Why Uber's Latest Fight Could Get All Sides Hurt

Uber Technologies Inc. has been plagued for months by a steady drumbeat of bad news. Allegations of sexual harassment by employees, a federal probe into software designed to bypass regulators and a lawsuit involving Alphabet Inc.’s Waymo unit led to co-founder Travis Kalanick’s departure in June. The latest challenge is a lawsuit against Kalanick by Uber’s largest shareholder, the venture capital firm Benchmark. The case comes at a perilous juncture for the ride-hailing company. It also signals an end to the blank check on behavior that venture firms have long given startup founders like Kalanick.

Though Kalanick relinquished the CEO job two months ago, he has refused to relinquish two of the three board seats he controls. Benchmark sees Kalanick as a toxic force at Uber and holds him responsible for its cultural failings, detailed in a secret report compiled by former U.S. Attorney General Eric Holder. Benchmark, which holds a 13 percent stake in Uber, spearheaded Kalanick’s ouster after the board allowed the embattled co-founder to take a leave of absence. Kalanick says in court papers that Benchmark pressured him to resign and merely "suggested that he should agree to limit his discretion in filling those seats.”