Af­ter Travis Kalan­ick’s res­ig­na­tion, can a new chief move Uber for­ward?

Los Angeles Times - - FRONT PAGE - By Paresh Dave and Ryan Faugh­n­der

With $6.5 bil­lion in an­nual sales and 12,000 em­ploy­ees around the world, Uber Tech­nolo­gies hardly re­sem­bles a blank slate.

But that’s the pitch — lon­gawaited in some of its in­vestors’ and em­ploy­ees’ eyes — that Uber can now make with this week’s res­ig­na­tion of Chief Ex­ec­u­tive Travis Kalan­ick.

Un­der Kalan­ick, the 8-year-old San Fran­cisco start-up al­legedly be­came a place where com­plaints of sex­ual ha­rass­ment went un­in­ves­ti­gated, stolen trade se­crets were put to use, ex­ec­u­tives were al­lowed to mis­han­dle med­i­cal records and a pro­gram was de­vel­oped to cir­cum­vent in­quiries from public of­fi­cials.

Now, Uber board mem­bers and ex­ec­u­tives are launch­ing a search for a new chief who they view as hav­ing a broad can­vas to craft a fresh nar­ra­tive and in­spire an im­proved culture. To them, Kalan­ick’s de­par­ture and the com­pany’s moves in re­cent weeks to oust 20 prob­lem­atic em­ploy­ees should give job can­di­dates con­fi­dence about the com­mit­ment to mov­ing past months of scandal.

But man­age­ment ex­perts fear that Kalan­ick’s con­tin­u­ing pres­ence on the board and sig­nif­i­cant stake in the com­pany may still be ma­jor detri­ments, spark­ing spec­u­la­tion he could make a come­back some­day as Ap­ple co-founder Steve Jobs did af­ter he re­signed.

De­spite a wide ar­ray of ex­ec­u­tive job open­ings, Uber’s new CEO may not get to pick each lieu­tenant, and there’s no cer­tainty that the com­pany can find some­one with both the rigor and vi­sion to drive Uber into its next gen­er­a­tion.

“They’re go­ing to need a strong leader with experience build­ing

dis­rup­tive busi­nesses, and not every CEO can do this,” said Bill Si­mon, a se­nior ex­ec­u­tive at Los Angeles-based Korn Ferry In­ter­na­tional, an ex­ec­u­tive re­cruit­ing or­ga­ni­za­tion. “The board has to de­velop a very strong point of view about the kind of leader they want, not just in terms of experience and skills, but in val­ues and phi­los­o­phy.”

Kalan­ick’s res­ig­na­tion was met with sig­nif­i­cant divi­sion among em­ploy­ees and share­hold­ers of Uber, which through pri­vate fundrais­ing has been val­ued at near $70 bil­lion. Some fear that with­out a co-founder as CEO, a role which Kalan­ick as­sumed about a year in, that the com­pany will strug­gle to gen­er­ate the cru­cial two-moves-ahead in­sights needed to ward off com­pe­ti­tion.

“Whether it’s au­ton­o­mous ve­hi­cles, truck­ing, fly­ing cars — that’s the stuff that I think you re­ally need Travis for,” said ven­ture cap­i­tal­ist Bradley Tusk, an early Uber in­vestor and ad­vi­sor.

He worries in­vestors who wanted Kalan­ick gone are pri­or­i­tiz­ing short-term gains that could un­der­mine Uber’s am­bi­tions. “It’s about the long term. If they re­place him with a safe bet, it prob­a­bly gets them to an IPO faster,” said Tusk.

In­vestors who sup­ported the res­ig­na­tion are bet­ting that a new hire’s in­creased ex­per­tise in fi­nance and or­ga­ni­za­tion will off­set the loss of Kalan­ick’s in­ti­mate knowl­edge of the com­pany and in­dus­try.

Uber brought in-house its long-time ex­ter­nal con­sul­tant, Har­vard busi­ness pro­fes­sor Frances Frei, to help set the foun­da­tion. She’s work­ing closely with 14 ex­ec­u­tives across de­part­ments who are col­lec­tively run­ning Uber un­til a new chief is tapped. The man­age­ment coun­cil is work­ing in tan­dem with board of di­rec­tor sub­com­mit­tees to fill va­can­cies cre­ated by ex­ec­u­tives flee­ing in the last year.

It’s un­clear how far along they are in their searches, but it’s pos­si­ble some high­level hires could hap­pen be­fore a CEO is named.

“If the board doesn’t act quickly and de­ci­sively, this ex­ec­u­tive merry-go-round can lead to a cri­sis of con­fi­dence,” said Joseph Daniel McCool, prin­ci­pal of the McCool Group, which ad­vises com­pa­nies on re­cruit­ment and suc­ces­sion plan­ning. “This is a new-econ­omy com­pany that is learn­ing some old-school les­sons about lead­er­ship, suc­ces­sion and align­ing lead­ers with the culture.”

De­spite months of scandal, the chief ex­ec­u­tive po­si­tion of the world’s most highly val­ued start-up is ex­pected to be cov­eted. The com­pany could well de­fine the next gen­er­a­tion of trans­porta­tion as it races to de­velop self-driv­ing ve­hi­cles and cre­ate soft­ware to con­nect peo­ple with tran­sit faster and cheaper.

The search could draw auto, air­line, lo­gis­tics and tech lead­ers, in­clud­ing for­mer CEOs Alan Mu­lally of Ford, David Cush of Vir­gin Amer­ica, D. Scott Davis of UPS and Marissa Mayer of Ya­hoo.

And ex­perts ex­pect an out­sider to be cho­sen.

“Given that some of these is­sues are self-in­flicted cul­tural is­sues … the board would be look­ing heav­ily ex­ter­nally for some­one to come in with a fresh per­spec­tive,” said Jason Schloet­zer, pro­fes­sor at Ge­orge­town’s McDonough School of Busi­ness.

Can­di­dates will have to get past Kalan­ick’s on­go­ing role as a board mem­ber. Cre­ative vi­sion­ar­ies have clashed with re­place­ment lead­ers, in­clud­ing this year when Ralph Lau­ren’s CEO left be­cause of strat­egy dis­agree­ments with the ap­parel maker’s name­sake founder and chair­man.

Peo­ple close to the com­pany, in­clud­ing those fa­vor­ing and op­pos­ing the ouster, say Kalan­ick will be just one voice at a ta­ble of nine in the board­room. Its chair­man re­mains Uber co-founder Gar­rett Camp.

“Change is healthy, and needed,” Camp, long seen as a Kalan­ick ally, said Wed­nes­day af­ter­noon on Twit­ter.

Kalan­ick’s out­sized vot­ing power can give him sig­nif­i­cant sway over de­ci­sions, such as when to go public and what com­pa­nies to buy. And there’s no way to rule out Kalan­ick’s po­ten­tial re­turn to an op­er­a­tional role should Uber suf­fer fur­ther tur­moil in the com­ing years, as hap­pened to Jobs at Ap­ple and more re­cently Jack Dorsey at Twit­ter.

Kalan­ick’s res­ig­na­tion was viewed as a strong sig­nal by other share­hold­ers that he doesn’t want to do any­thing to slow down the com­pany’s move to its next chap­ter, sources said. When com­pany-hired in­ves­ti­ga­tors pub­lished rec­om­men­da­tions on how to re­bound from trou­bling man­age­ment and em­ployee ex­o­dus, chief among them was a lesser role for Kalan­ick. The change now en­acted, more peo­ple may be more will­ing to hear out Uber’s of­fers — whether they’re driv­ers, pas­sen­gers or job can­di­dates.

“Page has been turned, who picks up this valu­able ‘ball’ and moves to­wards its great po­ten­tial?” Brent Granado, a gen­eral part­ner at Uber share­holder Sway Ven­tures, posted Tues­day on Twit­ter.

Steve Vas­sallo, Foun­da­tion Cap­i­tal gen­eral part­ner, said Uber has to fo­cus on turn­ing its nearly $3-bil­lion an­nual loss, which ex­cludes items such as stock-based pay, into prof­its. Kalan­ick may have been good for wild, in­tox­i­cat­ing growth. But slow and steady may win out now.

“It’s not al­ways the troops that storm the beaches that are the right ones to set up the gov­ern­ment,” Vas­sallo said. “That’s the case here.”

Find­ing a qual­i­fied ex­ec­u­tive could be dif­fi­cult for a com­pany in the midst of a cri­sis. Search­ing for ex­ec­u­tives can be an ar­du­ous process even for long-es­tab­lished, suc­cess­ful firms with rel­a­tively sta­ble man­age­ment, such as Walt Dis­ney Co., which has strug­gled to iden­tify a suc­ces­sor to its chief.

Si­mon ex­pects the Uber board will want to make a de­ci­sion within 60 days.

“This is an op­por­tu­nity for the lead­er­ship and board of di­rec­tors to reestab­lish Uber as a leader in its space and be a suc­cess­ful en­ter­prise com­mer­cially,” he said. “It’s an op­por­tu­nity, and it’s an ur­gent op­por­tu­nity.”


Spencer Platt Getty Images

UBER BOARD MEM­BERS and ex­ec­u­tives are launch­ing a search for a new chief who they view as hav­ing a broad can­vas to craft a fresh nar­ra­tive and in­spire an im­proved culture. Above, a man en­ters an Uber SUV in New York last week.

Mike Cop­pola/VF17 Getty Images for VF

TRAVIS KALAN­ICK, Uber co-founder. His de­ci­sion to re­sign as CEO was met with divi­sion among em­ploy­ees and share­hold­ers.

Mar­cus Yam Los Angeles Times

DE­SPITE an ar­ray of ex­ec­u­tive open­ings, Uber’s new CEO may not get to pick each lieu­tenant, and there’s no cer­tainty that the com­pany can find some­one with the rigor and vi­sion to drive Uber into its next gen­er­a­tion. Above, a view of down­town L.A. from in­side an Uber ride.

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