Author: bedelman

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Investors asked Kalanick to resign

Mike Isaac’s Super Pumped (p. 344) reports that investors Benchmark, Fidelity, First Round, Lowercase Capital, Menlo Ventures, and others insisted that Travis Kalanick step down — or else they would go public with their request for his resignation, including giving the New York Times their letter requesting his resignation.

Investors’ letter to Kalanick:

Dear Travis:

On behalf of Benchmark, First Round, Lowercase Capital, Menlo Ventures, and others—which collectively owns more than 26% of Uber’s economic stock, and over 39% of Uber’s voting shares—we are writing to express our profound concerns about Uber’s direction and to propose a way forward.

Please know that we are deeply grateful for your vision and tireless efforts over the last eight years, which have created a company and an industry of which no one could have dreamed. Unfortunately, however, [the] series of recent revelations have deeply affected us. . . . [A]ll of these issues are causing tremendous damage to Uber’s brand and threaten to destroy Uber’s value for its shareholders and stakeholders. We believe the issues stem from deep–seated cultural and governance problems at Uber and from the tone at the top. . . . 

We must take concrete steps to address these issues and strengthen Uber’s brand and governance. If we do not adequately address these issues now, Uber’s brand and market share will continue to erode, to the detriment of the company and all of its shareholders, including you.

 . . . With these changes we firmly believe Uber can regain its place as one of the most important companies Silicon Valley has ever produced. We hope you will agree to move forward with us on this path.

“Moving Uber Forward”: Investor Demands

First, you must immediately and permanently resign as CEO. We strongly believe a change in leadership—coupled with effective Board oversight, governance improvements, and other immediate actions—is necessary for Uber to move forward. We need a trusted, experienced, and energetic new CEO who can help Uber navigate through its many current issues, and achieve its full potential.

Second, Uber’s current governance structures, including the composition and structure of the Board of Directors, are no longer appropriate for a $68 billion company with over 14,000 employees. The new CEO must report to an independent Board that will exercise appropriate oversight. . . . Further, as you know, the Holder Report calls for the appointment of additional independent Board members. To that end, you should fill two of the three Board seats you control (retaining one for yourself) with truly independent directors who comply with the Holder Report’s recommendations for qualification for service. . . . 

Third, . . . [y]ou should support a board led CEO search committee, with an independent chairperson, and the inclusion of a representative of senior management and a representative of the driver community. . . . 

Fourth, the company should immediately hire an adequately experienced interim or full–time Chief Financial Officer. The company has intentionally operated without a properly qualified executive in the top finance [role] for over two years. The investor group broadly believes that this specific executive hire needs to be addressed urgently.

We hope you will agree to move forward with us on this path, and look forward to your response.

Isaac reports Kalanick’s response:

“If this is the path you want to go down, things are gonna get ugly for you,” Kalanick said. “I mean it.”

In response, Kalanick called investors and Uber executives, seeking their support for a shareholder vote.  Finding limited support, Kalanick ultimately resigned.

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Board member mocked women talking at Uber all-hands

Mike Isaac’s Super Pumped (p. 331) reports tense discussions as Uber’s Board of Directors summarized the Holder Report and changes to Uber’s governance. After Arianna Huffington announced a woman joining Uber’s board, board member David Bonderman remarked “I’ll tell you what it shows. It’s that it’s much likelier to be more talking on the board.”  Isaac says “the room froze” and attendees perceived that “one of Uber’s board members [had] just made a sexist comment about women talking too much.”

Travis Kalanick, long in dispute with Bonderman, took this opportunity to have Bonderman removed from the Board. (Isaac p. 332-335)

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Bribed police in Indonesia

Mike Isaac’s Super Pumped (p. 313) reports that Uber managers in Indonesia bribed police in a dispute about location of driver service centers.  Isaac explains:

Instead of moving the company’s hubs, local Uber managers decided to pay off the cops. Every time a police officer would show up, an Uber manager would fork over a cash bribe—usually around 500,000 rupiah, around the equivalent of $35 USD, and the officer would leave. Unsurprisingly, the police became regular visitors.

The US Department of Justice investigated these payments — among others in China, India, and Malaysia — as possible violations of the Foreign Corrupt Practices Act.  In January 2020 the investigation was closed without enforcement action.

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Mass deletion of internal data

Mike Isaac’s Super Pumped (p. 312) reports deletion of internal documents:

Employees were unnerved by mass deletion of internal emails, group chats, and company data, carried out under an internal initiative to “eliminate data waste” throughout all levels of the company. Internally, many believed executives wanted to cover Uber’s tracks, anticipating a subpoena for some unknown future court case.

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Strategic Services Group spied on competitors, politicians, and police

Mike Isaac’s Super Pumped (p. 310) reports that Uber’s Strategic Services Group spied on political figures, lawmakers, and polite in cities where Uber was under scrutiny.  He explains:

They followed people on foot and in cars, tracking their digital activities and movements, and even took photographs of officials in public places.

Isaac reports that Uber SSG also pursued competitors:

SSG operatives recorded private conversations between opponents at DiDi and at Grab, their Southeast Asian competitor. One Lyft executive grew so paranoid about being followed by Uber that he walked out onto his porch, lifted both middle fingers in the air and waved them around, sending a message to the spies he was absolutely sure were watching.

Isaac questions whether these efforts were actually useful for Uber:

It was unclear how much of this intelligence was actionable or even valuable.  Nonetheless Kalanick okayed budgets that spun into the tens of millions for surveillance activity, global operations, and information collection.

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Refused to obtain California DMV permit for driverless testing

In December 2016, Uber began testing self-driving cars in California.  But it failed to obtain a $150 permit from the  California Department of Motor Vehicles — not a clerical error, but instead an affirmative decision not to obtain such a permit because, Uber leaders claimed, their vehicles did not require such a permit.  Thus Uber launched its self-driving pilot without notifying state regulators.

The Verge summarizes:

“In their minds, they really thought they weren’t autonomous,” Jessica Gonzalez, assistant deputy director of public affairs at the DMV, told The Verge. “But we decide what’s autonomous. And under our regulations, it was.”

The core of the disagreement was whether Uber’s vehicles constituted “autonomous vehicle” under California law.  Uber claimed that its cars required a human being in the driver’s seat, hence were not autonomous.  But California law defined autonomous based on technology (“any vehicle equipped with technology that has the capability of operating or driving the vehicle without the active physical control or monitoring of a natural person”, emphasis added), not just usage.

Contrary to Anthony Levandowski’s email to regulators that “We don’t do AV testing,” The Verge also reported evidence that the Uber vehicles were in fact used in autonomous mode.  For one, The Verge re ports its staff riding in the back seat of one of Uber’s self-driving SUVs in San Francisco prior to the public launch in December. The Verge also reports that its reporters sat behind the driver’s seat while the vehicle drove itself.  The Verge explains:

In both cases, the vehicle drove itself for long stretches of the trip, deftly handling intersections, bridges, and pedestrians without human intervention. There were times when a chime would sound, signaling the driver to take control. But other than that, the car was capable of operating “without the physical control or monitoring of a natural person,” as stipulated under the law.

The idea behind these public demonstrations was to prove that Uber’s self-driving vehicles were capable of handling dense urban environments, in anticipation of one day being capable of operating without a steering wheel, pedals, or even a human in the driver’s seat.

 

After the dispute became public, Uber removed its vehicles from California and began testing in Arizona instead.

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Jeff Jones criticized Uber as he left

Jeff Jones, Uber’s president of ride sharing, left the company in March 2017 after just six months.  He had been poached from Target to be Uber’s second-highest executive.  In a statement upon his departure, Jonas criticized Uber’s culture:

The beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber, and I can no longer continue as president of the ride sharing business.

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Kalanick criticized SVP of Communications Rachel Whetstone

Mike Isaac’s Super Pumped (p. 289) reports Travis Kalanick’s harsh words to SVP of Communications Rachel Whetstone.  Under pressure from video showing Kalanick arguing with a driver, Kalanick sought to hire outside PR advisors, telling Whetstone and a colleague “You two aren’t strategic or creative enough to help us get out of this situation.”  Whetstone and the colleague left the meeting and planned to quit, though others later convinced them to stay.

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