Will Uber be haunted by their spurned CEO?
Kalanick retains massive influence, which could stifle any new leadership
SAN FRANCISCO » The dramatic ouster of Uber CEO Travis Kalanick was meant to be a changing of the guard at the troubled ride-hailing company. Despite the shock waves it generated, experts say the spurned leader’s reign is far from over.
Though Kalanick is no longer helming the world’s most valuable startup, he’s still on the board, remains a major shareholder and retains the sacred title of “founder” — all of which gives him significant influence over Uber’s future, according to corporate governance experts. That continued leverage is sure to complicate Uber’s efforts to overhaul its aggressive company culture, move past a series of scandals closely associated with Kalanick, and ultimately go public, they say.
“He’s not going to go away in any real sense,” said Michael Greeley, cofounder of Flare Capital Partners and former member of the National Venture Capital Association’s executive committee.
More than a week after investors in the $70 billion global company forced Kalanick to resign, it remains unclear how involved he’ll be in the company’s top two priorities — picking his replacement and fixing Uber’s cultural issues. Uber won’t say whether he’s part of the board subcommittee leading the search for a new CEO, or the new oversight committee created to make sure the startup follows through on its promises to change.
“To me, the lack of that clarity from Uber’s board about how the succession process will be organized, who’s involved in the committee, and a lack of detail about Travis’ ongoing role on Uber’s board are particularly interesting,” said Jason Schloetzer, a professor at Georgetown University’s McDonough School of Business and an expert on corporate governance. “And until we see communication like that, then I think that Travis’ resignation is an incomplete story.”
As Uber starts making changes suggested by outside investigators — overhauling everything from the company’s drug and alcohol policy to its governance structure — Kalanick is poised to continue shaping Uber’s future in a more hands-on way than his critics might hope. He likely can use his outsized influence to effectively veto potential CEOs, and probably will have a large say in Uber’s future fundraising, Greeley said. That’s important because the unprofitable company eventually will burn through its cash reserves — maybe even in a few years. Uber can forget going public until the new chief executive has been at the helm for a year or two, Greeley said.
The pugnacious Kalanick, credited with Uber’s stunning growth and blamed for its many troubles, resigned following four months of turmoil that kicked off when a former Uber engineer accused the company of failing to act when she complained of sexual harassment. Since then, Uber has faced additional allegations of harassment, sexism and inappropriate behavior, a criminal investigation into its use of software to evade regulators, and a lawsuit accusing the company of stealing technology from selfdriving car rival Waymo.
As the problems piled up, Kalanick — who once referred to his company as “boober” because it helped him attract women — became the face of what has been called Uber’s “toxic” culture. He was caught on camera losing his temper during an argument with an Uber driver over fares, and not long after, an embarrassing internal email leaked in which he instructed Uber employees on ground rules for partying and having sex with co-workers. Investors ultimately demanded that Kalanick resign, and he complied.
Kalanick sits on the board alongside co-founder Garrett Camp, early employee Ryan Graves, Huffington Post co-founder Arianna Huffington, an official representing Saudi Arabia’s government investment fund, and three directors who joined in the past three weeks — Benchmark investor Matt Cohler, TPG investor David Trujillo and Nestle executive Wan Ling Martello.
Uber said Kalanick does not hold the title of chairman or executive chairman of the board.
Keeping Kalanick around is a smart move, according to some, because the young company still needs his innovation and guidance. His resignation sparked a backlash from some Uber employees — more than 1,000 reportedly signed a petition to bring him back into the C-suite — and big names including former Yahoo CEO Marissa Mayer and actor and tech investor Ashton Kutcher have publicly come to his defense.
“I would not let the visionary CEO just walk into the sunset,” said Vish Mishra, venture director at Clearstone Venture Partners.
And as a major stakeholder in the company, Kalanick has a financial incentive to cooperate with his board and executive team and keep Uber moving forward, experts say.
However, his lingering presence also could be a liability, making the chief executive job less attractive to the qualified candidates Uber needs to recruit, experts said.
“CEOs like to be their own boss,” Schloetzer said. “They don’t want to have the former CEO and also founder and also significant shareholder watching over their day-to-day decision making.”
It’s the same cloud that hung over Uber’s search for a chief operating officer — whoever took the job would have to work in the shadow of Uber’s notoriously bullheaded founder. Kalanick searched for nearly four months for a COO without releasing the names of any promising candidates.
While it’s not uncommon for a founder to abdicate the company’s chief executive role and then stay on as a director, problems tend to arise when the old CEO is perceived to be looking over the new CEO’s shoulder, Lux Capital managing partner Peter Hebert said.
“More often than not, it does not work out,” he said.
Recent examples show it can be tough for a company to shake its founder once and for all. Dell founder Michael Dell resigned as CEO in 2004 but kept his board seat — three years later, as the company struggled with lackluster earnings, he snatched the CEO post back. Former Starbucks CEO Howard Schultz resigned in 2000, returned to the role in 2008, and then left again earlier this year. And former Zynga CEO Mark Pincus also played the revolving door game, stepping down in 2013, coming back in 2015, and leaving again less than a year later.
Kalanick almost certainly is plotting a similar return, said Uber critic Dave Sutton, spokesman for the taxi industry-funded public action group Who’s Driving You? Uber’s broken internal culture has influenced its policies, Sutton said, including the startup’s adamant refusal to follow taxi companies’ lead and require fingerprint background checks for its drivers — a move he argues puts passengers at risk.
Kalanick created and fostered that culture, Sutton said.
“Uber is in the trouble that it’s in because of him, there can’t be any doubt about that,” he said. “With him in the wings, I seriously doubt the company will be able to change in a meaningful way.”