ITL #227 Entrepreneurs and reputation: the Uber problems of fast-growth start-ups

4 years, 2 months ago


Company founders often struggle with staff management and business reputation issues, with potentially damaging consequences. By Jacqueline Purcell.

Uber CEO Travis Kalanick recently resigned after a long string of scandals. When a company is constantly in trouble, look at the leadership. Founder/co-founder led start-up companies seem to be especially prone to instability and Uber’s string of problems continue to drive its reputation downwards.

Many get it right and become a shining example of innovation, muddling through exponential growth without too much fuss or loss of reputation. Others find the transition to stability a rocky path. Many founders have had no management or leadership training to speak of, despite having the great ability to create something new and useful.

In the UK, SMEs employ over 15.7 million people.  Records show that at the start of 2016 there were 5.5 million private sector business start-ups in the UK. Many may never grow beyond the first stage.

SMEs are a vital, active part of the UK economy.  There is clearly a need to get leadership training and development to founders, co-founders and their management teams before it is too late.

Bewildered stakeholders

Uber employees, fans and followers are said to have become bewildered by  poor decision making, out of control situations and strange behaviour patterns from their leaders and the resultant overflow: negative publicity. Often, when start-up founders recruit professionally trained talent they proceed to tie them up in knots because the founders insist that they do what they are told, rather than what is right or necessary for business success.

Talented managers are often forced out because employees prefer their leadership and the founders get jealous because they alone want to be centre stage, hogging the limelight.  Why do founders employ experts only to micro manage them? Add to that, constant brinksmanship and you have a recipe for disaster. In the worst cases scenarios, we see some or many of the following:

  • Management by feeling rather than fact.  All or nothing swings occur with very little moderate behaviour. Fact and feeling need both to be considered but in appropriate ratios.
  • Paranoia sets in and spy networks are created within the company so that management can receive feedback on ‘what’s really going on’. Spies are rewarded. Lies that reinforced what the founders are already thinking are especially welcome.
  • Promoting only those who say nice things about, and to, the founder or co-founders. Flattery can soon lead to humiliation. The Emperor’s New Clothes.
  • Promoting those who smile and laugh a lot. You get promoted if you always appear extraordinarily happy to be in this company but not so the hard workers who form the skeleton of the company. They are viewed as boring.
  • Kangaroo courts are established. In the absence of proper HR policy and standards; legislation to protect employees, unfair practice exists and the co-founders and their sycophants become judge, jury and executioner without employees having any chance of a fair hearing. Many employees report resultant mental and physical health issues with long periods of recovery needed after repeated abusive onslaughts.
  • Establishing key performance targets such as KPIs but when employees reach them – no  reward, only a higher set of performance targets.  This makes a mockery of targets and demotivates employees. Trust in management is eroded.
  • Management by talking a lot. Listening becomes ‘one-way’. Insisting that employees listen to founders because after all, ‘we pay you and we know best’. Very soon management lose their listening skills altogether and head for dictatorship.
  • Ego driven publicity that never mentions the team effort – only the co-founders. ‘Yeah, we are super humans and the employees, ah they have a salary as reward. We alone are the creators of all you see’.
  • Management by informal and uninformed family members/friends telling co-founders what they think the company should be doing.My girlfriend wants us to open an office in L.A. `cause she likes it there”.
  • Bully tactics within and then bully tactics applied to other stakeholders or partners. Weekly management meetings where managers are bullied and ‘squeezed like lemons.’ So they in turn, often feel pressured to pass on the same bully treatment to their teams. A cascade of negative behaviour ensues and a bully culture starts to dominate, starting within and then outside the company.
  • Male dominated groups with women added as decoration only. The one who wears high heels and is ‘made up’ to the maximum gets promoted because: ‘She makes our pictures look good. I look like James Bond when we go to client meetings’.
  • Employing only the young and good looking. ‘Free of our parents/caregivers at last. Now we do exactly want we want. We will never grow old. Our image must show that we are a young sexy company.’
  • No training culture, a ‘just do it’ ethos. Requests by employees to bring in an outside trainer or consultant are met with ‘Nope, we will do it ourselves, as we go along. So what if it is a disaster, we can go for bravado drinks and laugh about how amazing the mess was.’
  • Management by experimentation. We will just experiment as we go along. Those that do not fit the mould are said to ‘not have the right DNA’. Ergo, dispose of them swiftly. Find a way to erase their memory, trash any goodwill they have, remove the ‘DNA offender’ immediately.
  • Disruptor culture start which cannot then conform. Many start-ups are disruptors, often on the thin edge of the law or actively breaking the law in all, or some, countries. Many make money because they operate outside the law.  The truth is that once the start-up starts to grow, it can no longer exist as Peter Pan – the boy who never grew up. Start-ups must conform to some degree. That is a hard-to-impossible transition for many.
  • Lack of understanding about the need for meaningful Public Relations. Public Relations and communication gaps add to the the lack of substantial leadership in decision making, leading to image and reputation loss, usually followed by costly and embarrassing crisis management. A skilled PR leader is needed to ensure stability and best practice behaviour.

That said, compassion is called for. Many founders/co-founders ‘don’t know what they don’t know’ and being flattered at the inception of a new project makes it seem that they have conquered the world. Parents, care givers, mentors or friends will say: ‘I always knew you were a genius. Now your time has come. I am so proud of you.’

Such validation is intoxicating and can also become toxic. As we have all seen in the recent UK election, hubris is ultimately followed by nemesis.

Disaffected ex-employees

Employees that leave the founder/co-founder-led enterprise could still be an asset; many were customers as well as staff members. But the experience leaves them so shell-shocked that they never stay in touch or pass back that great contact that could boost sales or awareness.  

They ‘unlike’ you on social media and many find ways to promote distrust of your achievements. ‘Hey… what is a leader if there are no gung-ho followers only employees faking it so that they continue getting a salary cheque?’ Even one ex-employee can damage a company irreparably through legal and/or social media means.

The solution is to get proper training in leadership. Understand how to lead and examine the consequences of rash actions and brinkmanship behaviour, both of which create anxiety for the team. Uncertain leadership tactics may be good for ‘drama at work’ but very quickly become draining as employees leave for a stable company where they can achieve and get on with their job without a soap opera every day.

Where were the advisors?

Many founders now report that, on reflection, they are haunted by their treatment of their employees. ‘It felt like I was doing the right thing, but now I know that I was dead wrong and I cannot undo it except to say sorry.’ One of my questions on this Uber debacle is, where were Uber’s high-profile advisors while these problems unfolded?

Uber should commission a case study on what they have learned and publish it, so that we can see how many of points 1-16 were part of the dramatic exit of so many, including the CEO.   

However, for the case study to have any value or integrity whatsoever, it must be conducted by an independent outsider.

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The Author

Jacqueline Purcell

Jacqueline Purcell is an IPRA Board Member and an independent consultant for founder led, fast-growth businesses.

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