Experts: Uber faces daunting challenge without Travis Kalanick
(Photo by Steve Jennings/Getty Images for TechCrunch) SAN FRANCISCO, CA – FEBRUARY 05: Winner Travis Kalanick of Uber collects the award for Best Overall Startup of 2014 at the TechCrunch 8th Annual Crunchies Awards at the Davies Symphony Hall on February 5, 2015 in San Francisco, California. (Photo by Steve Jennings/Getty Images for TechCrunch)
SAN FRANCISCO — After months of turmoil, Uber’s investors decided the company could no longer live with Travis Kalanick, the embattled CEO whose pugnacious vision built an empire and shaped the future of transportation. Now Uber faces what may be a tougher question: Can it live without him?
The surprise leadership shakeup marks a major turning point for Uber as the $70 billion company works to reform its aggressive culture and lay the foundation for an eventual IPO. Some industry watchers Wednesday cheered Kalanick’s departure as the necessary culmination of months of scandal that have left the company’s image tarnished and led to an exodus of top-level talent. But others felt a sense of foreboding, as they wondered if the company could continue its innovation streak without Kalanick at the helm.
“There had to be a sacrificial lamb,” said Robert Bies, a professor of management at Georgetown University’s McDonough School of Business. “This is an organization that is a great success story but filled with lots of bad news, and somebody had to take the blame.”
Kalanick resigned Tuesday, forced out by investors a week after taking a temporary leave of absence. The shocking move capped four months of near constant controversy for the ride-hailing startup. The turmoil started with a February blog post written by a former Uber engineer who claimed the company did nothing when her manager sexually harassed her. Similar accusations then began to pile up, revealing an aggressive, freewheeling company culture that Uber’s top executives admitted needed to change. Following two outside investigations, Uber fired 20 employees and agreed to reform everything from its drug and alcohol policy to its board structure. But it was not enough — and pressure mounted for changes at the top.
Rather than battle the investors who wanted him out, Kalanick said in a statement he resigned so “Uber can go back to building rather than be distracted with another fight.” But Kalanick retains his board seat and majority stake in the company, suggesting he could continue to wield considerable control over the world’s most valuable startup.
Early Uber investor Bradley Tusk of New York-based Tusk Ventures was up reading a book on his phone at 1 a.m. Eastern Time when he saw a news alert announcing Kalanick’s departure. Tusk said he was immediately was gripped with worry — both for the company he has a significant stake in, and for the man he’s worked closely with for the past six years.
Not only did Kalanick build a global empire and upend the taxi industry, he created a service so ubiquitous that its name has become a verb — an honor that gives Uber a place of distinction alongside Google in Silicon Valley lore. Removing Kalanick from Uber’s helm is a huge risk, Tusk said.
“It’s one of those moves that will quiet critics, will win some short-term praise and maybe will even work for the next few years,” he said. “But if you look up in 10 years, if Uber is not a $500 billion company and is not radically dominating the way people get around, it’s probably because of this one decision.”
The wheels of Kalanick’s ouster started turning Tuesday, when Uber stakeholders with Benchmark drafted a letter demanding that he step down, according to an Uber investor with knowledge of the situation who asked not to be named. The Benchmark team reached out to other investors, and got supporters from Menlo Ventures, First Round Capital and Lowercase Capital to sign on, before calling Kalanick to give him the news.
Kalanick initially fought back, determined to survive the coup, the person said. But after Kalanick spoke with other members of his board, he realized he had lost all support. About five or six hours after the first phone call, Kalanick agreed to resign.
While Kalanick likely could have fought the ouster and won — he and co-founder Garrett Camp and the company’s first employee, Ryan Graves, together hold a majority of board votes — he seemed to realize how damaging such a fight would be, the person said.
There was no specific incident over the past week to make investors decide Kalanick had to go, the person with knowledge of the situation said. Instead, stakeholders decided running a company in limbo — with a CEO on an indefinite leave of absence and a handful of executives heading the company — wasn’t tenable.
Now Uber, which was already hunting for a chief operating officer to serve as Kalanick’s second-in-command, will shift gears and launch a search for a new CEO. In the meantime, the company will continue to be run by the 14-person leadership committee put in place last week. That team includes chief technology officer Thuan Pham, chief human resources officer Liane Hornsey and new senior vice president of business David Richter, Uber confirmed. But many of Uber’s top positions — including chief financial officer, senior vice president of engineering and chief marketing officer — remain vacant following a string of high-level departures, lending increased pressure to the search for a new leader.
Industry watchers on Wednesday suggested everyone from former Disney COO Thomas Staggs to former Yahoo CEO Marissa Mayer as possible replacements. Kalanick likely will have significant say in who ends up filling the role, Bies said. By resigning as CEO but retaining his board seat, Kalanick has set up the potential for a “power game” to be played between him, his fellow board members and the new CEO, he said.
“He’s still there. He still has influence,” Bies said of Kalanick. “So it’s not over yet.”
Other industry experts suggested Kalanick might even return as CEO, much like Steve Jobs returned to the helm of Apple in 1997 after more than a decade away.
Despite the controversies that have dogged Kalanick, Uber’s investors and board members had positive things to say about him Wednesday. Director Bill Gurley of Benchmark tweeted “very few entrepreneurs have had such a lasting impact on the world.” A statement issue by the board as a whole called Kalanick’s resignation “a bold decision and a sign of his devotion and love for Uber.”
Marlene Williamson, CEO of Watermark, a Silicon Valley organization dedicated to women in leadership, said not only will Kalanick’s resignation help Uber get back on track — his departure will have ramifications for other Bay Area tech companies struggling with their own issues of gender bias and sexual harassment.
“It gives everybody an opportunity to examine their own environment and say are we the best we can be?” she said. “It will definitely continue to send a message.”
Staff writer Patrick May contributed to this report.
How one woman’s blog post led to the fall of a Silicon Valley titan
Four months after one woman’s complaint of sexual harassment at Uber, CEO Travis Kalanick is forced to resign. Here’s a look at how events unfolded:
Feb. 19 — Former Uber engineer Susan Fowler Rigetti publishes a blog post detailing alleged sexual harassment, which goes viral. Kalanick launches an investigation.
Feb. 22 — A report by The New York Times claims Uber managers groped, yelled at and threatened employees.
Feb. 23 — Google spinoff Waymo sues Uber, claiming the ride-hailing company stole its self-driving car technology.
Feb. 24 — A second former Uber employee blogs anonymously about “chauvinistic, racist and homophobic” attitudes she says she experienced there.
March 3 — Another former Uber engineer, Keala Lusk, publishes a blog post complaining of sexism at the company.
March 3 — The New York Times reveals Uber has been using a tool called Greyball to evade law enforcement.
March 19 — Uber’s president of ride-sharing, Jeff Jones, quits abruptly.
May 26 — Kalanick’s mother, Bonnie Kalanick, dies in a boating accident in Fresno.
May 30 — Uber fires Anthony Levandowski, the head of its self-driving car program and the engineer at the heart of the Waymo lawsuit.
June 6 — Uber fires 20 employees over complaints of sexual harassment, bullying and other unprofessional conduct.
June 7 — Uber fires exec Eric Alexander after Recode reports he obtained the medical records of a passenger who was raped by her Uber driver.
June 8 — Recode publishes an embarrassing leaked email from 2013, in which Kalanick weighed in on everything from workers having sex with fellow employees, to puking, while on a business trip to Miami.
June 12 — Emil Michael, Uber’s senior vice president of business and a close confidant of Kalanick, leaves the company.
June 13 — Kalanick takes a leave of absence. The same day, Uber reveals some results of an investigation into its company culture.
June 20 — Kalanick resigns.