Uber CEO Kalanick Relinquishes Power After Investor MutinyBy
Five investors said to have called for his resignation
His departure comes after a series of self-inflicted scandals
Travis Kalanick has resigned from his job leading Uber Technologies Inc., giving up 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 officer to step aside. Five of Uber’s major investors, including Fidelity Investments and Benchmark, asked Kalanick to step aside in a letter to him titled “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 many of the company’s controversies.
He referred to his business as “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 “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, led by Benchmark partner and Uber director Bill Gurley, couldn’t have come at a more painful time in his life. Kalanick’s mother died in a freak boating accident in May that severely injured his father. After the CEO’s resignation, 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.” Fidelity declined to comment, and Benchmark didn’t respond to requests for comment.
Uber has been searching for a chief operating officer. With Kalanick’s departure, the company is now also looking for a CEO -- a far more desirable position for a business leader. Whoever takes the helm will have to plug a leadership vacuum. Uber also needs to hire an independent board chair, chief marketing officer and 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 a human resources 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 HR 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 is a paper billionaire thanks to his approximately 12 percent stake in the company, with a net worth of $6.7 billion, according to calculations by the Bloomberg Billionaires Index. Uber itself has been valued at $69 billion.
Kalanick won’t receive severance or other post-employment benefits, said a person familiar with the matter. As is often the case, company executives who depart of their own free will typically walk away with nothing. And many tech businesses, including Apple Inc. and Amazon.com Inc., employ executives at will and don’t offer special payouts in case of a termination or if the company is bought.
Kalanick will retain his stake in Uber, where he exerts significant influence over the company through super-voting shares. He, along with two longtime friends Garrett Camp and Ryan Graves, control much of the board. While the three will stay on as directors, the board approved a plan to recruit more independent directors and a chair to tilt power away from Kalanick. Nestle SA’s Wan Ling Martello is the first such appointment.
Uber plans to fill the board seat left by David Bonderman, a TPG Capital founding partner who resigned last week after making a sexist joke, with his colleague David Trujillo, Bloomberg reported on Wednesday. Trujillo, who was integral in TPG’s 2013 deal for Uber, is expected to help with recruiting as the company tries to fill the many gaps in leadership.
Uber has 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.
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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.”
— With assistance by Anders Melin