Uber Technologies Inc CEO, Travis Kalanick
Uber Technologies Inc Chief Executive Travis Kalanick,
co-founder of one of the most influential technology companies of its
generation, resigned on Tuesday under pressure from investors after a string of
setbacks.
Kalanick's departure caps a tumultuous period for the
world's largest ride-services company that has revolutionized the taxi industry
and challenged transportation regulations worldwide.
The resignation sent shockwaves through Silicon Valley and
leaves Uber's board of directors with the problem of finding a dynamic leader
who also has a steady hand needed to heal Uber after a bruising six months.
"The person who still best personifies Uber's potential
is the person who left Tuesday night," said Bradley Tusk, an Uber investor
and adviser. "But it's not like he really could stay without it being
brutally bad for the company."
Kalanick's pugnacious style largely defined Uber's approach
and helped it become a transportation colossus valued at $68 billion, the
largest private firm backed by venture capitalists in the world.
But that brashness has also been blamed for a string of
scandals this year, from the unearthing of a culture of sexism and bullying at
Uber to a U.S. Department of Justice federal investigation and a high-stakes
lawsuit filed by Alphabet Inc's (GOOGL.O) autonomous car division, Waymo,
that threatens Uber's self-driving car ambitions.
"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 an email to employees
that was seen by Reuters.
Kalanick's departure as CEO widens an already gaping hole at
the top of Uber which has no chief financial officer, head of engineering or
general counsel at the moment. For now, 14 people who reported to Kalanick are
running Uber.
It is not clear who will be Uber's new CEO, but the next
leader will likely be tasked with making the company profitable and paving the
way to an initial public offering, said executive recruiters.
"They need someone who is willing to walk into this
mess, and be the single adult in this room for awhile until the rest of the
executive team is in place," said Steve Nilsen, a partner at executive search
firm Boyden.
The pursuit of a CEO puts the more than three-months-old
search for a chief operating officer on hold, according to a source close to
the board. The CEO must be hired first, the person said, and he or she will be
key to figuring out the remaining positions to fill. Uber declined comment.
Facebook Inc (FB.O) Chief Operating Officer Sheryl
Sandberg has been identified as a target in media reports, but a source close to
Sandberg told Reuters she plans to stay at the online social media company.
"TOXIC
CULTURE"
Kalanick, who will remain on Uber's board, will likely have
some sway over the new CEO. He still wields significant power in the board
room, made possible by a dual-class share structure that gives him and key
allies 10 votes per share.
Ultimately, it was some of Uber's main investors who forced
Kalanick out, according to a source familiar with the matter.
Venture capital firm Benchmark, whose partner Bill Gurley is
one of Uber's largest shareholders, plus investors First Round Capital,
Lowercase Capital, Menlo Ventures and Fidelity Investments, all pressed
Kalanick to quit.
A source close to Menlo Ventures, which led one of Uber's
early financing rounds, told Reuters that the firm helped write a letter
calling for Kalanick to step down.
The investors delivered the letter to Kalanick while he was
in Chicago, the New York Times reported, citing people with knowledge of the
situation.
Kalanick's decision "was a surprise to everyone",
a second Uber spokesman said.
In a statement sent to Reuters, the Uber board of directors
said Kalanick's resignation "gives the company room to fully embrace this
new chapter in Uber's history."
Gurley on Wednesday resigned from his influential board
seat, a Benchmark spokeswoman said, signaling the departure of one of
Kalanick's closest confidants. He will be replaced by Benchmark general partner
Matt Cohler.
The board got a second new member on Wednesday in David
Trujillo of TPG Capital, an Uber investor, according to a source familiar with
the matter. Trujillo replaces David Bonderman, a co-founder of TPG who resigned
from the board last week after making a sexist remark during an all-staff
meeting called to discuss the results of an investigation into sexual
harassment and discrimination at Uber.
U.S. Attorney General Eric Holder led that investigation,
which concluded that Kalanick's authority should be reduced and that board
oversight and independence should increase.
Uber hired Holder's firm Covington and Burling to look into
its culture and workplace practices after a female former employee, Susan
Fowler, publicly accused the company of sexual harassment. In addition, Uber
fired 20 employees for incidents involving discrimination, sexual harassment
and other bad behavior earlier this month.
Uber "is the very definition of a toxic leadership
culture" and Kalanick "set the tone", said Jason Hanold, chief
executive officer and managing partner at human resources executive recruitment
firm Hanold Associates.
Following the release of the Covington report, Kalanick said
last week he would take a leave of absence to grieve for his mother, who died
recently in a boating accident that also seriously injured his father, and to
work on his leadership skills.
"Uber couldn't make a credible claim that it was
committed to the changes it has to make if he was hovering in the wings,
waiting to return as CEO," said Erik Gordon, a technology and
entrepreneurship expert at the University of Michigan's Ross School of Business.
Kalanick and other executives were also criticized for the
handling of a crisis in India after an Uber driver was arrested for raping a
passenger. Though the driver was convicted in 2015, Kalanick and other
executives became convinced the crime was a set up by a local rival, former
employees said.
Eric Alexander, the head of Asian business for Uber, shared
medical records internally, including with Kalanick. Alexander argued they
showed the woman had been assaulted but not raped, people who spoke to him said.
Alexander was fired earlier this month.
Even some of Kalanick's staunchest allies have found fault
with how Uber has been run. In a blog post on Medium published on Tuesday, Uber
co-founder Garrett Camp, who has long aligned himself with Kalanick, called
Uber's problems serious.
"Over the years we have neglected parts of our culture
as we have focused on growth. We have failed to build some of the systems that
every company needs to scale successfully," Camp wrote.
In March, following the start of the Holder investigation,
Uber director Arianna Huffington said on a call with reporters the board had
full confidence in Kalanick.
She repeated that position on Friday in an interview with
Reuters by saying Kalanick's leave of absence was solely his decision.
Benchmark's Gurley praised the CEO on Twitter following his
resignation.
"There will be many pages in the history books devoted
to @travisk - very few entrepreneurs have had such a lasting impact on the
world," Gurley wrote.
(Additional reporting by Subrat Patnaik in Bengaluru and
Douglas Busvine in New Delhi; Editing by David Clarke, Bill Rigby and Edwina
Gibbs)
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