SAN FRANCISCO — A year after a string of scandals and allegations that its culture promoted sexual harassment — prompting a movement to #DeleteUber — the company is still struggling with its reputation.
And that’s despite hiring its first chief marketing officer, rapidly adding staff and launching a national campaign, including television commercials, aimed at restoring its image.
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 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.
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.
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.
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.
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.