Uber CEO Kalanick to step away indefinitely
Probe of company’s culture reveals need for more accountability
Uber CEO Travis Kalanick said Tuesday he will take an indefinite leave of absence as the ride-hailing company starts to institute sweeping recommendations from an internal investigation into Uber’s culture and governance that was sparked by claims of pervasive sexism and questionable corporate practices.
Kalanick has been largely absent from the company’s San Francisco headquarters since late May, when his mother was killed in a boating accident and his father was seriously injured.
“For the last eight years my life has always been about Uber,” Kalanick said in a statement. “Recent events have brought home for me that people are more important than work, and that I need to take some time off of the day-to-day to grieve my mother, whom I buried on Friday, to reflect, to work on myself, and to focus on building out a world-class leadership team.”
Kalanick said he would remain available for counsel on the company’s “most strategic decisions.”
In his absence, Uber will be run by Kalanick’s leadership
team, which consists of 14 senior executives including CTO Thuan Pham, U.S. operations chief Rachel Holt, chief product officer Jeff Holden, and board member and first hire, Ryan Graves.
Kalanick’s decision came the same day as the company — under fire for fostering a sexist and cutthroat office culture that didn’t shrink from shady tactics — released recommendations from a report by former U.S. attorney general Eric Holder that will also lessen some of his influence at the company.
The nearly 50 recommendations, developed in the 31⁄ 2 months since the probe started, targeted everything from Kalanick’s role and control to ways for senior leadership to hold managers accountable for a cultural turnaround. Holder and his team interviewed more than 200 current and former Uber employees and reviewed more than 3 million documents.
The recommendations include forming a board oversight committee (Kalanick and co-founder Garrett Camp control voting rights in the privately held company), rewriting Uber’s cultural values, requiring leadership training and making inclusion and diversity a high priority.
Monday, Nestle executive Wan Ling Martello was appointed as an independent member of its board, and it recently hired Frances Frei, a Harvard Business School expert on cultural transformations.
“While change does not happen overnight, we’re committed to rebuilding trust with our employees, riders and drivers,” Liane Hornsey, Uber’s recently hired head of human resources, said in a statement.
Uber investors Mitch Kapor and Freada Kapor Klein, who actively push for diversity in tech and in late February were very critical of Uber and its CEO during the crisis, said in a statement Tuesday “the recommendations are both thoughtful and extensive, and we are very encouraged that they have taken this as seriously as we had hoped.”
But one incident during Tuesday’s all-hands meeting at Uber headquarters to announce the findings seemed to undermine the new mission. Board member Arianna Huffington was discussing the hiring of Martello to its board, making her the second female voting board member, according to audio of the meeting leaked to Yahoo Finance.
“There’s a lot of data that shows that when there’s one woman on the board, it’s much more likely that there will be a second woman on the board,” Huffington said.
That’s when TPG Capital chairman and Uber board member David Bonderman interjected: “Actually, what it shows is that it is much more likely to be more talking.”
Bonderman later apologized and resigned from the Uber board, saying he did “not want my comments to create distraction as Uber works to build a culture of which we can be proud.”
The first line of the Holder report, compiled by Holder’s firm Covington & Burling and presented to Uber’s board a week ago, cites former engineer Susan Fowler’s explosive February blog post as the catalyst for the introspective turn at Uber.
Fowler, a former engineer at Uber who now works at start-up Stripe, described sexual harassment by a boss that was ignored by human resources because the manager was considered too valuable; she later found other women had experienced similar problems with the same manager. Women complaining to human resources were ignored or in some cases, chastised for reporting. Tuesday, in response to the investigation recommendations, Fowler was less than enthusiastic on Twitter, calling the company’s actions to date “all optics.”
While Silicon Valley has been known for decades as a boys club, this is the first time a public post has managed to shake a major tech player to its core.
In its aftermath, Kalanick called for an “urgent” investigation into her claims and vowed to root out bad apples. But that blog was just the start of a stream of leaked disclosures about Uber’s recent past, including that Uber had used a fake version of its app to fool municipal regulators in cities hostile to its business and the firing of its Asia Pacific operations chief after news outlet Re
code reported on his role in securing an Indian rape victim’s medical records.
The Holder report addressed Uber’s problems by urging a crackdown on Uber’s lax internal controls, suggesting changes that could make the company come more in line with the structure and practices of a large public company. These include expanding the size, role and independence of the audit committee, tightening rules regarding travel and expense reimbursement and installing compliant software to track all HR complaints and disciplinary actions.
Also cited were policy changes that might seem unnecessary at a major company, such as cutting down on alcohol at official gatherings and instituting a policy against romantic relationships with direct reports.
The report lands just a day after Monday’s high-profile resignation of senior vice president Emil Michael, a man at the center of many Uber controversies, as well as last week’s firing of 20 employees. More dismissals are expected from the separate investigation by law firm Perkins Coie into 215 instances of sexual discrimination, bullying and oth- er forms of workplace abuse flagged by Uber employees.
The Covington investigation, and Kalanick’s decision to step back, mark a critical turning part for Uber. The company’s story is the stuff of Silicon Valley legend, rising fast in eight years from bootstrapped local favorite to global phenomenon valued at close to $70 billion. But in recent months, Uber has lost market share and brand image during the flood of reports on workplace missteps, threatening that preIPO valuation and its ability to attract customers and new hires.
“It’s important to remember that Uber’s problems are diverse, including the mistreatment of employees, secret programs used to get around regulators and a less-than-stellar relationship with its drivers,” says Jeremy Robinson-Leon, principal at corporate communications firm Group Gordon. “It won’t be enough to address one, and each will require different fixes.”
If culture starts at the top, it stands to reason Kalanick stepping aside, even temporarily, might help fix a variety of company woes. After all, the CEO has long been the poster child for Uber’s successes and failures. He has been integral to the company’s sharp-elbowed approach to bulldozing past taxi unions and city officials. And he has been a key part of creating the company’s frat-like culture, from calling Uber “Boob-er” after how it helped him with dating, to reportedly writing party memos warning employees to make sure any sex was consensual, according to a memo obtained by Recode.
Says Alpern: “If (Kalanick) remains (at Uber), people will believe it if they see him go out and model the new way, talking to people. That goes a long way.”
“While change does not happen overnight, we’re committed to rebuilding trust with our employees, riders and drivers.” Liane Hornsey, Uber’s recently hired head of human resources