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12 min read

    12 min read

    Harry here. With Travis’ departure, there are a lot of unanswered questions for drivers and for Uber employees. One of the most interesting questions will be, how ‘gone’ is Travis really? While RSG can only observe from afar, senior RSG contributor John Ince has been following TK and Uber for years now, and today he has some pretty insightful commentary on the future of Uber and what Travis is up to next.

    senior RSG contributor John Ince has been following TK and Uber for years now, and today he has some pretty insightful commentary on the future of Uber and what Travis is up to next.

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    Uber Founder Travis Kalanick Resigns as C.E.O. [The New York Times]

    Sum and Substance:  Travis Kalanick stepped down Tuesday as chief executive of Uber, the ride-hailing service that he helped found in 2009 and that he built into a transportation colossus, after a shareholder revolt made it untenable for him to stay on at the company. 

    Mr. Kalanick’s exit came under pressure after hours of drama involving Uber’s investors, according to two people with knowledge of the situation, who asked to remain anonymous because the details are confidential. Earlier on Tuesday, five of Uber’s major investors demanded that the chief executive resign immediately. The investors included one of Uber’s biggest shareholders, the venture capital firm Benchmark, which has one of its partners, Bill Gurley, on Uber’s board. The investors made their demand for Mr. Kalanick to step down in a letter delivered to the chief executive while he was in Chicago, said the people with knowledge of the situation.

    In the letter, titled “Moving Uber Forward” and obtained by The New York Times, the investors wrote to Mr. Kalanick that he must immediately leave and that the company needed a change in leadership. Mr. Kalanick, 40, consulted with at least one Uber board member and after long discussions with some of the investors, he agreed to step down. He will remain on Uber’s board of directors. “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,” Mr. Kalanick said in a statement.

    The company, with its co-founder Travis Kalanick, is known for its brash, aggressive approach. That approach has taken a toll. Uber has been trying to move past its difficult history, which has grown inextricably tied to Mr. Kalanick. In recent months, Uber has fired more than 20 employees after an investigation into the company’s culture, embarked on major changes to professionalize its workplace, and is searching for new executives including a chief operating officer.

    … The five shareholders who demanded Mr. Kalanick’s resignation include some of the technology industry’s most prestigious venture capital firms, which invested in Uber at an early stage of the company’s life, as well as a mutual fund firm. Apart from Benchmark, they are First Round Capital, Lowercase Capital, Menlo Ventures and Fidelity Investments, which together own more than a quarter of Uber’s stock. Because some of the investors hold a type of stock that endows them with an outsize number of votes, they have about 40 percent of Uber’s voting power. 

    Mr. Kalanick’s resignation opens questions of who may take over Uber, especially since the company has been so molded in his image. And Mr. Kalanick will probably remain a presence there since he still retains control of a majority of Uber’s voting shares.

    Taking a start-up chief executive to task so publicly is relatively unusual in Silicon Valley, where investors often praise entrepreneurs and their aggressiveness, especially if their companies are growing fast. It is only when those start-ups are in a precarious position or are declining that shareholders move to protect their investment. In the case of Uber — one of the most highly valued private companies in the world — investors could lose billions of dollars if the company were to be marked down in valuation.

    In the letter, in addition to Mr. Kalanick’s immediate resignation, the five shareholders asked for improved oversight of the company’s board by filling two of three empty board seats with “truly independent directors.” They also demanded that Mr. Kalanick support a board-led search committee for a new chief executive, and that Uber immediately hire an experienced chief financial officer.

    My Take:  As an outside observer, the best I can hope to do is to piece together various first person accounts to hazard an educated guess as to what really happened to bring down the mighty Travis from his seemingly invincible perch at Uber. A follow up article in the New York Times, by perhaps the most knowledgeable Uber observer, Mike Isaac, gives an account of two Benchmark partners confronting TK at a hotel in Chicago with a list of  demands. The most significant demand was that he resign by the end of the day. TK initially resisted, and even tried to mobilize his few remaining supporters in San Francisco to engineer a “whisper campaign” to undermine the cabal of insurgents who were trying to force his ouster.

    It’s a tale of high intrigue that befits the unfolding melodrama that we call Uber. My personal take after following TK closely for almost 3 years is that he can’t be trusted. He needed to be replaced if there were to be any hope of Uber surviving in the marketplace. Incrementally, TK squandered away every bit of moral authority he acquired during his ascent at Uber.

    But let’s not start shouting from the rooftops quite yet.  He’s not going anywhere. His influence over the day to day administrative matters will be diminished, but he still will have the final say over any matter of real import for the company. Why? He (along with co-founder Garrett Camp) still control the majority of the voting shares in the company, so he has veto power.

    However, the public perception of Uber has now officially been rebooted. The tipping feature was timed to be in support of that perception. But that feature cost the company nothing. On matters that affect Uber’s bottom line, TK and the board will still wield influence. They’re still hugely influential players in this drama.  It just doesn’t look like that from the outside.

    Uber Fail: Upheaval at the World’s Most Valuable Startup is a Wake-Up Call For Silicon Valley [Time Magazine]

    Sum and Substance: Chaos at the world’s most valuable venture-backed company is forcing Silicon Valley to question its values. On the morning of June 13, Uber employees shuffled into an all-hands meeting at the company’s San Francisco headquarters. They came to hear the results of an investigation that, like many in Silicon Valley, they had been anxiously awaiting for months. …

    … Kalanick’s approach was brazen and nakedly capitalistic. Unlike Google or Facebook, which famously brought in “adults” Eric Schmidt and Sheryl Sandberg to help manage a growing enterprise, Kalanick remained the face of the firm, which he referred to as “Boob-er” in a 2014 interview with GQ because it had made him more popular with women. Traits often ascribed to Steve Jobs–pique, occasional churlishness–were in Kalanick married to the missionary zeal of an engineer who would make the world more efficient if only obstructionists would let him. “He’s a fighter. He is against institutional structures,” Schmidt told TIME in 2015. “He can be disagreeable in that sense that, well, he disagrees.”

    Kalanick’s readiness to fight–with lawmakers, competitors, reporters–was at first an asset. Compared to firms like Google, which flew under the radar for years before rubbing up against regulators, Uber was born into conflict. “Everything this company has almost ever done has been a battle,” says Avi Savar, CEO of Dreamit, a startup accelerator and venture-capital firm. That made Uber successful going up against comparatively sclerotic municipal governments in cities like New York, but also encouraged what some employees have described as a bunker-like paranoia among executives. “When you have a value system that is in some ways a benefit to you in the early days when you’re charging really hard, it can turn into a tragic flaw,” says Stephen Beck, founder of consulting firm cg42. “’Run fast, break things, and we can pick up the pieces later’ is O.K. until it’s not O.K.”

    Technology is advancing so rapidly that, at this point, it is always going to outpace the law, the government or the public’s capacity to fully understand its ramifications. The genie is never going back into its flip phone. How else could history’s most valuable startup, however troubled, emerge from nothing in eight years? Future startups are going to make decisions that will impact the lives of millions, defining the world the way religions and empires used to. iPhones and tweets and more convenient taxis were one thing. But the wave on the horizon now–artificial intelligence, genetic engineering, nanotechnology–will be something else entirely.

    If Uber’s stunning stumble proves anything, it’s that in the absence of any rule makers that can keep up with them, the architects of the new economy–which may be another way of saying, the new world–must hold themselves accountable. And consumers need to be able to trust them to do that well. It’s possible the Valley has never had a trust-testing moment quite like this one.

    My Take: When Uber makes it to the cover of Time Magazine, you know Uber has made it to the mainstream.  Much of this story is a recap of events and information that are already well known to anyone who has been following this melodrama.  But somehow with each retelling, the story gets richer. We get the sense that as drivers we are part of history here.

    We’re not just part of the ridesharing experience, we’re also part of a questioning of the values and practices of an entire tech community. Google, Facebook, Apple, Microsoft, Amazon and now Uber have each profoundly altered the global landscape in their own way. In the process, each of the founders of those companies have become living legends – some with fatal flaws like our very own TK.

    More than 1,000 Uber employees ask for Travis Kalanick to return [Axios]

    Sum and Substance: More than one thousand current Uber employees have signed a letter to the company’s board of directors, asking for the return of deposed CEO Travis Kalanick “in an operational role.” One of its venture capital investors also is chiming in, with a similar message. The letter is the result of a petition that has been circulating since yesterday, through which employees could add their name and comments on the situation. Rather than technically “signing,” they logged into a Google Doc by using their Uber identification credentials. So far, the signatories represent nearly 10% of the company’s estimated employee base (which does not include drivers).

    Below is the full text of the letter to the board, which was provided to Axios by a source under the condition that we not include the names of signatories.

    Board of Directors —

    I’m writing to you today ahead of your scheduled meeting to share the thoughts of over 1,100 full-time Uber employees (and counting) who vehemently disagree with Travis’ resignation as CEO and the associated pressure placed on him to do so by investors and board members alike. In less than 12 hours, these employees have expressed their belief that Travis should return to Uber in an operational role. This magnitude of a response was unexpected and should not be ignored. What started as simple note to my closest co-workers turned into a petition spanning hundreds of offices and teams, and has yet to be seen by a majority of employees. As the folks who’ve actually worked alongside Travis for years to help create Uber from nothing, we are extremely disappointed by the short-sightedness and pure self-interest demonstrated by those who are supposed to protect the long-term interests of our company.

    Yes, Travis is flawed, as we all are. But his passion, vision, and dedication to Uber are simply unmatched. We would not be here today without him, and believe he can evolve into the leader we need. He is critical to our future success. We await your response and look forward to Travis’ return in an operational role.

    There also have been several public Facebook posts in support of Kalanick, including from current Uber employees like Margaret-Ann Seger and former ones like Frederique Dame. Finally, Axios has received a statement from Mood Rowghani, a partner with venture capital firm Kleiner Perkins Caufield & Byers, which is an Uber investor. He appears to agree with the idea of Kalanick retaining an operational role at the company, in addition to just a board seat. It reads:

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    “It would be wrong to conclude from Uber that founder involvement in the companies they create is a mistake. While founders should be held accountable to strong, independent boards and need the support of experienced leadership teams, founder DNA is a precious asset and cannot be under-estimated. It is a founder’s passion, strategic clairvoyance, ability to inspire and motivate employees and relentless pursuit of the mission that enables start-ups to achieve seismic changes against the odds. Founders may not always play the role of CEO but several great companies — most notably Apple and Twitter — that severed all ties to their founders eventually came to regret it.”

    My Take: This petition has TK’s fingerprints all over it. Even if he didn’t orchestrate this effort, he did hire, teach and train the people who have been doing this kind of thing in cities all over the world – organizing political pressure to achieve their desired ends. It’s right out of Uber’s playbook. Uber goes in to a city and tries to intimidate elected officials.

    Here, they’re just directing the effort at a different target – Uber’s board of directors.  This is just one more indication that Uber’s DNA goes very deep. Just because a few directors forced TK to resign, doesn’t mean the brawler in chief has stopped brawling, nor does it mean that he’s gone for good.

    Readers, what do you think of the changes that have unfolded in the last week or so? Do you think all of this turmoil in Uber will be good for drivers, Lyft, both or neither?

    -John @ RSG

    John Ince

    John Ince

    John Ince is a former Fortune reporter and Wall Street banker. He has about 1,000 rides under his belt driving part time for Uber and Lyft.  He’s writing a book about his experiences entitled:  Travels With Vanessa:  A Rideshare Driver Tries To Make Sense of It all - For a sneak peak visit the link above.

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