also were stymied by the HR department, which in turn was not supported from above adequately.

One source familiar with the process said it was often decided very quickly whether an employee should be fired, with no real investigation. Another staffer, who had previously received a high performance review, said when his subsequent performance review was inexplicably significantly lower, the human resources representative offered little help to mitigate or understand the situation.

That said, other sources maintained that they also came across situations where a staffer was reported for being inappropriate and was dealt with swiftly. There was less a concerted effort to cover up workplace issues, those sources said, attributing problems to inadequacies of the department.

Perhaps this comes as no surprise. During the first half of 2016, sources said, the company had fewer than 10 representatives — called human resources business partners — who served to train managers or handle things like sexual harassment for its close to 6,000 employees.

Leadership coaching or training is especially important at Uber and other tech companies, where many of the department heads or top execs are often younger staffers who would work their way up at the company. According to sources, Atwood spent considerable time defending the need for more HR business partners.

But, according to one source, there was one HR business partner handling the entire Asia Pacific region; two handling Europe, the Middle East, and Africa; three in corporate functions handling engineering, finance and marketing; and only three working in operations and with city teams.

Uber disputed this and says the company had around 20 people dedicated to that role at the time. Today, the company has 35 and plans to add between 30 to 40 more under Hornsey.

In addition, sources said that Atwood and other managers also didn’t feel Graves was experienced enough to appropriately handle the company’s increasingly complex people operations. According to two sources, Atwood asked if she could report directly to Kalanick on at least two occasions, said sources inside and outside the company, but to no avail.

Atwood remained at the company until late 2016, when the company had grown to more than 9,000 employees. (She briefly joined Twitter, but has since left that company too.) Toward the end of the year, Kalanick then hired Google HR veteran Hornsey to lead the team.

Around the time that Atwood left the company, there was also significant churn at Uber’s HR department. A few months before Atwood left, Heidi Schriefer, who headed HR for product and tech for a little more than a year and a half, left to go to a software company called Looker.

Atwood was quickly followed by three other high-level staffers: Head of HR and recruiting for Europe, the Mideast and Africa Linda Aiello; HR director Stephanie Nip; head of global HR operations Paige DeLacey; and head of people operations Eric Schaeffer.

It was not until the fall of last year, though, that Hornsey was put into place, meaning a key job at the company was left open for many months. In that time, Graves acted as the interim head of human resources, in addition to other major — and time-consuming — duties at the company. Uber has now grown to more than 11,000 employees globally.

1/ What’s described here is abhorrent & against everything we believe in. Anyone who behaves this way or thinks this is OK will be fired. https://t.co/6q29N7AL6E

— travis kalanick (@travisk) February 20, 2017

It’s also probably not a surprise that Uber has long declined to publish its diversity stats, which has become a common practice across other tech companies like Google, Facebook and Apple as well as other large startups.

Several former employees across departments said that it has been Kalanick who has resisted having the human resources department collect or distribute diversity data sources. Even when pressed by communications managers to release basic diversity data to increase transparency, sources say, they were told it would be a non-starter to try to persuade Kalanick.

Why? Two sources said he felt racial or gender diversity weren’t useful metrics for the company and argued that diversity comes in a lot of different forms. It’s an interesting and even fair point, to be sure, but it’s not clear why Kalanick did not then direct the company to release any such information. In other words, Uber did nothing publicly.

According to Uber, the company thought it was more important to focus on internal programs that promoted diversity rather than report numbers and goals. One example of these programs is employee resource groups, where specific identity groups, such as LGBT employees or women, provided a network between Uber and potential hires from these groups.

Further, the company said it didn’t want to follow in the footsteps of tech companies that released numbers and goals, but didn’t change much in their diversity efforts.

But there was such a desire for these statistics that a group of engineers took it upon themselves to get this data, several sources say. They tracked how many women were in the engineering departments, including who was leaving and who was joining, and shared the information among themselves.

Uber said the company was not aware this was happening.

After the Fowler allegations, Kalanick said in a memo to staff that this would all change. Now, he promised, the company would become transparent around such information he had resisted releasing for the first time in its history. Initial data he cited noted that about 15 percent of Uber’s technical staff were women.

That’s lower than some rivals and masks, according to Fowler and others, a culture that has seen a marked decline in female engineers. That’s another issue the investigation will focus on.

And then there’s the key matter of whether any of this controversy will actually change anything for the better. Kalanick promised in his memo yesterday that it would, though he did not apologize in any way for the past.

“What is driving me through all this is a determination that we take what’s happened as an opportunity to heal wounds of the past and set a new standard for justice in the workplace,” he wrote. “It is my number one priority that we come through this a better organization, where we live our values and fight for and support those who experience injustice.”

The big question he did not address: Who will ultimately pay for that injustice at Uber?

If you have any additional information you can contact this reporter at johana@recode.net or on Signal, Confide or Telegram at 5162338877.


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Author: Johana Bhuiyan

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