Lessons from Uber

Last year I wrote an article for Inc. magazine about why startup leaders need to develop their interactive ‘soft’ skills to be successful. Last week, Uber demonstrated why such skills are even more necessary today.

In between that article and the Uber implosion, something happened that gives me even more perspective on soft skills and hard jobs – I started my own startup. Moving from being a tenured dean of a communication school, to launching a new venture called The Center for Third Space Thinking has given me a lot more empathy (not just sympathy) toward company founders, as well as more insight as to why Uber-type situations occur.

Whatever factors provoked the meltdown, as Farhad Manjoo said in his New York Times article on Uber, this is not a situation confined to one company. It’s systemic.

While wearing my research hat last year, interviewing business people in Silicon Valley, Silicon Beach and elsewhere, I found that VCs and start-ups agreed with our earlier findings that there are five essential attributes that all companies need to succeed in our digital, disrupted world: adaptability, cultural competence, empathy, intellectual curiosity and 360-degree thinking (parallel to the ‘STEM’ acronym, collectively I call them ‘ACE IT’).

Business leaders also insisted that those attributes are needed by firms large as well as small. Long established companies can afford to swap out and replace a poor performer who has empathy and adaptability issues, whereas a start-up with only six employees cannot. Great. Research concluded, hypotheses confirmed.

Soon thereafter I decided to take the plunge and heed the advice of my interviewees in the Bay Area, Beijing and beyond, and we started a Center to…yep, you guessed it, go into the executive education business and provide interactive skills to companies.

Alas, this is precisely when I discovered the important difference between agreeing with a professor’s analysis and conclusions, and writing an entrepreneur a check! Who knew! Talk about learning ‘cultural competence’ about the ways two different communities think.

Once again the business leaders I interviewed agreed. But this time they said I faced two problems with my new product. First, the people who really need the service are the entrepreneurs, but being green they are rarely convinced communication skills are important. And even if they agree, they don’t have the spare cash lying around in the sofa to pay another company to educate them and their start-up teams. They don’t want to take anything away from the immediate survival needs of the company. I get that.

OK, so the baby entrepreneurs don’t necessarily value critical communication skills and can’t afford them.

Not a problem, I said, thinking of those who do get the big picture (360 degree thinking) and who do have big money – the investors.

So surely they will sign up for our Third Space services, either for themselves or their portfolio companies. Great – knowledge and money. What’s not to like?

Alas, here’s the story I heard again and again. With a couple of exceptions, investors in the Valley religiously follow the 95-5% rule, and it’s worked for them really well – only 5% of the companies they invest in will be successful. It’s not worth the hassle to help the other 95% get their act together. The way investors calculate their returns, any payments to the shaky start-ups come right out the partners’ pockets. Who wants that?

However, there is a range in what VCs offer to support their portfolio companies. Andreessen Horowitz for example can provide specialized knowledge for corporate development, technical talent, executive talent, operations and the like. They could decide to bolster the capacities of their experts to provide higher quality interactive people skills and give such skills greater weight in the investment decision. The “Uber challenge” is whether partners will decide that the ROI of providing better interactive skills – affecting reputation, share price, hiring and reputation – is higher than current practices.

According to the professor, the solution is to promote everybody’s common good by encouraging institutions with money to help new owners and partners develop a more inclusive culture and a broader sense of management responsibility – and empathetic efficiency. And according to the start-up guy, we have just the organization that can help!