3 Lessons on Power We Can Learn from Uber’s Catastrophe

Travis Kalanick is out at Uber and the hyperventilating has begun. There are at least three important lessons from this tale for every senior executive in public or private companies, and not necessarily the ones you are reading about. 

But before the lessons, let’s get some perspective. Contrary to conventional wisdom and the popular press, founders (and for that matter non-founder CEOs) lose their jobs all the time. There’s David Neeleman, founder of JetBlue, who lost his CEO position in 2007 and his board chair position the following year. Evan Williams, the founder (no, it wasn’t Jack Dorsey) of Twitter, who was forced out. George Zimmer, not only the founder but the advertising face of clothing retailer Men’s Wearhouse, who was dismissed by a board he had handpicked. Rob Kalin, the CEO of Etsy, had been fired once before he was removed as CEO of the retail goods website. The list goes on and on.   

Noam Wasserman, now at USC, conducted a widely cited study of 212 American startups. He found that by the time “ventures were three years old, 50% of founders were no longer the CEO … and fewer than 25% led their companies’ initial public offerings.” Wasserman also found that founders of successful companies were particularly likely to get fired. As the wife of one ousted technology founder perceptively told me, people don’t fight over garbage. The more valuable the company, the more likely it is that people will contest for control.

Data from Quora show that by the time companies have four or more rounds of funding, only 15% of founders are still in the CEO role. Founder replacement is so common that a Google search produces literally hundreds of articles on the topic as well as suggestions for how founders might keep their jobs and when VCs should replace them. The idea that Kalanick’s firing as a founder-CEO is somehow unusual is absurd.

Now to the lessons. Here’s a question I might pose in my Paths to Power class at Stanford: Why is Kalanick out and Elizabeth Holmes still CEO of Theranos? There are many answers to this question, including the fact that Kalanick essentially decided not to fight his investors. But one huge difference is how the two manage their respective relationships with their board members.

A fundamental principle of organizational life is that everyone has a boss. Founders and public company CEOs risk losing their jobs the minute they forget that fact and stop cultivating, spending time with, and, yes, flattering the wisdom and advice of their esteemed and brilliant board members. Want to keep your job—any job at any level?  Manage up. Success, of course, goes to people’s heads and they think that since they have made others, maybe even their board members, a ton of money, they will get gratitude in return. That’s a bad bet. Ego tends to dominate money. So keep yours in check, help your bosses feel better about their brilliance, and make sure your bosses love you.

Next lesson: with success and power comes visibility and public scrutiny. CEOs need to understand that fact and be hypersensitive to what they say and do. People, lots of people, are watching them all the time. Surviving constant public scrutiny is stressful and not something that most people are well-prepared to do.

There’s no doubt that Travis Kalanick was far from the perfect CEO. He had plenty of faults and made many mistakes. But compare him to a CEO described by one of my former students, also in Silicon Valley: This CEO stole money from the company and lied to his board members, and he still has his job. I’m not going to tell you the name of the company and you wouldn’t have heard of it if I did. And there’s the difference. One price of power and success is being on stage and under the microscope all the time.  Spend time thinking about how others will see you, because they are constantly looking.

The third lesson: Construct a (positive) narrative that makes all of your actions and your company’s actions at least somewhat justifiable. Contrast Kalanick and Uber with Jeff Bezos and Amazon. Amazon is a tough place to work, for white collar employees, who must confront a demanding, even brutal, culture, and for warehouse employees, who must work in un-aircondtioned workplaces that could reach 110 degrees and whose every move is monitored, a throwback to Frederick Taylor and his time and motion studies. Some people contend that Amazon is, or is on its way to becoming, a monopoly. But unlike Uber, Amazon has consistently—and forcefully—fought back against negative publicity and articulated a narrative about it being customer-focused and good for consumers. Uber’s attempts to tell a similar tale of consumer-benefiting innovation and disruption have been much less omnipresent and hard hitting. Whoever does public relations for Amazon is a lot more skilled than the comparable team at Uber.

Everyone makes mistakes. No company is perfect. And not every company apologizes for its shortcomings. So before you take too moralistic a lesson from the downfall of Travis Kalanick, nice as that might feel, consider the real lessons from what happened to him. It just might help you keep your own job.