Issue of the week: the transit of Travis

The resignation of the Uber boss exposes the limits of Silicon Valley’s “cult of the founder”

“Just a few months ago, Travis Kalanick’s position at Uber seemed impregnable,” said Mike Isaac in The New York Times. Having co-founded the ride-hailing company in 2009, he had pushed it into markets around the world, disrupting taxi industries everywhere and sending the loss-making company’s value to almost $70bn. How quickly things unravel. Uber’s mystique as the most successful start-up of all time has been severely dented by a wave of scandals that last week resulted in Kalanick’s ousting at the hands of disgruntled investors, led by Benchmark and Fidelity. It was a remarkable “fall from grace” for a man once hailed as “a tech visionary”; and Kalanick’s exit raises many questions about Uber’s future. The company not only lacks a CEO, but also a CFO, COO and a slew of other managers. There is a vacuum in the C-suite.

“Of all the silliness in Silicon Valley, the cult of the ‘founder-led’ start-up is the most hallowed and dangerous absurdity,” said Lex in the FT. It took months of drift, and 215 complaints from staff, including serious allegations of sexual harassment, for investors to demand new leadership. And the failure to act earlier has had a compounding effect – hence the management exodus. “Uber’s shtick is supposed to be that it does not employ the drivers; not that it does not employ anyone at all.” Investors might argue that their hands were tied: Kalanick cemented his clout by being Uber’s single biggest shareholder, with extensive voting rights. But their success in finally ousting him is a reminder to other shareholders, particularly in tech companies, that voting rights aren’t everything. “Moral suasion counts – especially when reinforced by financial self-interest.” Many feared that the “flood of negative publicity” had allowed rival Lyft, long an also-ran, to “chip away” at Uber’s position.

Kalanick’s resignation is a “victory for everyone who cares about the way businesses are run”, said The Guardian. It ends a “particularly nasty iteration of runaway executive autocracy”, which included mistreating and underpaying drivers, bullying reporters and even illegally accessing a rape victim’s medical records. Still, Uber’s “unbridled appetite for a fight” may not have been dulled. On the contrary, more than 1,000 employees have signed a petition demanding Kalanick’s reinstatement. They may have a point, said John Thornhill in the FT. Amid all the uproar around Uber’s “sick corporate culture”, we shouldn’t ignore the “healthily disruptive impact” the company has had in many markets. If we believe in the “creative destruction” of capitalism, we need entrepreneurs “to challenge settled ways of doing things”. Still, as Kalanick has discovered, there are limits to how far you can go.