Why Uber Should Hire a Female CEO

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Approximately 36 hours ago, Uber’s founder and CEO, Travis Kalanick, resigned after intense pressure from five influential investors that represented 40 percent of the company’s shares.

That it’s a watershed moment for Silicon Valley’s biggest unicorn goes nearly without saying. But could it also serve as a cultural turning point?

Certainly the Valley’s brash bro swagger – the “by any means necessary/take no prisoners/at all costs” vibe, which Mr. Kalanick took to a new level of absurdity- can be alienating and unwelcoming to a diverse employee and customer base. Although voters may not mind adolescent posturing (both men and women voted for a president who unrepentantly bragged about grabbing women by the genitals), it turns out that in business, a great product may not be enough when your corporate culture frightens and disgusts half of your potential customer base.

Now we ask what’s next.

Although Kalanick was forced through the door, he remains a board member who controls the majority of Uber’s shares. If he loves Uber as he claims to do, and wants what is best for the company as he says he does, he should use his power to support a stellar CEO search that targets a strong female executive for the role, and give her the leeway to run the company independently.

This is why.

Women in the C-Suite are good for profits. A Peterson Institute for International Economics study noted that a C-suite comprised of at least 30 percent women translated to a 15 percent increase in profitability, as opposed to companies with none. (It’s worth noting that this same study points out that female CEOs neither outperform or underperform versus their male counterparts). However, it’s likely that having a female CEO (along with board members Arianna Huffington and Wan Ling Martello) would encourage the “pipeline effect” of drawing more women to join Uber’s workforce – and kickstarting that profit expansion in the process.

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There’s other real-world evidence to back this up: In Facebook’s growth and maturation into the social media powerhouse it is today, Sheryl Sandberg’s experience and judgment helped the company navigate the tricky phase of hypergrowth and the transition from a sticky product to one of the most profitable companies in the world. In China, women make up 51% of senior management positions, and lead some of the world’s most powerful companies. China travel powerhouse, CTrip, is helmed by CEO Jane Sun and CFO Cindy Xiaofan Wang, who have led the company to a market cap of $25B (outstripping Expedia by $8B), a staff of 33K, and a 75 percent increase in sales in the third quarter alone. Gillian Tans, CEO of Priceline’s Booking.com, has helped lead that company to a $92B market cap.

A female leader sends a good signal to other women. Great companies are built by great people. To keep up with the company’s hypergrowth, Uber needs to attract and retain the best talent in huge numbers. The dark cloud surrounding Uber from scandal after scandal, particularly around its treatment of women, has earned Uber pariah status among many of the industry’s most talented women, cutting its talent pipeline at precisely the time the company urgently needs it to grow. Earning such a dubious distinction is really quite the feat, particularly given the broader diversity issues in Silicon Valley (just skim this “Elephant in the Valley” research to see the problems at a stark and powerful glance). A recent Atlantic article also sums it up nicely:

“Studies show that women who work in tech are interrupted in meetings more often than men. They are evaluated on their personality in a way that men are not. They are less likely to get funding from venture capitalists, who, studies also show, find pitches delivered by men—especially handsome men—more persuasive. And in a particularly cruel irony, women’s contributions to open-source software are accepted more often than men’s are, but only if their gender is unknown.”

Fortunately, the data also shows that building a gender-diverse workforce is easier with a female leader at the helm, which nurtures both retention and ambition. For instance, 70 percent of women who report to a female CEO say that leader’s reputation influences their decision to stay at the business – and a greater number (29 percent) indicate interest in becoming a CEO when they have a female CEO. Hiring a strong female CEO would send a powerful signal that women are valued in Uber’s workforce.

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Uber needs a restoration of ethics. This is a company that has repeatedly struggled with legal, ethical and moral issues – using Greyball, for example, to evade law enforcement, stealing trade secrets from rivals, violating the medical privacy of rape victims – to highlight just a few. Research from MSCI shows that companies without a strong female component (meaning a female CEO and at least one female board member or a board whose female members exceeds the country average) struggle with 24 percent more governance issues, such as “bribery, corruption and fraud.”

Given Uber’s current legal entanglements, bringing more women into leadership may help bring a more ethical culture to the embattled company.

It will send a clear message that things are about to change – for the better. Uber is taking some big – and well deserved hits – for its business practices. But we all like a good redemption story. Hiring a brilliant, tough, no-nonsense CEO who happens to be a woman would send a smart signal, internally and externally. Within the company, it tells the old guard, “Times are changing and if you want to stick around, you will too.” For everyone else at Uber, particularly those that were uncomfortable with the environment, the message is, “Times are changing – stick around and you’ll be happy you did.” To the Street, the media and those watching from the outside, a hyper-professional and business-like CEO would be reassuring and stabilizing, encouraging turned-off customers to come back and calming investor fears of a plummeting valuation.

Of course, this is not to argue that gender is all that matters. However, given the nature of Uber’s deep, self-inflicted wounds, hiring a strong, independent, female CEO would serve as a fresh new page after a very long, difficult chapter in the company’s history.

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