Company / division: Uber
Another week, another story about erstwhile Uber CEO refusing to go gently into that good night. The Information is reporting that Travis Kalanick has been quietly building up a bloc of shareholders who will back him in a potential fight over the course of several years, while also sounding out employees recently on whether they would support him in that eventuality. Though the details here are new, the broad thrust is similar to the reporting last week that Kalanick was hoping to be able to get back into an operational role at Uber sooner rather than later, something many in leadership at Uber don’t want, and also a situation that’s likely to put off potential new CEOs, which is presumably part of Kalanick’s motivation here. That he still doesn’t see how central his behavior has been to Uber’s struggles, and how badly it needs to operate for at least some time without him, is the biggest possible sign that Kalanick hasn’t actually changed and isn’t actually sorry for any of what he’s done, which is in turn the best possible signal that he shouldn’t come back. But it seems he has enough supporters left at Uber that he’s convinced himself it’s worth trying anyway. Update: later in the day, an internal email from Uber co-founder and board member Garrett Camp was leaked, in which he said Kalanick would not be returning as CEO, apparently attempting to defuse some of this speculation and even the push to get him back.
via The Information
Lyft’s Gross Bookings Growing at Higher Rate Than Uber’s (Jul 25, 2017)
Bloomberg has some inside data from Lyft that suggests its gross bookings grew by 25% year on year in the second quarter, which would be higher than the mid-teens growth Uber had told investors to expect in a preliminary call earlier this month. As with other recent signals that Lyft may be gaining on Uber, it’s tempting to read this as evidence that there’s some kind of backlash against Uber over its recent troubles, but I continue to see very little evidence of that. Rather, it’s likely that Lyft’s big push into new markets in the first half of this year has helped it grow bookings significantly during this period, while the Uber scandals have made a far more limited impact. And of course Uber’s results are on a much bigger base, meaning that its dollar growth is likely far larger than Lyft’s even if its percentage growth rate is lower. I’m happy to see Lyft gaining on Uber – it’s always struck me as a more ethical company with a leadership with more integrity than Uber’s, and I’ve been using Lyft pretty much exclusively when traveling recently. But I see very little evidence that Lyft is gaining on Uber broadly for this reason, and in using Lyft it’s often been clear just how big an edge Uber has – at airports, there are multiple times as many Ubers in the pick-up area as Lyfts, and at least half my drivers have been drivers for both services, often skewing heavily towards Uber in their actual share of driving (which often turns to a 100% share on specific days given the bonuses Uber offers for driving over a certain amount).
Waymo Drops Three of Four Patent Claims Against Uber (Jul 7, 2017)
Waymo has dropped three of the four patent claims in its lawsuit against Uber, partially complying with a suggestion from the judge in the case. The patents dropped relate to a design which Waymo became aware of, but which Uber doesn’t actually use and has promised not to use going forward, making them much less important. The judge has indicated throughout the process that he largely believes Waymo’s claims about Anthony Levandowski downloading files and bringing them to Uber, but has also suggested that the patent part of the lawsuit is going to be tough to prove and should be set aside by Waymo. Uber is, of course, trumpeting the news as a sign that the whole thing is misguided, while at the same time seeking depositions of Alphabet executives with a few to showing that the suit is motivated by a desire to slow Uber’s efforts down rather than a true desire for legal redress. The tone of Uber’s statement to various outlets today certainly suggests that it isn’t backing down on its aggressive response following the departure of Travis Kalanick as CEO, answering one of the questions I posed at the time he stepped down. Ultimately, though, narrowing the case to a few key points and potentially even dropping the remaining patent claim is likely to give Waymo a better chance at winning in court, even if the scope of that win is smaller than it originally hoped. Update: later in the day, the judge granted Uber’s request to depose Larry Page for up to four hours, per Recode.
Uber Talking to SEC About Giving Drivers Equity (Jun 29, 2017)
According to Axios, Uber has been meeting with the Securities and Exchange Commission to discuss giving drivers equity in the company. As the piece notes, this was something recently-acquired ride sharing startup Juno promised to do, but which it found legally difficult given SEC regulations. Of course, if drivers were employees, there would be entirely standard ways to deal with stock-based compensation, but the combination of the fact that Uber is a private company and drivers are contractors rather than employees make this more complex. Given the historical meteoric rise of Uber’s valuation, I could certainly see the appeal for drivers of getting a stake in the company, though the attraction will have waned a little as there have been reports of shares selling at lower prices in the private markets over recent months. Longer term, there are still big questions about whether Uber’s valuation will continue to grow if it doesn’t have a clear path to profitability and doesn’t seem to be winning decisively against Lyft and other big competitors in its important markets. And its big investment in autonomous driving is another potential huge cash sink which isn’t guaranteed to pay off, especially given the distraction and uncertainty created by the Waymo lawsuit and the departure of Anthony Levandowski and Travis Kalanick in recent weeks. Still, Uber does seem to be genuinely interested in trying to find ways to improve its relationship with drivers recently, and this is another potential step in that direction.
Weekly Narrative Video – Uber’s Culture is Toxic (Jun 23, 2017)
This week’s narrative video is on the Uber’s Culture is Toxic narrative, which has very much been in the news the last couple of weeks as the results of the Eric Holder investigation were released, and Travis Kalanick first took a leave of absence from Uber and then resigned as CEO. The last six months have brought long-simmering accusations and perceptions about Uber’s toxic culture to a head, and the investigations which concluded in recent weeks provided ample evidence of just how bad things had become. There is now, though, finally some hope that Uber can begin to change in earnest with Kalanick out of his role as CEO. Subscribers can watch the video on the narrative page here as always, and if you’re not yet a subscriber you can sign up for a 30-day free trial here and get access too.
Uber’s CEO Travis Kalanick has finally bowed to pressure from investors in the company and resigned. It doesn’t look like Uber has issued an official statement at this point, but Recode claims to have confirmed the news following a letter from a number of big investors demanding his resignation. At various points since Uber started melting down in January, I’ve both said that Travis Kalanick was the source of the company’s cultural problems and therefore that it would be very hard for the company to truly change with him still in place, and also as recently as last week said that resignations of other top executives felt hollow when Kalanick had in many places been involved in or at least aware of their wrongful actions. For many years, Kalanick’s closest allies within the company were protected by him even when acting egregiously, and that circle had tightened to just Kalanick himself in recent weeks, but did still include him, making all the changes Uber was making ring rather hollow as he continued at the helm. I think his leave of absence was intended to achieve some of the same objectives as an outright resignation without forcing him out, which would have been tough to do, but it was already clear that he was remaining involved remotely in key decisions and thus that there was no real separation. What’s notable is that, despite all the outside pressure for Kalanick to go, and board members’ repeated defenses of him, it took investors acting as a group to finally force him out. This now leaves an enormous vacuum at the top of the company – a committee of no less than 14 people has been said to be running Uber during Kalanick’s absence – at a time when it has already been looking to fill the COO role and has left several other key executives in recent months. I would guess all that will now be reset, with several new executive search processes eventually running to fill the key roles. That, in turn, is going to make it very hard for the company to move forward aggressively with the changes it has committed to in the wake of the Holder Report recommendations. But this is all for the best long term, even if it’s messy in the short term. One big question that’s outstanding is whether the legal strategy in the Waymo-Uber court case changes at all as a result of Kalanick’s departure – we’ll see now to what extent the approach pursued so far was driven by him personally and to what extent the company will act consistently or differently now that he’s out.
Uber Adds Tipping and Makes Other Driver-Friendly Changes (Jun 20, 2017)
Though I hesitate to write yet another Uber piece this week, this one is worth mentioning just because it illustrates how all the formal investigations and programs in the world can’t instantly change the individuals in a company or the culture they collectively embody. It appears that at the internal Uber meeting to announce the conclusion of the Holder investigation and how its recommendations would be rolled out, board member David Bonderman made what certainly came off as a highly sexist remark. Though he suggests the remark was misunderstood, it was almost impossibly tone deaf in the context, and he has subsequently resigned from the Uber board, which feels like the only way this could have ended once word got out. But it’s symbolic of both just how hard changing culture actually is when some biases and mindsets are so deeply ingrained, and also of how differently Uber is going to approach all these issues going forward, with much less tolerance for any missteps. That’s a good thing, and one of the few early and visible signs that things really are going to be different, though of course so far it’s only really been applied to those incidents high profile enough to capture attention from outside of Uber.
The long-awaited investigation by Eric Holder and Tammy Albarrán of law firm Covington & Burling into the workplace culture at Uber has concluded and its recommendations made public. The fact that the report contains twelve pages of recommendations is evidence in and of itself just how broken the corporate culture at Uber has become, and quite how much it needs to change. That change, the recommendations suggest, needs to start at the top with the composition, independence, and responsibilities of the board, and work its way down through the CEO, Travis Kalanick (some of whose responsibilities should be handed over to others), and on from there. The changes recommended are sweeping, which seems appropriate given just how badly things have gone, and importantly they include many layers of accountability with real consequences attached to both good and bad behavior from performance reviews to financial incentives. Travis Kalanick is apparently going to take a leave of absence, partly to grieve for his mother who was killed recently in a boating accident, but partly also to get some time away from his job and reflect on all that’s gone on, which seems very sensible too. But one of the most notable aspects of this whole thing is just how much of a role Kalanick and the culture he has personally created at Uber is responsible for so many of the issues, and one of the biggest questions remains whether he personally can change enough to fit in with all the other changes that will be made both immediately and over time. All that’s gone on at Uber should also serve as a cautionary tale for many other tech firms, some of which will be looking down at Uber at this time but many of which have many of the same cultural flaws, even if to a lesser degree (or merely less publicly). The recommendations in the Holder report would almost all be considered best practice in the fields they cover rather than merely remedies to be applied after a major failure. I suspect every company would be better off by following the majority or even all of them.
Any other week, I’d have made this a top post – it’s momentous – but of course we’re all waiting for the other shoe to drop on Tuesday in terms of the release of the Holder report to employees at Uber and hopefully to the rest of us too. As such, Emil Michael’s departure merely feels like the tipoff for a week of big announcements and changes. But his departure is also somewhat problematic because many of his missteps also involved or were supported by Travis Kalanick. In other words, if his past actions merited being pushed out of the door (and they certainly did) then Kalanick staying feels like a sign of a double standard. Either those actions warranted those responsible being fired, or they didn’t. However, symbolically, Michael’s departure signals the end of an era in which Kalanick’s top people pretty much got to stay no matter what they’d done, something we’ve seen signs of changing in recent weeks with several other departures, not least that of Anthony Levandowski. Also worth noting is that Uber has hired a new female board member who currently serves as EVP in South Asia at Nestle. Her appointment as an independent director appears to be in line with recommendations from the Holder Report, though it clearly can’t have been brought about that quickly and must have been in the works previously.
While ride sharing companies like Uber and Lyft continue to grab the majority of attention in the transportation tech space, with autonomous driving technology companies getting most of the rest, it’s worth remembering that there are various other transportation tech startups out there, not all of them doing all that well. It appears that Uber is in the process of trying to acquire assets and hire staff from valet parking service Luxe, which is one of those services that appears to have struggled to make its business model work. It had recently announced a pivot of sorts to a new model, but it now seems as though all that will remain is a shell once Uber has snapped up the parts it wants. That may or may not mean that Uber expands into the valet parking space – in fact, I’d say it’s at least as likely that Uber simply sees this as a way to get a number of competent staff with relevant skills quickly and easily while also acquiring some relevant technology.