THE VIEW
Mind the Gap
by

Many start-ups, bulging with endless capital, still lack the nous on how to enforce the ethical values needed to mature

How Uber’s board works together to resolve its current ethical dilemma and repair its badly-bruised reputation will serve as an important example for years to come

PUBLISHED : Monday, 07 August, 2017, 7:31am
UPDATED : Monday, 07 August, 2017, 7:30am

Travis Kalanick, CEO of Uber, has vowed he plans “do a Steve Jobs” and stage a comeback as Uber’s CEO.

Whether or not he can improve the treatment of women in Uber and restore its dominance in the ride sharing market are not two independent goals.

The inability of its investors and board to enforce ethical conduct shows its level of disarray even as they have been seeking a new CEO. The Washington Post reported last week the short list has been narrowed down, to three men.

Discrimination against women is alive and well in Silicon Valley and technology. I know successful female engineers who were told in high school by teachers – even female teachers – they should plan for a career as a secretary.

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From an early age, to start-ups and right up to board level, women are treated poorly in the male dominated, fraternity house atmosphere.

Sexism, ageism and other afflictions of stereotyping are rising to the surface in Silicon Valley and technology like no other time.

One of the reasons is that women are more willing to speak out and militate against sexual harassment and campaign for equal pay. Feminism may be dead as a social movement, but it has evolved into issue-driven battles.

Sexism, ageism and other afflictions of stereotyping are rising to the surface in Silicon Valley and technology like no other time

As more brave women have come forward to share their own tales and experiences from the belligerent environment of the tech world, it is becoming more evident the industry has long-standing, pernicious problems. And everyone in the industry is complicit.

But, today the financial and technological stakes in Silicon Valley are higher than ever. And tech, venture capital and the power and glory of successful start-ups have become mainstream culture.

The Silicon Valley zeitgeist is accurately skewered in the HBO series Silicon Valley. At a valuation of $60 billion, sovereign funds and leading private equity investors have piled into Uber. Yet, they cannot seem to extricate themselves from this embarrassing corporate governance dilemma.

Unlike established corporates with longer histories, start-ups are usually formed with little regard for issues such as political correctness and gender balance. The founders are usually friends or colleagues or classmates – people close and relevant and necessary for starting the business and developing the technology.

There is scant thought for any political sensitivities. Meeting gender quotas in management or at board level is a low consideration.

Start-ups are a high risk for founders, surviving milestone to milestone, month to month.

Today, a new breed of start-up like Uber presents conflicting corporate governance issues. It’s not really a new company since it has been around since 2009. With $6.5 billion in 2016 sales and a $60 billion valuation, it’s certainly not a small operation.

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But, because it is not publicly listed, Uber’s investors treat it like a start-up have indulged a dominant founder’s excesses. They fear that if they lose him that the enterprise will collapse. And with billions of capital tied up, it could one of the biggest failures in VC history.

Meaningful change can only begin at board or investor level. The overarching issue for investors is how tech companies even as big as Uber can cross the chasm into becoming sustainable and successful high growth corporations.

There is scant thought for any political sensitivities. Meeting gender quotas in management or at board level is a low consideration

It used to be that hiring adults – older and more experienced senior managers from IBM or Hewlett-Packard – was enough to convert a start-up with a successful product with structured sales and marketing and product support teams.

It is no excuse that ethics and corporate sustainability have a hard time keeping up with sprawling growth. All of Uber’s institutional investors state they adhere to ethical codes, yet few of them acted to rectify serial sexual harassment and bad boy CEO conduct.

The ability for a young company to cross the chasm from being a small enterprise into a large one remains a constant challenge facing tech start-ups. The initial promise of monopolies like Uber can encourage an investment frenzy. The lure of temporary exclusivity makes it almost worthwhile to ignore or suspend unethical behaviour because the rewards are astronomical.

How Uber’s board works together to resolve its current dilemma will serve as an important example for years to come.

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