Is your start-up facing the Uber problem?

'As they grow bigger, the trail of their pioneering success often leaves behind a causticity marked by deficient human resource practices, negligible focus on corporate governance and rife sexism.'
Dhruv Munjal, Nikita Puri and Ranjita Ganesan go behind the scenes at Indian start-ups to gauge the toxicity of work culture.
Illustrations: Dominc Xavier/Rediff.com

Less than a month after chief executive officer Travis Kalanick was shown the door at the company he solely, and so admirably, built, Uber was named the 'most improved brand in the United States among millennials' in a report released by YouGuv BrandIndex, a public-perception research firm that interviews over 1.5 million people every year.

Uber upstaged the likes of Apple, Microsoft and Google, with the latter three failing to make even the top 20.

That the poll was conducted during the first half of the year -- just in time before Kalanick's acrimonious ouster -- obviously helped.

There are reasons why Uber is still so well received: The convenience and utility it offers remain unmatched.

And at its core is a game-changing product that is hugely beneficial for both riders and drivers.

In the eight years since its existence, Uber's valuation has risen to almost $70 billion.

But such dizzying highs have come at a cost.

Uber now finds itself desperately trying to stave off allegations of sexual harassment and questionable trade practices -- a billion dollar start-up looks like it is on the verge of going off in a blaze of terrible publicity.

Uber, over the past year or so, has ably personified the perniciousness of the start-up culture, unearthing a reckless environment where an 'anything goes' attitude -- all in the guise of innovation and disruption, and of course, hyper growth -- has become a new norm.

Uber is not alone, which is not to say that all start-ups embody such toxicity of culture -- several have successfully created buoyant workplaces without compromising on ethical and governance standards.

But some part of this Silicon Valley ethos has percolated through to Indian start-ups as well.

The past few months have seen the co-founders of ,The Viral Fever (TVF), the online digital entertainment company, and ScoopWhoop, the Internet media firm, both get booked, for sexual harassment; an investigation is ongoing in the two cases.

Almost all start-ups pride themselves on an easygoing and malleable work habitat; a unique dynamism seldom offered by larger organisations, which is complemented by enormous learning potential and an informal work hierarchy.

But as they grow bigger, the trail of their pioneering success often leaves behind a causticity marked by deficient human resource practices, negligible focus on corporate governance and rife sexism.

"The problem with start-ups is that they don't realise when this 'cool quotient' goes overboard. They get away with it because they like to portray it as a way of life," says Vikram Kedia, co-founder of ComplyKaro, a service provider that helps companies comply with legal obligations.

Large companies have in place strong human resource mechanisms for the smooth dealing of such issues, and a public relations machinery that works overtime to ensure that these stories do not blow up in public.

Warning letters, withholding of bonuses or performance appraisals are some of the inbuilt penalty instruments used by companies to tackle anything they view as untowardly.

Such robustness is pretty much nonexistent in a start-up.

Culture, especially at the initial stages of the company, is largely driven by the tone set by the founders, notes Bengaluru-based Sharda Balaji, founder of NovoJuris Legal, which works with start-ups, some of which have grown into unicorns.

Several Indian start-ups are attempting to take the Uber route to mega-success, adopting the take-no-prisoners, win-at-all-costs outlook that Kalanick himself extolled during his time at the company. In his own words, he liked to 'hustle'.

When contacted, Uber India said "its spokesperson might not be well placed to comment on the global developments in the company".

A request for an interview with both TVF and ScoopWhoop went unanswered.

Chennai-based Vijay Anand, who in entrepreneurial circles is known by his Twitter handle, The Startup Guy, jokes about how in almost every start-up, founders prefer to dive into the scene with full force, "without stopping for regular showers or anything else".

Google may have invited employees to live at the workplace by bringing in washing machines, but that "approach only works with geeks", says Anand, founder of The Startup Centre, an accelerator for young tech companies.

"In other organisations with young employees, where your workplace is your whole world, it creates a poisonous culture. So when you tell a new employee you like her dress, it makes her awkward because she's not used to socialising at the workplace," says Anand.

This chance example is eerily similar to the scenario a woman walked into when she joined a tech start-up in Bengaluru two years ago.

'He (one of the start-up's founders) flirts with everyone, the receptionist, the waitress at the coffee shop, women from the other companies in the building,' she writes in an anonymous post on Quora.

When she told a colleague that she easily found a place to stay, her new boss responded by saying, 'Oh, everyone is willing to rent out to pretty women.'

"We have very few women co-founders, and usually the first set of employees, especially in tech start-ups, is largely men," says Balaji.

"The picture of six young guys, fresh out of college, working out of an apartment 18 hours a day isn't something that spells 'comfort' for a woman looking for a job."

Such troubles and crude attempts at offsetting intensity are only accentuated by alcohol, which is a feature at parties but more worryingly at work, too.

How does one deal with a tipsy co-worker who passes a loose remark about a female colleague, wonders Balaji.

Ambiguity is a start-up attribute that most employees willfully embrace. But it's the hyper competitiveness and a fixation with speedy growth and valuations that see start-ups sidestep concerns over a noxious work environment.

Sheetal Malhotra, who works at a Delhi-based digital marketing start-up, says that the top brass chooses to remain oblivious to employee concerns or morale as long as targets are met and the influx of funding is steady.

"You are picked on if you don't play along. And if something like casual sexism bothers you, then this is not the place for you," she says.

The pressures don't end there.

Some are even off-loaded for failing to fit into the company's "cultural mix" -- generally those who speak poor English or those devoid of a decorous, urban background.

Such ignorance clearly reflects in start-ups' hiring policy, too.

The ones who comprise the creative force that drives the company are hired from elite B-schools and well-known engineering colleges.

Appointments to the human resource department are generally forced and deemed unnecessary.

"It's like anyone can perform that role, when it is actually a specialised position," says a former employee of a Gurugram-based travel search engine start-up.

According to a 2013 law on sexual harassment, all companies with a workforce of 10 or more must have an internal committee to deal with complaints from women employees -- a mandatory measure that all start-ups do not follow.

But for a new company floated by a 20-something founder who is hamstrung by a paucity of funds, putting in place such measures is much tougher than it sounds.

"When you embark on building a start-up, you don't know if the company will last. You adopt a hire-and-fire policy. You don't even know what it's going to look like after a few months. So these things aren't paid attention to," says K Ganesh, strategic investor and co-founder, GrowthStory.

"But at the same time, that cannot be used as an excuse for such incidents."

Kiran Jonnalagadda, co-founder of Bengaluru-based HasGeek, which organises events for geeks, echoes a similar sentiment. He says start-ups typically have to deal with more fundamental stresses like whether they'll survive until the next quarter.

"Funded start-ups that have several months of runway usually worry about metrics that their investors will want to see, and I've never heard of an investor wanting to hear about fair treatment of employees."

That comes into focus only when bad news hits the press. That is exactly what happened at Uber.

Matt Cohler and Peter Fenton, two venture capitalists from Benchmark, one of Uber's biggest shareholders, asked Kalanick to step down after realising that the company had miserably failed to quell discontent among its various stakeholders -- an unprecedented move given that investors rarely pay heed to internal problems afflicting a company.

In Kalanick's case, with a valuation at stake, they felt necessary to step in and stop the bleeding.

Ganesh says that must change, and workplace conduct must be used as an evaluation yardstick by investors.

"Uber is an eye-opener for the start-up ecosystem. No matter what scale you're operating on, you must define what is acceptable and what is not. Investors must look at this, too."

Some investors, in fact, have been at the receiving end themselves.

Several years ago, when Vani Kola, managing director at Kalaari Capital, sealed a big sales deal, a colleague asked her if she had 'slept with the client', questioning her competence.

"These comments are often dismissed as harmless and they tend to camouflage actual prejudices and deep biases. An organisation's silence signals approval for this behaviour to continue," she says.

At some start-ups, this toxicity has started to tell.

Sushant Reddy, a former Indian Institute of Technology-Bombay student, worked in Silicon Valley before deciding to start AskArvi.com, a chat-driven platform that helps young people pick insurance policies.

He points out that it is harder to attract and maintain employee interest now. They are more detached, less emotional about the success of the company.

A 25-year-old IIT graduate, who worked for a Delhi-based B2B e-commerce company, says that while people worked for 15 hours at a stretch, there seemed to be a lack of direction.

He had experienced a debacle before while working with Mumbai's Housing.com, whose then CEO Rahul Yadav had a series of public arguments with investors.

The company found itself in the doldrums for burning cash, sudden office closures, and rampant reshuffling of employees -- amply illustrating how developing a product is vastly different from running an organisation.

An IBM report earlier this year blamed 'poor corporate governance' and 'entrepreneurial inexperience' for the failure of so many Indian start-ups.

There are some, however, trying to initiate change.

HasGeek, for instance, has a woman CEO. Mahendra Pyati, co-founder of one-year-old AAO Hostels, plans to bring in a woman director and a more experienced CEO to balance the scales in an otherwise youngish organisation.

Jonnalagadda suggests making certifications crucial to business viability.

In the US, the Better Business Bureau and Consumer Reports are consulted before doing business with any new entity, which helps force positive change -- something investors here could do with.

What the start-up sphere perhaps could do with more is greater sensitisation and awareness, which would be a great starting point to turn this broken image around.