The Washington PostDemocracy Dies in Darkness

Internal data shows Uber’s reputation hasn’t changed much since #DeleteUber

The ride-hailing giant launched a half-billion-dollar marketing campaign last year to rebuild its image. It didn’t pay off.

Dara Khosrowshahi, left, replaced Travis Kalanick as chief executive of Uber as the company attempted to weather scandal ahead of its initial public offering. (Washington Post illustration; photos by Bloomberg News and Getty Images)

SAN FRANCISCO — Uber has a reputation problem.

The ride-hailing giant launched a half-billion-dollar marketing campaign last year to rebuild its image. A string of scandals, including the collection of fares during a taxi strike, had prompted a movement to #DeleteUber, and there were allegations that its culture promoted sexual harassment. It hired its first chief marketing officer, rapidly added staff and launched a national campaign, including television commercials, aimed at restoring its image.

It didn’t pay off.

Uber’s metrics, based on a mixture of internal tracking tools and external polling firms, have recently placed brand sentiment near the same lows measured in the depths of its crisis, according to multiple people familiar with Uber’s market research data who spoke on the condition of anonymity because they weren’t authorized to discuss it publicly. The company obsesses over those metrics, the people said, because it closely tracks Uber giving up market share to rival Lyft.

As Uber’s reputation has continued to struggle — and taken a toll on revenue growth — the company made sweeping changes to streamline its marketing efforts and trim costs over the summer. Last month, in a curt video conference call, it laid off 400 employees who were largely responsible for helping improve its external image.

In Uber’s filing before its initial public offering in May, it detailed the need to maintain and enhance its brand and reputation as critical to the company’s future success.

“We have previously received significant media coverage and negative publicity, particularly in 2017, regarding our brand and reputation, and failure to rehabilitate our brand and reputation will cause our business to suffer,” Uber said in its stock market filing.

Uber’s brand dilemma complicates its already rocky start as a public company. Uber is now worth $55 billion, more than 40 percent less than the high end of its projected price tag before it went public. Investor pressure to make money has heightened as Uber reported its largest quarterly loss ever — $5.2 billion — earlier in August.

The Post's Geoffrey A. Fowler took an Uber with Dara Khosrowshahi, the new CEO who took over after Travis Kalanick's rocky tenure. (Video: Jhaan Elker, Erin Patrick O'Connor, Geoffrey Fowler/The Washington Post)

Uber rang in its IPO with champagne and mimosas. Then the hangover began.

The need to ease investor concerns has triggered belt-tightening, including the layoffs, a hiring freeze in engineering and even a ban on “workaversary” balloons, according to employees and correspondence reviewed by The Washington Post. That, in turn, has resulted in a loss of the magic that once came with working at the unicorn, current and former employees say. Now, employees say they are treading on eggshells, waiting for the next shoe to drop.

Uber declined to make chief executive Dara Khosrowshahi or other executives available for interviews.

Uber’s attempt to revamp its image following a crisis shows the potential limits of a company’s ability to win back consumers — no matter how much money it spends. It joins other companies that have struggled with varying success to restore their brands, including United Airlines after a passenger was forcibly removed from a flight, Chipotle after a food poisoning outbreak and Samsung after faulty batteries began exploding in its Galaxy Note 7 phones. Some of those have recovered better than others.

Brand reputation problems immediately place companies in danger of losing market share to competition, said Charles Lindsey, an associate professor in the University at Buffalo’s School of Management who focuses on consumer behavior and brand reputation. Whenever a company faces these types of public struggles, it can trigger consumers to say, “Oh, here we go again. Is this a company that I trust? Is this a company that has a good business model?” he asked. “And maybe you start thinking about the competition.”

Uber’s core ride-hailing business has never been profitable, as the company instead poured incoming cash into expansion. Adding financial pressure is rival Lyft, which nearly doubled its market share to as much as 40 percent over the past two years, according to its stock market filing. The companies had been locked in a fierce price war to win customers in the lead-up to their respective IPOs, offering steep discounts to attract passengers.

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Lyft’s biggest gains came in the wake of the #DeleteUber movement, which started with accusations that Uber disrupted a taxi strike and spread as allegations of Uber’s toxic “tech-bro” culture emerged.

Then-CEO Travis Kalanick was ousted and Khosrowshahi, the former chief executive of Expedia, was brought in to clean up the company’s reputation and prepare it to go public.

Uber uses internal tracking tools that gauge brand sentiment in real time and tracks data from outside polling firms, according to former employees who spoke on the condition of anonymity because of separation agreements with the company. It relies heavily on customer email surveys and in-app pop-up questionnaires, which help it measure the all-important level of consumer trust in its brand.

While that measure fell steeply during the #DeleteUber fallout, it recovered some last year. It fell again around the time of the IPO and after it, prompting consternation inside the company, according to these people.

These people attributed the reputational declines to a swarm of negative publicity stemming from driver strikes — timed to coincide with the IPOs of Uber and rival Lyft — that helped draw nationwide attention to the harsh working conditions and low pay of ride-hail drivers. That continued a bad cycle of media coverage, including a disappointing IPO and big losses. Just this week, Democratic presidential candidate Pete Buttigieg joined a demonstration outside Uber’s San Francisco headquarters pushing for a state bill to reclassify gig workers as employees rather than independent contractors.

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Even before that, investors and longtime company observers worried the new CEO spent too much time apologizing for Uber’s past mistakes, inadvertently drawing further attention to its problems without a coherent marketing strategy to help it emerge with a new story.

“Brand damage and sentiment is one of the final factors in somebody’s decision” to use the app, said one of the former employees.

While the company tracked its brand reputation before its scandals, the company afterward weighted it so heavily that it may have come at the expense of a broader strategic vision, some of the people say. Senior executives have paid close attention to the company’s reputation and image over the past few months, according to the former employees, especially given Khosrowshahi’s charge to turn the company’s image around.

Uber stocks went public May 10 after the ceremonial bell-ringing at the New York Stock Exchange. Present was chief executive Dara Khosrowshahi. (Video: Reuters)

Around the time of Uber’s IPO and in its wake, the company faced criticism regarding its treatment of drivers and the safety of using the service. Its past cultural woes were again examined. A driver strike gained some traction. Hard partying by some employees as the company went public, The Post reported, triggered bad memories of an Uber many thought had been left behind.

The stock price fell precipitously.

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A few weeks after going public, and after Khosrowshahi saw that Uber’s reputation wasn’t improving, he announced the company would combine its marketing, communications and public policy teams in an effort to create a “consistent, unified narrative” about the company.

That meant putting longtime Uber stalwart Jill Hazelbaker in charge. When the new senior vice president of marketing and public affairs assumed her new role, she introduced herself with a team-wide email saying she had been appointed by Uber to reach “the best of its possibilities,” former employees recalled. She sent regular emails to lay out progress on restructuring, too.

“Something about that wording made us all think ‘layoffs,’ ” said one of the former employees.

Uber said that Hazelbaker wrote in her introductory email that she is "excited about the enormous opportunity we have ahead of us.”

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On July 29, hundreds of employees — many focused on strategic marketing meant to build the company’s external reputation — received a cryptic email asking them to call into a 9 a.m. video conference. Hazelbaker appeared on the screen and acknowledged it would be a tough day.

“If you’re on this call, your position is no longer needed at Uber,” she told them in comments that lasted roughly 90 seconds, according to multiple former employees. As she disappeared from view, a human resources representative took over. It left those laid off stunned. One former employee described it as almost “inhuman.” Employees questioned the methods at an all-hands meeting the next day.

Khosrowshahi said at the meeting the company had wanted to act “very, very quickly” to right its approach to marketing, which suffered because messaging diverged from location to location. “All of the various local players and teams expressing Uber in that uniquely local way started to become a weakness because we weren’t talking with one voice as to what Uber was and what Uber meant,” he said, according to excerpts of his comments reviewed by The Post.

In an email viewed by The Post, he said that many teams were too large, creating overlaps that could lead to mediocre results. It’s “critical that we look at the big picture, admit when we aren’t where we need to be as a company, and, most importantly, get back on track,” he wrote, saying that while the company had grown quickly, many felt it was slowing. “So, put simply, we need to get our edge back.”

A person familiar with the company’s thinking who spoke on the condition of anonymity to discuss sensitive matters said Uber took its approach to the layoffs based on best practices to minimize rumors and prevent employees from agonizing over whether they would be affected.

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Employees were summoned that day to turn in their equipment, have their laptops wiped and say their last goodbyes. One former employee downloaded the Lyft app for a ride the next day, calling it “petty revenge.”

Since then, employees have noted that the company seems to have continued its cultural shift from its heady start-up days, instead focusing on pleasing investors.

Chief Financial Officer Nelson Chai said in a companywide email this month that Uber would no longer give out employee anniversary balloons, a Silicon Valley tradition, opting instead for stickers. He cited the $200,000 the company was spending annually on balloons, applauding an employee for bringing it to his attention. He also noted the additional benefit of being more environmentally friendly.

Uber also recently implemented a hiring freeze for some U.S. and Canada engineers. And some engineers are longing for the days of Kalanick’s leadership, with a handful leaving for his new start-up, Los Angeles-based CloudKitchens, which connects restaurateurs with shared kitchen spaces for rent.

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“Across engineering, they want to work for Travis again,” said an employee who spoke on the condition of anonymity because they were not authorized to speak publicly about the company.

Engineers aren’t the only ones. Some early investors who are friendly with Kalanick also think he should return to the helm of the company.

“At this point, the market might be receptive to a change at the top,” said early Uber investor Bradley Tusk, who also worked as a political adviser for the company and has been harshly critical of management, though he stopped short of advocating Kalanick’s return.

Kalanick declined to comment through a spokeswoman.

Jason Calacanis, an early investor in Uber, called publicly for Kalanick to return on Twitter this month. He acknowledged the mistakes the company had made.

But, he tweeted, “it’s also clear that @travisk is the leader who built the company to true greatness. It’s time we discuss bringing @travisk back — just like #stevejobs rejoined @apple (& the company surged again).”

He added: “#thereturnoftheking.”