How Uber is recovering from a ‘moral breaking point’

Yahoo Finance Canada
Uber Canada’s recently-appointed general manager Rob Khazzam poses for a photograph in Toronto on Wednesday, January 17, 2018. (THE CANADIAN PRESS/Nathan Denette)
Uber Canada’s recently-appointed general manager Rob Khazzam poses for a photograph in Toronto on Wednesday, January 17, 2018. (THE CANADIAN PRESS/Nathan Denette)

After a turbulent year that pushed Uber Inc. staff to a “breaking point,” the U.S.-based ride-sharing giant’s Canadian market manager is taking stock of mistakes that led to strained relationships with drivers and rocky rapports with regulators.

The company is eager to turn the page on 2017, a year marked by CEO Travis Kalanick’s departure following reports of a company culture that condoned sexual harassment. Not to mention a string of sexual assault claims against drivers, and news of a massive data breach cover-up.

“We had a moral breaking point where internally our team said we want to change,” Uber Canada General Manager Rob Khazzam said at a NewCo Toronto event last week.

Khazzam grew up in Toronto. He quit his job on Bay Street to work on Uber’s eastern European expansion, launching the ride-hailing service in the Czech Republic, Hungary and Romania.

That was in 2014, when he was one of about 900 employees. The explosive expansion that came next, he explained, would be met with serious growing pains.

“In my first 20 months we hired 8,000 people and we launched in 500 cities. We were really focused on that mission. We were focused on that mission almost to a fault,” he said. “I think that Uber, like many companies that go through hyper-growth, had some maturing to do.”

Khazzam told an audience of tech-savvy entrepreneur-types gathered at Uber’s Toronto office that the company’s laser-focus on cultivating “customer obsession” bred resentment among its drivers leading up to 2017.

That year, a report showed only around three per cent of drivers who signed up to work for Uber were on the road a year later. Driver protests erupted, and lawsuits were filed to force Uber to treat them like employees rather than independent contractors.

A class-action lawsuit filed in the Ontario Superior Court of Justice by a Toronto-based employment law firm last year is seeking $200 million in damages for Ontario residents who worked as drivers since 2012. The legal action mirrors a number of similar cases in the U.S.

Khazzam said tension also mounted over a rating system that was heavily biased in favour of riders. He said complaints from riders that were “not always justified” saw a lot of drivers “deactivated,” essentially fired, at the time.

The company was slow to respond to drivers who reached out to the company for support.

“We know that drivers are often targets. Sometimes riders are in a bad mood . . . but we always gave the benefit of the doubt to the rider,” he said. “We didn’t have a genuine partnership with drivers. They are really the lifeblood of our business.”

Last year, as part of the company’s “180 days of change” initiative, Uber rolled out a series of new features, ranging from in-app tipping to 24-hour phone support. The aim was to build goodwill, better communication, and make the job less stressful.

The rebalancing act, led by new CEO Dara Khosrowshahi, also involves things like allowing drivers a “personal destination,” so rides will take them towards home at the end of their work day.

Khazzam also spoke about how Uber’s strategy of pushing into new cities, building a customer following, and forcing regulators to react is shifting towards a more gentle, collaborative approach.

“We just forgot to do things like bring people along, and explain to cities what we were doing. It was never like we had the wrong intentions. It was that we never really thought about how we were being perceived,” he said. “Four years ago, Uber may have kind of barged through the door to launch. Today, we really bring cities along.”

Maintaining friendly ties to municipalities will be critical as Uber pursues better integration with city-run transit, electric scooters, and bikes.  

In Toronto, where the company recently invested $200 million to expand its autonomous vehicle research, a 10-person compliance team is said to be in daily talks with city officials. For Khazzam, it’s money well spent to safeguard Uber’s future in his home town.

“We try to really build great relationships and enter markets constructively,” he said. “Uber is eight years old. Like an adolescent or like a puppy, you are going to make mistakes.”

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