- Uber CEO Kalanick Relinquishes Power After an Investor Mutiny
Travis Kalanick has resigned from his job leading Uber Technologies Inc., giving up on his effort to hold onto power as a torrent of self-inflicted scandals enveloped him and the global ride-hailing leviathan he co-founded.
Pressure from investors, who’ve poured more than $15 billion into a company that has burned through billions, ultimately did what the board could, or would, not: it convinced the 40-year-old chief executive to step aside. Five of Uber’s major investors, including Fidelity and Benchmark, asked Kalanick to step aside in a letter to him entitled “Moving Uber Forward,” according to people familiar with the matter.
Kalanick, who grew Uber’s bookings to $20 billion last year, has played a starring role in most of its controversies.
He called the company “Boob-er.” He argued with a driver about pay in a video published by Bloomberg. He’s said to have questioned whether a female passenger had been raped by a driver who was convicted of the crime in India. Kalanick co-authored corporate values that included “Let Builders Build, Always Be Hustlin’, Meritocracy and Toe-Stepping, and Principled Confrontation.” Uber now plans to scrap many of those tenets on the advice of former U.S. Attorney General Eric Holder, who just concluded an investigation into the cultural failings of a company built in Kalanick’s image.
“I love Uber more than anything in the world and at this difficult moment in my personal life I have accepted the investors request to step aside so that Uber can go back to building rather than be distracted with another fight,” Kalanick said in a statement. He will remain on the board of directors, Uber said separately.
The campaign to convince Kalanick to step aside couldn’t have come at a more painful time in his life. His mother died in a freak boating accident in May that severely injured his father. Benchmark partner Bill Gurley tweeted: “There will be many pages in the history books devoted to @travisk – very few entrepreneurs have had such a lasting impact on the world.” Representatives for Fidelity and Benchmark didn’t immediately respond to emailed requests for comment outside of normal business hours.
Kalanick began an indefinite leave of absence on June 13 and left the day-to-day management of the company to a committee of 14 top executives. Regional operations heads continue to oversee much of the company’s business.
Uber’s been searching for a chief operating officer. With Kalanick’s departure, the company is now also looking for a chief executive officer–a far more desirable position for a business leader. Whoever takes the helm will have to plug a leadership vacuum. Uber needs to hire a COO, an independent board chair, a chief marketing officer, and a general counsel. Many of the company’s top executives were promoted internally after their bosses left, including heads of business, policy and communications, and product.
Kalanick’s closest confidant Emil Michael was ousted by Uber’s board following Holder’s recommendations. Like Kalanick, he was tied to the mishandling of an Indian rape case and attended an outing to a karaoke bar in South Korea that triggered an HR complaint.
This month, the company shared the recommendations of Holder’s law firm. More than 20 people were fired as part of a separate probe by another firm into sexual harassment, discrimination, retaliation, and other human resources complaints.
Despite recent turmoil, Uber’s business is growing. Revenue increased to $3.4 billion in the first quarter, while losses narrowed — though they remain substantial at $708 million. Kalanick remains a paper billionaire given his stake in the company, with a net worth of $6.7 billion according to the Bloomberg Billionaire’s Index. Uber itself has been valued at $69 billion.
And there’re signs the company’s willing to give in. It’s sought to head off a defection of drivers by adding a function to its app that lets customers provide tips, a feature offered by U.S. rival Lyft Inc. Kalanick was against letting riders tip, calling his opposition “principled” since he believed restaurants and taxi companies use tips to underpay their workers. Now, in Kalanick’s absence, the company is trying to take a new tack.
In a statement about Kalanick’s resignation, Uber’s board of directors said: “This is a bold decision and a sign of his devotion and love for Uber. By stepping away, he’s taking the time to heal from his personal tragedy while giving the company room to fully embrace this new chapter in Uber’s history.”
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